The United States is on track to reach an energy “tipping point” by 2013 in the expansion of commercial cellulosic-ethanol facilities, according to a Platts news report. This expansion will come due to government investment, even with declining federal production targets and difficulty in new construction funding.

U.S. Department of Agriculture (USDA) Secretary Tom Vilsack confirmed the country is getting close to seriously expanded production and use of ethanol on the television program Platts Energy Week, Aug. 28.

“By 2012, 2013, you are going to see commercial-size facilities that we are helping to finance at USDA, be operational,” Vilsack told program host Bill Loveless. “And when you see that you will begin to create greater efficiencies, you will begin to see markets expand.”

Platts points out that Vilsack”s comments come even as the cellulosic ethanol industry has struggled recently to attract sufficient funding to increase production. In light of this struggle, the Environmental Protection Agency (EPA) has reduced cellulosic ethanol production targets from 500 million gallons to between 3.45 and 12.9 million gallons for 2012, Platts reports.

The U.S. departments of Energy and Agriculture have awarded the cellulosic ethanol industry about $2 billion in grants and loan guarantees since 2007, including several hundred million in loan guarantees for cellulosic plants, Platts reports. Vilsack told Platts it is crucial to maintain the renewable fuel standard (RFS) with a goal of blending 36 billion gallons of ethanol into gasoline by 2022.

According to Platts, the RFS calls for 21 billions gallons of that to come from advanced biofuels, such as cellulosic ethanol. Vilsack said the RFS is the most important government incentive for the ethanol industry, as a tariff and a 45 cents-per-gallon tax credit are likely to be reduced and eventually eliminated.

He told Platts that policies that focus on diversifying biofuels such as the recent $510-million federal investment in “drop-in” biofuels from the U.S. departments of Agriculture and Energy and the U.S. Navy are the kind of “creative” arrangements that are needed as government agencies face diminishing budgets.