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September 8, 2017
On September 7, Senators Franken (D-MN), Durbin (D-IL) and Baldwin (D-WI), introduced the “Agriculture Energy Programs Reauthorization Act of 2017” (S.1776), more commonly known as the Energy Title. The Energy Title, Title IX of the Farm Bill, represents less than 1 percent of Farm Bill spending but has an outsized impact on renewable energy and fuels and biobased product development and use in rural America. S.1776 seeks to reauthorize the title, return funding to 2008 Farm Bill levels, and broadens the focus of the biobased programs beyond biofuels, to the production of high value biobased chemicals and products.
The Energy Title was originally enshrined in the 2002 Farm Bill as a way to reduce energy costs in rural America, increase the use and production of renewable energy in rural and farming communities, and to spur the development and innovation of a domestic biobased economy – all as a way to spur rural development, energy security and a way to reduce emissions. Perhaps best known for the Rural Energy for America Program (REAP), the Energy Title contains nine different programs. Below, we outline some of the key changes to the Energy Title programs found in S.1776.
Section 9003: Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program
Section 9003 provides loan guarantees for the development of facilities that produce advanced biofuels, renewable chemicals and biobased products. S. 1776 would remove the requirement that facilities produce a biofuel product. This would open the program up to producers of biobased chemicals, as an example.
Section 9007: Rural Energy for America (REAP)
REAP provides grants and loan guarantees to farmers, ranchers and small businesses to install renewable energy and energy efficiency programs. Perhaps the most popular program, REAP continues to be oversubscribed, and S.1776 tries to address this by increasing funding threefold, to $150 million in mandatory funding per year.
Eligible technologies include wind, solar, renewable biomass, ocean, geothermal, hydroelectric and energy efficiency technology. The bill also expands allowable technologies to include electricity distribution components and energy storage; blender pumps (for biofuels utilization) are still excluded from the program.
Additionally, the bill seeks to place an initial 30 percent cap on the funding available to any one technology. Currently, the program is dominated by energy efficiency and solar energy projects. By placing a cap on each technology, the sponsors hope to inject further investments into currently underutilized technologies, such as biogas digesters or geothermal heat pumps.
Section 9010: Biomass Crop Assistance Program (BCAP) – Renamed the Biofuels and Biobased Product Feedstock and Forest Protection Program
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. Due to a combination of factors, including high up-front costs and few end-markets for cellulosic materials, most of the program has been directed towards the latter purpose -- harvesting residues, particularly woody biomass from hazardous fuels reduction projects.
In recognition of the different nature of the two programs under BCAP, S.1776 essentially splits the program into two, the first being an annual and establishment payments program, the second being a matching payments program, primarily directed at forest fire hazard reduction. The annual establishment program would receive $20 million per year, and the matching payments program would receive $50 million per year. Hopefully, by reserving a portion of funding solely for establishment of cellulosic crops, the program can function as originally envisioned, and be a driver for the use of environmentally beneficial biomass crops. Additionally, algae and animal waste and byproducts would now be considered eligible feedstocks.
The matching payments program would also have several new criteria when considering hazardous fuels reduction projects. It would prioritize projects that “are at risk from wildfire; or in need of restoration; and which will provide -- the greatest benefit to the protection of human life and structures in the wildland-urban interface; and the greatest protection of municipal water supplies.” Additionally, the bill stipulates that 30 percent of woody biomass material must be left uncollected and unharvested for environmental benefit.
It is expected that the proposed changes to the Energy Title will be discussed in conjunction with Rural Development programs at an upcoming Agriculture Committee hearing.
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