Briefing Highlights Power of Energy Title Programs to Catalyze Economic Growth in Rural America

On April 4, EESI and the Agriculture-Energy Coalition held a briefing on the Farm Bill’s Energy Title.  The Energy Title was created in the 2002 Farm Bill and in the last 16 years, has been a major catalyst of private investment in rural economic development.  At the briefing, speakers shared how we are at the beginning stages for a true revolution in rural manufacturing and renewable energy production, thanks to the Energy Title. However, continued federal investment in the Energy Title is critical to continue growing these nascent sectors, which include renewable energy – including wind, solar, geothermal, biogas, and advanced biofuels – as well as energy efficiency and high value and high quality biobased chemicals and products. 

According to the Biotechnology Innovation Organization (BIO), the U.S. bioeconomy is worth an estimated $205 billion, and creates 1.6 million direct jobs. Yet, according to speakers, the U.S. position as global leader in the bioeconomy is at risk unless lawmakers at the federal, state and local level prioritize the growth of new and novel industries created by advances in biotechnology and renewable energy.

Four core energy title programs were represented at the briefing – the Biobased Markets Program (Section 9002), the Biorefinery Assistance Program (Section 9003), the Biomass Crop Assistance Program (BCAP, Section 9010) and the Renewable Energy for America Program (REAP, 9007).  A major theme from the briefing was that a modest federal investment has resulted in an amazingly diverse set of companies and products that benefit both rural and urban residents alike.

Biobased Markets Program (Section 9002)

The biobased markets program helps spur the creation of biobased products, which are defined as products containing plants or other renewable materials, and can be derived from agricultural or forest products and include things like lubricants, detergents, plastics, fabrics and more.  John Sagrati, Business Development Manager at DuPont Industrial Biosciences, discussed DuPont’s work to create high performance, scalable, and responsible biomaterials.  He commented that, “DuPont made a commitment quite a while ago … taking our polymers and our materials and deriving them from agricultural-based products, made a lot of sense for the environment and for the business.”

The biobased markets program contains a verification and labelling program administered by USDA that allows for biobased products containing biobased components to receive the USDA BioPreffered label. Sagrati noted that this label can provide important credibility, as “there’s still a bit of stigma. If it comes from bio, if it’s natural, it’s probably inferior,” but, he noted that DuPont feels the opposite, “this is an opportunity to make superior products.”

There are currently 15,000 industrial biobased products labelled under the BioPreffered label.

Biorefinery Assistance Program (Section 9003)

Section 9003 provides loan guarantees for the development of facilities that produce advanced biofuels, renewable chemicals and biobased products.  John Shaw, President of Itaconix Corporation, discussed how Itaconix is using renewable itaconic acid to produce water-soluble polymers such as non-phosphate detergent, which is superior from an environmental standpoint, as it does not feed algae blooms in waterways.  Itaconix’s polymers are in products such as dishwasher and laundry detergents. Their non-phosphate detergent provides the same high-performance as polluting phosphate-based detergents.  Additionally, Itaconix is working on developing a 100 percent biodegradable superabsorbent that could be used in a 100 percent renewable, biodegradable diaper, for example. 

Shaw discussed the chicken-and-egg problem faced by small companies such as his, where the value and supply chain must be guaranteed to purchasers, but without commitments from purchasers to buy the product, the cash flow is not available to invest in building production. He noted that “Demonstrating the value of a new material to go into an end product is a very time-consuming process. You don’t just go to a large detergent manufacturer and say here, go try this … It is a multi-year process… At the same time, you can’t get into it unless you have a reliable supply.”

This is how broadening the eligibility of the Biorefinery Assistance Program could help small companies like Itaconix grow.  Currently, the program requires that a qualifying facility produce renewable biofuels, but this is locking out a huge segment of the biobased economy. According to Shaw, by expanding eligibility within the program to renewable chemicals would allow more companies “to go after safer chemicals, and ones that have less environmental impact.”  This includes examples such as replacing formaldehyde with nano-cellulose, and biodegradable poly-lactic acid, which can replace plastics that persist in the environment.

