New farm bill supports the renewable chemicals industry

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In early February, after nearly four years of debate, President Obama signed the Agricultural Act of 2014 (i.e., the farm bill) into law. In his remarks, the president highlighted the positive impacts the farm bill will have on the U.S. agriculture industry, the jobs sector and rural economies.

For the first time, the farm bill will offer strong support for the emerging renewable chemicals market here in the U.S. Renewable chemicals are those that use sustainable biomass as feedstocks for production, in place of traditional petrochemical inputs.

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New language in this farm bill extends incentives to manufacturers that use industrial biotechnology to make renewable chemicals. The next generation of biochemical manufacturing is focused on utilizing cellulosic (nonfood) plant material. The Department of Agriculture has been granted $881 million in mandatory funds to be allocated to its rural energy programs over the next 10 years. Increased support for innovative development in renewable chemicals will help to achieve cost-competitive bio-alternatives, benefitting both business and the environment.

Renewable chemicals will now be eligible for funds under specific Title IX energy programs. This will allow companies that produce polymers, plastics or other chemical substances from sustainable biomass to qualify for loan guarantees and other relevant programs. Moreover, it establishes an important status for renewable chemical technology, which has historically been absent in U.S. policy.

An important section of the energy Title programs continued in the farm bill is the Biobased Markets Program. Though only responsible for $25 million of the total allocation, it has far-reaching implications in maintaining the federal preference for procurement of biobased products and the BioPreferred labeling program, which alone is responsible for more than 100,000 jobs.

The inclusion of renewable chemicals into these programs will position the United States as a global leader in this industry, a rapidly growing portion of the $3.5 trillion global chemical market. Companies seeking to produce biochemicals in the U.S. can seek out loan guarantees for manufacturing plants under the Biorefinery Assistance Program, which has traditionally been open only to biorefineries producing fuels. This program will have mandatory budget authority for $100 million in fiscal 2014 and $50 million each in fiscal 2015 and 2016.

By creating a more level playing field between renewable fuels and renewable chemicals within U.S. policy, all bio-industry companies will be encouraged to invest in development of new products for both industrial and consumer applications while meeting demand for safer, less resource-intensive ingredients.

The funds made available through the farm bill will help augment an expansion beyond petroleum-based chemicals to support the production and integration of cellulosic biochemicals (made from nonfood plants), at a meaningful scale. This new focus on bio-based chemicals will provide a significant boost to the overall economy in the form of jobs, particularly in rural areas, that cannot be exported. It also underscores confidence in the ability of the nation’s agricultural and technology sectors to work together, which will spur additional private investment in homegrown renewable chemicals. The inclusion of biochemicals in the farm bill is validation of the importance of this growing industry and the role it plays in the emerging U.S. bio-economy.

Schweiker served as governor of Pennsylvania from 2001 to 2003. He is currently chief relationship officer at Renmatix, a King of Prussia, Pa,- based company that makes cellulosic sugars for renewable chemicals and fuels.