The Farm Bill Energy Title Is Working and Must Be Renewed

By Brent Erickson, Executive VP, BIO, head, Industrial Biotechnology and Environment section

Special to the Digest

Ten years ago, Congress passed and President George W. Bush signed into law a Farm Bill that, for the first time, embraced the vital role American farmers, foresters and rural communities must play in achieving U.S. energy security. Congress and the President fully recognized that domestic renewable energy production and biobased product manufacturing are necessities for national security and rural economic prosperity. The 2002 Farm Bill created an R&D program to support biorefinery development and a federal purchasing program to lead market pull for biobased products.

Six years after, almost to the day, Congress adopted and President Bush signed another Farm Bill that sought to hasten the commercial development of advanced biofuels and biomanufacturing. The bill moved beyond R&D grants to support farmers in creating a value chain for new purpose-grown energy crops, start-up company executives raising capital for first-of-a-kind large-scale energy projects, and manufacturers opening traditional markets to new products.

Because of bipartisan Congressional support in 2002 and again in 2008, and following several years of rulemaking and program implementation, agricultural energy programs are now revitalizing rural economies, reducing farmer dependence on commodity support programs, and ushering a new generation of advanced biofuels, renewable chemicals, and biobased products to the cusp of commercialization. In short, Farm Bill energy programs are working. The proof is that U.S. companies are beginning to put steel in the ground.

Success stories

INEOS Bio and its joint venture partner, New Planet Energy, are preparing to open the Indian River County BioEnergy Center near Vero Beach, Florida.  This biorefinery is a major landmark for the country – the first commercial cellulosic biorefinery. INEOS Bio was also the first company to close a loan under the USDA’s Biorefinery Assistance Program, created in the 2008 Farm Bill. Raising private capital investment to build this first-of-a-kind facility would have been nearly impossible in today’s financial environment without. But INEOS Bio obtained debt financing from a farm credit agency with a long history of working with USDA lending programs. That debt financing, in turn, attracted over $130 million in private investment for a project that will produce 8 million gallons of cellulosic ethanol and 6 megawatts of renewable electricity per year from renewable biomass, such as yard waste or municipal solid waste, and create 380 direct or indirect jobs.

ZeaChem recently started up a demonstration biorefinery in Boardman, Oregon, that will scale up biotechnology breakthroughs to convert fast-growing poplar trees to chemicals and cellulosic ethanol. The Biomass Crop Assistance Program (BCAP), also created in the 2008 Farm Bill, helps farmers in the county surrounding the facility to grow the trees that will feed both the demonstration project and a commercial facility planned to be completed in the next few years.  ZeaChem’s commercial biorefinery will employ 100 people and invest several hundred million dollars in local infrastructure; it will also provide employment opportunities to another 442 people in Central Oregon.

Myriant is building a 30 million pound per year commercial succinic acid biorefinery in Lake Providence, Louisiana.  The biorefinery will create 50 full time jobs and will revitalize the Port of Lake Providence. Farm Bill energy programs helped to foster innovation in the renewable chemicals and biobased products sector that is generating this domestic investment and job creation.  The Biobased Markets Program helps expand consumer awareness of alternatives to petroleum-derived chemicals and products through consumer labeling and preferred procurement procedures.  Opening the Biorefinery Assistance Program to renewable chemicals could further accelerate these biorefining technologies in the same way they’ve accelerated advanced biofuel production.

A high rate of return

Overall, Farm Bill energy programs have produced a high rate of return for the American taxpayer. These programs have helped farmers keep more than 150,000 acres of farmland in 150 counties across 10 states in productive use. They have helped innovative companies unlock private debt equity financing to build first-of-a-kind advanced biofuel and renewable chemical biorefineries, even in the midst of an economic downturn. They programs have helped open a market for new biobased products that have generated employment opportunities and growth over the past five years – from under 6,000 people in 2007 to more than 100,000 today. As a whole, the programs have the potential to create or save 700,000 jobs and clear the path for several new industries to emerge. Biobased industries can reduce our reliance on foreign oil and revitalize domestic manufacturing by producing domestic biobased products from renewable biomass.

BIO member companies – with assistance from Farm Bill energy programs, such as the Biorefinery Assistance Program, BCAP, and the Biobased Markets Program – have accelerated commercialization of biorefineries, unlocking the potential of agriculture and forestry to create new opportunities for rural economic prosperity and energy security. BIO thanks the Senate Agriculture Committee for including mandatory funding for these programs in the bipartisan bill that passed the committee in April. BIO’s President & CEO Jim Greenwood made these same points to the House Agriculture Energy Subcommittee during a hearing in May. We believe the United States must continue investments in America’s energy and agricultural future and a strong energy title is one of the key investments in that portfolio.