President’s Budget Proposal Will Help Bring Cellulosic Ethanol to the Pump If Fully Funded

WASHINGTON, D.C. (February 7, 2006) –The Biotechnology Industry Organization (BIO) urges Congressional appropriators to fully fund the Department of Energy Biomass and Biorefinery Systems R&D program in the President’s 2007 budget request, released yesterday.

“The biotechnology industry can play a vital role in meeting the President’s stated goal of increasing America’s energy security by replacing imported oil with domestically produced alternative fuels. Bringing cellulosic ethanol to the pump will require government support in biotech research and development, biorefinery construction, and market expansion,” said Jim Greenwood, BIO president and CEO.

“Biotech enzymes have been the key to enabling the use of crop wastes and other cellulosic matter in the production of ethanol. These advances have served to drive down the cost of this alternative fuel and increase its availability.

“We need huge volumes of ethanol to enhance our energy picture. Once we add crop wastes as the new ‘renewable crude oil’ we can begin to significantly ramp up ethanol production above current levels. The technology is ready today and sustainable agricultural feedstocks such as corn stover and wheat straw are abundantly available in most states.

“The President’s biofuels initiative can help bring cellulosic ethanol to filling stations throughout the country within a few short years, if we start now to build the biorefineries needed to produce large volumes of this domestically grown fuel,” Greenwood added.

“Even with the demonstration of cellulosic ethanol technology, federal policy is needed to ensure market pull for alternative transportation fuels in a market dominated by petroleum. The Energy Policy Act of 2005 established several programs to create and expand the market for cellulosic ethanol. These programs should be fully implemented,” Greenwood concluded.

“The President’s Advanced Energy Initiative will help displace future demand for oil by increasing funding to develop affordable, domestically produced bio-based transportation fuels (ethanol and biodiesel) and other products largely derived from oil today. The increased investment will support construction of an industrial-scale biorefinery to demonstrate production of fuels, chemicals, heat, and power from biomass (energy crops and crop residues), much like an oil refinery produces these products from oil. If successful, industry will begin investing in commercial-scale biorefineries, and consumers could begin buying more products -- including fuel for their cars and trucks and bioplastics -- produced in America’s heartland. America’s breadbasket could soon become our energy fields as well.” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section.

Breakthroughs in industrial biotechnology have dramatically reduced the cost of enzyme-based cellulosic ethanol production over the past five years. However, advances in new feedstocks, harvesting, storage, transportation and processing are still needed to produce renewable and sustainable transportation fuel at a price competitive with fuel from the mature petroleum industry. The Energy Policy Act of 2005 provided for strong programs at both the departments of Energy and Agriculture. These research, development and demonstration programs should be funded at least at the level authorized in the Act. The program received $91 million in 2006 appropriations, and the President has proposed increasing funding to $120 million for 2007. This is still just over half the authorized level.

The single greatest hurdle to commercialization of cellulosic ethanol is construction of the first integrated biorefineries. The Energy Policy Act of 2005 established the Biorefinery Loan Guarantee Program and the Biorefinery Grants Program to provide the government assurance necessary to help refiners secure private financing for construction of the first new plants. These programs must be funded at a level sufficient to mobilize private financing.

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products.