Fueling the Bioeconomy: Clean Energy Policies Driving Biotechnology Innovation
The transition to a clean energy future and diversified sources of energy requires a fundamental shift in how we produce and consume energy across all sectors of the U.S. economy. The transportation sector, a sector that heavily relies on fossil-based energy, stands out not only because it is the sector that releases the most carbon into the atmosphere, but also for its progress in adopting next-generation technologies when it comes to new technologies and fuel alternatives.
Over the past several years, the federal government has made concerted efforts to support clean energy innovation in transportation, both for on-road and off-road. Particularly, in hard-to-electrify transportation sub-sectors, there has been added focus such as through the Sustainable Aviation Fuel (SAF) Grand Challenge. These efforts have enabled a wave of biotechnology-driven solutions to move from research labs to commercial markets, such as LanzaJets alcohol-to-jet technology in producing SAF. From renewable fuels to bio-based feedstocks, biotechnologies are enabling the replacement of fossil-derived energy sources and contributing to a more sustainable, secure, and diversified energy system.
SAF in particular has gained traction, enabled in part by public investment and interagency coordination, like the SAF Grand Challenge Roadmap. This increased federal attention demonstrated how strategic federal action, paired with demand signals from government, targeted incentives, and industry buy-in, can create the conditions needed to accelerate biotechnology adoption.
To better understand the factors driving this progress, FAS conducted a landscape analysis at the federal and regional level of biotechnology innovation within the clean energy sector, complemented by interviews with key stakeholders. Several policy mechanisms, public-private partnerships, and investment strategies were identified that were enablers of advanced SAF adoption and production and similar technologies. By identifying the enabling conditions that supported biotechnology’s uptake and commercialization, we aim to inform future efforts on how to accelerate other sectors that utilize biotechnologies and overall, strengthen the U.S. bioeconomy.
Key Findings & Recommendations
An analysis of the federal clean energy landscape reveals several critical insights that are vital for advancing the development and deployment of biotechnologies. Federal and regional strategies are central to driving innovation and facilitating the transition of biotechnologies from research to commercialization. The following key findings and actionable recommendations address the challenges and opportunities in accelerating this transition.
Federal Level Key Findings & Recommendations
The federal government plays a pivotal role in guiding market signals and investment toward national priorities. In the clean energy sector, decarbonizing aviation has emerged as a strategic objective, with SAF serving as a critical lever. Federal initiatives such as the SAF Grand Challenge, the SAF Roadmap, and the SAF Metrics Dashboard have helped to elevate SAF within national climate priorities and enabled greater interagency coordination. These mechanisms not only track progress but also communicate federal commitment. Still, despite these efforts, current SAF production remains far below target levels, with capacity largely concentrated in HEFA, a pathway with constrained feedstock availability and limited scalability.
This production gap reflects deeper structural challenges, many of which parallel broader issues across the clean-energy biotech interface. One of the main challenges is the fragmented, short-duration policy incentives currently in use. Tax credits like 40B and 45Z, while important, lack the longevity and clarity required to unlock large-scale, long-term private investment. The absence of binding fuel mandates further undermines market certainty. These policy gaps limit the ability of the clean energy sector to serve as a sustained demand signal for emerging biotechnologies and slow the transition from pilot to commercial scale.
Importantly, these challenges point to a broader opportunity: SAF as a test case for how the clean energy sector can serve as a driver of biotechnology uptake. Promising biotechnologies, such as alcohol-to-jet and power-to-liquid, are currently stalled by high capital costs, uncertain regulatory pathways, and a lack of coordinated federal support. Addressing these bottlenecks through aligned incentives, technology-neutral mandates, and harmonized accounting frameworks could not only accelerate SAF deployment but also establish a broader policy blueprint for scaling biotechnology across other clean energy applications.
To alleviate some of the challenges identified, the federal government should:
Extend & Clarify Incentives
While tax incentives such as the 45Z Clean Fuel Production Credit offer a promising framework to accelerate low-carbon fuel deployment, current design and implementation challenges limit their impact, particularly for emerging bio-based and synthetic fuels. To fully unlock the climate and market potential of these incentives, Congress and relevant agencies should take the following steps:
- Congress should amend the 45Z tax credit structure to differentiate between fuel types, such as SAF, e-fuels, biofuels, and renewable diesel, based on life cycle CI and production pathways. This would better reflect technology-specific costs and accelerate deployment across multiple clean fuel markets, adding specificity as to how to utilize and earn the credits based on the type of fuel.
