Environmental and Energy Study Institute

September 2009

Policy Updates

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  Public Comments Due on EPA Renewable Fuel Standard Regulations

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  USDA Biomass Crop Assistance Program Gets Under Way

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  USDA Releases Draft Impact Statement for Biomass Crop Assistance Program

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  USDA Secretary Vilsack Announces “New Vision” for Nation’s Forests

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  DOE Awards $21 Million for Biomass Energy Supply Chain Projects

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  DOE Announces More than $300 Million for Alternative Fuel Stations and Vehicles

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  Thermal Energy and Efficiency Act Introduced

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  Bill Would Provide New Incentives to Convert from Oil Heat to Gas or Wood Pellets

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  Bill Introduced to Include Algae-Based Biofuels in Renewable Fuel Standard

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  Biodiesel Tax Incentives Bill Introduced

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  Massachusetts Announces Only Waste-Based Fuels Will Meet Requirements

On August 7, the Environmental Protection Agency (EPA) released peer reviews of its controversial life-cycle carbon analysis of biofuels. The peer reviews are part of the EPA’s ongoing public review of its draft regulations to implement the Renewable Fuel Standard (RFS) provisions of the Energy Independence and Security Act of 2007 (P.L. 110-140). The RFS requires:

1) the use of 11.1 billion gallons of biofuel in 2009, increasing to 36 billion gallons in 2022;

2) shifting away from corn starch-based ethanol (to be capped at 15 billion gallons annual production) to advanced and cellulosic biofuels; and

3) new biofuel producers to reduce significantly the total life-cycle greenhouse gas (GHG) emissions of biofuels compared to petroleum-based fuels.

In developing the rules, EPA was required to estimate the GHG emissions associated with land use changes around the world that may result indirectly from using crops such as corn or soybeans to produce biofuels. To do this, EPA had to answer questions such as: How much new land would likely be converted due to U.S. biofuels production, what kinds of land would likely be converted (pasture, grassland, or forest), and what amount of GHGs would be released to the atmosphere as a result of that land conversion? Recognizing the complexity of the issues, the EPA sought expert peer review of its models, methods and findings in four main areas:

a) “satellite imagery and emissions factor analysis”

b) “methods and approaches to account for life-cycle greenhouse gas emissions from biofuels over time”

c) “international greenhouse gas emissions and factors”

d) “life-cycle greenhouse gas emissions production due to increased biofuel production model linkage.”

The peer reviews are posted here(scroll down to "peer review"), and comments may be submitted here. The EPA will be accepting comments from the public on both the draft regulation and the peer reviews until September 25, 2009. To submit comments to EPA on the overall draft regulation, click here.

On August 31, U.S. Department of Agriculture (USDA) Secretary Tom Vilsack announced that the first matching payment had been made by the Farm Service Agency (FSA) under the Biomass Crop Assistance Program (BCAP). BCAP was authorized in the 2008 Farm Bill (P.L. 110-246, Section 9011) to provide financial assistance for the establishment, harvest, storage, and transport of biomass feedstocks for energy production. FSA will provide matching payments to qualified producers who sell materials to qualified biomass conversion facilities. Show Me Energy Cooperative of Missouri was the first to qualify for the FSA payment match. Show Me Energy makes fuel pellets from agricultural and forestry waste products, which are sold for a variety of heat and power applications, and it has the potential to expand to producing cellulosic biofuels in the future. It has over 500 biomass suppliers providing a variety of feedstocks, including switchgrass, saw dust, wood chips, and corn stover. The FSA began accepting applications for the BCAP program July 29.

On August 11, the U.S. Department of Agriculture (USDA) released a draft Environmental Impact Statement (EIS) for the Biomass Crop Assistance Program (BCAP). BCAP was authorized in the 2008 Farm Bill (P.L. 110-246, Section 9011) to provide financial assistance for the establishment, harvest, storage, and transport of biomass feedstocks for renewable energy production. BCAP is administered by the Farm Programs Division of the Farm Services Agency. The program has two main elements: the Project Area Program component supports the establishment and production of biomass crops for conversion to bioenergy in approved project areas, and the second component provides monetary assistance for the collection, harvesting, storage and transport of eligible materials for use in a biomass conversion facility.

