Renewable Fuels Infrastructure Investment Program Overview

Goals

• Accelerate the deployment and accessibility of renewable fuels through incentive programs designed to substantially reduce the costs incurred by retail fueling station owners to purchase and install dispensing equipment compatible with renewable fuels

• Initially focus on the renewable fuels producing regions of the nation and any increased blends of renewable fuels in the national gasoline pool to ensure compatible infrastructure build-out

• Reduce risk throughout the industry value chain and develop complementary assets that will help attract private capital

Opportunity

• American Recovery and Reinvestment Act (ARRA) funding under the State Energy Program (SEP) and Energy Efficiency and Conservation Block Grant (EECBG) program may be used for eligible transportation projects such as renewable fueling pump deployment

• Installing renewable fueling pumps (but not storage tanks or other underground equipment) is included in DOE's template for activities eligible for expedited NEPA review

• While a portion of recipient's unobligated SEP and EECBG ARRA funds could be immediately directed towards a renewable fuels infrastructure investment program, grantees also have the opportunity to modify their plans to include renewable fuels infrastructure investment programs should they have confidence that a program would be easily implementable and well received by their constituents

Program Design & Approach

• In order to maximize speed to market, renewable fuels infrastructure investment programs should target compatible dispensing equipment at those retail locations where limited storage tank replacement and/or modification is required due to the additional costs and ARRA requirements(e.g. NEPA) that such a program might otherwise be subject to

• Programs should be designed to be equipment agnostic and have the flexibility to promote and provide incentives for retrofit kits or installation of new equipment depending upon local stakeholder demand

• Regardless of the equipment, grantees should consider and utilize the following checklist to determinate the appropriateness of pursuing a renewable fuels infrastructure investment program in their particular state and/or region

  • Concentration of local production facilities
  • Significant number of flex-fuel vehicles in the region
  • Local demand for renewable fuels
  • Infrastructure build-out already underway
  • Adequate oversight to require and ensure that proper due diligence is conducted by contractors to avoid potential infrastructure compatibility issues
  • Local stakeholder groups willing to champion the program
  • Local characteristics of retail fueling stations that would make program attractive and feasible

     

• Program development should consider the following guidelines and criteria options:

  • While there are benefits to low interest loan programs, in most cases grants will be easiest to deploy and most attractive to retail fueling station owners
  • The grant could be structured various ways to attract participation and leverage federal dollars, however grantees should consider providing a certain percentage or ceiling of funds
    • Initial investigation reveals that at least a 50% - 70% cost subsidy for the purchase and installation of retrofit kits or new equipment is necessary to drive retail fueling station uptake
  • Similarly, grantees should consider the impact of allowing DOE ARRA funds to be used for storage tank or underground hardware replacement or modifications that may lead to a further NEPA review process
  • Grantees should require that awardees continue to sell renewable fuels for a specified period of time, and have a grant recapture clause for failure

     

• Key to a successful program will be effectively marketing the program and educating consumers with the assistance of national and local stakeholders

  • Grantees should establish key partnerships and leverage the existing network of regional and national experts in the renewable fuels infrastructure industry
  • Grantees will have access to DOE technical assistance providers, DOE Clean Cities Coalitions, USDA field staff, and stakeholder groups including local government and biofuel industry groups that will assist in connecting with local auto retailers and other non-profit organizations to design and implement programs tailored to the specific needs of local constituents
  • Programs should also be designed to enable a portion of ARRA funds to be used for marketing and education should there be insufficient local resources to assist in demand creation
    • Effectively communicating the value proposition of renewable fuels to consumers in a coordinated fashion is critical to drive demand at the pump and convince fueling station owners that this is a worthwhile investment

Additional Resources

Details on DOE hosted webinar will be forthcoming

Link to DOE Ethanol Infrastructure Information:
http://www.afdc.energy.gov/afdc/ethanol/station_infrastructure.html

Link to DOE Biodiesel Infrastructure Information:
http://www.afdc.energy.gov/afdc/fuels/biodiesel_infrastructure.html