Biomass and Biofuels: BIO Briefs Congress on Impact of USDA Bioenergy Programs

BIO and five member companies – Mendel Biotechnology, Arborgen, Abengoa Bioenergy, Novozymes and BP Biofuels – along with the Biomass Power Association held a briefing on Capitol Hill this week, outlining the importance of the USDA’s Biomass Crop Assistance Program (BCAP) and related programs. Regulatory rules for the BCAP, Biorefinery Assistance Program, and Rural Energy for America Program (REAP) were finalized by USDA only during the last quarter of 2010. But Congress is considering cutting the funds for these programs before they have a chance to show their effectiveness.

The programs have tremendous potential. USDA estimates the cost of the program over 15 years would be $461 million. However, this could generate an estimated $88.5 billion in economic activity and 700,000 jobs for growers, biorefineries, harvesting and transport in rural areas.

BCAP was established to overcome a classic chicken-and-egg challenge. Bioenergy facilities need a steady and predictable supply of biomass from bioenergy crops close by. But many bioenergy crops need several years’ time to grow before the first harvest – time during which the grower makes no money. BCAP reduces the financial risk for landowners who switch from familiar, revenue-generating crops to new, biomass crops that will eventually be sold to bioenergy facilities.

The BCAP program provides establishment payments, where growers can get reimbursed for up to 75 percent of the costs of establishing a perennial crop, or matching payments for eligible biomass delivered to a qualified biorefinery, which provides up to $45 per dry ton of in value for the first two years of harvest.

The REAP program supports a variety of agriculture‐based renewable energy and energy efficiency projects. The Biorefinery Assistance Program provides grants and loan guarantees for advanced biofuels and biobased products. Other programs, including the Bioenergy Program for Advanced Biofuels, could help maximize renewable energy deployment.

Bob Cleaves of the Biomass Power Association noted that there are already 80 facilities in 20 states, with about 14,000 employees. John Thorne of Mendel Biotechnologies told attendees that a 50,000-acre Miscanthus plantation can supply a 100MW power facility or a 50 million gallon biofuel facility, creating 700 new jobs in the community. Mendel is currently conducting field trials in Alabama, California, Georgia, Indiana and Kentucky.

Amy Ehlers told the Congressional staffers that Novozymes annually invests more than 14 percent of global revenue in research and development, with two of its largest research and development facilities located in Davis, Calif. and Franklinton, N.C. Novozymes will bring another facility, built to support the next generation of biofuels production, employing 100 people online in Nebraska in 2012, following a $200 million investment.

BP Biofuels highlighted one of the first commercial-scale cellulosic biofuels production facilities in the United States, under construction in Highlands County, Florida. The facility will convert perennial grasses into cellulosic biofuels, employing roughly 200 people, with many high-paying engineering roles. BP’s total investment in the facility and agricultural feedstock operation will be $400 million.  The construction process will employ approximately 800 construction workers over two-and-a-half years.