The Senate Agriculture Committee draft would inflict steep cuts to programs, including REAP (Rural Energy for America Program), BCAP (Biomass Crop Assistance Program), and Biorefinery Assistance.

These programs have pushed innovative energy development and provide a safety net for farmers. (Click here to learn about the accomplishments of the 2002 and 2008 Energy Title.)

Without mandatory funding for these programs, they will wither, rolling back advances in clean, homegrown energy and placing rural jobs in peril. Contact the committee to demand mandatory funding of the energy title.

In 2011, the Rural Energy for America Program (REAP), just one program impacted by proposed cuts:

• Created or saved 7,000 jobs
• Cut greenhouse gases by almost 2 million metric tons
• Saved the equivalent of over 2 billion kilowatt-hours of electricity
• Generated $456 million in investments in our communities

“We thank the Senators for including Energy Title programs in the new Farm Bill in the difficult climate they face, especially the leadership from Senators Stabenow, Lugar and Harkin.  We also hope the Agriculture Committee can restore mandatory funding to these core clean energy programs that mean so much to our rural communities and to our nation,” said Andy Olsen, senior policy advocate with the Environmental Law & Policy Center.

WASHINGTON, D.C. – More than 100 diverse groups representing agriculture, energy, rural development and conservation called on Congress today to renew and fund core energy programs in the Farm Bill that push forward clean, homegrown energy. These programs advance energy efficiency, wind, solar, new energy crops, biomass energy and biobased products.

In a joint letter to the leaders of the House and Senate Agriculture Committees, signers noted, “These important and growing industries all benefit agriculture and forestry and are poised to make huge contributions to our economic, environmental and national security in the coming years, provided that we maintain stable policies that support clean energy.”

The energy programs are administered by the USDA and have made a number of accomplishments since the first Energy Title was created in the 2002 Farm Bill:

* The Rural Energy for America Program (REAP) has supported nearly 8,000 energy efficiency and renewable energy projects across the nation in varying agricultural sectors.

* The Biomass Crop Assistance Program has assisted farmers in developing homegrown energy crops that support farms and supply needed energy sources

* Biofuel advancements have accelerated through support from the Biorefinery Assistance Program.

“This letter arrives at the Agriculture Committees as rising gasoline prices remind America that our long-term energy challenges to our nation’s well-being require long-term commitment,” said Andy Olsen, ELPC Senior Policy Advocate. “Polls show the American people believe the Farm Bill should support clean energy and we know Congress can pass a Farm Bill that reflects the will of the American people.”

Download the letter.

“Olsen says biomass projects such as Show Me Energy serve multiple policy goals. They’re a source of cleaner-burning, homegrown energy, and the crops they use as feedstocks can help reduce soil erosion, improve air and water quality and conserve wildlife habitat.”

Read the story.

“We commend the experts and Senators who took a stand for homegrown clean energy today,” says Andy Olsen, Senior Policy Advocate at the Environmental Law & Policy Center (ELPC), a long-time champion of the Farm Bill’s clean energy programs. “Through these programs, America has made unprecedented gains in rural renewable energy and energy efficiency. Congress and the White House should continue this forward momentum.”

Steve Flick, one of the nation’s farm energy entrepreneurs, called for Congressional action to renew and fully fund core Farm Bill clean energy programs, such as the Rural Energy for America Program (REAP), Biomass Crop Assistance Program (BCAP) and the Biorefinery Assistance Program. “America’s farmers, ranchers and rural residents can have a bright future ahead of them with the right incentives,” Flick says. “Renewable energy is the future of rural America.”

Bennie Hutchins of Mississippi provided numerous examples of how REAP has helped agricultural producers and rural small businesses save money and produce income across the South. He shared ELPC analysis showing that REAP produces jobs at a greater than average rate.

“Farm Bill clean energy programs have been an unprecedented success. They have helped farmers reduce their energy bills and energy waste through energy efficiency and accelerated the introduction of modern clean energy technologies into the marketplace,” Olsen says. “Congress and the White House should continue this momentum by renewing and fully funding core Farm Bill clean energy programs.”

They said:

Here are some agricultural priorities that should be included as Congress proceeds:

Including:

Continuing the energy title in the 2005 Farm Bill, which encourages renewable energy on farms in Michigan as a way to provide farmers with additional opportunities for income and helps reduce our dependence on imported oil.

For more, read the commentary.

