Washington (Platts)--4Apr2012/342 pm EDT/1942 GMT

By tinkering with the US renewable fuel mandate before it runs its course, Congress would squander the global competitive edge in advanced biofuels that the law has helped the country quickly and unexpectedly acquire, the chief executive of BP Biofuels said Wednesday.

CEO Philip New said the US biofuel industry has "responded incredibly powerfully" to the push provided by the Environmental Protection Agency's Renewable Fuel Standard. The program requires refiners to blend 36 billion gallons a year of plant-based fuels into the nation's transportation fuel supply by 2022.

"Only in this country do we see the combination of farming and technology at a scale that puts anything that's happening anywhere else in the world to shame," New told the Advanced Biofuels Leadership Conference in Washington. "I speak as a European, and I regret enormously the contrast between what is happening in Europe at the moment -- and the confused state of regulatory support and incentive there that means there is effectively no robust, clear investment going into advanced fuels -- with what I see happening here."

The US tripled its ethanol exports last year to 28.5 million barrels, surpassing even sugarcane giant Brazil as the world's top supplier of biofuel, according to Energy Information Administration data.

New said the federal mandate created a market that gave investors certainty and confidence that will be key to developing next-generation fuels.

While producers have churned out more than enough ethanol to meet the law's rising target, they have fallen short in the more advanced category of cellulosic biofuel. The law called for 6.6 million gallons last year, but the industry made none on a commercial scale.

For 2012, the EPA has required the blending of 8.65 million gallons of cellulosic biofuel, a target the American Petroleum Institute called unachievable in a lawsuit it filed against the agency this month.

BP's New said he finds it "bizarre" that anyone should be surprised the industry has not yet met the cellulosic goals.

"Coming from a big energy background, we're used to seeing big, big energy solutions take 10 or more years to come to fruition," he said. "The fact [is] that in the next 18 months to two years, we are likely to see the first of the new cellulosic commercial plants come to life, something like seven years from the time the Energy Independence and Security Act is adopted."

New added that Silicon Valley timelines have created unrealistic expectations on the industry.

"Anyone who ever thought that you can resolve significant energy challenges as though it was a dot-com analog is nuts," he said. "This is about big energy solutions. It needs serious money, serious players, serious technology. That's what we're starting to see happening around cellulosics."

New added that BP remains "very skeptical" that vehicles powered by batteries, electricity or natural gas would become anything more than a niche market for the foreseeable future, because of the extreme difficulty of shifting infrastructure away from liquid fuels.

"Infrastructure has a huge retarding effect on the introduction of new energy types," he said. "That is why we believe that we are going to be in a paradigm of liquid fuels with internal combustion engines for as far forward as we can see. It is why we believe that biofuels are a central part of the mix because they represent the only realistic alternative to crude."

BP plans to break ground this year on a cellulosic plant in central Florida that will produce 36 million gallons a year. The company's nearby 20,000 acre farm will feed the facility with energy cane and other grasses.

--Meghan Gordon, meghan_gordon@platts.com

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