Farm Bill Energy Programs Enable New Feedstock Production To Help Fuel the Biobased Economy

By Brent Erickson, Executive VP, Biotechnology Innovation Organization, Special to The Digest

Congress has made it a priority to try and return the annual appropriations process to regular order, following multiple years of passing late omnibus funding bills. Omnibus funding bills rob many successful programs of the individual evaluation they merit; the Farm Bill Energy Programs are an example of this problem. Congress changed mandatory funding for two key bioenergy programs – despite their tangible successes – through its Fiscal Year 2016 (FY16) Omnibus spending bill. USDA’s Section 9003 Loan Guarantee Program and the Biomass Crop Assistance Program (BCAP) were capped well below the funding levels mandated in the 2014 Farm Bill, and their funding was reallocated to other congressional priorities. These particular programs are substantial sources of federal support for biofuels and renewable chemicals manufacturers in the United States. As Congress returns to regular order on appropriations bills, it should give these programs their fair due.

The 9003 Program helps companies secure capital to fund the construction of advanced biofuel biorefineries in rural communities. To date, USDA has helped 14 companies negotiate loans with private lenders totaling more than $1.2 billion. In the 2014 Farm Bill reauthorization, the 9003 Program was expanded to include renewable chemicals producers, improving their access to capital needed to build commercial facilities. Renewable chemical companies are building biorefineries to meet the increasing consumer demand for greener and safer household and personal care products.

INEOS Bio’s Indian River BioEnergy Center, located near Vero Beach, Florida, was one of the first biorefineries to utilize USDA’s 9003 Program. INEOS Bio was the first company in the United States to bring cellulosic biofuels to commercial scale, proving technology first developed at the University of Florida. Their facility is designed to produce up to eight million gallons of advanced biofuels and six megawatts of renewable power annually from local yard and citrus grove waste. It provides 50 full-time jobs for the area. Without this loan guarantee program, the company would not have been able to finalize construction of this first-of-a-kind cellulosic biorefinery.

Biosynthetic Technologies, LLC, a renewable chemical company, recently benefited from the 2014 Farm Bill expansion of the 9003 loan guarantee program to include renewable chemicals. The company is working with a rural lender to finance the construction of a full-scale commercial manufacturing plant that will produce 20 million gallons a year of its high-performance motor oils, industrial lubricant products, and cosmetics. These biobased oils have higher viscosity, thermal stability and flash point than traditional petroleum motor oils as well as existing synthetics. This new project will create manufacturing jobs in the U.S, strengthen the agricultural sector, and help create environmentally friendlier products that perform better in cars.

Congress dealt another blow to the bioenergy programs in the 2014 Farm Bill when it transferred mandated funds out of the Biomass Crop Assistance Program provision in its FY16 Omnibus spending bill. BCAP has successfully aided farmers in developing nontraditional crops for conversion into renewable energy. Producers who cultivate purpose-grown energy crops for the production of next-generation biofuels and bioenergy create jobs in rural America and help reduce our dependence on foreign oil.

In August 2015, USDA allocated $7.7 million towards four existing BCAP project areas in New York, North Carolina, Ohio/Pennsylvania and Kansas, which established 10,500 acres of shrub willow, giant miscanthus, and switchgrass for energy. These projects were sponsored by Chemtex International, Aloterra Energy LLC, ReEnergy Holdings LLC and Abengoa Biomass LLC. An additional 19 energy facilities in 10 states have turned more than 200,000 tons of biomass (dead or diseased trees) from federal lands into renewable energy. Reducing funds from BCAP can severely inhibit the incentive for companies to produce cellulosic feedstocks.

Like other USDA programs, the 9003 program enables manufacturers to access capital for large-scale projects in rural communities. Without loan guarantee programs, rural communities might never be able to pool sufficient capital to lend to large capital projects like biorefineries – rural populations are not large enough. But the program repays the federal commitment by generating well-paid jobs and economic growth in those rural areas. Renewable chemical startups and small companies can now better manage the financial risks as they take their production lines into commercial development. As Congress discusses budgets and appropriators are submitting funding requests to their respective subcommittees, it is essential to call attention to those programs that have successfully shown federal dollars at work and not at waste.

And on that subject: On Sunday, April 17, 2016, 2:30-4:30pm, USDA will be sponsoring a pre-conference workshop on the potential growth of the national bioeconomy at the 2016 BIO World Congress on Industrial Biotechnology to be held in San Diego at the convention center. The “Growing a Billion Ton Bioeconomy in the United States” workshop will be moderated by Todd Campbell, USDA Policy Advisor, Energy and Bioeconomy; and Harry Baumes, USDA, Director, Office of Energy Policy and New Uses, Office of the Chief Economist. This workshop will be open to all conference attendees.