- Congress should extend the duration of the 45Z credit and other clean-fuel related incentives to provide long-term policy certainty. Multi-year extensions with a defined minimum value floor would reduce investment risk and enable financing of capital-intensive projects.
- Congress and the Department of Treasury should clarify eligibility to ensure inclusion of co-processing methods and hybrid production systems, which are currently in regulatory gray areas. This would ensure broader participation by innovative fuel producers.
- Federal agencies, including the Department of Energy (DOE), Department of Transportation (DOT), and the Department of Defense, should be directed to enter into long-term (more than 10 years) procurement agreements for low-carbon fuels, including electrofuels and SAF. These offtake mechanisms would complement tax incentives and send strong market signals to producers and investors.
Scale Biotech Commercialization Support
The clean energy transition depends in part on the successful commercialization of enabling biotechnologies, ranging from advanced biofuels to bio-based carbon capture, SAF and biomanufacturing platforms that reduce industrial emissions. Recent or proposed funding cuts to clean energy programs risk stalling this progress and undermining U.S. competitiveness in the bioeconomy.
To accelerate biotechnology deployment and bridge the gap between lab-scale innovation and commercial-scale production, Congress should take the following actions:
- Authorize and appropriate expanded funding to the DOE, particularly through Bioenergy Technologies Office (BETO) and to the Department of Agriculture (USDA) to support pilot, demonstration, and first-of-a-kind commercial scale projects that enable biotechnology applications across clean energy sectors.
- Direct and fund the DOE Loan Programs Office to establish a dedicated loan guarantee program focused on biotechnology commercialization, targeting platforms that can be integrated into the energy system, such as bio-based fuels, bioproducts, carbon utilization technologies, and electrification-enabling materials.
- Encourage DOE and USDA to enter into long-term offtake agreements or structured purchasing mechanisms with qualified bioenergy and biomanufacturing companies. These agreements would help de-risk early commercial projects, crowd in private investment, and provide market certainty during the critical scale-up phase.
- Strengthen public-private coordination mechanisms, such as cross-sector working groups or interagency task forces, to align commercialization support with industry needs, improve program targeting, and reduce time-to-market for promising technologies.
Design and Promote Next-Gen Biofuel Policies
To accelerate the deployment of low-carbon fuels and enable innovation in next-generation bioenergy technologies, Congress and relevant agencies should take the following actions:
- Congress should direct the Environmental Protection Agency (EPA) to modernize the Renewable Fuel Standard by incorporating life cycle carbon intensity as a core metric, moving beyond volume-based mandates. Legislative authority could also support the development of a national Low Carbon Fuel Standard, modeled on successful state-level programs to drive demand for fuels with demonstrable climate benefits.
- EPA should update its emissions accounting framework to reflect the latest science on life cycle greenhouse gas (GHG) emissions, enabling more accurate assessment of advanced biofuels and synthetic fuels.
- DOE should expand R&D and demonstration funding for biofuel pathways that meet stringent carbon performance thresholds, with an emphasis on scalability and compatibility.
Regional Level Key Findings & Recommendations
Regional strengths continue to serve as foundational drivers of clean energy innovation, with localized assets shaping the pace and direction of technology development. Federal designations, such as the Economic Development Administration (EDA) Tech Hub program (Tech Hub), have proven catalytic. These initiatives enable regions to unlock state-level co-investment, attract private capital, and align workforce training programs with local industry needs. Early signs suggest that the Tech Hub framework is helping to seed innovation ecosystems where they are most needed, but long-term impact will depend on sustained funding support and continued regional coordination.
Workforce readiness and enabling infrastructure remain critical differentiators. Regions with deep and committed involvement from major research universities, national labs, or advanced manufacturing clusters are better positioned to scale innovation from prototype to deployment. Real-world testbeds provide environments for stress-testing technologies and accelerating regulatory and market readiness, reinforcing the importance of place-based strategies in federal innovation planning.
At the same time, private investment in clean energy and enabling biotechnologies remains crucial to developing and scaling innovative technologies. High capital costs, regulatory uncertainty, and limited early-stage demand signals continue to inhibit market entry, especially in geographies with less mature innovation ecosystems. Addressing these barriers through coordinated federal procurement, long-term incentives, and regional capacity-building will be essential to supporting growth in regions with strong assets to develop industry clusters that could yield clean energy benefits.
