April 20, 2021

U.S. Department of Energy Biofuel Funding Opportunities for the Maritime Sector

Holland & Knight Alert
Sean T. Pribyl | Taite R. McDonald | Christopher R. Nolan

Under the Biden Administration, environmental sustainability as a means to combat climate change has been thrust into the spotlight as an emerging national imperative. This was made clear through President Joe Biden's rejoining the Paris Agreement and later in his Executive Order on Tackling the Climate Crisis at Home and Abroad, in which he stated that the U.S. should aim for net-zero emissions, economy-wide, by 2050. In the maritime sector, the International Maritime Organization (IMO) has targeted a cut in annual emissions from ships of at least 50 percent by 2050 against 2008 levels. To reach these aspirational goals, alternate and novel marine fuels are needed, which must be developed through collaborative approaches between industry and government in order to afford certainty for business investment with the long-term confidence necessary to inject meaningful capital into the sector.

While the shipping sector is viewed as the lifeblood of international trade, carbon dioxide (CO2) and greenhouse gas (GHG) emissions from international shipping are estimated to be approximately 2.1 percent of global emissions, and domestically, transportation is viewed as the largest source of U.S. GHG emissions. Thus, decarbonizing the transportation sector, to include the shipping sector, is seen as of vital importance. Consequently, there is a pressing need for evaluating several zero-emission fuel options to shift away from historical use of fossil fuels oil, although there is no "silver bullet" – rather, several options must be developed in tandem to assess what is technically viable from both operational and infrastructure viewpoints.

Potential Solutions

One potential solution gaining prominence in pursuit of net-zero emissions is biofuels that are derived from renewable resources and viewed by some as one of the most promising paths to zero-carbon aviation and shipping. Biofuels are any fuel that is derived from biomass into a liquid fuel – in other words, renewable biological sources such as crop waste, food waste and algae – that can serve as a low-carbon equivalent to fossil-based fuels such as jet or marine fuel. Now, next-generation biofuels are being developed and will be needed to support overall alternate fuel solutions.

In support of the pursuit toward transformational efforts to tackle climate change, the U.S. Department of Energy (DOE) has announced $61.4 million toward biofuels research to reduce transportation emissions. The DOE views biofuels as one of the most promising paths to zero-carbon aviation and shipping, since biofuels can power aircraft and ships to help accelerate the U.S.'s path to a net-zero emissions economy by 2050. The stated purpose of the funding opportunity is to include high-impact biotechnology research, development and demonstration (RD&D) to bolster the body of scientific and engineering knowledge needed to produce low-carbon biofuels at lower cost. The DOE views the investment as a means to accelerate the deployment of bioenergy technologies and mobilize public clean energy investment in the biofuels, chemical and agricultural industries. More information is available on the DOE's Bioenergy Technologies Office (BETO) Funding Opportunities page.

The DOE is, of course, not alone in examining emerging opportunities for reducing emissions in the transportation sector. On April 15, 2021, the U.S. House Transportation and Infrastructure subcommittee on Coast Guard and Maritime Transportation held a hearing on "Practical Steps Toward a Carbon-Free Maritime Industry: Updates on Fuels, Ports, and Technology." The hearing emphasized the urgency of developing a U.S. market for alternate fuels and signaled the importance and prioritization of alternate fuels toward a green marine sector.

Holland & Knight Can Help

To find out more about how federal funding opportunities and emerging alternate fuel markets could benefit your company, whether domestic or internationally based, contact the authors or another member of Holland & Knight's Maritime Team or Renewable Energy Team, who continue to work with interested stakeholders as congressional efforts advance.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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