Biomass Crop Assistance Program (BCAP, Section 9010)

BCAP is essentially two programs; one provides cost-shares of up to 50 percent of costs for the establishment of cellulosic crops, such as perennial grasses and short-rotation woody trees; the second provides matching payments for the harvesting of eligible materials, such as forestry and agricultural residues.  

Sarah Boggess, the Director of Communications and Governmental Affairs at ReEnergy Holdings LLC, discussed how ReEnergy is providing an end-market for a novel agricultural crop in Central and Western New York.  ReEnergy owns and operates facilities that use woody biomass and wood residues to produce homegrown, renewable energy.

The ReEnergy contract has allowed farmers in the region to grow shrub willow on marginal and otherwise unutilized lands to provide additional farm income.  According to Boggess, the BCAP program provided the stability and wherewithal to farmers in the region to be able to grow the crop, knowing that ReEnergy would buy the material. Over the 11-year contract, ReEnergy has purchased more than 8,500 tons of shrub willow from 1,188 acres in three counties. At the ReEnergy Black River plant, which is inside Fort Drum, New York, 100 percent of the installation’s energy is being provided by ReEnergy from woody biomass materials such as shrub willow.

Scott Coye-Huhn discussed how his company, Alloterra, used a $5 million BCAP investment to spur $25 million in private market investment in rural Northeast Ohio.  Alloterra is the world’s first facility producing renewable pulp and packaging from a sterile grass, miscanthus. Miscanthus pulp can be used as an absorbent, pulp, molded fiber, nano-cellulose and other fiber products.  One example is Alloterra’s miscanthus-based food containers, which are part of the rapidly growing ‘green-ware’ market for domestically sourced biodegradable packaging and food service materials.  The company currently supports 125 farming family and landowners who are growing miscanthus on 4,000 acres of marginal land, as well as 70 full-time jobs with benefits, and plans to expand to 250 full time jobs.

Both Boggess and Coye-Huhn discussed how BCAP provides critical support to de-risk growing these novel crops for farmers. According to Coye-Huhn, BCAP is critical because “what we’re trying to do is commercialize plants that haven’t been commercial before. We’re trying to bring a new corn or soy into the market… The role of BCAP is to get that raw material supply chain going, and then the private market can come in with the investment and manufacturing will follow.” Therefore, continuing BCAP and providing robust funding to the program will help new crops enter the agricultural landscape, providing diversification to the agricultural system and help commercialize environmentally beneficial crops that can be grown on marginal lands.  

Renewable Energy for America Program (REAP, 9007)

Last but not least, Graham Christensen and James Duffy discussed the importance of the Renewable Energy for America Program (REAP).  REAP provides grants and loans to farmers, ranchers and small businesses to build renewable energy projects such as biomass, geothermal, hydropower, wind and solar, and invest in energy efficiency.  This incredibly popular program is continuously oversubscribed.

Christensen, a family farmer in Nebraska and President of GC ReVOLT, a distributed solar systems and alternative energy systems, discussed the difference REAP has made both to his own farming operation and local community. According to Christensen, “I am one of those farmers who is always looking to diversify operations… In just under three years, my company has developed 25 [solar] systems in Nebraska and Iowa.” 

The program provides energy diversification and financial returns to small businesses and family farmers, with benefits spilling over to the local community, including contractors, banks and others in the communities. Christensen stated that, “the interest level is really exploding” in REAP, not only because “farmers are moving in this direction, [but] it’s starting to make a lot of fiscal sense.” In Nebraska, a renewable solar project through REAP can be developed for 5 cents per kW hour, while a typical utility bill in Nebraska is about 10 cents per kW hour. Christensen’s company is also exploring community-scale installations, which can help local communities alleviate property tax pressure through new revenue streams such as land lease payments.

Jim Duffy of Nixon Peabody and board member of the Distributed Wind Energy Association discussed how small-scale distributed wind primarily serves rural areas, and are primarily made of domestically-sourced components. Duffy advocated for changes to REAP, to ensure that underutilized technologies have a level playing field within REAP.  The program currently favors lower cost technologies and not necessarily proven technologies that are less market mature. Additionally, Duffy advocated for considering ‘made in America’ as a priority within REAP.