USDA Secretary Tom Vilsack announced today at the National Press Club in downtown Washington that his agency would give a boost to biofuel producers through a Biomass Crop Assistance Program (BCAP). Vilsack said the USDA will soon publish the BCAP's final rule, and that means eligible biomass producers will be able to get money from the USDA. The BCAP operated as a trial program last year. Here's how it works:
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 percent 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. ... 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.
Vilsack also said the USDA and the Federal Aviation Administration (FAA) will begin working on a biofuel for the aviation industry.

On the E15 front (need background? Read this), Vilsack said that biofuel incentives need to continue and that Congress should reinstat the Biodiesel Production Tax Credit and provide "a fiscally responsible short-term extension of the Volumetric Ethanol Excise Tax Credit."

The Union of Concerned Scientists doesn't think the deal is all that great though. They think it's half great. UCS released a statement saying that Vilsack is "only half right" with the biofuel promotion plan. Jeremy Martin, the UCS's Clean Vehicles Program's senior scientist, said:
Secretary Vilsack got it half right on biofuels tax credits. We agree that it is time to reform the current tax credits and replace them with performance-based incentives that reward biofuels producers for cutting pollution and saving oil. However, there's no reason to extend the existing tax credits – even for a brief time -- because they waste taxpayer dollars without strengthening national security or providing any benefits to farmers and the environment.
Read more from the USDA and the UCS after the jump.

[Source: USDA, Union of Concerned Scientists | Image: AP Photo/Charlie Neibergall, File]

PRESS RELEASES

Remarks by Agriculture Secretary Tom Vilsack on Biofuels as Prepared for Delivery at the National Press Club, Washington, D.C.
October 21, 2010

Our country needs a strong, vibrant rural economy. Unfortunately, over the past several decades there have been times when it was neither strong nor vibrant. Persistent high unemployment and poverty encouraged many to leave their rural communities. A majority of rural counties lost population, and with it came a loss of political representation.

President Obama refuses to accept the notion that Rural America's past predicts its future. He recognizes that the source of America's innovative spirit and our enduring values remain rooted in our rural areas.

The President's vision for a revitalized rural economy that creates real opportunity for growth and prosperity centers on our ability to add innovative technologies, open new markets for crops, and better utilize our natural resources. The President ordered USDA to make that vision a reality.

We've gone to work immediately. USDA announced assistance under the Recovery Act for 334 broadband expansions designed to reach more than 6 million people and 250,000 businesses in rural and remote areas.

Broadband access empowers farmers and ranchers with real time weather and market information, small business owners with expanded markets, educators with distance learning, public safety officials with more reliable communications, and medical professionals with telemedicine. All of which adds to the strength of rural communities.

By launching the USDA led effort "Know Your Farmer, Know Your Food" we began to promote better linkage between local producers and local consumers through investments in processing, storage, and warehouse facilities. All of which helps producer's bottom lines and creates new job opportunities.

USDA, along with other federal agencies and departments, responded to the President's call for a new age of conservation with the America's Great Outdoors initiative. The report, to be issued next month, will highlight the enormous economic opportunities inherent in increased access to the outdoors, and the innumerable recreational opportunities arising from an expanded use of the outdoors.

However, the approach at the heart of the President's vision - which combines new technologies, new markets, and better use of our natural resources - is our nation's capacity to reduce its dependence on imported oil and fossil fuels through the increased production and use of biofuels and renewable energy.

No one can dispute that we remain too dependent on imported oil. That dependency, absent action now, will grow as our need for more energy grows. The Energy Information Administration estimates that by 2035, US Energy consumption will have increased by another 50 percent.

Thirty years ago 28% of the oil consumed in the United States was imported. Today that figure is closer to 60 percent – some of which comes from countries that neither like us nor support us. Today we still send a billion dollars a day outside our shores helping other countries' economies to grow while our economy recovers from a deep recession.

With the disastrous oil spill in the Gulf of Mexico, we are also reminded that the development of our own oil resources is not without environmental and economic risk.

We can do better. We have to do better. Rural America is where we will do better.

The Renewable Fuel Standard, known as RFS2, reaffirmed the goal of producing by 2022: 36 billion gallons of biofuels to include 21 billion gallons of advanced biofuels.