The EIS assesses two potential courses of action: (1) examining limited development of new commercial biomass conversion facilities and newly established crops under a targeted implementation, and (2) a more intensive expansion of current biomass programs and other new programs to expand participation. Included in the EIS is a no action alternative, which demonstrates the impact of continued current programs and policy. The EIS evaluates in detail the impact of BCAP implementation on: socioeconomic and land use resources, biological resources, water quality, soil resources, air quality, and recreation.

To review and comment on the draft EIS, click here.

On August 14, U.S. Department of Agriculture (USDA) Secretary Tom Vilsack announced the administration’s new vision for the future of the nation’s forests, both National Forests and privately-owned, with regards to management, conservation and restoration.

"Declining forest health and the effects of our changing climate have resulted in an increasing number of catastrophic wildfires and insect outbreaks," said Vilsack. "It is time for a change in the way we view and manage America's forestlands with an eye towards the future. This will require a new approach that engages the American people and stakeholders in conserving and restoring both our National Forests and our privately-owned forests. It is essential that we reconnect Americans across the nation with the natural resources and landscapes that sustain us.

". . . Emerging markets for carbon and sustainable bioenergy will provide landowners with expanded economic incentives to maintain and restore forests. The Forest Service must play a significant role in the development of new markets and ensuring their integrity. Carbon and bioenergy aren't the only new opportunity for landowners. Markets for water can also provide landowners with incentives to restore watersheds and manage forests for clean and abundant water supplies. These markets can also create jobs in rural communities near forests.” To read the full speech, click here.

The U.S. Forest Service will provide economic incentives for landowners to maintain and restore forests while developing new markets to sustain economic viability of forest stewardship. Funding provided through the American Recovery and Reinvestment Act is helping to get this initiative off the ground. The USDA has already begun implementing 512 projects to help restore private, state and National forests. Of these, 37 projects are geared towards promoting the development of bioenergy from woody biomass to create a renewable energy infrastructure, new green jobs, and rural economic development.

On August 26, Vilsack awarded more than $4.2 million for woody biomass utilization projects. Seventeen small businesses and community groups were chosen to receive the grants in order to develop innovative woody biomass technology, as well as the incorporation of woody biomass as a renewable energy source. This investment comes as an installment of Vilsack’s new vision for the nation’s forests. Vilsack said "These grants will help restore our forests by reducing hazardous fuels, handling insect and disease conditions, and treating forests impacted by catastrophic weather while creating markets for small-diameter material and low-valued trees removed from these areas.”

On August 31, the U.S. Department of Energy (DOE) Secretary Steven Chu announced that $21 million will be awarded to five selected projects to develop supply systems that can handle high volumes of biomass for the production of low-carbon, next generation cellulosic biofuels. In order to transition from today’s primarily corn starch-based ethanol production to less greenhouse gas-intensive, cellulosic, ethanol production, new feedstocks, technologies, and supply chains must be developed on a large scale. The five projects chosen will demonstrate systems that can handle the entire feedstock production process, from harvesting to storing and transporting large amounts of biomass. Agricultural crop residues, energy crops, forestry residues, and urban wood wastes are among the eligible feedstocks.

On August 26, U.S. Department of Energy (DOE) Secretary Steven Chu announced that $300 million would be awarded for alternative fuel stations and vehicles with funding from the American Recovery and Reinvestment Act(ARRA). This investment is part of the Clean Cities Program, which is a government-industry partnership that works to reduce the petroleum consumption in the United States. Chu said "Advancing the number of alternative fuel and advanced technology vehicles on the road will increase our energy security, decrease our dependence on oil, and reduce pollution across the country." The DOE estimates that the funding will put over 9,000 fuel-efficient vehicles on the road, as well as create 542 alternative fuel (natural gas, propane, ethanol, biodiesel, etc.) refueling locations nationwide.

