In this calendar year alone, the U.S. DOE announced a multiyear biofuels research and development investment of more than $1 billion. These cost-share grants—in which the government returns a certain portion of every dollar a company or researcher spends—included $385 million for six commercial-scale cellulosic ethanol plants, $375 million for the establishment of three bioenergy research centers, $200 million for small-scale, pilot biorefineries, $34 million for enzymes research and $23 million for projects to develop efficient microbes for the biomass-to-ethanol conversion.

Nearly two-thirds of these funding opportunities were provided by the DOE Office of Energy Efficiency and Renewable Energy (EERE) while the remainder, the financing for the bioenergy research centers, was provided by the DOE Office of Science.

"It was an unprecedented year," says Jacques Beaudry-Losique, DOE program manager for the EERE's Industrial Technologies Program. "This is probably the largest amount we've announced in a very long time. It's certainly far higher than what was done in previous years."

Perhaps a better metric for evaluating the significance of these investments is the annual budgets for the DOE offices, Beaudry-Losique says. "The budget is really the core sign of commitment and these have been up by at least 30 percent in '07 and '08 versus previous years," he says.

Take the EERE, for example. The annual budget for EERE's Biomass Program has jumped more than 60 percent from $87 million in 2005 to $224 million in 2007. Although the office's 2008 budget had not been resolved by press time, the U.S. House appropriations bill would increase funding for the Biomass Program to $250 million while the U.S. Senate bill would increase funding to $244 million. "Now they have to agree in conference on what the final number will be so you never know," Beaudry-Losique says. But "the outlook is very good."

Funding Opportunities
The EERE determines the types of research, development and deployment the office will fund based on administration priorities like the president's "20 in 10" plan, congressional legislation such as the Energy Policy Act of 2005 and the DOE's internal goal of protecting national and economic security by promoting the development and delivery of reliable, affordable and environmentally friendly energy. "We have been mandated by the president to make cellulosic ethanol cost competitive with corn-based ethanol by 2012 so we look at the major technology barriers that exist today to bring that cost down to where it needs to be," Beaudry-Losique explains. "We organize solicitations around these barriers."

Once the office decides the kind of projects it will fund, the agency issues a funding opportunity announcement. Interested parties submit their applications, which are first screened for compliance with the language of the solicitation by DOE representatives in the Golden, Colo., field office as well as independent contractors. The applications that survive this first screening are then reviewed by a technical review panel comprised of DOE national laboratory experts as well as external experts. These reviewers score each proposal according to a list of criteria that were included in the original funding announcement. The panel of experts decides which projects pass and which fail and finally produce a committee report that goes to a program manager like Beaudry-Losique. The program manager then signs a selection statement and a notification to Congress as well as informing the applicants of the outcome. "It's a fairly independent process," Beaudry-Losique says.

Before recipients can draw from these grants, however, project leaders must negotiate the terms of the funding award. In the traditional type of funding agreement used by the DOE called a cooperative agreement, the conditions for receiving certain portions of the funds are laid out. These conditions include how and when the funds will be dispersed and what milestones the companies or researchers must achieve to get certain portions of their funding. These negotiations typically take two to three months for smaller projects or up to nine months for more complex projects, Beaudry-Losique explains.

"[Being chosen as a recipient] was more like getting a credit card application in the mail saying ‘hey you've been pre-approved for say a $25,000 line of credit but now you have to qualify,'" says Arnold Klann, CEO of BlueFire Ethanol Inc., which was chosen to receive up to $40 million for its commercial-scale landfill waste-to-ethanol plant. "Everybody has to negotiate a contract with the DOE." These negotiations include audits by DOE auditors to make sure accounting systems are in compliance and approval of the project development approach and planning by DOE subcontractors.

In addition, the DOE is working on a new type of agreement called a technology investment agreement (TIA). TIAs will be used for the first time by the DOE to deal with the larger projects like BlueFire Ethanol's commercial-scale cellulosic ethanol plant. "The TIA will give us a lot more flexibility to develop and negotiate commercialization deals with the private sector with better protections for their intellectual property," Beaudry-Losique explains. "It's very innovative and we're very excited about it." This is the type of agreement that Range Fuels of Broomfield, Colo., recently negotiated with the DOE. Like BlueFire Ethanol, Range Fuels was also chosen to build a large-scale cellulosic ethanol plant with DOE monies. "This is the agreement that's going to build plants," says Mitch Mandich, chief executive officer of Range Fuels.

Jessica Ebert is an Ethanol Producer Magazine staff writer. Reach her at jebert@bbibiofuels.com or (701) 746-8385.