|
Energy Security, Climate Change and Industrial Technology
In December 2007, the President signed the Energy Independence and Security Act to promote energy conservation and help reduce U.S. dependence on foreign oil. The energy bill is focused on increasing energy security and confronting global climate change by expanding the production of renewable fuels. A mandatory Renewable Fuel Standard (RFS) will require fuel producers to use at least 36 billion gallons of biofuel in 2022. Enabling technologies such as biotechnology and increased knowledge in systems biology will have to be leveraged and exploited in order to achieve those standards set forth by the President in a cost-effective and sustainable manner, The Environmental Protection Agency (EPA) recently released the Bioengineering for Pollution Prevention through Development of Biobased Energy and Materials State of the Science Report recognizing the importance and significance of industrial biotechnology for industrial commodity production with less environmental impact. The EPA report identifies several attributes of industrial biotechnology that are favorable to support green chemistry. Attributes such as utilizing renewable resources and having limited production process byproducts are essential in order to reduce the carbon fingerprint on the environment.
The U.S. Department of Energy (DOE) is supporting the development, integration and deployment of a domestic biomass industry through its Biomass Program. In addition to direct funding opportunities, current proposed legislations such as the Lieberman-Warner Climate Security Act and the recently passed Farm Bill will provide additional funding opportunities to further the utility of industrial biotechnology to address energy security and climate change issues. While Lieberman-Warner stalled in the current congress, it is certain to be introduced again next year with a high chance of passage given that both Senator John McCain and Senator Barack Obama support implementing cap and trade policies.
DOE Biomass Program
The Biomass Program is a multiagency effort to work with industry and academia to harness renewable and biomass resources for the development and establishment of integrated biorefineries. A central component of the integrated process is the biochemical conversion of renewable feedstocks such as lignin and cellulosic materials. Development of a cost-competitive process to convert these materials into sugars is key to a viable and sustainable industry. Current research and development efforts utilizing industrial biotechnology for biochemical conversion are focused on high-yield feedstocks, more efficient enzymes and more robust microorganisms. In 2007, DOE awarded over $1 billion for multi-year biofuels related projects.
Carbon Emission Cap and Trade System
The U.S. Senate recently considered the Lieberman-Warner Climate Security Act which seeks to reduce greenhouse gas emissions 70 percent by 2050 via a cap and trade system. A cap and trade system has two significant advantages: it sets a clear limit on emissions and gives companies the flexibility to achieve emissions reductions. Cap and trade legislation like Lieberman-Warner is certain to be introduced in January when the 111th Congress convenes.
Sectors affected by cap and trade system:
- Transportation
- Electricity
- Industry
A cap and trade system creates a financial incentive to reduce emissions by associating a cost with emissions. An annual total emissions limit or “cap” for greenhouse gases will be established and gradually lowered each subsequent year to achieve overall emissions reduction. Companies are allocated individual emissions permits or allowances (each permit equals one ton of carbon dioxide, CO2, emissions) with the total number of permits not greater than the cap. Companies that emit more than the allowed can buy additional permits from companies that emit less. A percentage of allowances will be allocated to a nonprofit corporation without stock established by the bill. For 2012, 21.4% of the total allowances will be allocated to the corporation. This will gradually increase to 69.5% by 2035. These allowances will be auctioned off by the corporation to companies requiring additional permits. The auction proceeds will be utilized to support EPA directed activities, and for emergency firefighting funds at the Bureau of Land Management and the Forest Services. A significant portion of the revenue generated will be reinvested into alternative energy technology development and deployment programs. Estimates of potential revenue raised by auctioning of allowances are in the hundreds of billions of dollars.
Energy Technology Deployment Program:
- Zero or Low-carbon Energy Technologies
- Advanced Coal Technologies
- Fuel From Cellulosic Biomass
- Advanced Technology Vehicle Manufacturing Incentive Program
- Sustainable Energy Program
Industrial biotechnology will remain a central enabling technology for the production of fuel from cellulosic biomass. Revenues from cap and trade will provide an enormous funding source for these green technologies.
Farm Bill
Congress passed the new Farm Bill in May 2008. The bill provides $20 million in Commodity Credit Corporation (CCC) funds in FY 2009 increasing to $40 million by FY 2012 to continue DOE and U.S. Department of Agriculture (USDA) joint efforts on the Biomass Program. In addition, the bill authorizes up to $35 million per year in discretionary funds. The bill provides $55 million in CCC funds in FY 2009 to support advanced biofuels production. The funding increases to $105 million by FY 2012. New tax credits for producers of advanced cellulosic biofuels are also established to support production.
McKenna Long & Aldridge LLP’s (MLA) Industrial Biotechnology Practice
MLA’s Industrial Biotechnology practice is a multi-faceted resource for businesses interested in the application of enabling biotechnology for newly emerging industries such as biofuels and bioremediation. The firm helps clients develop and secure funding for new solutions to rising energy concerns, and to harness biotechnology innovations for non-medical applications.
McKenna Long & Aldridge LLP is an international law firm of lawyers and public policy advisors. The firm provides business solutions in the areas of environmental regulation, international law, public policy and regulatory affairs, corporate law, government contracts, intellectual property and technology, complex litigation, real estate, energy and finance. For more information about Industrial Biotechnology and other Life Sciences activities, please visit www.mckennalong.com. | 
