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February 17, 2017
The Farm Bill’s Energy Title provides loans and grants to farmers, ranchers and small businesses to encourage investment in renewable energy, energy efficiency and the production of renewable bioproducts such as fuels and chemicals. Despite its strong bipartisan roots in the 2002 Farm Bill, the Energy Title has long had a target on its back. When the 2014 Farm Bill was signed into law, it contained $694 million in mandatory funding for the Energy Title. Since then, appropriators and special interest groups have successfully sought to cut the Energy Title, despite its importance to rural America.
Lawmakers, Groups Seek Cuts to the Energy Title
Since its passage, the Energy Title has faced cuts through the appropriations process, with the House of Representatives cutting mandatory funding through an obscure, but increasingly common practice, Changes in Mandatory Spending (CHIMPs). CHIMPs is a way for appropriators to change policy to previously authorized legislation. The CHIMPs in the Farm Bill have undermined the bipartisan agreements made through the 2014 Farm Bill.
For example, the Biomass Crop Assistance Program (BCAP), which is supposed to provide funding to farmers and forest landowners to grow and harvest biomass crops, has mandatory funding set at $25 million per year through the Farm Bill, but received only $3 million in FY2017. House appropriators have also routinely sought to cut both the popular Renewable Energy for America Program (REAP), which assists in renewable energy and energy efficiency installations, as well as the Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance Program.
Looking forward to the 2018 Farm Bill, conservative groups, such as the Heritage Foundation, have suggested cutting all biomass-related programs in the Energy Title, calling BCAP a federal “handout” to farmers. According to the Heritage Foundation, “If biofuels manage to succeed as a competitive source of transportation fuel, it will not be as a result of any taxpayer-funded handout or government-imposed mandate. Whether the industry flourishes or fails is for private actors, using their own resources, to determine. This holds true not just for biofuels, but for all energy resources and technologies.” The Heritage Foundation has supported the continuation of many decades-long subsidies and tax breaks to the oil and gas industry.
More recently the Heritage Foundation has called for the termination of any federal funding for “projects to commercialize wind, solar, nuclear, and natural gas technologies; biofuels, carbon capture and sequestration, integrated gasification combined cycle (IGCC), and advanced manufacturing programs,” and “Implementation and enforcement of the Renewable Fuel Standard.”
Energy Title Programs Lacking Budget Baseline
In the 2014 Farm Bill, there are two types of funded programs – those with a budget baseline, and those without. Those programs that have a baseline are assumed to continue past 2018. As lawmakers propose changes to the Farm Bill, baselines will be used as a benchmarking tool. Any proposed program without a baseline will count against the total amount of funding available for the overall Farm Bill. Non-baseline programs are either those that have less than $50 million in mandatory funding in the last year of the Farm Bill, or were established after 1997.
According to the Congressional Budget Office, there are 37 programs across nine Farm Bill titles, totaling $2.607 billion, that do not have baselines. It includes the majority of the Energy Title (REAP being the exception), several conservation programs, several research and pilot programs and programs for disadvantaged and veteran farmers. Without a baseline, lawmakers will have to propose new mandatory funding levels for these programs and potential offsets from other Farm Bill programs.
With reports that farm income is flat or declining, it may be appealing to some to cut non-commodity programs in the 2018 Farm Bill. However, programs like the Energy Title provide resiliency to producers by helping them cut energy costs, tap into new markets, and create new, renewable products. Additionally, according to the USDA, the U.S. bioeconomy is responsible for 4 million jobs and contributes $369 billion to the U.S. economy each year. For each direct job created, 1.64 jobs were also created in other industries.
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