More U.S. backing seen possible for ethanol plants

Load out technician Slade Whetro fills a railroad tank car with ethanol fuel, converted from corn, at the Lincolnway Energy plant in the town of Nevada, Iowa, December 6, 2007. REUTERS/Jason Reed

WASHINGTON (Reuters) - Congress may add $1 billion to a U.S. loan guarantee program for construction of cellulosic ethanol plants, the president of a renewable fuels trade group trade said on Tuesday.

During a teleconference, Renewable Fuels Association President and CEO Bob Dinneen said lawmakers apparently were looking at $1 billion for loan guarantees to bring new feedstocks into use.

A $320 million guarantee program was created in the 2008 farm law for biorefineries producing advanced fuels such as ethanol from cellulose found in wood and grass.

Agriculture Secretary Ed Schafer says the first guarantee may be issued soon.

“You need to have some sort of loan guarantee program or you won’t get off the ground,” said Chris Standlee of Abengoa Bioenergy, who also serves as RFA chairman, because the recession makes it harder to obtain private financing.

Standlee said Congress also should require that by 2012, half of new vehicles sold are flex-fuel vehicles that can use alternative fuels.

RFA is seeking changes in federal regulations that will allow a slight increase in the ethanol-to-gasoline blend rate in the near term and in the longer term a blend rate that could be double the current 10 percent.

Also on Tuesday, a coalition of agriculture, renewable energy and conservation groups said lawmakers should provide at least $1.2 billion a year in additional funding for renewable energy programs run by the Agriculture Department.

Their list included programs to pay farmers to experiment with biomass crops, to build biorefineries using new feedstocks and a program boosting wind, solar, bioenergy, geothermal and energy efficiency programs in rural areas.

Reporting by Charles Abbott; Editing by Christian Wiessner