The future is here, despite some US GOP politicians’ shortsightedness about the GOP’s positive contributions to biofuels space

As an investor and analyst, I don’t usually get too embroiled into political discourse, especially in an election year.  But recent quotes from Republican presidential contenders have me astonished at their shortsidedness over their own parties’ initiatives and history with advanced biofuels.  Of course, this ignorance may be feigned in order to curry favor with Republican conservatives, but derisive statements about the industry marginalize the contributions of the hundreds of thousands involved in the industry.  Worse yet, the negative effect on public perception hurts investment potential in the sector and overall public perception about what is in fact, reality.

Recently, GOP candidate Newt Gingrich has been referring President Obama with the derisive moniker “President Algae” over his support for algal-based fuels.  Read more about this here.  In making these statements, Gingrich is exhibiting his shortsideness in an area where the GOP provided some visionary leadership in 2007.   You see, the Energy Independence and Security Act of 2007, which was signed into law under Republican President George W. Bush, refers to algae several times, and sanctions a report to Congress on the viability and sustainability of algae as a renewable fuel source.  This report was largely favorable towards algae, spurring public and private investment into the sector.  Although this law was originally sponsored by Democrats, as the Clean Energy Act, GOP lawmakers negotiated a bill that was more focused on US energy independence by inserting provisions to benefit US fuel producers.  This visionary leadership, in many ways, created the market for cellulosic biofuels.

Here’s a little background on EISA (source: Wikipedia: http://en.wikipedia.org/wiki/Energy_Independence_and_Security_Act_of_2007 ):

Years after a Republican President signed into law an act that encouraged exploration and research of advanced biofuels and renewable fuel sources, and Republican lawmakers negotiated provisions to benefit US fuel producers, the market responded.  In 2011, Solazyme, a company that manufactures algal-based chemicals and biofuels, had an IPO, and successfully supplied domestically-produced algal fuel to the US Navy.  This fulfilled the vision of the 2007 EISA act.

Additionally, Condoleeza Rice, former Secretary of State under the Bush administration, joined the board of directors of biofuels maker KiOR, whose technology creates biocrude oil from wood.  KiOR has active partnership agreements with Chevron and Weyerhauser.

In my opinion, Mr. Gingrich is exhibiting an astonishing level of recklessness in making vocal, anti-biofuel statements as part of his campaign strategy.  He’s also missing a tremendous opportunity to display some of the visionary leadership GOP lawmakers have provided in the space in the past.

But Gingrich is not alone.  Mitt Romney recently stated:

Romney too, missed an opportunity to profile the GOP’s visionary leadership, even though he used the exact wording of the Republican-passed EISA bill in his statement.

Despite what some GOP political contenders would have their followers believe, the biofuels sector has:

• Successfully fueled commercial aviation flights with algae-based jet fuel (Continental, Alaska Airlines)

• Fueled commercial shipping voyages with algae-based fuel (Maersk)

• Fueled US Navy vessels, enabling one to break a sea speed record in 2011

• Demonstrated successful conversion of woody biomass into crude oil, with a former Republican Secretary of State on the Board of Directors

• Engaged in mutually beneficial partnerships with “oil guard” and “big oil” firms like Shell, BP, Chevron, Valero, DuPont

It is arguable that none of this could have happened without the support of the GOP and the passing of the 2007 EISA act by President George W. Bush.

GOP politicians should be cognizant of their own party’s historical contributions to a rapidly emerging source of domestic energy, rather than recklessly trying to score political points at the risk of hurting business investment and performance in a nascent industry.  Oil from algae is not a futuristic dream, is has happened, with positive business results.  Hundreds of thousands are working directly in the industry, now.  Some of these individuals are providing cutting-edge research, some are financial analysts, some are construction workers involved with constructing pilot and commercial facilities for publically traded companies like KiOR and Solazyme.  

These are the US workers and investors that Gingrich is harming with public statements aimed at marginalizing the biofuels industry.  To them, and to many of us, livelihoods shouldn’t be put at risk to gain short-lived political points.   The GOP has an opportunity to recognize their contributions to the industry, and that some major contributors to GOP campaigns are already actively partnering with biofuels companies.  A stance that hurts those partnerships doesn’t seem beneficial to any Republican, whether they are conservative or moderate.  I hope Mr. Gingrich changes his tone.