(ALERT: While REFRESH is a positive step in the longer term, an immediate priority is next year’s budget. Please add your voice now to those opposing unfair cuts to REAP and BCAP. Time is of the essence – Congress may take further action very soon. Thank you.)

REFRESH provides nearly $1.3 billion in mandatory appropriations for five different clean energy programs with significant additional discretionary funding authorizations.  In particular, REFRESH includes annual funding of $70 million for the REAP program and an additional $80 million annually in discretionary funds.  The legislation also extends REAP to assist our nation’s rural schools with energy efficiency programs.

The legislation also supports the development of energy crops with the BCAP program.  REFRESH proposes to fund BCAP at $55 million dollars a year, with an additional $150 million a year in discretionary funding, while working to improve the program in several important respects. REFRESH includes complementary loan guarantee financing for biorefineries by continuing the Biorefinery Assistance Program for two more years.

REFRESH also adds a new Rural Energy Savings Program for rural electric cooperatives and others to help their customers save energy and money. REFRESH also extends the Biobased markets program.

Without reserving comment on the merits of the entire proposal, we applaud Senator Lugar and Representative Stutzman for recognizing that America’s the great potential for renewable energy from the heartland.  REFRESH affirms the value of energy for rural America, and the win-win of clean energy for rural economic development, energy security and environmental quality.

Tuesday, July 19, 2011
10:00 – 11:30 a.m.
1302 Longworth House Office Building

Tuesday, July 19, 2011
2:00 – 3:30 p.m.
188 Russell Senate Office Building

The Environmental Law and Policy Center (ELPC) and Environmental and Energy Study Institute (EESI) invite you to a briefing on the energy title of the farm bill, with a special focus on the Rural Energy for America Program.

Big decisions loom in the next Farm Bill, including for key farm energy programs. The Rural Energy for America Program (REAP) incentivizes a broad range of energy efficiency and renewable energy technologies for all agricultural sectors across the country. As a result, thousands of rural producers and businesses are slashing energy costs with energy efficiency and renewable energy. They also are earning new income from renewable energy and creating new jobs, income, and wealth across rural America. This briefing will provide an overview of the Farm Bill Energy Title, as well as specific examples of dairy and poultry producers, rural electric cooperatives, and other rural producers and small businesses from across the country that have benefitted from the REAP program.

Speakers will include:

• Bill Midcap, Farmer and Rural Development Specialist, Rocky Mountain Farmers Union, Colorado
• Bruce Knight, Dairy Advisor, Strategic Conservation Solutions, LLC, and former Chief, Natural Resource Conservation Service, U.S. Department of Agriculture, Washington, D.C.
• Bennie Hutchins, Principal, Ag Energy Resources, Mississippi
• Andy Olsen, Environmental Law & Policy Center, Wisconsin

This briefing is free and open to the public. No RSVP required.

USDA is accepting comments on the rules through April 12, 2011. However, by issuing the rules as “interim final rules” rather than “proposed rules,” the Department can implement the regulations now, and then adjust them as necessary after receiving comments.

Repowering Assistance for Eligible Biorefineries

This program implements Section 9004 of the 2008 Farm Bill, Repowering Assistance. Its purpose is to help to “green” ethanol plants with funding for existing facilities to convert their on-site power plants from fossil fuel to renewable biomass. The carbon savings can be significant, with larger plants reducing greenhouse gases by 100,000 tons or more annually. The 2008 Farm Bill committed $35 million in funding for Repowering Assistance.

ELPC commented extensively on USDA’s first proposal for Repowering Assistance, and we are pleased that the Department has agreed in whole or in part with most of our recommendations. For example, the rule largely drops the “rural restriction” requirement that plants had to be located in rural areas.

However, we remain concerned that the program does not sufficiently reward the greatest carbon reductions in funding proposals, so we will comment on the interim final rule as well.

The Interim final Rule is available here, and comments are due April 12, 2011. Please feel free to contact Andy Olsen at ELPC if you have any questions about the Repowering Assistance Program.

Advanced Biofuel Payment Program

This program implements Section 9005 of the 2008 Farm Bill, the Bioenergy Program for Advanced Biofuels. Its purpose is to encourage production of lower-carbon biodiesel and cellulosic ethanol. Corn starch ethanol is not eligible. It offers production payments for biofuels based on several factors, and we expect that most of this funding will be used for soy biodiesel in the first several years of the new Farm Bill, along with some funding for other oilseed crops. The 2008 Farm Bill included $300 million in mandatory funding for this program.

