Industry leaders say a White House directive to accelerate biofuel development could be a needed shot in the arm for Montana's renewable-energy firms.

Efforts to develop a viable oilseed fuel business in the state haven't met optimistic forecasts of the last three years, which included plans for in-state refineries and production of more than 100 million of gallons of biodiesel. Federal red tape and record-high commodities prices in 2008 are most often cited for slowing Montana biodiesel development.

The U.S. secretaries of Agriculture, Energy and Environmental Protection have been instructed to form a Biofuels Interagency Working Group to accelerate renewable-fuels development. President Barack Obama directed the group to develop a comprehensive biofuel market, coordinate infrastructure development to deliver biofuel to consumers and develop policies to make biofuel production environmentally sustainable.

The national press reported Obama's directive as way to save corn ethanol, the nation's biggest biofuel sector, from a credit crisis. Marching orders from Obama come with $786.5 million in Recovery Act funding.

Corn ethanol, which seemed like the fuel of the future last year as gasoline prices edged toward $4 a gallon, tanked when regular gasoline fell below $2 a gallon in the last quarter of 2008. Lenders previously eager to finance biofuel development have become more cautious. Ethanol plant closures have been announced monthly, if not weekly, since the beginning of the year.

But the directive wasn't ethanol-centric. Recovery Act funding specifically for ethanol research was set at $20 million, or slightly more than 2 percent of total spending, according to White House documents. Developing products like camelina, as well as second-generation biofuel from cellulosic plant matter, was emphasized.

Camelina oilseed has been touted as Montana's best bet as a biodiesel producer. It's a nonfood crop, meaning that raising it for fuel doesn't put producers at odds with the food industry, which has accused corn ethanol production of driving up costs for everything from breakfast cereal to livestock feed. And the small-seeded cousin to the mustard plant isn't very thirsty, making it a good survivor in Northern Plains states. It grows well on marginal land, meaning it isn't necessarily in direct competition with the food industry for farm acres.

The challenge has been getting farmers to grow camelina on a broad scale, which biodiesel firms working in Montana say Obama's directive could help.

"We have in camelina a very good crop for biofuel," Sam Huttenbauer III, of Great Plains - The Camelina Co., said last week. "Let's get the expansion done, let's find regions where this can fit throughout the United States. By our estimates, there are up to 5 million acres where it can fit nicely in Montana. The second thing is really infrastructure development. The third component is rallying around research and improving what is already a really good crop."

Camelina development was slow-going in 2008, partly because the seed hadn't previously been grown as commercial crop. As a newcomer, it lacked a prescribed herbicide treatment and a crop insurance plan. Also, the government hadn't approved the pressed oilseed meal as a food for livestock. Meal sales for feed can be a significant source of revenue for oilseed companies, but camelina didn't have that approval until a few months ago when the federal government said it could be fed to broiler chickens as a small percentage of their diet.

Herbicide treatments have now been prescribed. And the Federal Crop Insurance Corp. is developing a pilot crop insurance program for camelina. Producers in 2009 can be eligible for the Noninsured Crop Assistance Program until the pilot program is ready.

"Once we delivered a study that adhered to protocols required under good laboratory practices and wrote it up in a format they wanted, the government actually moved pretty fast," said Scott Johnson of Sustainable Oils in Bozeman.

"I think in a lot of ways it was a young industry that didn't anticipate the regulatory hurdles. Frankly, those of us in agriculture don't have to deal with a new crop very often."

Sustainable Oils is a partnership between Targeted Growth of Seattle and Green Earth Fuels of Houston. It isn't affiliated with Sustainable Systems, a debt troubled, Missoula-based renewable-fuel company that recently shuttered a seed crushing plant in Culbertson.

Both Johnson and Huttenbauer said they're on a different trajectory than larger biofuel players like ethanol producers, which could give oilseed companies solid footing in key niche markets, namely the airline industry.

The largest oilseed players in Montana steered clear of the automobile market and have instead focused on jet fuel. That's important because unlike the automobile market where hundreds of thousands of curbside biofuel pumps are needed to reach the public, jet airlines refuel at a much smaller number of locations.

Lux Research, a bio-energy research firm, reported last week that there simply aren't enough filling stations or cars capable of using biofuels, nor will there be for several years. Without those components, growth in biofuel production for automobiles will soon flatten, according to Lux.

The infrastructure development needed to reach the jet industry is considerably smaller. Also, the regulatory pressure on commercial airlines to cut back on air pollution is considerably stronger. Airlines are voluntarily trying to pollute less, with the threat of cash penalties for pollution looming internationally.

Camelina fuel was one of a select few biofuels chosen for test flights in commercial jets earlier this year. And the fuel produced 84 percent less pollution than standard jet fuel, when emissions from all phases of its life from field to fuel tank were considered.

In contrast, ethanol is under fire for providing only marginal pollution improvements. In announcing the Obama directive, the EPA said May 5 that pollution associated with ethanol was only 16 percent better than gasoline related emissions. The amount of fossil fuel energy burned while refining biofuels made ethanol only marginally better polluters than gasoline.

A key part of the Obama directive was to help biofuel producers eliminate their dependence on fossil fuel energy when it comes to powering biofuel refineries.

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