Boost to rural areas seen from new bioenergy definitions in farm bill
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WASHINGTON, Feb. 12, 2014 - Biotechnology interests say provisions in the new farm bill that for the first time recognize biobased products and renewable chemicals on a par with biofuels represents a sea change, offering new benefits to farmers and rural areas, all while leveling the playing field with other countries that already have policies supporting their development.
The Agriculture Act of 2014 expanded the Section 9003 Biorefinery Assistance Program so that the manufacturing of renewable chemicals - monomers, polymers, plastics, formulated products or chemical substances produced from renewable biomass and biobased products are now eligible for USDA loan guarantees.
Appropriately enough, the farm bill renames the program the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program, and it authorizes mandatory funding of $100 million for fiscal 2014 and $58 million each for fiscal 2015 and 2016 (though it limits to no more than $25 million in each of the first two years the funding to be used to promote biobased product manufacturing). The bill authorizes another $150 million annually in discretionary funding through the life of the farm bill.
The measure also provides $3 million in annual mandatory funding of the Biomass Research and Development Initiative, with a directive that USDA encourage the involvement in the initiative of advanced manufacturing facilities that can play an active part in developing advanced biofuels and biobased products.
The mandatory funding offered through the biorefinery program, said Lloyd Ritter, co-director of the Agriculture Energy Coalition, is a “modest, but necessary investment . . . and will offer major benefits of energy security, economic growth and environmental gains across the U.S.”
In a media call Friday, Ritter said the funding will “unlock investment” that will help farmers build new markets for new energy crops, as well as biobased products and renewable chemicals.
“The renewable energy and energy efficiency programs in the bill will continue to build a successful record of helping rural America create new biobased manufacturing opportunities and stable, well-paying jobs,” Ritter said.
Advocates of the expanded eligibility see it prompting growth throughout the country of operations like Myriant Technologies in Lake Providence, La., where a plant that uses sugar as a feedstock was started up last year. The facility has the capacity to annually produce 30 million pounds of biobased succinic acid, a building block that can be used for the manufacture of a whole range of high-volume, high-value chemical products.
Myriant's Louisiana plant was partially funded through a $50 million cost sharing cooperative agreement received from DOE, $25 million from the USDA Business and Industry Loan Guarantee Program (a longstanding Rural Development initiative) and a $10 million grant from the Lake Providence Port Commission and the Louisiana Department of Transportation.
The farm bill, industry leaders say, adds to the arsenal of funding mechanisms available to developers and focuses specifically on the new technologies that will be used to manufacture biobased and renewable chemical products.
Hugh Welsh, the president of DSM North America, which is building with POET energy a cellulosic ethanol plant set to open in Emmetsburg, IA, this year, called the measure a “biotech jobs bill” that will help fund new plants and create new jobs across the country.
Noting that while his firm chose not to use the Biorefinery Assistance Program loan guarantees to build the Iowa plant (the company had available capital and plans to license the plant's technology to others), he said the program will enable other manufacturers who don't have deep capital to use loan guarantees to leverage additional financing at a rate that industry leaders say could go as high as 10-1.
Welsh said the bill will help advance the technology that will move the sector “to true biorefineries” that can produce both fuels and chemicals from renewable resources.
Matt Carr, managing director of the Industrial and Environmental section at the Biotechnology Industry Association (BIO), said raising the status of biobased products and renewable chemicals in the farm bill “creates a much larger awareness” of the products that can be derived from the biorefinery technology that's now expected to grow rapidly.
He emphasized that the “important and long-overdue” expansion of eligibility under the program “establishes important policy status for renewable chemical technology, which hill help our industry achieve parity in other policy areas, such as the tax code.”
Paul Winter, BIO's director of communications, notes that renewable chemicals and biobased products are not currently eligible for tax credits - “they aren't even recognized in the tax code.”
Production tax credits (PTC) for cellulosic ethanol and other renewable energy technologies expired last year. But efforts are underway to try and urge Congress to renew and extend them. Because this year's farm bill includes the first definition of renewable chemicals ever in federal policy, industry leaders say there is renewed hope that a PTC will be authorized for the newer biorefinery technologies.
It helps that the Senate Agriculture Committee chair, Sen. Debbie Stabenow, D-Mich., a strong proponent of biorefinery development who played a major part developing the related language adopted in the new farm bill, is the primary sponsor of a bill introduced last year that would create a PTC for renewable chemicals. A similar bill was filed in the House by Rep. Bill Pascrell, D-N.J.
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