Biofuels still the hungry little sibling for government funds

DOE just announced $21 million in funding for five projects in second-generation biofuels research. Sounds nice, but that kind of money won't get anywhere near bringing second-generation biofuels across the Valley of Death - a single commercial-scale plant costs upward of $100 million.

Second-generation biofuels players like Range Fuels are likely looking jealously at the wind power sector, which has secured government support on a different scale:

Big banks including Morgan Stanley and Citigroup are underwriting wind farms worth more than $100 million each.

That’s partly a result of new government policy: For the first time, wind-farm developers have the option of receiving 30% of the cost of the project in cash, rather than getting tax credits over the life of the wind farm.

30% of $100 million is the kind of money that would definitely help a demonstrated second-generation biofuel build a commercial-scale plant... and it's more than the recent DOE grant in its entirety.

Update: Environmental Capital has the numbers on the wind grants. $500 million in total, with $294 million swept up by Iberdrola for five projects, or almost $60 million each on average.

Granted wind projects have much more commercial certainty than a first-of-its-kind commercial-scale plant for second-generation biofuels, but that's also an argument that the private sector should be able to bear the burden on its own. The next generation of biofuels is unproven, so there are broader public benefits of the "Valley of Death" being crossed, and the rationale for government intervention is stronger.

Maybe the government can take equity rather than give a guaranteed loan, in order to avoid accusations of favoritism towards one of the many second-gen biofuel companies out there?