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June 8, 2018
On Friday, June 8, the Senate Agriculture Committee released the Agricultural Improvement Act of 2018. In contrast to the GOP-only bill that has advanced in the House, the bipartisan Senate farm bill refrains from eliminating the Energy Title, but provides mandatory funding to only one program, Renewable Energy for America Program (REAP). In addition to changes at the program level, eligible technologies under the Energy Title are expanded, to include renewable chemicals, intermediate ingredients or feedstocks of renewable biomass that are used to create biofuels, renewable chemicals, or biobased products. This reflects the diversification of the bioeconomy that has occurred since the 2014 farm bill.
Since its 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 of dollars 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 creating greater diversification of rural economies across the country. The following Energy Title programs are reauthorized over the next five years:
Additionally, the Repowering Assistance Program (Sec. 9004) is repealed and the Biomass Research and Development Initiative (BRDI, Sec. 9008), is moved to the Research Title (Title III). Below are some key changes the Senate farm bill would make to the Energy Title.
Biobased Markets Program (9002)
The Biobased Markets Program helps spur the creation of biobased products, which are defined as products containing plants or other renewable materials, and can be derived from agricultural or forest products, including products like lubricants, detergents, plastics, fabrics and more. The program contains both a mandatory federal procurement program, and a voluntary label that is consumer-facing.
The Senate bill would bring further clarity on which renewable chemicals would be able to receive the Biobased Products label issued by USDA; renewable chemicals are a quickly growing area of the bioeconomy. Additionally, the bill would require USDA to develop North American Industry Classification System Codes (NAICs) for renewable chemical and biobased product manufacturers. Since these products don’t yet have NAICs, it has been quite difficult to track their use and uptake in the broader economy.
Another issue has been on the federal procurement side. While federal offices are required to procure biobased products when feasible and cost-effective, knowledge of these products is still lacking within the federal procurement community. The bill would require USDA to conduct education and outreach related to both federal procurement and the biobased labeling program. The bill would also allow USDA to significantly streamline the process required to use the ‘USDA Certified Biobased Product’ label. As the biobased product sector has grown, USDA has had difficulty keeping up with the growing demand for product labeling.
Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance (9003)
Section 9003 provides loan guarantees for the development of facilities that produce advanced biofuels, renewable chemicals and biobased products. In the 2014 farm bill, the program was expanded to include renewable chemical production. However, currently, the program requires that a qualifying facility produce renewable biofuels, but this is locking out a huge segment of the biobased economy. Under the Senate farm bill, a facility may now produce any one of, or a combination of, advanced biofuels, renewable chemicals, or biobased products. At a recent EESI briefing on the Energy Title, it was discussed how this change could benefit small companies who want to produce renewable chemicals for various end-uses. Demonstrating the market value of these new chemicals can take years, therefore, Section 9003 could provide important early market support.
Biomass Crop Assistance Program (9011)
The Biomass Crop Assistance Program (BCAP) is essentially two programs: one provides cost-shares of up to 50 percent of costs for the establishment of cellulosic crops, such as perennial grasses and short-rotation woody trees; the second provides matching payments for the harvesting of eligible materials, such as forestry and agricultural residues. In the Senate farm bill, algae is added as an eligible crop, and it makes hazardous woody fuel reduction an eligible activity for BCAP.
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