On Thursday, September 28, the Senate Committee on Agriculture, Nutrition, and Forestry concluded its series of hearings, “Perspectives for the 2018 Farm Bill,” with a hearing focused on Energy and Rural Development programs. While these programs might be on the chopping block in the President’s 2018 Budget Proposal, which would cut funding to the U.S. Department of Agriculture (USDA) by 21 percent, they are broadly supported by the members of the Senate Agriculture Committee.
With a wide-ranging hearing that covered many critical aspects of rural development, including broadband, infrastructure and the devastating opioid crisis, witnesses in the hearing also advocated for the protection of Energy Title programs (Title IX of the Farm Bill) that support renewable energy production on farms. These programs include the Renewable Energy for America Program (REAP), which provides grants and loans to farmers to build renewable energy projects, and the Biomass Crop Assistance Program (BCAP), which supports farmers in converting their crops to biofuels. While they may have had a friendly ear with the members of the Senate Agriculture committee, the Energy Title’s fate among the larger debate around the Farm Bill is less certain. Hopefully, Energy Title programs will be spared even further cuts if they can prove their worth as drivers of economic development, in addition to lowering energy costs and carbon emissions in rural communities.
Mark Olinyk, President of Harvest Energy Solutions, a solar developer that serves farmers and other rural businesses, testified to the popularity and impact of REAP. Olinyk said that many of his sales to farmers are contingent on REAP grants, since renewables installations can have high up-front costs. A typical solar payback period is 7 years, but with REAP funding, the average payback period is just 4 years, which hastens the return on investment for farmers. Additionally, the electricity savings from renewable systems are meaningful to farmers who survive on thin profit margins. Demand for REAP is high; there are currently three times more REAP applications than available funding. REAP’s annual budget, passed in the last Farm Bill, is $50 million in mandatory funding and $20 million in discretionary funding. However, REAP funding has been cut by Congressional appropriators most years, although not as deeply as some of the other Title IX programs.
The hearing also addressed Title IX biomass programs, such as BCAP and the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program. Dr. Brent Shanks, Director of the NSF Engineering Research Center for Biorenewable Chemicals at Iowa State, advocated for continued funding for these programs on the condition of reform. Dr. Shanks argued that current policies are too narrowly focused on biofuels, which must overcome significant barriers in technology, infrastructure, and cost before achieving market viability. With low oil prices, development of advanced biofuels have further languished. Shanks recommended that the objectives of Title IX be expanded to promote not only biofuels, but biochemicals and other bio-based products as well.
Dr. Shanks argued that development in these related industries is more attainable and can create an achievable pathway to advanced biofuel production. He testified, “We have a wonderful objective to create advanced biofuels, but we also have the ability to create opportunities, success, on the way to that ultimate success.” For example, there is big potential in the $200 billion United States chemical market, which is only slightly smaller than the fuel market. Biochemicals currently make up less than 1 percent of the market. Shanks estimates that 10 percent market share is a reasonable goal for expanding the biochemical industry within the next decade.
Senator Franken’s (D-MN) marker bill for the Energy Title (S.1776) would expand the definition of eligible projects in the energy title beyond biofuels to include biobased products and chemicals. This language was incorporated into some programs in the 2014 Farm Bill, but S.1776 would go further. Shanks drove home the point that the Energy Title is all about driving rural development, as well, stating, “An important aspect of a strategy for farm security and rural investment is making sure we have products that are valuable. We think that biomass-derived products are tremendously important… How do we create value from the biomass?”
Author: Beatrix Scolari
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