Growing Jobs and Rural Economies: The Farm Bill’s Energy Title

Since their inception in the 2002 Farm Bill, Energy Title (Title IX) programs have helped farmers, ranchers, small businesses, and rural communities generate thousands of jobs and millions in economic development. The sectors impacted by the Energy Title range from renewable energy—including wind, solar, geothermal, biogas, and advanced biofuels—as well as energy efficiency and biobased chemicals and products. The Farm Bill Energy Title programs have played an important role in the greater diversification of rural economies across the country. 

The Environmental and Energy Study Institute (EESI) and the Agriculture Energy Coalition held a briefing examining the outsized positive impact on rural America of the investments made through the Energy Title and how to make its suite of innovative programs even stronger.

Highlights

John Sagrati, Biomaterials Business Development Manager, DuPont Industrial Biosciences

• Within the Farm Bill's Energy Title, there is a biobased markets program (Section 9002), which provides value for commodities and novel end-uses.
• A biobased product is anything derived from plants or other renewable materials, providing an alternative to petroleum.
• Part of the Biopreferred program, the USDA Certified Biobased Product label is a certification by the U.S Department of Agriculture that confirms that a product is bio-based.
• DuPont has made a commitment to look for greener and better solutions, and derive polymers from agricultural products.
• DuPont envisages three pillars for success in biomaterials:
  1. Innovative science to produce high performance materials, providing an opportunity to make superior products
  2. Scalable supply: a great product needs to be affordable
  3. Renewable sourcing: responsible materials
• At the core of DuPont's renewable business is alcohol 1,3 Propanediol. It's a responsible material: environmentally responsible but also socially responsible (the resulting products are not harmful to human health or to the environment, and they are sourced from geopolitically stable countries).
• Sagrati emphasized that the development and marketing of these new bio-based specialty products is just beginning. He said these new renewable chemicals are not just replacements for petro-chemicals, they are actually superior products in their performance abilities.

John Shaw, President, Itaconix

• Itaconix, founded in 2008, is a world leader in polymerizing renewable itaconic acid.
• In 2009, the federal government put import tariffs on citric acid (from Canada and China), so citric acid’s prices went up and Cargill (the domestic supplier) decided not to make itaconic acid anymore. That was a bad day in the development of Itaconix, limiting its product development. Itaconix had to change product strategy, focusing on smaller applications.
• Itaconix is seeking to recover from the setback by producing its own itaconic acid from domestic sources. But to do so, they need financial support during the development process. The Farm Bill's Energy Title can provide this support.
• There are challenges that make it difficult for the private sector to bear the entire burden of developing novel chemicals from renewable sources:
  • Demonstrating the value of new materials in end-product formulations can take many years.
  • Setting up a reliable supply and putting a plant in place are both very capital intensive.
• Private funding for high-risk, long-term endeavors like this is difficult to get, which is why expanding the Section 9003 program from biofuels to renewable chemicals is critical to Itaconix.

Sarah Boggess, Director of Communications and Governmental Affairs, ReEnergy Holdings.

• ReEnergy owns and operates biomass-to-electricity plants in the Northeast.
• One of ReEnergy’s projects was awarded a Biomass Crop Assistance Program (BCAP) grant in 2012 by USDA to support the commercialization of shrub willow in central and northern New York.
• The project was a partnership between ReEnergy and the College of Environmental Sciences and Forestry (State University of New York).
• ReEnergy committed to purchasing all of the willow over an 11-year period, thus providing an important end market for farmers of this new crop.
• Currently, 1,188 acres in three counties in New York are enrolled and more than 8,500 tons of willow were delivered to ReEnergy from 2013 through Feb. 2018.
• The Biomass Crop Assistance Program has many benefits:
  • Helps growers overcome barriers of high upfront costs and delayed payments until the crop is established
  • Creates stable, long-term end markets
  • Advances research and deployment
  • Provides fuel diversity benefits
  • Supports jobs and rural development (45 – 59 jobs for every 10,000 acres)
  • Creates environmental benefits, including wildlife habitat
  • Carbon-neutral
• Additionally, BCAP can really be helpful for the West, where people are struggling with forest fire risk (particularly in California). BCAP enables public/private partnerships to remove dead and dying trees (also known as hazardous fuels) and put them to use as fuel to generate power.

