Vilsack Announces Range of Efforts to Incentivize Biofuels

October 22, 2010 Bookmark and Share

USDA will move quickly on a series of initiatives to help incentivize biofuels production and, as a result, bolster rural economies, Secretary of Agriculture Tom Vilsack said Thursday in much-anticipated speech at the National Press Club in Washington.

The Secretary’s speech and press events following it were wide-ranging, touching on new and existing efforts to increase demand; ways the Department will bolster research and biorefinery development; and the implementation of a key program to help develop new and varied biofuels feedstocks.

On the demand side of the equation, Vilsack called on Congress to extend ethanol tax credits that expire at the end of the year and renew a biodiesel tax credit that expired at the end of 2009. Further, he said he has instructed the Rural Development mission area within USDA to provide financial assistance, using existing resources, to help install 10,000 blender pumps and storage systems over the next five years.

He also announced a five-year agreement with the Federal Aviation Administration (FAA) to develop aviation fuel from forest and crop residues and other feedstocks, similar to a program USDA is already working on in conjunction with the Department of the Navy.

He also described a new biofuels report prepared by USDA’s Economic Research Service (ERS) that concludes replacing more petroleum with cost-competitive domestic biofuels reduces crude oil imports, thereby lowering prices for energy and benefiting the U.S. economy.

For longer-term development of the industry, he announced the creation of five regional Biomass Research Centers to coordinate the science and technology needed to incorporate feedstock production into existing crop systems and assist in the development of viable biorefineries.

This came with a directive to Rural Development to announce in the next 60 days funding under the current Biorefinery Assistance Program for the construction of such a facility in each of the five research regions.

The announcement that will most directly affect feedstock production – and which producer groups like NAWG feel underpins many of the other initiatives Vilsack touched on – is the imminent publication of a final rule to implement the Biomass Crop Assistance Program (BCAP) as authorized in the 2008 Farm Bill.

The program has been operating as a pilot, pending publication of the final rule. Vilsack said the final rule will reflect information gathered from more than 24,000 comments and the experience gained with the program while part of it was up and running in 2009.

BCAP seeks to solve the problem of which develops first, a feedstock base or a refinery to purchase it. It provides assistance for the establishment and production of eligible renewable biomass crops within specified project areas.

Producers who enter into BCAP contracts may receive payments of up to 75 percent of the cost of establishing eligible perennial crops and additional payments for annual or woody perennial crops.

BCAP also assists agricultural and forest landowners and operators by providing matching payments for the transportation of eligible biomass to eligible facilities.

NAWG and other agricultural groups welcomed Vilsack’s announcements and applauded USDA’s renewed zeal in the biofuels arena.

NAWG has long been a supporter of policies, including the RFS-2, which will incentivize the commercial production of cellulosic ethanol, for which wheat straw and biomass will be feedstocks in many areas. NAWG will continue to work with coalition partners and state associations to follow these programs as they develop and provide necessary guidance to USDA about wheat and biomass priorities.

For more industry reactions, please see this wrap-up at the Domestic Fuels blog, http://domesticfuel.com/2010/10/21/usda-speaks-ethanol-industry-reacts/.

For much more about the announcements this week please visit http://www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&contentid=2010/10/0546.xml.