Farm Energy

(Feb. 15) This week the President launched the first round in the FY2012 budget process with a proposed budget that cuts Ag funding over prior years but retains most clean energy priorities, albeit at slightly lower levels.

 For Agriculture, the Administration proposes to reduce total discretionary spending by over $3 billion from FY2010 levels. (Congress has not yet passed a final FY2011 budget; a Continuing Resolution based on 2010 levels is funding the government at least until March 4).

The President’s budget emphasizes clean energy development. Specific clean energy development funding proposals  include:

• Rural Energy for America Program (REAP) – $106.8 million. Includes $36.8 million in proposed discretionary funding plus $70 million mandatory funding from the 2008 Farm Bill. Total program funding is a small increase over current funding levels ($99.34 in FY2010).
• Biomass Crop Assistance Program (BCAP) – $198 million. To refocus this important program on its primary purpose of encouraging new energy crop development, the Administration proposes to cap funding for the Collection, Harvest, Storage and Transport component at $70 million, which would leave most of the funding ($128 million) for establishing and growing energy crops.
• Rural Utilities Service loans – $6 billion for low-interest Federal Financing Bank loans. As in FY2011, the Administration commendably wants most of these loans to finance new clean energy projects, and proposes that:
  • Not less than $4 billion shall be used for renewable energy plants or for fossil fueled plants with carbon sequestration;
  • Funding may be used for fossil peaking units operating in conjunction with wind and solar power; and
  • Not more than $2 billion may be used for projects to reduce pollution from fossil fueled plants. 

Next steps include House and Senate committee hearings on its budget proposals, and intense jockeying in Congress over the future of these and other programs. Stay tuned for more developments. And you can visit here for current information on the unsettled 2011 budget picture.

(Feb. 8)  To spur more farmer and other locally-owned energy projects, Congressman Jeff Fortenberry (R-NE) has introduced the Rural Energy Equity Act. The legislation removes a key obstacle to financing local ownership of  these projects with Rural Energy for America Program (REAP) grants.

Current tax rules undercut the value of REAP grants for community wind and other locally-based energy projects. That’s because two critical funding programs – REAP and the federal Production Tax Credit (PTC) – conflict.

PTC regulations reduce the value of the REAP grant by as much as 50 percent, which is a serious problem. This “haircut” reduces the capital investment that local investors can bring to the project, lowers the value of the PTC credit to corporate investors (and therefore reduces the project’s financial returns), and delays the time at which project ownership “flips” from the corporate developer back to the local owners.

Representative Fortenberry’s Rural Energy Equity Act (H.R. 277) would solve these problems by exempting REAP grants from the PTC offset. This would ensure that REAP grant recipients receive the entire grant amount to which they are entitled and inspire corporate investment in locally-based community energy projects. Fortenberry’s common sense solution will facilitate financing for a host of farm energy technologies including wind, manure digesters and other biomass energy.

Representative Fortenberry sponsored similar legislation in the last Congress with Representative Herseth Sandlin (D-SD), who did not win re-election.

Representative Fortenberry needs your help – he is now seeking co-sponsors for this important legislation to help move it forward. You can ask your  U.S. Representative to sponsor H.R. 277, here.

The Omnibus Appropriations Bill introduced to the US Senate late on December 14 would cut Farm Bill clean energy programs by over $120 million and would eliminate the Biomass Crop Assistance Program. See the following list of cuts:

• Rural Energy for America Program, Section 9007. Cut from total $99.34 million in 2010 to $70 million in 2011.
• Biomass Crop Assistance Program, Section 9011, is denied administrative funds, effectively killing the program.
• Bioenergy Program for Advanced Biofuels, Section 9005 is reduced by $28 million.
• Biorefinery Assistance Program Section 9003 is reduced by $56 million.

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Come to a meeting to learn about REAP, the Rural Energy for America Program. Renewable energy and energy efficiency projects can cut your costs or generate new income. USDA’s REAP program provides grants and loan guarantees to farmers, ranchers and rural small businesses nationwide. Some use REAP incentives to upgrade to more efficient ventilation, pumps, coolers, insulation, or heating and cooling systems. Others now generate their own energy with solar panels, wind turbines, biogas or biofuels.

Hundreds of farmers, ranchers and rural small businesses are making greater profits and slashing energy costs with REAP.

Join the Environmental Law & Policy Center, the South Dakota Famer’s Union, River Electric Power Cooperative and your local Touchstone Energy Cooperatives to learn how you can take advantage of REAP.

At the meetings, experts will share important information about program eligibility, energy audits, and other specifics about applying. There will be opportunities to ask questions about REAP and find out if it’s right for specific farms, businesses or communities.

The REAP was included in the 2008 Farm Bill and is administered through the United States Department of Agriculture (USDA). REAP provides grants and loan guarantees to farmers and rural small businesses for renewable energy (bioenergy, geothermal, hydrogen, solar, wind and hydro power) and energy efficiency projects.

Meeting Dates and Locations:

Tuesday, December 14

1:00 p.m. – 3:00 p.m.
Codington County Electric Cooperative
3520 9th Ave SW
Watertown, SD

Wednesday December 15

1:00 p.m. – 3:00 p.m.
Swiftel Center
824 32nd Ave
Brookings, SD

Thursday December 16

1:00 p.m. – 3:00 p.m.
Beresford Public Library
115 S. 3rd St
Beresford, SD

On December 15, 2010, the Environmental Law & Policy Center and USDA Rural Development’s North Dakota office presented a webinar on REAP, the Rural Energy for America Program. Renewable energy and energy efficiency projects can cut your costs or generate new income. USDA’s REAP program provides grants and loan guarantees to farmers, ranchers and rural small businesses nationwide. Some use REAP incentives to upgrade to more efficient ventilation, pumps, coolers, insulation, or heating and cooling systems. Others now generate their own energy with solar panels, wind turbines, biogas or biofuels.

Hundreds of farmers, ranchers and businesses are making greater profits and slashing energy costs with REAP.

Mindi Grieve of the Environmental Law & Policy Center and Dennis Rodin of USDA’s Office of Rural Development explained the program and answered questions.  You can listen to the webinar and view slides from the discussion to learn how you can use REAP to make your energy efficiency or renewable energy project a reality.

Webinar Recording

USDA REAP Presentation

ELPC REAP Success Stories and Application Tips

On October 27, 2010, USDA/FSA published the final rule implementing the Biomass Crop Assistance Program (BCAP) in the Federal Register.  The rule is effective immediately and summarized, below. You can download the final BCAP rule here.

ELPC Reaction to Final BCAP Rule

ELPC welcomes publication of a BCAP rule that will finally and fully implement the entire BCAP program.  However, ELPC is disappointed that the final rule fails to ensure the majority of program resources will support sustainable perennial energy crop production.  No funding limitations are placed on the collection of existing biomass materials and the final rule does not require a competitive review process to give priority consideration to the most environmentally and economically sound BCAP projects.

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