Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Tuesday 02/11/14

Energy Programs in the New Farm Bill

It's no longer called burning wood. It's called 'utilizing a biopreferred renewable resource' that is eligible for federal government buying preferences.

Rural renewable energy programs under the Agricultural Act of 2014 had the potential to dwindle with just $84 million in mandatory spending through 2018. Also, the House version of the farm bill didn't boost mandatory spending for any energy programs.

The final legislation, however, injects significant spending increase to several programs through the 2018 fiscal year. Renewable energy programs are expected now to cost $625 million over the five-year life of the legislation. That translates into a $541 million mandatory increase on those programs.

Rural Energy for America Program (REAP): The largest program in the Energy Title gets $185 million more in spending over five years (a 10-year CBO score of $435 million) for grants and loans for energy efficiency projects and renewable energy infrastructure. REAP funds will have three levels of spending, including projects costing $80,000 or less, up to $200,000, and projects larger than $200,000.

While asking USDA to choose a diverse mix of projects to fund, the farm-bill managers stopped REAP from being used for ethanol blender pumps.

Noninsured Crop Assistance Program (NAP): NAP covers crops that don't have other insurance option. The Advanced Biofuels Association noted that NAP coverage in the Miscellaneous Title is extended to crops such as sweet sorghum, biomass sorghum. The bill allows coverage sweet sorghum and biomass sorghum used for biofuels, renewable electricity or other biobased products. USDA can also waive fees for "beginning, limited resource and socially disadvantaged farmers" who already pay 50% less than required for additional NAP coverage. NAP now is projected to cost $337 million over 10 years, a spending boost of $226 million compared to its old baseline.

BioPreferred Program and Federal Government Procurement Preference Program: Both are reauthorized. The report also allows forest projects to be eligible for those programs. Lawmakers stated in the managers' statements that they "believe that most forest products, including products with recovered fiber content, apply innovative approaches in the growing, harvesting, sourcing, procuring, and manufacture of the product."

Biorefinery Assistance Program: Extended, but grants are eliminated. The program loans are expanded to include retrofitting facilities with newer technology. The program will get $100 million in mandatory funds for this year, but that is cut to $50 million for 2015 and 2016. Appropriators also could boost spending by up to $75 million annually.

Repowering Assistance Program: Also extended with up to $12 million set aside for the program.

Bioenergy Program for Advanced Biofuels: Includes $15 million in mandatory funds throughout the farm bill.

Biomass Research and Development (BRDI): This program helps look for ways of reducing the costs of turning biomass into fuel. Extended with $3 million in mandatory funds annually and discretionary options of up to $20 million per year as well.

Biomass Crop Assistance Program (BCAP): $25 million in mandatory funds annually. Collection, harvest, storage and transportation payments are available for two years mainly for technical assistance. Residue from commodity program payments may be eligible for BCAP but not the whole grains. One-time payments to help establish BCAP crops are limited to $500 an acre unless the farmer qualifies as socially disadvantaged. Then payments can go as high as $750 an acre.

Feedstock Flexibility Program for Bioenergy Producers also is extended.

Energy Efficiency Report: The bill requires USDA to submit a report within six months explaining its own energy use and energy-efficiency projects.

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Posted at 4:34PM CST 02/11/14 by Chris Clayton
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