In 1938, as the German-Czechoslovakian crisis unfolded on the eve of World War II, Hilaire Belloc summarized British Prime Minister Neville Chamberlain’s appeasement policy as:
I don’t think they’ll attack yer,
But I’m not going to back yer.”
So might the policies of a Romney Administration towards biofuels be fairly described. It shaped up as a campaign hopeful for breakthroughs under an “all of the above energy” umbrella, supportive of basic research, silent on the fate of key Bush-era instruments such as the Renewable Fuel Standard, and unwilling to invest in steps to accelerate the commercialization of technologies or the building of feedstock reserves.
The Romney platform is remarkable, vis-a-vis biofuels, for ignoring the word altogether – so we are left to guess as to an incoming Administration’s attitude towards nearly 10 percent of the US energy supply.
Generally, as you might expect, it would be an Administration focused less on an “all of the above” energy strategy as an “all of the below” energy strategy, that is, oil and gas.
Like all political candidates, views evolve with markets and changes in public sentiment – so take some of the historical record in context. But, left without much in the platform, we turn to the record for clues on policy.
Enhanced Energy Production: Consistently for
From the Romney platform: “The United States is blessed with a cornucopia of carbon-based energy resources…Conduct comprehensive survey of America’s energy reserves…Open America’s energy reserves for development…Expand opportunities for U.S. resource developers to forge partnerships with neighboring countries…Support construction of pipelines to bring Canadian oil to the United States…Prevent overregulation of shale gas development and extraction.”
Energy Independence: Consistently for
“America must become energy independent… We’re in a very vulnerable position. Our economic and military strength require us to become energy independent. I’m not just talking about symbolic measures. I mean that we must finally take the actual steps that will produce as much energy as we use…We’ll end our strategic vulnerability to an oil shutoff by nations like Iran and Russia and Venezuela. And we’ll stop spending or sending a billion dollars a day to other nations, some of whom are using that very money against us…”
Oil dependency: Flip-floppy
Back in 2006, Governor Romney wrote in the Waterloo Courier: “We’re using too much oil. We have an answer. We can use alternative sources of energy — biodiesel, ethanol, nuclear power — and we can drill for more oil here. We can be more energy independent and we can be far more efficient in the use of that energy.”
Mandates: Consistently against
The Governor wrote: “Republicans should never abandon pro-growth conservative principles in an effort to embrace the ideas of Al Gore. Instead of sweeping mandates, we must use America’s power of innovation to develop alternative sources of energy and new technologies that use energy more efficiently.”
Policy uncertainty: Flip-floppy
The Governor wrote: “Businesses can live with “yes” or “no,” but government must stop saying “maybe” or “wait.”” The trouble is, this appears to apply to policies supported by the GOP. With policies opposed by the GOP, there appears to be endless patience with “maybe” or “wait” – and the opposite side of the aisle appears to feel the same way, hence the gridlock of a continuous election cycle.
R&D: Room for uncertainty
From the Romney platform: “Government has a role to play in innovation in the energy industry. History shows that the United States has moved forward in astonishing ways thanks to national investment in basic research and advanced technology…Concentrate alternative energy funding on basic research. Utilize long-term, apolitical funding mechanisms like ARPA-E for basic research.”
The Governor writes elsewhere: “I will invest in new energy technologies. We must not allow President Obama’s irresponsible and unethical funding of companies such as Solyndra to undermine the Department of Energy’s critical mission of basic research.”
Now, the proposed (and GOP-backed) Broun amendment would prohibit ARPA-E funding of projects at a Technology Readiness Level of 7 or higher (that is, a ‘system prototype demonstration in an operational environment’) – that seems to be a general proxy for where a Romney Administration would stand.
That’s pretty clear. What’s the uncertainty? Well, comes down to what we define as basic research. As commonly understood, that means no applied research – and anything TRL 1 or higher is applied R&D, not basic. So, we’re going to conclude that the focus will be on cutting out late-stage applied R&D and assistance across the Valley of Death, rather than a cut in all applied R&D.
Public/Private Partnerships: Room for uncertainty
“The Governor proposes creating new partnerships between business and universities to speed the commercialization of these technologies to create new jobs in the advanced energy marketplace. This will help make Massachusetts a world leader in energy technology, similar to how the state is a leader in biotechnology.”
Where’s the uncertainty? Well, business is generally going to invest in applied R&D only if there is a clear path through the Valley of Death to commercialization. This particularly applies to capital-intensive commercial projects such as energy, where the paybacks are slow (due to the time needed for scale-up), and the upfront investment is high, making it extremely difficult for new technologies to clear a corporate “hurdle rate” for return on investment.
Our surmise? The Romney view is that states should take up the leading role in fostering commercialization through public/private partnerships, to the extent that government should take a role – based on supporting those technologies that best match up with their resources.
The bottom line?
For advanced biofuels, we would expect far more emphasis on role of the states in fostering technology commercialization, continued commitment on basic research; and, continued support of international efforts like the Global Bioenergy Partnership and bilateral MOUs on energy cooperation (such as the US-Australia agreement).
Mandates? That will entirely depend on the composition of the next Congress, but we would expect to see an Administration that supported a reforecast of RFS2, a wind-down of tax credits at the federal level, but support for private sector instruments such as expanding Master Limited Partnerships to advanced energy technologies.
By. Jim Lane
Source: Biofuels Digest