[Editor's note: This story is the second part of a three-part series on how the U.S. presidential election could impact the greentech industry. Read the first part, Presidential Picks Cast Solar Ballots, for a look at what the new president will mean for solar power. And come back Tuesday for an article exploring how green car companies could be affected by the ballots cast that day.]

For a biofuel industry that's already gone through one boom-and-bust cycle in the span of the last four years – and hopes to see another boom start in the next four – the question of who will occupy the White House come January could be an important one.

After all, whether Democratic presidential candidate Sen. Barack Obama or his Republican opponent, Sen. John McCain, end up winning Tuesday's election could have a big influence on the country's policies on biofuels. That uncertainty, along with a troubled economy, has taken its toll on biofuel investments, according to Rick Kment, a biofuel analyst with DTN Research (also see this Green Light post).

That's why Brooke Coleman, executive director of the New Fuels Alliance, a group representing biofuel companies, has been paying close attention to both candidates and their proposals for his industry.

And Coleman has a straightforward answer: "Obama, I would describe his position on biofuels as infinitely better than McCain's."

After all, Obama's policy platform calls for the country by 2030 to use 60 billion gallons of "advanced" biofuels made from such nonfood sources as grasses, wood chips, algae and landfill wastes, rather than the corn and soybeans that now make up the vast majority of biofuel feedstock, Coleman said. The country's current renewable fuels standard requires the country to be using 21 billion gallons by 2022.

The Democratic candidate also has pledged to require that all new vehicles sold in the country be "flex-fuel" vehicles, able to use fuel containing mostly biofuel, by the end of his first term. Obama also has called for a national low-carbon fuel standard that could be a boon to the industry, depending on how it weighs the carbon footprint of biofuels against that of petroleum-based fuels, Coleman said.

Sen. McCain, on the other hand, has made a campaign mantra of the idea that the country can "drill, baby, drill" for domestic oil and gas supplies to wean its dependence on foreign oil, a position that Coleman disagrees with. 

The Republican candidate has called for doing away with the federal subsidies for ethanol, a 51-cent-per-gallon tax credit for those who blend the fuel, he said

What the ethanol industry needs from a new president is "consistent and stable support," said John B. Howe, vice president of public affairs for Verenium (NSDQ: VRNM), a Cambridge, Mass. company that is one of several trying to build a commercial cellulosic ethanol plant (see BP Invests $90M in Verenium for Ethanol).

"I think the specific policy proposals the Obama campaign has advanced would provide a very powerful stimulus to the growth of this industry," Howe said.

On the other hand, he called McCain's call for curtailing ethanol subsidies a move that "runs contrary to a longstanding pattern of bipartisan support for biofuels development. I do believe that was a mistaken position for the senator to stake out."

And in May, McCain joined other Senate Republicans to support Texas Gov. Rick Perry's request that the U.S. Environmental Protection Agency halve the nation's renewable fuel standard quota of 9 billion gallons of ethanol, Coleman added. The EPA denied the request in August (see EPA Denies Texas Ethanol Waiver.)

But shortly before McCain put his support behind that effort, Obama suggested on "Meet the Press" that the federal government should rethink its stance on corn-based ethanol. So regardless of who ends up in the White House, industry insiders have cause for concern about the standard.

Still, Coleman said Obama's comment hasn't worried him as much as McCain's more explicit statements against ethanol subsidies.

Not everyone agrees with Coleman, however, According to the agriculture business news weekly The Capital Press, McCain has won the backing of most major farming groups. However, Obama has picked up the endorsement of one major group, especially where biofuels is concerned – the American Corn Growers Association.

And not all biofuel groups share the concerns of corn-based ethanol backers. The National Biodiesel Board, a trade group of companies that make biodiesel mostly from soybeans, feels that "both campaigns have focused on biofuels as well as visiting biodiesel plants in particular, and have expressed their support for these alternative fuels," according to communications director Michael Frohlich.

Corn-based ethanol makers have seen their fortunes tumble in the past year, as the boom in ethanol production - from 3.9 billion gallons in 2005 to 6.5 billion gallons in 2007 – has kept prices low compared to the high price of corn (see VeraSun Preps for BankruptcyPoet Cancels Ethanol Plant, Ethanol Plant Gets Cancelled, Another Ethanol Plant Gets Cancelled, Ethanol's Tough Times Continue and Ethanol Margins Suffer).

At the same time, corn-based ethanol has come under attack from critics who say it could drive up the price of food and come with negative environmental impacts, although manufacturers disagree (see Tesoro Sues California Over Ethanol Mandate, Biofuels to More Then Double by 2030, Lester Brown Talks Smack About Ethanol and stories here, here, here and here).

Cellulosic ethanol made from nonfood sources could avoid those problems, according to backers, including both McCain and Obama. 

Both candidates have spoken of the need to move from biofuels based on food crops, such as corn, soy and sugarcane, to biofuels made from nonfood crops.

So far, companies have struggled to make it at prices that can compete with ethanol made from corn or sugarcane.

Still, that's where the investments in biofuels are going, Michael Butler, chairman and CEO of Cascadia Capital, said Tuesday at the Renewable Energy Financing Forum - West in Seattle. Those investments could lead to the "emergence from the ashes" for biofuel companies able to deliver commercially viable fuels made from nonfood crops, he said.

Necy Sumait, executive vice president of BlueFire Ethanol, an Irvine, Calif., company planning a $130 million waste-to-cellulosic-ethanol plant in California, said Obama's support of continuing the nation's ethanol subsidies is "going to be helpful for our industry."

"I think it needs to continue to bring the next-generation biofuels," she said. Still, considering both candidates' positions, "both of them seem to be interested in increasing our national and economic security. In that light, ethanol should have a more prominent role in either administration."

In a research note, Sanjay Shrestha, a senior analyst Lazard Capital Markets, wrote that he thought an Obama presidency would benefit alternative fuels, compared to a McCain presidency, which would give nuclear power, cleaner coal and domestic oil and gas exploration more of an edge. But he added that he expects support for various forms of alternative energy to increase no matter which candidate wins.

And, he noted, whatever "bold proposals" the two candidates make to boost biofuels or other renewable energy could be held back from near-term implementation by the faltering economy.

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Tags: biofuel, mccain, newfuelsalliance, obama