Archive for June, 2009

This week, Agriculture Committee Chairman Collin Peterson (D-Minn.) authored an amendment to the American Clean Energy and Security Act of 2009 (H.R. 2454), which helps address serious agricultural concerns.

In a press conference with House Speaker Nancy Pelosi yesterday, Peterson said he and others have been working with Senator Henry Waxman (D-Calif.) “to massage the part of the bill that affects agriculture in terms of whether we can develop the next generation of biofuels, and we can have an offset program that we believe works for agriculture . . .”

Following the announcement of the amendment, the Renewable Fuels Association (RFA) sent a letter to Rep. Peterson in support. The RFA has been concerned about the issue of international land use change being incorporated into lifecycle greenhouse gas analyses (as required by the Renewable Fuel Standard/RFS). The RFA points out that the science of international land use impacts is “nascent,” and that time is still needed for scientists to come to consensus on scientifically-sound analysis.

“Done correctly, the RFA believes such an analysis will demonstrate a significant carbon benefit is achieved through the use of ethanol from all sources.Your amendment restores the principles of sound science to the regulatory framework for the RFS,” wrote the RFA to Rep. Peterson.

The American Farm Bureau Federation (AFBF) also supports passage of the amendment because it “establishes an agricultural offset program within the USDA; provides for a list of eligible agricultural offsets; corrects the misuse of indirect land use calculations in evaluating the use of biofuels; and alters the definition of biomass,” said AFBF Bob Stallman.

The National Corn Growers Association reports that the amendment will create “a workable agricultural offsets market under the jurisdiction of the USDA and will explicitly exempt agriculture from a greenhouse gas emissions cap while also creating opportunities for producers to be a part of the solution for addressing climate change.”

It’s important to point out, however, that some agricultural and environmental constituencies are split on the measure. The debate will continue in Congress. If the bill passes in the House, it could face a more difficult time in the Senate. Stay tuned.

Two announcements from the ethanol industry this week show progress on the challenging issue of cost-effectively handling and transporting biomass for the production of cellulosic ethanol and getting it up to commercial scale. Logistics has been a key issue on many people’s minds.

At the Fuel Ethanol Workshop & Expo (FEW) in Denver this week, Jeff Broin, CEO, of POET, announced that his ethanol company has created a new division called POET Biomass. It will focus on managing the harvest and transportation logistics for corn cobs, waste wood and other biomass used for cellulosic ethanol and alternative energy projects at POET’s production facilities.

POET’s pilot plant in Scotland, SD, is already producing about 20,000 gallons of cellulosic ethanol per year. Moreover, plans are on schedule for producing 25 million gallons annually from the company’s Project Liberty plant in Emmetsburg, IA, in 2011.

The new division, says Scott Weishaar, vice president of commercial development, POET, “is here to make sure farmers have everything they need in order to play their important role in fueling our nation with both grain-based and cellulosic ethanol.”

Speaking about farmers, the Knoxville News Sentinel reports that the University of Tennessee (UT) has awarded switchgrass production contracts to 38 Tennessee farmers. The growers will produce switchgrass on a total of 1,900 acres this season.

Meanwhile, work progresses on a demo-scale cellulosic ethanol biorefinergy being built by UT and DuPont-Danisco Cellulosic Ethanol, LLC. The facility is expected to be operational by the end of this year.

Do you think that cellulosic ethanol on a commercial scale will become a reality? What are your concerns or questions? Share your thoughts by writing in.

I just signed up to receive e-mail updates on the progress of the Biomass Crop Assistance Program (BCAP). If you want to see how USDA is moving along with BCAP, sign up at www.fsa.usda/gov/energy. For techies, you can even follow Farm Service Agency (FSA) programs now at Twitter.

USDA recently proposed two alternatives for implementing BCAP. While the survey deadline is now past, you may still want to make your voice heard at your county FSA office. http://FarmEnergy.org will be publishing results later this month.

The reason you might want to contact USDA is that in USDA’s Alternative A—Targeted Implementation of BCAP, government payments would be limited to provide some risk mitigation for growing crops while Alternative B—Broad Implementation of BCAP would allow payments to completely replace lost potential income from non-BCAP crops.

See “What do you Think About BCAP?” at http:FarmEnergy.org to see the other differences between the two plans.

BCAP provides financial assistance to producers or entities that deliver eligible biomass material to designated biomass conversion facilities for use as heat, power, biobased products or biofuels.

The FSA will initially provide financial assistance for the collection, harvest, storage and transportation costs of biomass. Producers will be eligible for up to a dollar per dollar match, up to $45 per dry ton, for the value of the biomass delivered to a designated biomass conversion facility for up to two years of payments.

If a producer is paid $30 per dry ton for the biomass by the conversion facility, the producer would be eligible for a $30 per dry ton payment from the FSA for the costs associated with collecting, harvesting, transporting and storing the biomass.

FSA recommends that producers check back frequently for updates. The agency will publish a fact sheet, application documents and a list of participating facilities in the coming weeks.

What would happen if the government eliminated tax credits, tariffs and mandates supporting corn ethanol use? Ethanol production could decline by as much as 5.5 billion gallons and corn prices could fall by more than 13 percent, according to a study by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.

At the request of several members of Congress, FAPRI conducted a type of “what if” study of the economic impacts of various policy shifts. The report, “Impacts of Selected U.S. Ethanol Policy Options,” can be found at www.fapri.missouri.edu/outreach/publications/2009/FAPRI_MU_Report_04_09.pdf. It includes 11 scenarios, beginning with allowing the ethanol blender’s tax credit to expire at the end of 2010 to eliminating the Renewable Fuel Standard (RFS), as well as tax credits and tariffs supporting the U.S. corn-based ethanol industry.

The report included an assumption that 15% ethanol blends would be permitted this September. While this increase in ethanol blends would increase ethanol use and average corn prices, FAPRI found the effects would be modest–raising corn prices by an average of just 1.1%.