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.