To accomplish this, the federal government and regional governments should:
Strengthen Regional Workforce Pipelines
A skilled and regionally distributed workforce is essential to realizing the full economic and technological potential of clean energy investments, particularly as they intersect with the bioeconomy. While federal funding is accelerating deployment through initiatives such as the IRA and DOE programs, workforce gaps, especially outside major innovation hubs, pose barriers to implementation. Addressing these gaps through targeted education, training, and talent retention efforts will be critical to ensuring that clean energy projects deliver durable, regionally inclusive economic growth. To this end:
- Federal agencies like the Department of Education and National Science Foundation should explore expanding support for STEM programs at community colleges and Minority Serving Institutions, with a focus on biosciences, engineering, and agricultural technologies relevant to the clean energy transition.
- Federally supported training and reskilling programs tailored to regional clean energy and biomanufacturing workforce needs could benefit new and existing cross-sector partnerships between state workforce agencies and regional employers.
- State and local governments should consider implementing talent retention strategies, including local hiring incentives, relocation support, and career placement services, to ensure that skilled workers remain in and contribute to regional clean energy ecosystems.
Strengthen Regional Infrastructure and Foster Cross-Sector Collaboration
Robust regional infrastructure and cross-sector collaboration are essential to accelerating the deployment of clean energy technologies that leverage advancements in biotechnology and manufacturing. Strategic investments in shared facilities, modernized logistics, and coordinated innovation ecosystems will strengthen supply chain resilience and improve technology transfer across sectors. Facilitating access to R&D infrastructure, particularly for small and mid-sized enterprises, will ensure that innovation is not limited to large firms or major metropolitan areas. To support these outcomes:
- Federal support for regional testbeds, prototyping sites, and grid modernization labs, coordinated by agencies such as DOE and EDA, would support the demonstration and scaling of biologically enabled clean energy technologies.
- State and local governments, in coordination with federal agencies including DOT and DOC, explore investment in logistics infrastructure to enhance supply chain reliability and support distributed manufacturing.
- States should consider creating or expanding the use of innovation voucher programs that allow small and mid-sized enterprises to access national lab facilities, pilot-scale infrastructure, and technical expertise, fostering cross-sector collaboration between clean energy, biotech, and advanced manufacturing firms.
Attract and De-Risk Private Capital
Attracting and de-risking private capital is critical for scaling clean energy and biotechnology innovations. By offering targeted financial mechanisms and leveraging federal visibility, governments can reduce the financial uncertainties that often deter private investment. Effective strategies, such as state-backed loan guarantees and co-investment models, can help bridge funding gaps while strategic partnerships with philanthropic and venture capital entities can unlock additional resources for emerging technologies. To this end:
- State governments, in collaboration with the federal agencies such as DOE and Treasury, should consider implementing state-backed loan guarantees and co-investment models to attract private capital into high-risk clean energy and biotech projects.
- Federal agencies like EDA, DOE, and the SBA should explore additional programs and partnerships to attract philanthropic and venture capital to emerging clean energy technologies, particularly in underserved regions.
- Federal agencies should increase efforts to facilitate connecting early-stage companies with potential investors, using federal initiatives to build investor confidence and reduce perceived risks in the clean energy sector.
Cross-Cutting Key Findings
The successful deployment of federal clean energy and biotechnology initiatives, such as the SAF Grand Challenge, relies heavily on the capacity of regional ecosystems and the private sector to absorb and implement national goals. Many regions, particularly those outside established innovation hubs, lack the infrastructure, resources, and technical expertise to effectively utilize federal funding. As a result, the impact of national policies is often limited, and the full potential of federal investments goes unrealized in certain areas.
Federal programs often take a one-size-fits-all approach, overlooking regional variability in feedstocks, industrial bases and cost structures. Programs like tax credits and life cycle analysis models can unintentionally disadvantage regions with different economic contexts, creating disparities in access to federal incentives. This lack of regional customization prevents certain areas from fully benefiting from national clean energy and biotech initiatives.
The diffusion of innovation in clean energy and biotechnology remains concentrated in a few key regions, leaving others underutilized. Despite robust federal R&D investments, commercialization and scaling of innovations are primarily concentrated in regions with established infrastructure, hindering the broader geographic spread of these technologies. In addition, workforce development efforts across federal and regional programs are fragmented, creating misalignments in talent pipelines and further limiting the ability of local industries to leverage available resources effectively. The absence of a unified system for tracking key metrics, such as SAF production and emissions reductions, makes it difficult to coordinate efforts or assess progress consistently across regions. To address this, the federal and regional governments should:
Create a Federal–Regional Clean Energy Deployment Compact
A Federal-Regional Clean Energy Deployment Compact is critical for aligning federal clean energy initiatives with the unique capabilities and needs of regional ecosystems. By establishing formal mechanisms, such as intergovernmental councils and regional liaisons, federal programs can be more effectively tailored to local conditions. These mechanisms will ensure two-way communication between federal agencies and regional stakeholders, fostering a collaborative approach that adapts to evolving technological, economic, and environmental conditions. In addition, treating regional tech hubs and initiatives as testbeds for new policy tools, such as performance-based incentives or carbon standards, will allow for innovative solutions to be tested locally before scaling them nationally, ensuring that policies are effective and contextually relevant across diverse regions. To this end:
- The White House Office of Science and Technology Policy (OSTP), in collaboration with the DOE and EPA, should establish formal intergovernmental councils or regional liaisons to facilitate ongoing dialogue between federal agencies and regional stakeholders. These councils would focus on aligning federal clean energy initiatives with regional needs, ensuring that local priorities, such as feedstock availability or infrastructure readiness, are considered in policy design.
