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Biofuels Provisions in the US Farm Bill

The US Congress last week overrode President Bush’s veto of the US$289-billion Farm Bill (H.R.2419, the Food, Conservation, and Energy Act of 2008), putting it into effect as a law.

The wide-ranging bill, the passage of which generated some criticism from countries at the World Trade Organization for increasing farm subsidies at a time when the WTO is trying to reach a deal to cut them, includes a number of measures related to biofuels, both current generation and future.

Among the more than US$1-billion biofuel- and bioenergy-related provisions of the legislation are:

  • Extension of the 14.27¢/liter ($0.54/gallon US) tariff on fuel ethanol and of the 5.99¢/liter ($0.113/gallon US) tariff on ETBE to 1 January 2011. The tariffs were set to expire 1 Jan 2009.

    (The ethanol tariff provision as well as the cellulosic biofuel producer credit—below—are part of the Trade title (XV) of the bill. While the trade title was included in the conference report passed by Congress, it was left out of the official copy of the farm bill that the President vetoed. The House introduced legislation to correct the error.)

  • Sugar ethanol program. To assure that sugar imports do not result in increased forfeitures of US sugar, the Secretary of Agriculture is directed to purchase sugar to avoid forfeitures under sugar price support loans and to sell that sugar to bioenergy producers. Under the plan, sugar would be integrated into corn ethanol facilities. (Earlier post.)

  • Biorefinery loan guarantees. The legislation provides $320 million in mandatory funding for loan guarantees for commercial and pre-commercial biorefineries to produce advanced biofuels. Loans may be up to 80% of the cost or a maximum amount of $250 million. Loan guarantees may cover up to 90% of the loan amount. The bill also authorizes grants up to 30% of project costs for demonstration-scale biorefineries. Additional funds are authorized for appropriation.

  • Cellulosic biofuel producer tax credit. The legislation includes a new, temporary production tax credit for producers of cellulosic biofuels for up to $1.01 per gallon, available through December 31, 2012, with an estimated cost of $403 million over the ten-year budget window.

  • Biomass Crop Assistance Program (BCAP). The legislation directs the Secretary of Agriculture to establish BCAP project areas in which potential biomass crop producers and a biomass user facility have agreed to produce and use of biomass crops for conversion to advanced biofuels or bioenergy.

    Agricultural producers in BCAP project areas may contract with the Department of Agriculture (USDA) to receive biomass crop establishment payments up to 75% of costs, plus annual payments in amounts determined by the Secretary in subsequent years to help to compensate for lost opportunity costs until crops are established. The program also provides for cost-share payments for the harvest, storage, and transport of biomass crops to user facilities at a rate to match the biomass sale price, up to $45 per dry ton. The bill provides such mandatory funds as are necessary to carry out the program.

  • Bioenergy program for advanced biofuels. The legislation directs the USDA to make payments to support and ensure an expanding production of advanced biofuels. Mandatory funding of $300 million is provided and additional funds are authorized for appropriation.

  • Biomass R&D. The legislation provides mandatory funding of $118 million for the continuation of the Biomass Research and Development program and continues its collaborative implementation by the USDA and Department of Energy. Additional funds are authorized for appropriation.

  • Repowering Assistance. The legislation provides mandatory funding of $35 million for payments to encourage biorefineries to install new biomass energy systems or to produce energy from biomass for plant operations. Additional funds are authorized for appropriation.

  • Forest biomass for energy. The legislation authorizes research on the use of low-value forest biomass for energy and authorizes $15 million annually.

  • Biofuels infrastructure study. The legislation directs the Secretary of Agriculture to conduct of study of the infrastructure needs associated with the expanding production and use of biofuels, to be conducted jointly with the Departments of Energy and Transportation and the US Environmental Protection Agency.

Resources

Comments

NCyder

So, is now a good time to become a farmer?

Lulu

I hope we don't burn up our food, and create a world wide hunger crisis...

Not for small time farmers. Only corporate farms benifit from this.

Jon

There were hungry people before biofuels and there will be hungry people long after biofules are gone. The problem isn't there because of a food shortage. The people that are hungry don't have money to pay for the food. If they did someone would grow more food and sell it to them.

I don't know about that, the price of food is going up because biofuels increase demand and transportation costs have risen, and there are probably other factors as well. This means that while yes, there were starving poor people before, the number has just increased because those who could just barely afford to eat before are now in the same boat as the starving folks.

I'm not all about genetically modified foods, but if we're going to be burning food crops for fuel, the polite thing to do would be to grow specialty crops for gas, or create gm crops for consumption that grow faster, more easily, and are healthier. Bug resistant would be nice too. Just make sure they're safe first.

Onerall I think this is a good bill without checking the fine details; from a previous post:

75% of corn in North America is grown for livestock feed, 25% is primarily for Human food, the livestock portion is used to make ethanol. See the attached web site for dry and wet milling facts. http://www.ethanolrfa.org/resource/made/
When ethanol is produced there are byproducts, they are used in livestock feed, so an acre of corn for ethanol also produces food, mostly meat.