Key points in the Interim Final Rule include:

• Two-tier payments for both total annual production and yearly increases, with the incentive first prioritizing total production and then, by 2013, equally dividing the incentive payments between total and incremental production.
• Discouraging use of forest biomass in several ways, notably by limiting payments for fuels produced from forest biomass to only 5 percent of total annual funding.
• Encouraging carbon savings with a “BTU bonus” for biofuels that meet U.S. EPA renewable fuels standard (RFS) requirements.

 The Interim final Rule is available here, and comments are due April 12, 2011.

USDA is accepting public comments on its BCAP proposal through April 9, 2010. Here is a copy of the proposal (opens in new window); otherwise, read on for more information on the proposal.

Short Summary

BCAP has become controversial in the last several months because of its exploding costs and other impacts. Congress had expected that BCAP would cost only about $70 million through 2012. Yet the program may ultimately cost more than $2 billion, in part because of an expensive interim matching payment program USDA initiated last summer. USDA is now proposing to rein in BCAP’s costs somewhat, largely through some restrictions in the types of renewable biomass materials that will qualify for BCAP funding.

As proposed, BCAP would promote two types of activities:

• Funding for farm and forest owners and others to receive matching payments for eligible crops and agriculture and forestry wastes sold to facilities which produce advanced biofuels, heat, power and bioproducts. These matching payments help offset the costs of collecting these materials and delivering them to the processing facility. Matching payments may continue for up to two years after USDA issues the first payment.

• Funding for farmers and other producers of eligible renewable biomass crops to receive establishment and annual payments to help offset the costs of establishing and producing these crops. Establishment payments may offset up to 75% of the cost of establishing eligible crops, and annual payments may run between 5 and 15 years for crop production.

Matching Payments

USDA’s implementation of BCAP has gotten off to a rocky start. In June 2009 USDA began to issue matching payments for the delivery of renewable biomass material through an interim notice of funds availability (NOFA).  Most of these payments were for ag wastes such as corn stover and forest product wastes such as sawmill dust. Most of the material is being used as a substitute for fossil fuels in boilers. The financial impact of the matching payments program is major, with payments under this interim program expected to exceed $300 million in the next two years.

Apart from financial costs, an unintended consequence of USDA’s interim matching payments program was in restricting the availability of cheap sawdust and other mill residues for the wood products and paper and pulp industries. Responding to their concern, and the unexpectedly high cost for a program that was supposed to cost only $70 million through 2012, USDA has terminated the  matching payments interim program and will replace it with the program proposed in this rule.

No Payments for Woody Biomass Materials with Higher-Value Uses

To avoid this problem in the future, USDA is proposing to disallow matching payments for wood wastes and mill residues typically used to produce higher value-added products such as particle board. USDA also is proposing several options to further restrict matching payments for all forms of eligible renewable biomass material. For example, for facilities that convert wood wastes into heat and power, USDA might allow payments only for eligible materials used to make heat or power above the facility’s historical baseline production of heat or power. USDA is seeking comment on all of these options.

In another departure from its June 2009 matching payments NOFA, USDA is dropping the 20% cap on Farm Bill Title I commodity crop agricultural residues (for example, corn stover and straw), on the basis that that the cap is inconsistent with the 2008 Farm Bill.

Establishment and Annual Payments

USDA’s proposal is the Department’s first effort to create a framework for establishment and annual payments. As required by the 2008 Farm Bill, USDA will make eligible payments only for eligible crops within a specified BCAP “project area.” Either producers or “biomass conversion facilities” can propose BCAP project areas to the Farm Service Administration (acting on behalf of the federal Commodity Credit Corporation).

Key requirements/conditions for project areas include:

• Long-term economic viability.

• Specific geographic boundaries.

• Compliance with other criteria in the 2008 Farm Bill, including consideration of impact on soil, water and related resources.

Notably, several types of land are not eligible to receive payments, including government-owned land and land already enrolled in the Conservation Reserve Program, Wetlands Reserve Program, or Grassland Reserve Program.

Payment Amounts

USDA is proposing to pay for up to 75 percent of the establishment costs for perennial crops, including woody biomass. (Annual crops do not qualify for establishment cost payments.)

For annual payments, USDA proposes to calculate payments on a per-acre basis and based on market-based rental rates sufficient to ensure producer participation in a project area. USDA also is proposing additional incentive payments for biomass crops that are especially likely to produce highly efficient bioenergy or biofuels, that preserve natural resources or that address specific resource conservation needs.

Annual payments would last up to 15 years for woody perennial crops and 5 years for annual and non-woody perennial crops.