- The DOE and EPA should treat tech hubs and regional clean energy initiatives as testbeds for policy innovation. These regions can pilot performance-based incentives, carbon standards, and other policy tools to assess their effectiveness before scaling them nationally. Successful models developed in these testbeds should be expanded to other regions, with lessons learned shared across state and local governments.
- Regional universities and innovation hubs should collaborate with federal and state agencies to develop pilot programs that test new policy tools and technologies. These institutions can serve as incubators for innovative clean energy solutions, providing valuable data on what policies work best in specific regional contexts.
Build a National Innovation-to-Deployment Pipeline
Creating a seamless innovation-to-deployment pipeline is essential for scaling clean energy technologies and ensuring that regional ecosystems can fully participate in national clean energy transitions. By linking DOE national labs, Tech Hubs, and regional consortia into a coordinated network, the U.S. can support the full life cycle of innovation, from early-stage R&D to commercialization and deployment, across diverse geographies. Additionally, co-developing curricula and training programs between federal agencies, regional tech hubs, and industry partners will ensure that talent pipelines are closely aligned with the evolving needs of the clean energy sector, providing the skilled workforce necessary to implement and scale innovations effectively. To accomplish this the:
- DOE should facilitate the creation of a national network that connects federal labs, regional tech hubs and innovation consortia. This network would provide a clear pathway for the transition of technologies from research to commercialization, ensuring that innovations can be deployed across different regions based on local needs and capacities.
- Regional Tech Hubs, in partnership with local universities and research institutions, should be integrated into the pipeline to provide localized innovation support and commercialization expertise. These hubs can act as nodes in the broader network, offering the infrastructure and expertise necessary for scaling up clean energy technologies.
Develop a Shared Metrics and Monitoring Platform
A centralized dashboard for tracking key metrics related to clean energy and biotechnology initiatives is crucial for guiding investment and policy decisions. By integrating federal and regional data can provide a comprehensive, real-time view of progress across the country. This shared platform would enable better coordination among federal, state, and local agencies, ensuring that resources are allocated efficiently and that policy decisions are informed by accurate, up-to-date data. Moreover, a unified system would allow for more effective tracking of regional performance, enabling tailored solutions and based on localized needs and challenges. To this end:
- The DOE, in partnership with the EPA, should lead the development of a centralized dashboard that integrates existing federal and regional data on SAF production, emissions reductions, workforce needs, and infrastructure gaps. This platform should be publicly accessible, allowing stakeholders at all levels to monitor progress and identify opportunities for improvement.
- State and local governments should contribute relevant data from regional initiatives, including workforce training programs, infrastructure development projects, and emissions reductions efforts. These contributions would help ensure that the platform reflects the full range of activities across different regions, providing a more accurate picture of national progress.
The Department of Labor and the DOC should integrate workforce development and industrial capacity data into the platform. This would include information on training programs, regional workforce readiness, and skills gaps, helping policymakers align talent development efforts with regional needs.
The DOT should ensure that transportation infrastructure data, particularly related to SAF production and distribution networks, is included in the platform. This would provide a comprehensive view of the supply chain and infrastructure readiness necessary to scale clean energy technologies across regions.
The clean energy sector, and specifically SAF, highlights both the promise and the persistent challenges of scaling biotechnologies, reflecting broader issues, such as fragmented regulation, limited commercialization support, and misaligned incentives that hinder the deployment of advanced biotechnologies. Overcoming these systemic barriers requires coordinated, long-term policies including performance-based incentives, and procurement mechanisms that reduce investment risk and free up capital. SAF should be seen not as a standalone initiative but as a model for integrating biotechnology into industrial and energy strategy, supported by a robust innovation pipeline, expanded infrastructure, and shared metrics to guide progress. With sustained federal leadership and strategic alignment, the bioeconomy can become a key pillar of a low-carbon, resilient energy future.
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