Some Good News for a Change: Why The Farm Bill Is a Big Win for Biofuels and Biorefineries

By Brent Erickson, Executive VP, Head, Industrial & Environmental Section, BIO

It has been the winter of discontent for the biofuels industry, given EPA’s proposed RVO numbers for the 2014 Renewable Fuel Standards (RFS). But in the midst of the winter chill the sun broke through the clouds and providence shined down on the biorefining industry as Congress passed the long-awaited Farm Bill. The true good news is that the Senate conferees prevailed in getting $881 million in mandatory funding over the next ten years to renewable energy and biofuels initiatives and extending incentives for the first time to manufacturers that use industrial biotech to make renewable chemicals.

President Obama chose a fitting place to sign the 2014 Farm Bill. It was in Lansing back in February 2012 that Michigan Sen. Debbie Stabenow launched the “Grow It Here, Make It Here” initiative, which aimed to revitalize Energy Title programs. BIO helped found the Ag Energy Coalition to advocate for the Energy Title. Then BIO and its member companies stood with the Senator as she rolled out this initiative and brought together a coalition of farm energy groups to support her efforts to win reauthorization, extension and robust funding of the energy title programs. It was a long and sometimes difficult road, but the incorporation of the initiative into this year’s Farm Bill sets the stage for continued success of the programs and growth of the biorefinery and biobased manufacturing sector over the next five years.

The core farm energy programs have already built a foundational record of success, helping rural communities boost economic growth and create jobs. The Biomass Crop Assistance Program (BCAP) supports more than 1,100 growers in 188 counties across 12 states who are converting 53,000 underutilized acres to energy crops. USDA estimates that the program’s current projects generate more than 3,400 jobs. BCAP has been the only federal program targeted at the deployment of next generation crops for the commercialization of cellulosic biofuels and renewable chemicals. But now, the Farm Bill provides explicit direction to USDA to study insurance options for purpose grown energy crops.

The Biorefinery Assistance Program is already helping advanced biofuel projects secure more than $450 million in private capital. Now, companies that manufacture biobased products from renewable chemical building blocks can also compete for loan guarantees under the Biorefinery Assistance Program.

Including renewable chemicals in the Energy Title programs is an important and long-overdue change. In the immediate term, this allows companies that produce a monomer, polymer, plastic, formulated product, or chemical substance from renewable biomass to participate in the programs. In the long term, it also establishes important policy status for renewable chemical technology, which will help the industry’s efforts to achieve parity in other policies. Renewable chemical technologies create new manufacturing opportunities and jobs. If U.S. companies can capture a percentage of the $2.4 trillion worldwide clean energy market, they will create hundreds of thousands of jobs here at home. They will also improve our competitiveness and balance of trade.

The Biobased Markets Program has identified more than 25,000 biobased products in 100 separate categories that qualify for preferred federal purchasing. More than 1,000 of these products carry USDA’s BioPreferred^TM label. There are more than 3,000 U.S. companies that make such products – with significant concentrations in California, Illinois, Texas, Florida and New York – and they employ nearly 100,000 people.

And that was the goal of Senator Stabenow’s “Grow It Here, Make It Here” initiative – to combine the productivity of the U.S. agricultural sector with the know-how of the manufacturing sector by leveraging new technology, particularly biotechnology. Strengthening the Biobased Markets Program and expanding the Biorefinery Assistance Program to support renewable chemicals and other biobased products will build on the programs’ record of success, and we look forward to working with USDA on implementation. Importantly, Senator Stabenow’s initiative also included a new tax credit for renewable chemicals, and BIO continues to enthusiastically support her efforts to pass necessary tax credit legislation.

The mandatory funding for Farm Bill Energy Title programs, coupled with the Renewable Fuel Standard, provides the policy stability necessary to promote investments in new technology and manufacturing opportunities. These programs will help unlock significant new private investment capital for advanced biofuel, biobased products and renewable chemicals projects, and they’ll help farmers build new markets for dedicated energy crops. Besides Senator Stabenow there are numerous Senators and Congress members to thank for ensuring the necessary investments in farm energy programs. Adding to the programs’ records of success will be our industry’s way of thanking them for their faith in our innovative companies and technologies.

The challenges of commercializing advanced biofuels and renewable chemical products can seem daunting at times, but the good news is that passage of the Farm Bill Energy Title is a strong signal to industry and markets that biotech innovation and biorefining are here to stay.