The United States has supported the development of the ethanol industry using a combination of financial support and incentives. Thanks primarily to the Clean Air Act Amendments of 1990, the Jobs Creation Act of 2004, and Energy Policy Act of 2005, ethanol consumption has increased from one billion gallons in the early 1990s to a little over 5 billion gallons in 2006.

Recent efforts by our government have been bolder and more focused on the development and commercialization of cellulosic ethanol; ethanol produced from biomass, such as wood, switch grass, corn stover, and miscanthus grass, not corn. In his State of the Union Address in 2007, President George W. Bush announced his aggressive “20 x 10” plan, which would require the use of 35 billion gallons of ethanol and other alternative fuels by 2017 to lessen our dependence on foreign oil. Since a portion of this goal can be fulfilled by ethanol produced from corn, the government is recognizing the increasingly significant role cellulosic ethanol will play in securing our country’s energy independence.

Recently added support for the development and growth of cellulosic ethanol production has been demonstrated through increased development funding from the federal government. In late February, the U.S. Department of Energy (DOE) awarded grants totaling $385 million to six firms with plans to develop and commercialize the production of cellulosic ethanol. Range Fuels was one of the companies recognized by the DOE for its promising cellulosic ethanol technology and was selected for a potential $76 million grant for its first cellulosic ethanol plant to be built at a site near Soperton, Georgia.

DOE funding for research and development into the commercialization of cellulosic ethanol will more than double in 2007. The DOE plans to make $4 billion in loan guarantees available for projects that promote biofuels and clean transportation fuels. Additionally, the U.S. Department of Agriculture has proposed an aggressive package of new funding in its 2007 Farm Bill totaling $1.6 billion over 10 years – both in the forms of grants and loan guarantees – to bolster development of renewable energy research focused on the development and production of cellulosic ethanol.

Some have argued that these incentives and financial support are “corporate welfare,” but that argument misses several important points:

• Cellulosic ethanol is a developing technology, and, like all new technologies, it must offer returns that attract initial capital investment before it can become a mature, commercially viable business.
• The public has a vested interest in nurturing a technology that can increase energy security and reduce air pollution and global-warming gases.
• Nearly half the nation’s ethanol is produced not by large corporations, but by farmer-owned cooperatives.⁴⁴ By investing in this next-generation technology, farmers are diversifying and protecting themselves from market fluctuations and ensuring the viability of American agriculture well into the next century.
• The petroleum industry – hardly an emerging technology in need of a federal handout – receives billions of dollars each year in federal subsidies. In fact, it gets $6 billion annually just from the Energy Policy Act of 2005.