On August 4, the DOE announced plans to use $5.5 million in ARRA funding for ethanol blends infrastructure and outreach. $3.5 million will go to 15-30 cost-shared projects chosen by the DOE in order to expand blended fuel infrastructure to accommodate for flex fuel pumps, which are able to blend ethanol with gasoline at varying ratios, ranging between zero to 85 percent (E85). The other $2 million will go towards 5 national campaign projects to “raise public awareness of the benefits, safety, and use requirements of higher ethanol blends up to E85.” The DOE will be receiving project applications until October 4, 2009. To be considered visit FedConnect and search for reference number DE-FOA-0000125.

On August 5, Senators Bernie Sanders (I-VT) and Jeff Merkley (D-OR) introduced The Thermal Energy and Efficiency Act of 2009 (S.1621). The bill would set a goal of producing 20 percent or more of U.S. electric power from highly efficient combined heat and power and district energy systems by the year 2030, up from about nine percent today. The bill would allocate two percent of the revenues generated through a future cap and trade program, which is now being considered in separate climate legislation.

Much of the energy used today to produce electric power – 60 percent or more - is released as waste heat up the chimney. Combined heat and power (CHP) systems capture much of the wasted heat to provide space heating and cooling, hot water, and industrial process heat, in addition to electric power, achieving overall energy efficiencies of 60 percent or higher. Making electric power production much more energy efficient in this way will help reduce overall energy demand, significantly reduce greenhouse gas emissions, save consumers and taxpayers money over the long run, and create thousands of permanent jobs across the United States. Introducing the bill, Senator Sanders observed that CHP is “a fully developed technology, and there is nothing experimental about it.”

On August 6, Senators Olympia Snowe (R-ME) and Jeff Bingaman (D-NM) introduced the Cleaner, Secure, and Affordable Thermal Energy Act of 2009 (S. 1643). The proposed legislation would provide tax incentives to help families and businesses convert expensive oil heating systems to more efficient natural gas and wood pellet heating systems. The bill would provide a 30 percent tax credit up to $3,500. The bill was one of four bipartisan bills introduced by Snowe and Bingaman to improve energy efficiency, reduce oil dependence, and reduce greenhouse gas emissions.

On August 6, Representative Brian Bilbray (R-CA) and a bipartisan group of representatives introduced HR 3460, an amendment to the Clean Air Act to include algae as an eligible feedstock in the Renewable Fuel Standard (as amended by the Energy Independence and Security Act of 2007). The bill would also amend the Internal Revenue Code to include algae-based biofuels within the definition of “cellulosic biofuel.” For an algae-based biofuel to be eligible, the EPA must certify that its life-cycle greenhouse gas emissions are is at least sixty percent less than the baseline average for petroleum-based fuels.

On August 6, Senators Maria Cantwell (D-WA) and Charles Grassley (R-IA) introduced The Biodiesel Tax Incentive Reform and Extension Act of 2009 (S. 1589). The bill would change the current biodiesel incentive from a tax credit for fuel blenders to a tax credit for fuel producers. Biodiesel producers would receive a $1 per gallon credit. The bill would also provide a $1 per gallon tax credit for the production of renewable diesel that complies with the Clean Air Act Renewable Fuel Standard. The tax credits would be extended for a five-year period. For producers with a capacity of less than 60 million gallons per year, the credit would be increased from $1.00 to $1.10 for the first 15 million gallons of biodiesel produced.

On August 18, the Massachusetts Department of Energy Resources (DOER) announced that only waste-based biofuels will qualify toward fulfilling its biofuel requirements “until further notice.” Biofuels made from wastes will meet the 50 percent life cycle greenhouse gas reduction threshold in Massachusetts law. The Massachusetts Advanced Biofuels Task Force estimates the advanced biofuels industry could contribute between $280 million and $1 billion per year to the Massachusetts economy by the year 2025. The announcement, however, raised significant concerns in the biofuels industry because it excludes using other renewable and sustainable biomass feedstocks, such as agricultural crop residues and algae. Brent Erickson, executive vice president of Biotechnology Industry Organization’s (BIO) Industrial and Environmental Section said, “By permitting only biofuels made from waste feedstocks under its mandate, Massachusetts is preventing its own biotech companies from deploying their advanced technology to turn other sources of renewable biomass into advanced biofuels.”