Reaching that goal means importing less oil – at least, according to a recent industry study, a $350 billon cumulative total value of avoided petroleum imports over the 2010-2022 period. This means $350 billion that we can keep here, in this country. This means less fossil fuels releasing fewer toxins and having cleaner air to breathe, and, according to that same industry study, creating up to a million new jobs with investments of $95 billion in new biorefineries.

Today, we produce around 12 billion gallons of ethanol biofuels and around 800 million gallons of biodiesel. Very little of which is considered an advanced biofuel. While, under the RFS2, the biodiesel is an advanced biofuel, we are pushing the limits of technology and surging towards the production of advanced cellulosic ethanol, biobutenol, drop-in fuels and other advanced biofuels.

The benefits to the economy and to consumers are outlined in a new Economic Research Service study released today entitled Effects of Increased Biofuels in the US Economy in 2022.

The study notes that unlike the rising costs of fossil fuels priced to meet increased demand and increased production costs, biofuel production costs will continue to drop with each succeeding generation of biofuels. The industry requires more time and investment to mature.

The recent EPA announcement authorizing E-15 for late model vehicles will help boost demand, and EPA will make a decision later this year regarding 2001-2006 model vehicles.

However, to meet the 36 billion gallon goal, we need to work harder and faster.

Incentives helped build the biofuel industry and incentives need to continue. Congress should start by reinstating the Biodiesel Production Tax Credit and providing a fiscally responsible short-term extension of the Volumetric Ethanol Excise Tax Credit. At the same time, we need to begin to think about reforms to the ethanol credit program to make it more efficient and effective at addressing the full range of challenges we face in meeting our goals for traditional and next generation biofuels.

We have already seen what happens when incentives are withheld too quickly. The lapse of the biodiesel tax credit cost the industry jobs – nearly 12,000 jobs were lost as production was cut in half once the credit lapsed, according to industry estimates – these are jobs we can't afford to lose.

But, incentives, by themselves, are not enough. Our effort must include identifying additional feed stocks available throughout the country and discovering more efficient production processes. Research and development must intensify.

The President's Biofuels Interagency Working Group report, Growing America's Fuel, called for the establishment of five USDA regional Biomass Research Centers for the development of non food biomass feed stocks. These Regional Centers, involving a collaboration between the Agricultural Research Service (ARS) and the U.S. Forest Service, will focus, accelerate, and coordinate the science and technology needed to incorporate feed stock production into existing agricultural and forest based systems.

The Centers will also assist Rural Development officials in the development and construction of biorefineries. The lead personnel at the Centers will draw on the expertise of the entire USDA team including but not limited to our Rural Development coordinators, Farm Service officers, Natural Resources Conservation Service officials, Forest Service experts, and extension service specialists.

The Centers will service the regions of the country best suited for advanced biofuel production in the following locations:

1. The Northeast center will be located in Madison, Wisconsin, led by the Forest Service.
2. The Central East Center will be located in Lincoln, Nebraska, led by ARS.
3. The Southeast center, a little more complicated because so much is going on there, will be located both by ARS in Boonesville, Arkansas; and Tifton, Georgia, and in Auburn, Alabama, led by the Forest Service.
4. The Western Center will be located in Maricopa, AZ.
5. The Northwestern Center will be located in Pullman, WA, led by ARS, and Corvallis, OR, led by the FS.

Production of 36 billion gallons of biodiesel will require that biorefineries dot the rural landscape. The Farm Bill of 2008 authorized investments to assist in the construction of new biorefineries. Today, I am directing the Rural Development mission area of USDA within 60 days to announce funding under the current Biorefinery Assistance Program for the construction (to commence in 2011) of a biorefinery or bioenergy plant in each of the regions serviced by the regional centers. In doing so, the entire country can begin to see the economic benefit to producers and job creation potential of the biofuel/bioenergy industry.

I know that the Department of Energy will also provide leadership in this effort. Already the effort of the DOE is helping to spur construction of a biomass facility that converts woody biomass into crude oil.

As research identifies alternative feed stocks and as biorefineries are built to process those feed stocks, producers must be encouraged to grow the feed stocks. The Biomass Crop Assistance Program will provide that assistance.

