Farm Energy

REAP is one of an array of innovative farm  energy programs in the 2008 Farm Bill. Taken together, these programs provide a great opportunity to produce more clean energy from farms, ranches, other agriculture operations and rural small- and medium-sized businesses.

Total mandatory funding for the Energy Title averages $280 million a year, compared to $160 million annually in the 2002 Farm Bill. However, comparing the 2002 and 2008 Farm Bills is not “apples to apples” – program funds are now allocated differently and more favorably for cleaner energy. For example, mandatory funding for REAP more than doubled from $115 million to $255 million. The 2008 Farm Bill also includes $400 million in cellulosic ethanol tax credits.

Biomass Crop Assistance Program (BCAP )

This program provides incentives for farmers and others to grow and harvest sustainable biomass energy crops like switchgrass and other prairie grasses or fast growing trees. BCAP helps to solve the “chicken or egg” dilemma that is delaying the commercialization of advanced biofuels – no markets for energy crop producers and no energy projects because no supply of energy crops. By providing grants for establishing, growing, harvesting, collecting, storing and transporting energy crops, BCAP can encourage farmers to grow low-carbon, sustainable energy crops at a profit.

Biorefinery Assistance

Inconsistent federal funding has delayed commercialization of advanced biofuels like cellulosic ethanol. The Biorefinery Assistance program provides grants and loan guarantees for emerging technologies. Demonstration scale plants are eligible for grants up to 30% of costs, and commercial scale plants are eligible for loan guarantees for up to $250 million per plant.

Repowering Assistance

This program helps ethanol plants reduce their carbon footprint and pollution by burning energy crops and other renewable biomass instead of coal or natural gas in plant boilers. In addition to cutting pollution, the program helps to create new markets for energy crops.

Other Programs with Mandatory Funding

• Biomass Research and Development. Accelerates new biomass energy technologies through cost-share funding for research by companies, universities and government.
• Bioenergy Program for Advanced Biofuels. Pays biofuels producers to produce advanced biofuels, defined as most biofuels except corn starch-based ethanol.
• Biobased Markets Program. Expands the federal preference for biobased product labeling guidelines.
• Biodiesel Fuel Education Program. Continues this existing program.
• Biofuels Infrastructure Study. USDA to assess the infrastructure requirements for biofuels production and transport.

Other Programs with Only Discretionary Funding (subject to appropriations)

• Rural Energy Self-Sufficiency Initiative. Helps rural communities improve energy independence through building improvements and renewable energy production.
• Forest Biomass for Energy. Research and development to encourage use of “low-value” forest biomass for energy. Helps state and local governments install wood energy systems in community facilities.
• Renewable Fertilizer Study. USDA to assess the viability of producing nitrogen fertilizer from renewable resources (such as wind power) in rural areas.

Tax Credit Incentives

A new cellulosic biofuels production tax credit for up to $1.01 per gallon is available through 2012. This credit will be available for cellulosic biofuels produced from agricultural waste, wood chips, perennial energy crops and other non-food feedstocks. Congress helped to pay for that credit and other tax credits in the Farm Bill by reducing the volumetric ethanol excise tax credit (“blender’s credit”) from 51 cents to 45 cents per gallon, subject to some limitations.

Other Provisions

Several other provisions in the 2008 Farm Bill either directly or indirectly encourage more farm-based energy production and energy efficiency. For example, Title II of the bill significantly increases the size of the Conservation Stewardship Program (formerly the Conservation Security Program), which among other things encourages farmers to use energy-saving best practices. A new Sun Grant program in the Research Title encourages biobased energy technology development (although this program did not receive any mandatory funding), and other Research Title programs also focus on clean energy development.