USDA offers $181 mln to help build advanced biofuel refineries


WASHINGTON, Oct 21 (Reuters) - The U.S. government on Mondayannounced $181 million in loan guarantees to buildcommercial-size refineries making advanced biofuels or toretrofit existing biorefineries to produce the cleaner-burningrenewable fuels.

Since 2008, the Agriculture Department has provided $684million through the Biorefinery Assistance Program to supportprojects in eight states. Applications for the latest round offunding are due by Jan. 30.

"This financing will expand the number of commercialbiorefineries in operation in the United States that areproducing advanced biofuels from non-food sources," saidAgriculture Secretary Tom Vilsack.

USDA announced the funding at a time the federal mandate forbiofuels is under challenge in Congress and in the bureaucracy.The Environmental Protection Agency has said it is consideringwhether to scale back the mandate, now dominated by corn-basedethanol.

Advanced biofuels, made from plant materials like wood andgrasses and producing fewer greenhouse gases than current fuels,were expected to match corn ethanol by the end of this decadebut have been far slower to develop than expected.

The Advanced Biofuels Association lists more than 200plants, including biodiesel makers. Valero Inc. andDarling International are partners in a plant thatopened in June to produce 137 million gallons a year ofrenewable diesel from animal fats and cooking oil.

Michael McAdams, head of the biofuels trade group, said theoffer of loan guarantees would be "incredibly helpful" tosmaller companies that want to expand production.

One maker of cellulosic biofuels, KiOR Inc.,announced $100 million in financing on Monday to build a secondrefinery at Columbus, Mississippi, to convert wood chips intofuel. The original refinery produced 357,532 gallons ofgasoline, diesel and fuel oil from Jan. 1 to Aug. 31. KiOR has atarget of producing 13 million gallons a year at the plant.

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