Despite the success and popularity of the program, a Congressional “Conference Committee” is now deliberating just how drastically to cut REAP funding for 2012. “REAP is a successful clean energy program, generating jobs and economic development in rural communities while cutting pollution,” said Andy Olsen, Senior Policy Advocate for the Environmental Law & Policy Center. “Congress can create jobs and grow our economy, by continuing to renew and robustly REAP for 2012 and beyond.”

The greatest number of awards went to solar energy, for both solar electric and solar thermal (heat). For the entire year, REAP funded 478 solar projects in 44 states. Michigan fared the best with 48 awards followed by New York (39), Pennsylvania (36), Tennessee (34) and California (29). Farmers have always harvested the sun for growing food and fiber and now more are embracing solar energy for power and heat.

For the year 2011, REAP funded 55 wind power awards, with Iowa and New York leading with seven each. Wind power has flourished under REAP for both small and utility-scale technologies, but fell off significantly this year, from 164 projects in 2010.

Geothermal projects use the energy of the earth for efficient heating and cooling, saving money while cutting pollution. Fifty-nine awards sparked new project construction across the country. Leading states include Minnesota (13), Iowa (11) and Michigan (7).

Small hydroelectric projects were included in REAP in the 2008 Farm Bill revisions and new awards were made for a number of projects in the West (Oregon, Nevada, Idaho) and the southeast (Georgia and North Carolina).

The Rural Energy for America Program (REAP) is a Farm Bill program that enables farmers and rural small businesses to install diverse renewable energy or energy efficiency technologies to cut costs and increase profits. REAP provides loan guarantees and grants for up to 25% of the project cost, leveraging private sector investment and creating jobs. REAP is up for renewal in the new Farm Bill now being debated by Congress.

The Environmental Law & Policy Center (ELPC) has advocated for REAP from the program’s inception and has helped expand the program to benefit rural communities across the nation. ELPC is working to protect REAP funding and promote job creation and clean energy for rural communities.

Please share this video far and wide! Post it on your website, Facebook page, Twitter account, etc. Share it on your friends’ pages and your legislators’ pages, too!

(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.

The Senate Appropriations Committee slashed funding for the Rural Energy for America Program (REAP) in the Agriculture Appropriations Bill for FY2012. The Committee reduced overall funding from $75 million in FY2011 to $38.5 million in FY2012. REAP funding was already reduced in 2011 by 25% as the program continues to bear a disproportionate share of budget cuts.

In his introductory remarks, ranking member Senator Roy Blunt (R-MO) emphasized that most Farm Bill programs were reduced by only 5%. In stark contrast, The Rural Energy for America Program (REAP) was reduced by nearly 50% and the Bioenergy Program for Advanced Biofuels to $75 million, a cut of nearly 30%.

REAP is a popular and oversubscribed program that has funded over 7,600 farm energy projects since 2003, directly benefitting farmers in all agricultural sectors and every state and by making renewable energy and energy efficiency projects more affordable.  Because the program provides grants to cover 25% of the cost, the $36.5 million dollars cut from REAP jeopardizes at least $146 million of overall private and public investment – and jobs — in rural America.

“Disproportionate cuts to farm energy will stall efforts to create homegrown clean energy, new farm income and a healthier environment,” said Andy Olsen, Senior Policy Advocate for Environmental Law & Policy Center. “We will work to restore this funding as the process goes forward.”

The Senate Appropriations Committee met late Wednesday and passed an austere Agriculture Appropriations Bill for FY2012, starting this October 1. Thankfully, the Senate Appropriations Committee wisely preserved funding for the Biomass Crop Assistance Program, an innovative program to develop new energy sources from sustainably grown crops.  The committee reduced funding for the Bioenergy Program for Advanced Biofuels to $75 million, a cut of nearly 30%.

ELPC and the Environmental and Energy Study Institute (EESI) gathered experts on agriculture and clean energy development in Washington on Tuesday, July 19 to address the Rural Energy for America Program (REAP) and other Farm Bill energy programs. Speaking to over 150 staffers and stakeholders in separate House and Senate briefings, they explained the broad benefits of these programs for farmers, businesses, economic development and national energy security policy.

Panelists were:

• Bruce Knight, Dairy Advisor for Strategic Conservation Solutions, LLC and former Chief of the Natural Resources Conservation Service at the USDA under President Bush. Download presentation (PDF).
• Bennie Hutchins, Principal, Ag Energy Resources, Mississippi. Download presentation (PDF).
• Bill Midcap, Farmer and Rural Development Specialist, Rocky Mountain Farmers Union, Colorado. Download presentation (PDF).
• Andy Olsen, ELPC Senior Policy Advocate. Download presentation (PDF).