The final BCAP Rule will be announced in the Federal Register tomorrow. Producers will receive financial help to defray the cost of production, storage and transportation.

The assistance could be as much as 75% of the cost of establishing the new crop as well as annual rental payments to help cover the costs of transitioning from current cash crops.

Delivery of biomass to a renewable energy or biofuel facilities will generate matching payments to help reduce the costs that come from the logistical challenges facing any new industry. In crafting the final rule we paid attention to the concerns of industry and environmentalists, particularly with respect to woody biomass. Assistance for woody biomass will only be provided for materials removed from a forest for ecosystem restoration and forest health purposes.

As these new materials arrive at the biorefinery additional costs may be incurred by processors. To relieve that risk for advanced biofuels production, USDA, under section 9005 of the Farm Bill of 2008, will make payments to impacted processors. Up to $281.5 million remains for this purpose. I have directed that work on the final rule be completed by the end of this year making these funds available.

Over time a key missing link in the effort to meet the RFS2 goal will continue to be the lack of convenient locations to obtain higher blends of biofuels.

Convenient store operators and marketers remain reluctant to incur the cost of new pumps and tanks. USDA and other federal departments can and should offer help.

I have instructed 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.

Our effort to expand the biofuel industry will also include opportunities we control within our own vehicle fleet at USDA. We are committed to make E 85 and other blends of biofuels, including biodiesel mixes, more conveniently located. We'll encourage more use of biofuels in our fleet of almost 43,000 vehicles. The impact can be significant. The Department reported 42,882 light, medium, and heavy duty vehicles in the motor vehicle inventory in FY 2009. The approximate total fuel consumption was 19,500,000 gallons. The miles traveled by the USDA Motor Vehicle Fleet were approximately 342,500,000 with approximately $41,000,000 in fuel costs reported.

The USDA is already partnering with the Department of the Navy as it embraces a biofuel future. Today, USDA announces another partnership with the signing of a Memorandum of Understanding with the Federal Aviation Administration (FAA). The FAA and commercial airline industry also see the potential of biofuel as jet fuel. Under the MOU, the USDA and FAA will work together with the airline industry over the next 5 years to develop appropriate feed stocks that can be most efficiently processed into jet fuel. Doing so will decrease the industry's current dependence on foreign oil and help stabilize fuel costs in the long run.

I recognize that some may doubt our capacity to meet the challenge of expanding the biofuels industry. I do not under estimate the challenges, but I have seen Rural America rise again and again to continually meet the large challenge of providing food, feed, and fiber for the country and the world.

Belief and action remain powerful forces to affect change. I believe the President's vision for rural America compels us to action. I believe the goals articulated within the RFS2 mandate action. And, I believe the need for energy security, a cleaner environment, and better economic opportunity in rural American make the case for immediate action.

So, I am confident today that we at USDA, joined by those who live, work, and raise their families in rural areas stand ready to take action. Together, we will revitalize our rural economy and create meaningful opportunity for those who see the future – and their future – as brighter in Rural America.


Agriculture Secretary Vilsack Announces Renewable Energy Initiatives to Spur Rural Revitalization Throughout the Country
Biomass Crop Assistance Program Will Help Create National Biofuels Industry; New Agreement with the FAA Will Promote Production and Demand for Biofuels; USDA Report Shows Domestic Biofuel Production Benefits the Economy

WASHINGTON, Oct. 21, 2010 – As part of the Obama Administration's effort to promote production of fuel from renewable sources, create jobs and mitigate the effects of climate change, Secretary Tom Vilsack today announced a series of measures during a speech to the National Press Club in Washington.

"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," said Vilsack. "By producing more biofuels in America, we will create jobs, combat global warming, replace our dependence on foreign oil and build a stronger foundation for the 21st century economy."

The Secretary announced several measures, including the publication of a final rule to implement the Biomass Crop Assistance Program (BCAP). Under the BCAP final rule, USDA will resume making payments to eligible producers. The program had operated as a pilot, pending publication of the final rule. Authorized in the Food, Conservation, and Energy Act of 2008, BCAP is 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.

