ST. PAUL -- Obama administration officials say the Navy is on its way to rescue America's biofuels industry.
The federal agriculture, energy and Navy departments Tuesday announced they will spend up to $510 million in the next three years to build new or rebuild existing facilities to make fuel from what now is considered plant waste, such as corn stalks, grass, wood chips and corn cobs.
The announcement could be good news to the Northland, especially if it helps develop cost-effective technologies to convert wood chips into a liquid fuel.
"You get the sense that the technology is right there, that it is coming soon," said Bill Berguson, a scientist at the University of Minnesota Duluth's Natural Resources Research Institute.
Berguson specializes in developing ways to grow woody biomass as a crop for paper production or potentially wood chips as a heat or steam fuel. He said the Northland should have enough woody biomass -- waste wood, forest trees and hybrid tree crops -- to support a liquid fuel plant sometime in the future.
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Processing wood chips into a liquid fuel would have a higher added value, and economic benefit, than simply burning them to replace coal as a fuel for electricity, Bergson noted. And a liquid fuel technology could create new demand for a sagging wood products industry across the Northland hit hard by closed board plants and a sluggish paper market.
"But the technology has to unfold a little more before you'll see a company jump in," Berguson said. "It can be a piece of the (U.S. energy independence) puzzle. But the demand for liquid fuels is so staggering in our country that you could quickly use up all biomass supply and not come close to replacing oil. So you have to temper your enthusiasm about what role biomass can play in solving our demand for fuels."
The theory behind the federal involvement is that once the Navy's biofuel use ramps up, plants will be in place and prices low enough that the fuel will enter the civilian supply line, too.
Navy Secretary Ray Mabus told reporters that he envisions production plants being distributed across the country.
Once that happens, Energy Secretary Steven Chu said, rural America would supply much of the country's energy instead of spending $1 billion a day to import oil, as happens now.
President Obama set a goal of reducing oil imports a third by 2025.
"There is an opportunity here for rural America that we have not seen in some time," Agriculture Secretary Tom Vilsack said, continuing several days of promoting the Obama administration's rural policy.
During his Cannon Falls, Minn., visit on Monday, Obama hinted at Tuesday's announcement in response to a question.
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"A lot of folks here are familiar with corn-based ethanol, but the fact of the matter is the technology is moving where we need to start taking advantage of a whole range of biofuels, using refuse, using stuff that we don't use for food to create energy," Obama said. "And we are seeing incredible progress on that front, but it's key to make sure that we continue to make the research and that we also use the incredible purchasing power of the federal government to encourage it."
Vilsack said that the $510 million federal infusion into the industry would be matched with private business spending to make the next generation of biofuels feasible.
"This is a commitment to a new energy future," said Vilsack, who as Iowa governor oversaw a state with more ethanol plants than any other.
Mabus said the Navy has no higher priority than finding an energy source like biofuels that can be produced at home. He has a goal of providing half of the Navy's energy needs from biofuels by 2020.
Don Davis reports for Forum Communications Co. News Tribune staff writer John Myers contributed to this report.