Scott Coye-Huhn, Co-Founder and Senior Vice President, Aloterra

• BCAP can help commercialize new crops, like Miscanthus (a tall grass), which can help diversify the agricultural system and add additional revenue streams to farm operations.
• BCAP provides a subsidy to farmers to plant the crop in question; it provides a rent payment to the farmers while they are waiting for the crop to mature; and it provides a matching payment for the crop after it is harvested to subsidize the harvesting cost.
• This is important because Aloterra’s goal is to commercialize plants that have not been commercially marketed before. Financial support is necessary until the scale is reached to become competitive.
• Aloterra is focused on Miscanthus production. This is a specialty fiber crop that can be grown on marginal land and provide valuable products once it is established. There is the potential for Miscanthus to be grown on 40 million acres.
• The cost of the equipment for this special plant is around $1,500 per acre, which is a complete non-starter in farming. The BCAP program allowed Aloterra to decrease that cost to about $500 per acre.
• Time is a big issue. Even if the crop is subsidized by BCAP, farmers still need to wait two to five years for it to mature, which is why the rent payment is so critical.
• Critical mass needs to be reached: private markets needs reliable, stable, and consistent raw material supply chains. It takes time and money to create those.
• Miscanthus for foodservice packaging is an untapped market domestically. Most of the green and sustainable foodservice packaging in the United States comes from Asia, so there is a great market opportunity for domestic molded fiber packaging.
• Coye-Huhn emphasized that Miscanthus will undoubtedly be in hundreds of products because of its useful properties as a specialty fiber.

Graham Christensen, Nebraska Farmer, President of GC Resolve

• The Energy Title is good for small business people and for farmers who are looking to diversify their operations.
• The Rural Energy for America Program (REAP), for example, provides grants & loan guarantees to farmers, ranchers, and rural small businesses. These grants support:
  • Cost-sharing for the installation of a variety of renewable energy systems (including biomass, geothermal, hydro, wind, and solar).
  • Energy efficiency improvements (HVAC, lighting, insulation, refrigeration, etc).
• Christensen used REAP to help develop GC Resolve's Brummond 10 kW Farm Solar System. The program financed most of the upfront cost (the purchase of solar power systems entails high upfront costs).
• These grants (of up to 25 percent of project costs) help small business people alleviate some of their financial pressures.
• REAP is important for driving vital new rural revenues, opening up new job opportunities in rural America

James Duffy, Partner, Nixon Peabody on behalf of the Distributed Wind Energy Association (DWEA)

• Distributed wind refers to small, on-site installations of wind turbines (residential, school, commercial, remote, military, etc.)
• Distributed wind has many benefits:
  • Helps economically distressed areas (primarily in rural areas).
  • Contributes to the renaissance in American manufacturing (small/medium turbines have more than 90 percent domestic content).
  • Expands exports.
• DWEA's federal policy priorities in 2018 are:
  • The extension of REAP funding to provide balance for “underserved," emerging technologies (such as distributed wind).
  • Providing tax policy parity for distributed wind compared to solar, eliminating the 100 kW cap and providing a permanent 10 percent investment tax credit (ITC).
• DWEA supports full funding for REAP, but with reforms to address the technology diversity imbalances, for instance:
  • Excluding small systems from the need to submit environmental documentation (such an exclusion is already available for solar systems).
  • “Made in America” consideration in selections

Several Energy Title programs were explored. For example, the Rural Energy for America (REAP) program allows producers and small businesses to save money on energy costs and invest further in their businesses and communities. Over 13,000 projects in every state have received REAP awards since 2009, and the program has leveraged an additional $5 billion in private investments. The Biobased Markets Program (BioPreferred) has listed 15,000 industrial biobased products as eligible for federal purchasing preferences. BCAP helps develop new energy crops and reduce hazardous fuel loads in the nation’s forests. And the Biorefinery Assistance Program helps build cutting-edge domestic manufacturing capabilities.

While the Energy Title represents just one-tenth of one percent of the Farm Bill’s overall cost, the programs have been a major catalyst for rural economic development and America’s energy dominance. A recent report from the USDA notes that the bioeconomy’s share of the domestic economy is growing. The Biotechnology Innovation Organization (BIO) estimates that the U.S. bioeconomy is worth an estimated $205 billion, and creates 1.6 million direct jobs.