"The Obama Administration is aggressively supporting our nation's farmers, ranchers and producers of biofuels as they work to bring greater energy independence to America," Vilsack said. "BCAP will help the nation's power, biobased product, and advanced biofuel industries produce energy from sustainable rural resources and create jobs that will stimulate rural economies across the nation."

The BCAP final regulation reflects policies developed as a result of more than 24,000 comments received on previous Federal Register notices and a proposed rule, and knowledge gained by implementing a portion of the program in 2009.

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 percent 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.

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. Under the partnership, the agencies will bring together their experience in research, policy analysis and air transportation sector dynamics to assess the availability of different kinds of feedstocks that could be processed by bio-refineries to produce jet fuels.

The participants will develop a tool to evaluate the status of different components of a feedstock supply chain, such as availability of biomass from farms and forests, the potential of that biomass for production of jet fuel, and the length of time it will take to ramp up to full-scale production. The agencies already have existing programs and collaborative agreements with private and public partners and resources to help biorefiners develop cost-effective production plans for jet aircraft biofuels.

This cooperative agreement supports a larger research plan led by USDA through its five Regional Biomass Research Centers, which will help accelerate the development of a commercial advanced biofuels industry across the United States. Just as important, the plan sets out to include as many U.S. rural areas as possible to maximize the economic benefits of biofuel production across the country. The Centers will provide the critical mass needed to develop high-performance teams that will guide biomass research to address needs in both the public and private sector, including commercial aviation, military transportation, and other activities.

The Secretary also discussed a biofuels report prepared by USDA's Economic Research Service (ERS)that says replacing more petroleum with cost-competitive domestic biofuels reduces crude oil imports, thereby lowering prices for energy and benefiting the U.S. economy. The report also includes these findings:

* 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. Information about the USDA agreement with the FAA is available at www.faa.gov/. Biomass conversion facilities, eligible material owners and producers interested in the BCAP program should contact their FSA state offices or visit www.fsa.usda.gov/bcap for more information. Complete information about USDA's renewable energy programs is available through the energy matrix at http://energymatrix.usda.gov/. Information about state contacts for USDA energy programs is available at http://www.usda.gov/documents/USDA_Bioenergy_Resources.xlsx.


AG SECRETARY ONLY HALF RIGHT ON BIOFUELS TAX CREDITS, SCIENCE GROUP SAYS
UCS CALLS FOR 'BILLION GALLON CHALLENGE' TO MEET BIOFUEL GOALS

WASHINGTON (October 21, 2010) – Steps outlined today to increase domestic biofuel production by Secretary of Agriculture Tom Vilsack only "got it half right," according to the Union of Concerned Scientists (UCS). Vilsack was speaking at the National Press Club in downtown Washington.

"Secretary Vilsack got it half right on biofuels tax credits," said Jeremy Martin, senior scientist with UCS's Clean Vehicles Program. "We agree that it is time to reform the current tax credits and replace them with performance-based incentives that reward biofuels producers for cutting pollution and saving oil. However, there's no reason to extend the existing tax credits – even for a brief time -- because they waste taxpayer dollars without strengthening national security or providing any benefits to farmers and the environment."

In June, UCS released the only detailed proposal to replace existing biofuels tax credits with a performance-based tax credit, which would save more oil and cut more pollution at a lower cost to taxpayers. Another June UCS report, "The Billion Gallon Challenge," proposed a series of loan guarantees and investment tax credits that would provide the necessary support to install the first billion gallons of clean, cellulosic biofuels refining capacity.

"Our current policies have failed to bring clean biofuels to market," Martin said. "This year, the government had to lower the mandated levels of cellulosic biofuels by more than 90 percent due to lack of supply. It's time to get this industry back on track by launching a program to produce the first billion gallons of clean, cellulosic biofuels. Done right, cellulosic biofuels could curb America's oil dependence, reduce carbon pollution, and generate new economic opportunities across rural America."
###


The Union of Concerned Scientists is the leading U.S. science-based nonprofit organization working for a healthy environment and a safer world. Founded in 1969, UCS is headquartered in Cambridge, Massachusetts, and also has offices in Berkeley, Chicago and Washington, D.C. For more information, go to www.ucsusa.org
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