AFPM Statement: DOE Office of the Inspector General Finds Multiple Problems with Bioenergy Program

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A report released today by the Department of Energy’s (DOE) Office of the Inspector General (OIG) determined that the agency has failed to demonstrate the commercial viability of integrated biorefineries as required under the Energy Policy Act of 2005 and the Energy Independence Act of 2007.

A September 2013 audit report by the Department of Energy’s (DOE) Office of the Inspector General (OIG) determined that the agency has failed to demonstrate the commercial viability of integrated biorefineries as required under the Energy Policy Act of 2005 and the Energy Independence Act of 2007.

According to the OIG report, as of March 2013 the DOE’s Bioenergy Technologies Office, which was responsible for developing a bioenergy program, had spent $603 million of its obligated $929 million. Of the 29 projects that were awarded funding under the bioenergy program, the Department could demonstrate the successful operation of just three biorefineries, none of which were commercial scale. Also noted was the Department’s failure to meet its goal of the production of 100 million gallons of advanced biofuels annually by 2014, not altogether surprising since more than half of the projects slated to help meet the goal were terminated.

“This report is yet more evidence of how government policies that pick winners and losers in the marketplace end up in colossal failure. It is just the latest in a slew of examples highlighting how flawed energy policies based on subsidies and mandates, rather than markets and entrepreneurship, are detrimental to American consumers and the economy,” said American Fuel & Petrochemical Manufacturers President Charles T. Drevna.    

Key findings of the OIG report:

  • Specifically, the Energy Policy Act mandate to demonstrate the commercial application of integrated biorefineries had not been met and the Department was not on target to meet its biofuels production capacity goal.
  • The Department had not successfully achieved commercial-scale operations even though the Funding Opportunity Announcements issued in 2006 and 2007 indicated that the proposed projects should be operational at the commercial scale within 3 to 4 years.
  • Further, the 2009 FOA indicated proposed demonstration projects would be operational as soon as possible after award and proceed rapidly to commercial-scale operation. In fact, 6 of the 15 (40 percent) demonstration-scale and commercial-scale projects selected from the FOAs were mutually terminated by the Department and the recipients after expending more than $75 million on Government funds, including one recipient that had spent $44 million before losing its primary investor.

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Rebecca Adler
AFPM
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