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July 25, 2014
At the July 24 Rural Opportunity Investment Conference (ROI), the White House Rural Council announced a new venture which will allow pension funds and large investors to invest in rural development projects. So far, the Rural Infrastructure Opportunity Fund has $10 billion committed by CoBank, an agricultural cooperative bank. That same day, a coalition of nine Democratic Senators urged Senior White House advisor John Podesta to revisit the proposed cuts to the Renewable Fuel Standard (RFS), particularly the proposed cut to the 2014 volume of biodiesel, an advanced biofuel sourced from waste fats and oils.
The money for the Rural Infrastructure Opportunity fund is backed by the Farm Credit System, a group of cooperative banks that provide credit to farmers and related industries. Funds will be managed by an investment firm, Capitol Peak Asset Management, and USDA along with other federal agencies will assist in identifying investment projects. With the Federal Reserve interest rates hovering around 1 percent and lower, institutional investors are looking at investments that can provide higher yields. According to the New York Times, investment in non-traditional investments, such as hedge funds, is at an all time high. Pension managers, in particular, are looking towards rural investments as providing a high return on capital, given the currently high demand for capital from rural communities. Investments covered by the new public-private partnership may include hospitals, schools, as well as infrastructure projects such as water and wastewater systems, energy, broadband expansion, and local and regional food systems.
Secretary Vilsack noted the untapped potential investments available in rural areas, stating, “Meeting the world's needs for food and farm products, as well as the growing demand in areas like renewable energy, local food, and the bioeconomy will require continued investment in rural places … If the White House Rural Council can help facilitate even a small portion of the enormous amount of available investment capital into rural places, we can grow key industries and create jobs in rural and urban areas from coast to coast." At the same time, White House support of the RFS has been uneven – even though the RFS is a significant driver of investment in rural areas. Not only has renewable biofuel reduced the U.S. dependence on petroleum -- a cause of anthropogenic climate change, trade deficits, and security concerns -- it has reinvigorated rural economies and is a significant job creator.
While the final decision on the 2014 volumetric requirements for the RFS is expected imminently, the administration’s proposed reduction has already had a chilling effect on investors, especially in the advanced cellulosic industry, which is only now beginning to realize commercial-scale production. The EPA has continually evoked the practical challenges of getting more than 10 percent ethanol into fuel supplies as a reason for the proposed reduction. However, EPA has the authority to solve these infrastructure challenges: blender pumps, renewed federal support for FlexFuel Vehicles and consumer education would easily push past the E10 blend wall. Plus, EPA has certified E15 for use in vehicles manufactured from 2001 through present.
On Thursday, Senators Franken (D-MN), Heitkamp (D-ND), Klobuchar (D-MN), Harkin (D-IA), Murray (D-WA), Durbin (D-IL), Stabenow (D-MI), Cantwell (D-WA), Whitehouse (D-RI), and Donnelly (D-IN) met with Podesta to urge the administration to reconsider the proposed reduction to biodiesel, a commercially successful advanced biofuel. Senator Franken said, “Homegrown renewable energy, like biofuels, not only spurs job growth and economic development in Minnesota, but it also strengthens our national energy security by cutting our reliance on foreign oil … That’s why now is exactly the wrong time for the EPA to try to weaken the Renewable Fuel Standard and allow big oil companies to blend less biodiesel and other renewables into our nation’s gas supply… We need to renew our commitment to renewables, and we can start by reversing this shortsighted proposal.”
For more information see:
White House to Begin $10 Billion Rural Investment Fund, NY Times
Sen. Franken Leads Senate Meeting to Press White House on Keeping Renewable Fuel Standard & Biodiesel Industry Strong, Al Franken
Increasing Investment in Rural America, the White House
White House Rural Council Announces $10 Billion Private Investment Fund to Finance Job-Creating Infrastructure Projects in Rural America, USDA
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