Administration Releases Funding for Biofuels and Bioenergy Programs

On May 5, President Obama issued a directive requesting USDA to make available additional funding for advanced biofuels development and commercialization with one month – Obama’s so-called 30-Day Biofuels Directive. In answer to this request, USDA has issued funding notices for a number of biofuels-related provisions and programs established in the Food, Conservation, and Energy Act of 2008 (P.L. 110-246).

One such program is the Biomass Crop Assistance Program (BCAP, Section 9011 of the 2008 Farm Bill). BCAP will provide financial assistance for farmers seeking to establish new energy crops, as well as payments to cover the cost of collecting, harvesting, storing, and transporting renewable biomass. Environmental review of the portion of the program dealing with the establishment of new crops is still pending. On June 11, however, USDA released a Notice of Funding Opportunity (NOFA) for the portion of the program relating to collection, harvest, storage, and transportation. Qualified entities are eligible to receive a matching $1 payment for each $1 they receive from a qualified biomass conversion facility, up to a maximum of $45.

Further information, including instructions on providing comments and applying for payments, is available in the Federal Register Notice.

On June 12, USDA released a NOFA for the Repowering Assistance Program (Section 9004). This program was established to provide financial assistance to re-tool existing biorefineries to use renewable biomass (agricultural residues, byproducts, wood, etc.) as the primary source of process energy in the facility. By reducing fossil inputs in biorefineries, the overall carbon footprint and climate impacts of biofuels can be greatly reduced. The number of awards and size of payments under this NOFA will vary depending on applicant response, but individual grants will not exceed 50 percent of project costs or $5 million, whichever is less.

Applications are due between July 1, 2009 and November 1, 2009. More information on the application process is available in the Federal Register Notice.

In addition to these programs, USDA is reviewing additional applications under the Biorefinery Assistance Program (Section 9003) and the Rural Energy for America Program (REAP, Section 9007). USDA is also expected in the near future to release a NOFA and/or proposed rules for the Bioenergy Program for Advanced Biofuels (Section 9005), a program established to support and accelerate the production of advanced biofuels.

In addition to the farm bill programs and the President’s 30-Day Biofuels Directive, USDA continues to support woody biomass utilization as an important source of renewable energy and a key component in meeting national objectives for forest restoration. On June 11, Deputy Secretary Kathleen Merrigan announced $49 million in awards for wood-to-energy grants and an additional $8 million for other woody biomass utilization projects. This funding was made available under the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). In total, 30 projects in 14 states received awards.

USDA is not the only federal agency that is accelerating efforts to promote bioenergy and support the President’s emphasis on renewable energy. The IRS recently published long-awaited guidelines on a federal tax credit for ‘qualified biomass fuel property’, a term that includes pellet stoves, wood stoves, biomass-fueled furnaces, and units that use biomass to produce hot water. The tax credit, first established in the Emergency Economic Stabilization Act of 2008 (110-343) and expanded in ARRA, is worth 30 percent of the cost of qualified biomass stove or furnace, up to a maximum of $1,500. Qualified units must be at least 75 percent efficient.