Other speakers at the briefings included EESI Executive Director Carol Werner and ELPC Director of Federal Relations Karen Torrent.

Energy Title Overview

The first panelist, Andy Olsen, provided a high level overview of how the Farm Bill is accelerating energy savings and clean energy production, supporting rural economic development in the process. Olsen emphasized that the private sector has responded positively to these programs with ingenuity and the American “can do” spirit. For example:

• Advanced biofuels production – The USDA has moved quickly with the Biorefinery Assistance Program, providing loan guarantee financing to build cellulosic ethanol, community digester, and other biofuels/biopower facilities. USDA is accelerating approval of these guarantees and plants are now under construction in several states, with a concentration in the Southeast.
• Energy crops – Although the Biomass Crop Assistance Program got off to a rocky start in 2009, the USDA made several key changes and the 2011 program is now back on track. USDA refocused BCAP on energy crop development and now more than 95% of all funding is for establishing and growing energy crops. BCAP should be judged on the basis of the 2011 program.

Focus on the Rural Energy for America Program

Olsen and the other speakers also highlighted how the Rural Energy for America Program (REAP) serves every agricultural sector in every state, sparking private sector investment and innovation and retaining and creating much needed jobs in rural America.  REAP now has helped to finance more than 6,000 projects across the country – see map below.

Bennie Hutchins

Bennie described the growing popularity and use of REAP in the South, focusing on the strong benefits to poultry producers in slashing energy costs and producing renewable energy. REAP also has helped fund energy projects in aquaculture and forestry. Hutchins emphasized the great benefits for rural small businesses, such as “Mom and Pop” grocers who can use REAP to cut energy costs.

Bruce Knight

Bruce described how consumer demand has led the dairy industry to shift towards more sustainable practices through the whole dairy supply chain. Sustainability is “no longer a philosophical movement,” he said, “it’s now a consumer response.” Knight added that the dairy industry has been very responsive to this consumer demand, pursuing a broad and aggressive program to cut energy use and produce renewable energy and other coproducts from cow manure.  REAP is key to many of these efforts.

Bill Midcap

Bill explained that electric cooperatives are member owned and many of them offer great opportunity for locally-owned projects. He showed how many rural electric cooperatives have used REAP in innovative ways, such as: using the energy audit and renewable energy development assistance program to identify new projects; using feasibility study funding for their own coop-owned projects; grants to build their own systems; and combining multiple projects on customer properties under one master grant. He stressed that “REAP plus rural electric cooperatives can turn electric consumers into electric producers.”

Video

Click here to view the embedded video.

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.

(May 24, 2011) Today the House of Representatives’ Agriculture Appropriations Subcommittee will  vote to eliminate the popular and effective Rural Energy for America Program (REAP) in its 2012 appropriations bill. REAP is the only federal program successfully helping farmers and rural small businesses fight high energy costs with renewable energy systems and energy efficiency.

“Killing REAP leaves agriculture and rural businesses at the mercy of high oil and electricity prices,” said Andy Olsen, ELPC Senior Policy Advocate.

Each year more farmers and rural businesses have used REAP, with demand far outpacing the available funding. Since 2003, REAP has helped nearly 6,000 farmers and rural businesses in every state in the U.S. with grants and loan guarantees to help finance new clean energy and energy efficiency projects, drive private investment and save many millions of dollars each year on energy costs.

“The House could not be sending a clearer signal that they don’t care about rising on-farm energy prices,” said Mr. Olsen. “This ‘do-nothing” approach strikes at the heart of America’s ‘can do’ attitude.”

Last year Congress sliced total REAP funding by 25%, even as demand for the program continued to increase. This year’s draconian action would be a far more serious setback to energy independence and rural economic development.

In stark contrast, the Subcommittee is planning to maintain funding for the Rural Utilities Service’s major electric cooperative loan program at $6.5 billion, which is $500 million more than the President’s budget request. “These skewed priorities give farmers and rural businesses short shrift,” said John Moore, ELPC Senior Attorney.

The Subcommittee also is planning to cut the Biomass Crop Assistance Program (BCAP), which is producing results in helping farmers grow energy crops for fuel and power. “Eliminating the BCAP and REAP energy programs today is like leaving your wedding before you say ‘I do,’” said Steve Flick, President of the Show Me Energy Cooperative in Missouri.

To help the public understand the new REAP rule, ELPC is holding a webinar on Wednesday, April 27, at 3:00 pm Central Time. The webinar will be recorded for later viewing if you are unable to participate. This article summarizes the funding notice and the Interim Rule.