The argument that growing more corn uses up land that might be used for other crops is probably valid to a degree but then it is what it is: a 'cash crop' with food byproducts, we've always grown cash crops, maybe we can switch some of those to food, we can probably do without coffee, tea, tobacco, cotton, canola, flowers, christmas trees, anything else?
The high cost of food is not due to ethanol it's due to the high cost of fuel, that's why we 'must' diversify from this oil and gas monopoly. The high cost of food in the third world has more to do with WTO rules than anything else, they are not allowed to protect their 'local' farmers so they are susceptable to the effects of subsidized imports mostly form the west. Think about it, why does a local peasent in Haiti need to pay world prices for grain, he should be growing it locally.
Subsidizing an industry for domestic development is okay but for exports - No! That is detrimental to the destination country's own locally produce biofuels. The WTO in this case may have a point.

Janap

I would like to put these resent actions of congress into the context of some global and irresistible trends of the current age.

Globalization requires concentrated hydrocarbon fuel to function. Now, that fuel is oil. Biofuel cannot meet the energy needs of globalization because by its nature. It is finite, produced locally over a wide area, and cannot be gathered and transported easily. Therefore it will be consumed locally.

Both the political and corporate elites are committed to globalization to a level approaching religion. That is the underlying reason why the current administration has done nothing to convert the economy form oil to Biofuel. The elite in Asia feel that the modernization of their cultures can only be fostered by globalization and are committed to it totally and irrevocably.

In order to replace cheap oil over time, what will develop to meet this concentrated centralize hydrocarbon fuel need for globalization is coal to liquid and( if there is enough cheap gas) gas to liquid fuel production especially is Asia.

Globalization is the most powerful disincentive to Biofuel and the prevention of global warming. The finite amount of biomass puts a cap on the amount of Biofuel that can be produced. Therefore, the emergent of Biofuel because of its finite and localized nature means the reemergence of nationalism and the reduction of global trade. I can’t see this happening because of the dominance of corporatism throughout the world.

In summery, don’t buy any low lying property and learn to adapt to the coming warmer age.

sulleny

"The finite amount of biomass puts a cap on the amount of Biofuel that can be produced."

Er... Is that why it's called REnewable energy?

Janap

@sulleny

Yes, that statement is imprecise and needs to be expanded.

I meet to convey the following concept.

The amount of biomass is limited by time (growing season) and growing area. So, for any given year, only a finite amount of CO2 can be converted to hydrocarbon by plants or microbes. That ultimate yearly production level (I called it a cap) has not been reliably calculated to my knowledge but will be relatively low and limited in comparison to what can be provided by coal (CTL).

The concept that Biofuel cannot support an ever increasingly affluent world population with their associated fleets of cars, trucks, planes, and ships together with associated expanding global trade makes sense and is without much doubt.

If there is a flaw in this thinking, please respond.

Janap

@sulleny

Yes, that statement is imprecise and needs to be expanded.

I meant to convey the following concept.

The amount of biomass is limited by time (growing season) and growing area. So, for any given year only a finite amount of CO2 can be converted to hydrocarbon by plants or microbes. That ultimate yearly production level (I called it a cap) has not been reliably calculated to my knowledge but will be relatively low and limited in comparison to what can be provided by coal (CTL).

The concept that Biofuel cannot support an ever increasingly affluent world population with their associated fleets of cars, trucks, planes, and ships together with associated expanding global trade makes sense and is without much doubt.

If there is a flaw in this thinking, please respond.

boo radley

Biofuels are not the answer to replace oil as a major transportation fuel. Electricity is. Biofuel "crops" grown using food producing acreage are a dead end for everyone except those who are being subsidized by the government to prove it.

shigley

Hmm, me thinks I hear a faint oink, oink, oink as the congressional pork makes it way from DC to the nations 'Mega-Farmer' trough...er, bank account.
I wonder how many plug-in hybrids 300 billion would buy.

sulleny

@ Janap,

thank you for the explanation. I see what you are concerned about and agree. U.S. and global energy policy should continue to develop ALL sustainable solutions. Biofuel from crops is clearly not able to produce volume liquid fuel the global demand will make. But biofuels in combination with rapid electrification, better mass transit, energy conservation, solar, wind, geothermal, wave/tidal, WTL, CTL and nuclear should be able to meet our future energy needs.

With this policy in place and considering the technology exponent over next century - that should get us to a new energy resource presently unimagined.

middleoroad

Cellulosic ethanol does not require agricultural land,the feedstock can be waste,landfill,sawdust,corn stalks,rice hulls,or any other formerly living fodder.Biobutanol can use meat waste like chicken fat etc..Saab recently ran a modified diesel car on ethanol and reported better efficiency than running on diesel this may make oil based biodiesel a thing of the past.Corn ethanol is inefficient,but is a necessary stepping stone to cellulosic,without the infrastructure work done by corn ethanol,cellulosic would have had a tougher time fighting its way into the petroleum company owned stations across America.

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