The Bigger Picture

Congress intended BCAP to help solve the “chicken and egg” dilemma blocking development of sustainable biomass energy sources. Without an assured feedstock supply, many producers of advanced biofuels, bioproducts and bioenergy could not invest in new biomass energy plants. By the same token, farmers would not incur the substantial costs and risks of growing new biomass crops (like switchgrass) without the assurance of a market from a production facility. By paying farmers and others to establish, grow and deliver energy crops, BCAP overcomes these obstacles, reducing financial risk for both farmers and biomass energy plants.

BCAP Will Help Biopower First, Then Biofuels

USDA expects that most BCAP payments in the early years will support existing biomass conversion facilities using woody biomass as a feedstock (presumably to produce heat and power). BCAP expires in 2012, and according to USDA most biomass conversion facilities need to be in the pipeline now in order to qualify for BCAP benefits.

Reflecting these projections, USDA also expects that matching payments will consume most of the BCAP funds. Of the total expected $2.636 billion cost of BCAP, USDA projects that $2.1 billion will be for matching payments:

These projected costs are far higher than Congress’ expected $70 million cost for the BCAP program. Notably, Congress did not explicitly limit BCAP funding in the 2008 Farm Bill, so if BCAP costs as much as USDA predicts, it will become the highest-funded program in the 2008 Farm Bill’s Energy Title.

Environmental Considerations

BCAP’s environmental impacts, for both better and worse, will depend largely on how USDA implements the BCAP program. By emphasizing such factors as species diversity, habitat and natural resources protection, USDA would increase BCAP’s long-term success and public support. USDA is especially interested in how it takes environmental factors into account in implementing BCAP, and it is seeking comments on this issue in a number of different ways.

For Additional Information

• USDA’s BCAP Proposed Rule (from the Federal Register).

• USDA’s website for the BCAP program.

Today, June 11, USDA issued a Notice of Funds for Availability (NOFA) for the Collection, Harvest, Storage and Transportation (CHST) portion of the Biomass Crop Assistance Program (BCAP).  You can read the official notice here. Funding for the remaining components of BCAP (annual and establishment payments) will be announced in the final rule at a later date.

This NOFA is being rolled out as USDA completes a set of 6 public hearings around the country on the Programmatic Environmental Impact Statement (EIS) being conducted for BCAP.  BCAP advances sustainable energy crops — a global warming solution that provides new income opportunities for farmers.

Collection, Harvest Storage and Transportation Assistance

The CHST payments under BCAP provide biomass producers or owners with a $1 for $1 matching payment when they deliver biomass to a biomass conversion facility.  For each dollar a biomass producer receives from the facility, the USDA will pay an additional dollar, up to $45 per dry ton, for up to 2 years.  This payment is intended to help biomass producers with the costs of biomass collection, harvest, storage and transportation. A biomass producer or owner can be the owner of the land where the biomass is produced or a person with the right to collect or harvest biomass off of the land, such as a renter or contractor.

A biomass conversion facility is any facility using biomass to produce heat, power, biobased products or next-generation biofuels like cellulosic ethanol or biomass pellets.

There is broad eligibility for the types of biomass eligible for payments.  The only specific exclusions are biomass from state and federal lands, commodity grains and fibers, animal wastes and by-products, food and yard waste and algae.  However, only 20% of funding made available for CHST payments (estimated to be $25 million for 2009 but may increase) can go to residues from Title I commodity crops.

Biomass can be harvested from a wide variety of land types, including non-industrial and Federal forest land, crop land, and other privately owned lands such as rangeland and pastureland. Any forest land where biomass is being harvested for BCAP must be under a forest stewardship plan or a similar plan.  Cropland where biomass is being harvested for this program must comply with the same highly erodible land conservation requirements as Commodity Title programs.  Biomass harvest must follow all applicable state and federal environmental regulations.

Owners of participating biomass conversion facilities will enter into a memorandum of understanding with USDA that the facility can and will provide all relevant information on biomass delivery and use.  The local FSA office then considers submitted materials and qualifies facilities based on their applications.

FSA county offices will keep and distribute public listings of qualified biomass conversion facilities and the types of materials they are using in order to ensure more open market access for producers.  Then, biomass producers file an application with USDA to receive payments for providing biomass to a registered facility.  Once biomass is sold, producers must submit proof of sale materials, verified by the qualified biomass conversion facility, to FSA to receive the payment.

Stay tuned to FarmEnergy.org for more BCAP news!