Farm bill provides advanced biofuels incentives

By Susanne Retka Schill | June 02, 2008
The recently passed energy title in the Farm, Nutrition and Bioenergy Act of 2007 includes $1 billion for renewable energy programs and energy crops. Existing ethanol producers will also get some help in replacing their fossil fuel use with renewable energy in a $35 million program.

Jack Huttner, vice president of biorefinery development for Genecor, the enzyme division of Danisco AS, said the farm bill's $320 million loan-guarantee program is an important incentive for companies facing high risks in developing new technologies. The loan guarantees, combined with the production tax credit for up to $1.01 per gallon through 2012, will help the advanced fuels industry compete with the corn-based ethanol industry that has much cheaper operating costs and lower capital investment costs, he said.

However, at least one promising measure in the bill, the Biomass Energy Crop Transition Assistance Program, came with no designated funding. The crop assistance provision provides the USDA with a great deal of flexibility in designing the details of the program, said Anna Rath, vice president of commercial development for Ceres Inc. "It will be important to allocate sufficient funding," she added. The biomass crop assistance program will be available for either biorefineries or grower groups to apply for up to a 75 percent cost share on the establishment of energy crops, plus an undeclared amount for ongoing annual payments to growers until a biorefinery begins to purchase the feedstock. The legislation recognizes the differing commitments for feedstock production, she said, allowing five-year contracts for herbaceous crops and 15-year contracts for woody crops.

The energy title also included $120 million for the Biomass Research & Development Initiative to improve feedstock development and the efficiency of biofuels production. It also established a Forest Bioenergy Program to address the use of woody biomass for energy.