Research investments, tax reform needed to stimulate more jobs in Rural America

By Sara Wyant

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WASHINGTON, July 14 - The development of biobased products and efforts to make homes and businesses more energy efficient have the potential to create more jobs across rural America, testified a variety of panelists at the Senate Agriculture Committee hearing on Thursday.

 Noting that 16 million Americans have jobs because of agriculture, Chairwoman Stabenow called the rural economy a bright spot and underscored the potential for a manufacturing boom in the bio-based sector - where innovators and entrepreneurs are processing American grown agriculture products for use in manufactured goods and displacing the need for foreign petroleum.

 “Globally bioplastics are growing rapidly at over 20% per year with an almost unlimited potential,” testified Oliver Peoples, the Founder and Chief Scientific Officer for Metabolix, Inc. His firm, based in Cambridge, Mass., translated less than $5 million in Federal support for bioplastics into what is now over $300 million in private investment.  The firm's first production plant, with a capacity of 50,000 tons per year of a new bioplastic, is in operation with partner Archer Daniels Midland (ADM) in Clinton, Iowa and now employs over 100 people.

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 “The technical innovation developed in the US to make bioproducts is an opportunity for US to recapture its once dominant position in the plastics and chemicals markets,” Peoples said. “At its peak in the 1950s, the industry was responsible for over 5 million U.S. jobs and a $20 billion positive trade balance for the U.S.  Jobs associated with the industry were typically among the highest paid in U.S. manufacturing.”

 However, Peoples said that, “over the last two decades, competitive advantage for chemicals and plastics manufacturing has shifted towards the Middle East (feedstocks) and Asia (growth and low cost labor) as has the industry. U.S. employment in the sector has dropped over the last decade and is projected to shrink further as capital investment for the petroleum-based industry has essentially shifted away from the U.S.”

The U.S. can capture a projected $190 Billion of the $1 trillion global renewable chemical market, as well as all the value chain jobs that go with this sector,” emphasized Marc Verbruggen, CEO and President, NatureWorks.  “However, the industry needs similar manufacturingscale incentives that have been provided to other industries in their early stages such as those provided to the petrochemical, biofuels, wind, solar and other renewable industries” He outlined several important programs and tax reforms needed to grow the industry.

 Verbruggen warned that, the U.S. must remain focused on bringing new biobased innovations to scale if it wants to be home to the manufacturing of these innovations. He warned that sugar or starch producing countries in Southeast Asia, Europe or South America are working hard to attract manufacturing investment that will benefit local farmers by maximizing their crop value and while creating high wage industrial jobs.

 “One S.E. Asian country is now providing an incentive package containing a15year tax abatement for investors in the bioplastic industry.”

Winesses also discussed the potential for a Rural Energy Savings Program, which would enable the rural electric cooperatives to make loans to their customers in making energy efficiency improvements to their homes and businesses.  Senator Richard Lugar, R-Ind., included a similar proposal as part of his “Practical Energy Plan” and he is working on a stand-alone proposal with Senator Merkley. 

 “Progress on energy efficiency is a particular need and opportunity for our rural communities.  More than 42 million Americans live in rural communities, and many of these Americans reside in homes that are significantly less efficient than those typically found in urban communities,” noted. Sen. Lugar. “In fact, the USDA has found that rural households spend $200 to $400 more per year on their utility bills than comparable urban households.  This utility bill disparity is significant, especially given that rural households earn $10,000 less per year than the national average.

 The Rural Energy Savings Program proposal would permit rural families, farms, and other small businesses to receive low-interest loans to improve the energy efficiency of their properties. Loans would be issued through USDA's Rural Utilities Service to qualified local entities, primarily non-profit rural cooperatives, who would then issue loans to consumers to meet local needs.  Loans issued under this program would be repaid within ten years through money saved on utility bills. 

 The Rural Energy Savings Program proposal is projected to create nearly 26,000 jobs, spur retrofits in up to 1.6 million rural homes, save rural households hundreds of dollars a year after the loan is repaid, and eliminate the need for new generating capacity to power 625,000 homes, according to Lugar.


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