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USDA changes Renewable Energy Program Changes to promote biofuel production

US Agriculture Secretary Tom Vilsack announced interim rule changes to three renewable energy programs—the Biorefinery Assistance Program; the Repowering Assistance Program; and the Bioenergy Program for Advanced Biofuels—that are intended to create jobs in rural areas and increase the production and use of renewable energy.

The programs, authorized in the Food, Conservation, and Energy Act of 2008 (Farm Bill) are administered by USDA Rural Development.

The rule changes allow non-rural locations to be eligible for funding and remove prior citizenship requirements for borrowers. Complete details of the new rules for the Repowering Assistance Program and the Bioenergy Program for Advanced Biofuels are published on page 7916 of the February 11, 2011 Federal Register, The rule for the Biorefinery Assistance Program is expected to be published on Monday. Below is a summary of some of the changes:

  • Biorefinery Assistance Program. This program supports the development and construction of commercial-scale biorefineries and the retrofit of existing facilities using eligible technologies. The changes increase the maximum loan guarantee percentage in certain circumstances and add “refinancing” as an eligible project purpose under certain conditions.

  • Repowering Assistance Program. The program makes payments to eligible biorefineries to encourage the use of renewable biomass as a replacement fuel source for fossil fuels used to provide heat or power in the operation of the biorefineries. These payments are provided to biorefineries that were in existence when the Farm Bill was enacted. The changes allow participating biorefineries to request and receive reimbursement payments for eligible project costs during construction and require that the applicant provide information on any biobased product produced at the facility. This is in addition to providing information on biofuel production.

  • Bioenergy Program for Advanced Biofuels. Under this program, USDA Rural Development enters into contracts with advanced biofuel producers to pay them for the production of eligible advanced biofuels. To be eligible for payments, advanced biofuels produced must be derived from renewable biomass, excluding corn kernel starch, in a biorefinery located in a state. The interim rule adds to the definition provisions for determining whether an advanced biofuel producer of biogas or solid advanced biofuels is a “larger producer” or a “smaller producer.” The rule also deletes the term biorefinery and replaces it with “biofuel facility” to clarify that eligible advanced biofuels may be produced at facilities other than biorefineries.



Feed stock should exclude ALL edible biomass, not only corn kernel starch. Otherwise, farmers will quickly find ways to produce bio-fuel feed stocks instead of food. We all know (or should know) the potential impacts on food prices. Contrary to what many of us think, fuel price is not the only or main driver behind higher food prices.

It is rather a question of supply and demand + speculation.

Food prices are low during surplus periods and go up quickly when availability goes down. Watch what will happen when more bio-fuels are produced. Food prices could double again in the next 24 months.

Will we ever learn?

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