USDA to help install 10,000 blender pumps

By Kris Bevill | October 14, 2010
Posted Oct. 21, 2010

Secretary of Agriculture Tom Vilsack announced Oct. 21 that the USDA will use existing funds to assist in the installation of 10,000 blender pumps across the U.S. within the next five years. The announcement was part of a series of initiatives put forth by the USDA in order to further support the development, production and use of biofuels, which Vilsack said reaffirms the White House's commitment to biofuels.

"I believe the state of the rural economy and President [Barack] Obama's vision for rural America compels us to action now," he said. "I believe the goals articulated within the RFS2 mandate action now. And I believe the need for energy security, a cleaner environment and better economic opportunity in rural America make a case for action now."

The federal government recognizes that the development of new feedstocks, increased production of advanced biofuels, expanded infrastructure and demand have to occur simultaneously, he said. At the same time, Vilsack urged Congress to use the upcoming lame duck session to reinstate the biodiesel tax credit and provide a "fiscally responsible, short-term extension" of the Volumetric Ethanol Excise Tax Credit. "Domestic production of renewable energy, including biofuels, is a national imperative and that's why USDA is working to assist in developing a biofuels industry in every corner of the nation," Vilsack stated. "But tax credits are not enough. Our effort must also include additional feedstocks available throughout the country while discovering more efficient production processes."

The U.S. EPA's recent approval for E15 use in vehicle models 2007 and newer is a "momentum builder" for the ethanol industry and should help boost demand for ethanol, according to Vilsack, but he continues to urge the EPA to approve E15 for use in vehicle models 2001-06 as soon as possible. "It's already convinced NASCAR to use E15, and if it's good enough for Jimmie Johnson, I remain hopeful that it will also be good enough for earlier model vehicles," he said. In response to the reluctance of retail station owners to invest in additional dispensers and storage tanks for E15, Vilsack has instructed rural development officials to provide matching funds for the installation of 10,000 blender pumps and storage systems over the next five years. Existing funds from the USDA's budget will be used to support the blender pump build-out, he said, so there will be no need to approach Congress for additional appropriations. He was unable to provide an exact cost for the initiative, but said the agency has estimated that a complete blender pump system ranges in price from $25,000 to $50,000. Work on the blender pump program will commence "immediately," he added.

Vilsack also said he will encourage the use of E85 and biodiesel in the USDA's fleet of more than 40,000 vehicles. The agency's fleet consumed approximately 19.5 million gallons of fuel in fiscal year 2009, so the impact of increased E85 use could be substantial, he said, adding that he hopes the USDA will serve as a model for federal departments with larger vehicle fleets to follow.

Ethanol industry groups were quick to praise the USDA's efforts to expand the ethanol infrastructure. Growth Energy, which presented its own plan several months ago to expand the availability of blender pumps nationwide, said Vilsack's initiative will benefit all Americans. "There is no doubt that Sec. Vilsack and President Obama understand the need to move this nation off our dependence on foreign oil, create jobs here in the U.S. and improve our environment," Growth Energy CEO Tom Buis said. "The measures announced today accelerate our progress toward energy independence and getting our economy going again." Buis pointed out that there are currently fewer than 250 blender pumps installed throughout the U.S.

"We thank the secretary for his continued leadership on higher blends of ethanol and E85, and we look forward to working with the USDA to make his vision of 10,000 blender pumps a reality," said Ron Lamberty, vice president of market development for the American Coalition of Ethanol. "We applaud Sec. Vilsack's recognition that ethanol demand is key in expanding ethanol infrastructure." Last year, ACE partnered with the Renewable Fuels Association and several corn growers groups to form the Blend Your Own Ethanol campaign, which is also focused on increasing consumer access to E85 and mid-level ethanol blends. Lamberty said Vilsack's commitment to using ethanol in the USDA's fleet is an example of how ethanol demand can spur infrastructure growth by convincing retailers that there is a financial benefit in installing ethanol-blend dispensers.

Vilsack also announced that the Biomass Crop Assistance Program will be finalized by the end of this year, which will provide assistance toward producing advanced biofuels, such as cellulosic ethanol, from new feedstocks. When the rule is finalized, growers will be allowed to resume receiving assistance for establishing new feedstocks. In addition, the program will provide up to $281.5 million for advanced biofuel producers to alleviate the risks associated with new advanced biofuel production. Vilsack has also given his agency 60 days to announce support and funding for the construction of five biorefineries to be located in as many defined regions of the country next year. The facilities will serve as examples of how biorefineries can impact the economy, Vilsack said, which should trigger increased investment from the private arena. The USDA has also signed a memorandum of understanding with the Federal Aviation Administration to develop jet fuel from feedstocks such as algae and crop residues.

Vilsack cited a research study prepared by the USDA's Economic Research Service, released Oct. 21, as evidence of the need for continued government support and biofuels' potential to contribute to the country's economic recovery. The report found that while petroleum production costs will continue to increase, biofuels production costs will continue to decrease with each generation through improved technology and increased investment. However, "without policies that provide incentives to deploy renewable energy technology, biofuel producers likely will shy away from investing in new technology because of market uncertainty," the report's authors stated. The study also found the increased biofuel production will result in higher wages, increased household income and lower import prices. The entire report can be viewed at ers.usda.gov.