Advanced biofuels manufacturers are entering a critical phase as a new generation of production facilities are about to come on line. So reports Reuters.
The new facilities are designed to shift the industry to advanced fuels with a lower carbon footprint derived from products that do not compete with demand for food, such as cellulosic plant materials, animal waste and plant oils.
The U.S. government has targets for the next decade that call for fuel suppliers to blend biofuels into gasoline and diesel. This has helped biofuel companies map out expansion plans, Reuters says. What’s more, they do not rely on tax incentives or subsidies.
However, investors will likely have to wait for the technology to prove itself before seeing big payoffs, Reuters says.
KiOR Inc.’s new Columbus, Mississippi production plant is one example. It will turn wood products into components that can be used in gasoline and diesel and is expected to begin production in the second half of 2012.
Others under construction include Altair’s Washington plant, which will produce jet fuel from carmelina, and Diamond Green’s facility in Louisiana, which will convert animal fat and used cooking oil into diesel fuel.
Many of these companies have been developing technology for years.
Almost 400 million gallons of new biofuels production in the U.S. is expected to begin this year. Another 1.7 billion gallons of is slated from the beginning of 2013 through 2015, bringing total capacity to 2.3 billion gallons.
The Environmental Protection Agency’s Renewable Fuel Standard 2 calls for 21 billion gallons of advanced biofuels to be delivered annually by 2022.
The target could be reduced if producers are unable to meet production needs.
And given the diverse slate of fuels, feedstocks and company strategies in the industry, Reuters says investors may need to be patient.
The most crucial factor will be finding an adequate source of feedstocks that can be cheaply turned into fuel.
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