Funding Notice

The Notice of Funds Availability (NOFA) announces the availability of $70 million in REAP funding this year, based on the 2008 Farm Bill’s mandatory allocation of the same amount. USDA will issue a supplemental NOFA for additional funding if Congress allocates additional discretionary funding in the still-uncertain FY2011 budget

Application deadlines are as follows:

• June 15 for clean energy project grants and combined grants and loan guarantees;
• June 15 for loan guarantees only;
• June 30 for renewable energy Feasibility Studies grants;
• June 30 for Energy Audits and Renewable Energy Development Assistance grants.

Please read the NOFA for additional important application information. Since it is based on the REAP Interim Rule also proposed today, the remainder of this article summarizes the Interim Rule.

Interim Rule

The REAP Interim Rule is effective today and issued on an emergency basis to reflect changes made three years ago in the 2008 Farm Bill. Although effective immediately, USDA is requesting comments on its proposal and may change the rule in response to comments. The deadline for comments is June 13, 2011.

Here are highlights of the new rule’s requirements, focusing primarily on changes from the existing REAP rules and prior funding notices. Please check back on FarmEnergy.org soon for a more comprehensive summary of all of the rule’s requirements.

ELPC also is holding a webinar on Wednesday, April 27, at 3:00 pm Central Time to discuss the new rule. The webinar will be recorded for later viewing if you are unable to participate.

Key points in the rule include:

General

• Flexible fuel retail blender pumps are now eligible for REAP grants and loan guarantees. To qualify for a REAP award, gas stations must be owned by a rural small business. These pumps dispense gasoline blended with ethanol or biodiesel. (Biogas pipelines, transmission lines from wind farms, and other conveyance equipment are not included in this proposal.)
  • Note: Blender pump applications can receive up to 25 scoring points unique to pumps, based on number of additional pumps and USDA’s discretionary authority.
• Eliminates the “rural restriction” for agricultural producers located in non-rural areas – for example, commercial nurseries.
• Includes ocean energy and small hydropower (under 30 megawatts) as eligible technologies. Removes the financial need requirement (was not in 2008 Farm Bill).
• All REAP agreements terminate 2 years after signing unless USDA agrees to extension.

Renewable Energy and Energy Efficiency Grants and Loan Guarantees

• Higher funding limits for loan guarantees – up to 75% of total project costs; and the maximum amount of the loan guarantee was increased from $10 million to $25 million.
• USDA makes clear that applicants also can use the production tax credit (PTC) and other passive third-party equity contributions (although tax rules still cause a “haircut” to the total PTC).
• Energy efficiency improvements are exclusively for existing capacity improvements – USDA will not issue grants or loan guarantees to support capacity expansion (intended to address use of REAP to purchase larger grain dryers).

Feasiblity Studies and Audits/Development Assistance

Apart from the changes discussed in “General” above, the rules for the feasibility study grants and the energy efficiency audits and renewable energy development assistance grants appear to be similar to prior agency guidance contained in funding notices. We will summarize those requirements in a forthcoming article.

What the Interim Rule Does Not Address

• No streamlined applications for smaller, “off-the-shelf” pre-certified equipments such as wind turbines and solar panels.
• Did not eliminate the costly and unnecessary “two meter” requirement for farms that install wind turbines and solar panels where some small portion of the power generated may flow to the home.
• No increase in feasibility study grant limits (currently $50,000 per project, which is very low for large community energy developments).
• Non-profit entities are not eligible to conduct energy efficiency audits and renewable energy development assistance.
• Unclear yet if USDA eliminated the application preference for loan guarantees.

“The Obama Administration is committed to helping our nation become more energy independent by helping rural businesses build renewable energy systems,” said Secretary Vilsack. The grants provide assistance for rural small businesses and agricultural producers to conduct feasibility studies for renewable energy system installations.

Feasibility studies help farmers and rural small businesses identify ways to cut energy costs and get new clean energy projects in the pipeline. The REAP Feasibility Studies Program pays up to 25% of the costs of the study.

The 68 feasibility study grants totaled $1.6 million and fund studies in 27 states and territories. A number of larger-scale geothermal power projects in the American West were funded, including one for 500 kw and one for 10 MW. Direct geothermal electric technologies have long planning times, where this support makes a big difference. Ohio had the largest number of awards – 10 – for digesters, solar and wind.

Table 1: Breakdown, by state, of the number of projects and the total amount of funding for those projects

Click on charts to zoom.

Breakdown of 2010 REAP Feasibility Study Funding, by Technology

Number of 2010 REAP Feasibility Study Awards, by Technology

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.