Biofuels remains a focus for the Obama administration, with USDA Secretary Tom Vilsack one of the point people for their efforts. He recently announced several developments, including finalization of the Biomass Crop Assistance Program (BCAP), an agreement with the Federal Aviation Administration (FAA) and perhaps one of the most important ones, funding efforts via USDA Rural Development to install new blender pumps and storage facilities.
Vilsack said he has instructed USDA Rural Development officials to "provide financial assistance, using existing resources, to provide the resources and matching funds to help install 10,000 blender pumps and storage systems over the next 5 years. Work will commence immediately on putting that program together."
As for BCAP, USDA has now published a final rule for the program, under which USDA will resume making payments to eligible producers.
BCAP was initially a pilot program under the 2008 Farm Bill "designed to ensure that a sufficiently large base of new, non-food, non-feed biomass crops is established in anticipation of future demand for renewable energy consumption."
BCAP uses a dual approach to support the production of renewable energy. First, BCAP 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% of the cost of establishing eligible perennial crops. Further, they can receive payments for up to five years for annual or non-woody perennial crops and up to 15 years for woody perennial crops. FSA is accepting project area proposals and, after project area proposals have been approved, eligible producers may participate by enrolling at their FSA county office.
In addition, BCAP also assists agricultural and forest landowners and operators by providing matching payments for the transportation of certain eligible materials that are sold to qualified biomass conversion facilities. The facilities convert the materials into heat, power, biobased products or advanced biofuels.
Agreement with FAA: The Secretary also announced jointly with the Federal Aviation Administration (FAA) a five year agreement to develop aviation fuel from forest and crop residues and other "green" feedstocks in order to decrease dependence on foreign oil and stabilize aviation fuel costs. FAA and USDA will work together to "assess the availability of different kinds of feedstocks that could be processed by bio-refineries to produce jet fuels."
As for the report by the Economic Research Service (ERS), it said that replacing more petroleum with cost-competitive domestic biofuels reduces crude oil imports, thereby lowering prices for energy and benefiting the U.S. economy. In addition, the report noted:
- The biofuels industry becomes more productive as cost-reducing technology is applied, which results in higher wages for workers.
- Gains in Gross Domestic Product and real income are driven largely from the contribution from technological progress in biofuels, which increases the productivity of the economy.
- Next generation biofuels are considered to be a decreasing cost industry. This means that the cost of producing ethanol will decline as output increases.
The entire ERS report is available at http://www.ers.usda.gov/Publications/err102.