Farm Act Promotes Biofuel and Biomass Research and Development
By: SCOTT J. DORFMAN
July 2008
The 2008 farm bill, officially titled “The Food, Conservation and Energy Act of 2008,” passed both houses of Congress in May, and is expected to survive a threatened veto by President Bush with veto-proof majorities. The Farm Act contains billions of dollars in investments for all U.S. agricultural sectors, including more than $1 billion for renewable-energy programs. The Farm Act’s renewable energy provisions contain significant targeted incentives for research and development in the biofuels and biomass areas and should provide further incentives for development of next-generation cellulosic technologies.
Ethanol projects and programs will receive the lion’s share of funding under the Farm Act. Biorefineries will receive up to $320 million in loan guarantees for the production of advanced biofuels. The Act also creates a new Rural Energy for America Program (REAP) that will provide up to $250 million in grants and loan guarantees for rural small businesses and farmers to make investments in energy efficiency and purchase renewable energy systems. In addition, the federal Bioenergy Program will receive a $300 million grant to provide incentives for producers to expand production of cellulosic biofuels made from agricultural and forestry crops, including waste materials such as animal manure and food processing waste. This grant builds upon previous Department of Energy grants of more than $600 million to various next-generation biofuels projects throughout the country.
The Farm Act also provides $35 million to fund a new program to help existing ethanol facilities reduce fossil fuel use by using alternative technologies and improving energy efficiency. Finally, the Act establishes a sugar-to-ethanol program that aims to provide sugar to biofuels producers at competitive prices. The program specifies, however, that sugar is to be provided only during times of excess sugar supply.
Biomass energy producers also will receive millions in funding under the Farm Act. The Biomass Research and Development Program will receive an additional $120 million to coordinate development activities, including improvements in feedstock cultivation and development. The Act also creates a new Biomass Crop Assistance Program to help develop the next generation of biomass feedstocks, including an allowance for multiyear contracts for forest and crop producers to grow dedicated energy crops.
Coupled with the recent DOE grants, the Farm Act represents a significant ongoing commitment by the federal government to fund development of the next generation of biomass and biofuels resources.