This Oregon facility
intends to turn the
carbon emissions into
bio-fuel with the
help of algae
Washington D.C., United States — ESI-AFRICA.COM — 22 February 2011 – The United States Department of Agriculture (USDA) says that more than 500 bio-refineries will need to be built in the country between now and 2022 to meet the added requirements for advanced bio-fuels.

Revealing this in a statement here, the USDA said that, with those refineries costing somewhere around US$8 per gallon of capacity, or more than US$300 million each, the total price tag for bio-energy expansion would be in the region of US$150 billion.

Globally, the price tag could easily be double that, to US$300 billion, as other nations fulfill mandates and explore opportunities in energy security, job creation and climate control over the next 11 years.

The USDA and Department of Energy (DOE) have been working hard to assure that the technologies are developed and that the feed-stocks are sustainable, available, reliable and affordable.

Just as daunting, and rarely addressed, is the innovation required to aggregate and distribute the required capital. Just to name a single concern – only a handful of firms have skills in the due diligence required in financing highly technical, capital-intensive bio-energy projects. The amounts required will shortly overwhelm the technical and financial resources of those few.

North American project finance volume for 2009, for example, was US$31.2 billion for 93 projects, according to Dealogic. On the assumption that the big commercial scale-up of US advanced bio-fuels would begin no sooner than 2013, as companies move from demonstration to commercial scale, the capital required will be in the region of US$16 billion per year, of which perhaps US$13 billion will need to come from the debt market.

But it is the larger capital calls that may come, as the bio-based opportunity evolves, that make the reform of project finance an urgent topic for now, rather than the future. The build-out of a complete replacement of the current liquid fuels platform, based on fossil resources, would be more than of $10 trillion.