Last Thursday, USDA Secretary Tom Vilsack announced several measures the Obama Administration is taking to promote domestic renewable energy production, many of which would affect biofuels.
The Secretary announced the publication of a final rule to implement the Biomass Crop Assistance Program (BCAP). Under this rule which is being published this week, USDA will resume making payments to eligible producers. The program had operated as a pilot, pending publication of the final rule.
Authorized in the 2008 farm bill, BCAP is designed to ensure that a sufficiently large base of new, non-food, non-feed biomass crops is established in anticipation of future demand for renewable energy consumption.
BCAP provides assistance for the establishment and production of renewable biomass crops within specified project areas. Producers who enter into BCAP contracts may receive payments of up to 75 percent of the cost of establishing eligible perennial crops. They also can receive payments for up to five years for annual or non-woody perennial crops and up to 15 years for woody perennial crops.
FSA is accepting project area proposals. After these proposals have been approved, eligible producers may participate by enrolling at their FSA county office. Producers should contact their FSA state offices or visit www.fsa.usda.gov/bcap for more information.
BCAP also assists agricultural and forest landowners and operators by providing matching payments for the transportation of certain eligible materials that are sold to qualified biomass conversion facilities. The facilities convert the materials into heat, power, biobased products or advanced biofuels.
BCAP will pay producers for the establishment and maintenance of perennial crops (e.g., switchgrass, big bluestem, etc). The other portion of BCAP is assistance for the collection, harvest, storage and transportation of biomass to biomass conversion facilities. It will be available for two years, per producer, in the form of a matching payment for up to $45 per ton of the delivery cost to the facility. This is what Project LIBERTY, POET’s 25-million-gallon-per year cellulosic ethanol facility, is using. (Project LIBERTY is expected to begin producing commercial-scale cellulosic ethanol by the end of next year, using corn cobs and corn residue as primary feedstocks.)
“We’re working with farmers right now who are harvesting biomass, so we’re pleased that they will soon become eligible for matching payments through BCAP,” says Nathan Schock, director of public relations, POET. “This program is designed to help bolster income for biomass farmers during their first years of operation, to defray some of those initial costs. Having the final rule completed will be an important component for both POET and other cellulosic ethanol producers to establish a market for biomass.”
Secretary Vilsack also said that the administration supports funding to install 10,000 blender pumps over the next five years.
“Market access is the number one barrier that the ethanol industry faces in offsetting more imported oil,” POET’s Schock says. “It’s great that the government recognizes the problem and is being active in helping to alleviate it. This program will drastically expand drivers’ access to higher blends of ethanol.”
In his speech before the National Press Club last week, Secretary Vilsack also said the administration supports extending the ethanol blenders tax credit.
“We need to maintain support for the ethanol industry as the effects of our dependence on foreign oil become more evident every day,” Schock told Farm Industry News. “We’re hopeful that the proposal forwarded by Growth Energy and others in the ethanol industry will be successful. This proposal calls for a short-term extension of the blenders’ credit while we work to modernize the program to shift its focus toward improving market access through blender pumps, FFVs and ethanol pipelines.”
Biodiesel Tax Credit
The Secretary also said that the administration supports renewing the expired biodiesel tax credit.
“The National Biodiesel Board [NBB] sincerely appreciates Secretary Vilsack’s continued support for reinstating and extending the biodiesel tax incentive,” said Manning Feraci, vice president of federal affairs, NBB. “By making biodiesel price competitive with conventional diesel fuel, it has helped spur the development of a commercial-scale domestic biodiesel industry capable of displacing millions of gallons of petroleum diesel fuel with a clean burning advanced biofuel.”
The lapse of the tax incentive and the market uncertainty it has caused has had a detrimental impact on the industry, Feraci said. “As the Secretary noted in his speech, it has cost the nation thousands of good-paying jobs.”
“The U.S. biodiesel industry has been and will continue working with a broad range of stakeholders to urge Congress to seamlessly extend the biodiesel tax incentive when it reconvenes after the elections for the lame-duck session,” Feraci told Farm Industry News.
The NBB looks forward to working with the administration on efforts to enhance biofuels infrastructure and feedstock research. “Though biodiesel is fungible with existing infrastructure and diesel engines, enhancements such as additional terminal infrastructure would bolster the nationwide distribution of biodiesel,” Feraci said. “And we look forward to collaboratively working with USDA to develop new and enhance existing lipid sources that can be used to produce biodiesel.”
In his speech last week, Secretary Vilsack said, “By producing more biofuels in America, we will create jobs, combat global warming, replace our dependence on foreign oil and build a stronger foundation for the 21st century economy.”