New Farm Bill Program Can Advance Energy Crops
The 2008 Farm Bill contained the groundbreaking Biomass Crop Assistance Program (BCAP). This program, if promoted and used by farm energy leaders, can spur a new climate-friendly and farmer-friendly energy source. If implemented well, BCAP could make a major difference for our energy future.
While a great hope for tapping energy crops centers on making cellulosic ethanol, energy crops can be also be used for fuel for heat and/or power. Prairie grasses have been used for utility boiler fuel co-fired (or blended) with coal. In Missouri and elsewhere around the country, entrepreneurs are making fuel pellets from biomass. BCAP can accelerate the most successful of these approaches.
Below please find a basic summary of the program, its intent and how it works.
The BCAP was designed to support agricultural producers in producing biomass crops and collecting biomass for sale to commercial-scale facilities that commit in writing to use the biomass to produce fuels or power. The program is also intended to improve water quality through reduced water use and surface water protection. Environmental quality can increase with less fertilizer compared to traditional row crops and encouraging the use of perennial crops, which are better for soil, air, water and wildlife.
The program has two distinct pieces: 1) biomass crop establishment; and 2) assistance for the harvest, storage, processing and transportation of biomass materials for energy.
Unlike most programs in which Congress specifies the annual funding level, Congress funded BCAP at essentially an unlimited amount; the BCAP statute specifies simply that USDA will use whatever “sums as are necessary” to implement BCAP. This means that the BCAP funding is both mandatory and is not capped by Congress, reflecting the high value Congress placed on this program. In reality, the Office of Management and Budget, working with USDA, decides each year’s funding allotment based on projected program demand, administration priorities and other factors.
On February 8, 2010, USDA released a proposed rule to implement BCAP. USDA is accepting comments on the proposal through April 9, 2010, and it will then try to issue a final rule later this year. You can read a short summary of the proposal here, and also check our rulemaking page for updated information on the status of the program.
USDA”S final rule to implement BCAP will specify all of the eligibility requirements. The following description is based on the language in the BCAP statute, which USDA must follow.
To participate in the biomass crop establishment portion of the program, a group of farmers or a “biomass conversion facility” (any facility that will use the biomass to make biobased products or energy (heat, power, or advanced biofuels) must submit an application to USDA that defines the borders of the proposed production area and identifies the varieties of biomass crops to be used at the facility. The application also must include a commitment from at least one biomass conversion facility in the area to use the biomass in their facility.
All biomass production must occur on either agricultural land or industrial private forest land. BCAP excludes all land in federal land protection programs and native sod. BCAP also excludes any crops otherwise eligible for Title 1 (Commodity) programs and noxious and invasive species.
USDA will determine whether projects meet the minimum threshold for selection, based on criteria in the statute and others to be determined by USDA. The statutory criteria include:
- The amount of crops to be produced and the likelihood that they will actually be used to produce energy
- The amount of biomass likely to be available from sources other than the crops grown with support from the BCAP
- The local economic impact of the project
- The opportunity for local investors to participate in the ownership of the facility
- The participation of beginning or socially disadvantaged farmers
- The environmental impacts of the proposal
- The variety of agronomic practices and species – including mixes of different crops – proposed within a BCAP area
- The range of crops across projects areas
If the project meets the established criteria, then it will be funded, unless USDA sets other restrictions or conditions on funding.
Ag producers in project areas will receive a payment for up to 75% of establishment costs. Establishment costs refer to the costs to convert lands from an existing use to the new energy crop. Incentives also include an annual payment intended to compensate the producer for the opportunity cost associated with growing an energy crop on the land. Land that was formerly in a row crop will likely receive more than land that was fallow or pasture. The annual payments can continue for up to 5 years if the producer is growing a perennial grass and up to 15 years if the crop is trees.
Ag producers are required to implement a conservation plan on the enrolled land and to agree to provide information to USDA for research purposes, although the scope of the conservation plan requirement is one of the issues in USDA’s proposed rule.
Any person collecting and selling biomass crops or agricultural or forest waste for energy is entitled to receive this payment. The payment is structured as a match; whatever the biomass collector (whether the farmer or some other person) is paid by the biomass user facility, USDA will match. The BCAP statute requires USDA to pay dollar for dollar up to $45 per ton of material; in its proposed rule released on February 8, 2010, USDA has proposed several different ways to implement this matching payment program.