Concerned scientists call for cellulosic biofuel sweeteners

The US government should step up support for the emerging cellulosic biofuels industry with a new tax credit regime that would reward firms based on the performance and quality of the biofuels they produce.

That is the central recommendation of a new report this week from the Union of Concerned Scientists (UCS), which warns that the focus on first-generation biofuels such as ethanol has put a strain on agricultural resources while doing little to curb greenhouse gas emissions.

"Food prices have gone up, water supplies have been put at risk, and habitat and biodiversity have been sacrificed, all without making any progress toward reducing the emissions responsible for global warming," said the report.

The study, entitled The Billion Gallon Challenge, accuses current biofuel policies of undermining the production of cellulosic-based biofuels, which unlike first-generation biofuels are produced from waste materials, agricultural byproducts and crops that do not affect food supplies.

The report recommends the government set a target for the biofuel industry to produce one billion gallons of cellulosic biofuels annually, and support the sector through new tax credits and loan guarantees.

It also recommends replacing existing biofuel tax credits, which support all biofuels, with a performance-related credit system that distributes credits according to a fuel's performance.

Currently, Congress is considering the Renewable Fuels Reinvestment Act, which proposes extending the Volumetric Ethanol Excise Tax Credit (VEETC) for five years. The VEETC, which expires this December, provides a tax credit for ethanol producers.

The UCS report said that extending the current fuel tax credits would cost $100m (£67.5m) in the next 10 years, with 60 per cent of this money would go to producers of conventional biofuels such as ethanol. It argued that instead the government should invest $4bn in tax credits to finance up to 20 new cellulosic production facilities, adding that the new plants would reduce greenhouse gas emissions by 45 million tons per year by 2022 compared to business-as-usual projections.

The government is coming under increasing pressure to identify and fund alternative energy solutions in the wake of oil spill in the Gulf of Mexico. Late last week, the American Energy Innovation Council called for $16bn in government funding to create a national energy strategy and stimulate research and development in the energy sector.