Since 2002, the farm bill has contained an energy title, with cost-effective programs that support private investment in renewable energy, biobased manufacturing and energy efficiency. The programs are extremely successful in helping businesses create employment and economic growth opportunities in rural communities across the nation, fortifying a healthy farm economy. The farm bill is due for reauthorization this year, and the energy title programs have earned a permanent place in agriculture policies.
Last week, the House of Representatives debated the Agriculture and Nutrition Act (H.R. 2) — the House Agriculture Committee’s version of the farm bill reauthorization. While Congress continues to fight over final passage of the overall bill, members demonstrated strong, bipartisan commitment to reauthorizing the energy programs during last week’s debate.
Congress would be hard-pressed to find a more cost-effective way to build the rural economy. The energy title programs represent less than 1 percent of the federal government’s spending on agriculture and nutrition programs, but they generate a strong return on investment. The programs provide grants and loan guarantees, as well as research and development support for renewable energy projects. These services are vital to rural communities, because they ensure that rural lenders and businesses have necessary access to capital to finance projects.
Within the energy title, the Section 9003 program’s record of success stands out. Formally known as the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program, it backs rural lenders that finance the construction or revitalization of biorefineries. It is unique in supporting the launch of new biobased manufacturing technologies; without it, these new technologies could end up sitting on a shelf. The 9003 program could be significantly strengthened if Congress, in the next farm bill, allows companies and lenders to finance renewable chemical and biobased manufacturing projects without requiring integrated biofuel production.
The Section 9003 program is a vital first step in putting biobased manufacturing on an equal footing with fossil-fuel based interests. Federal regulations and permanent laws — such as tax credits for intangible drilling costs — support oil producers and petrochemical manufacturers, channeling private investment and institutional lending in their direction. The Section 9003 program does what the free market often doesn’t do: it ensures that rural communities and new technologies have a fair shot at competing for investment.
The 9003 program has had many successes in promoting investment, creating jobs, building infrastructure, and generating economic opportunities in rural communities. Take the case of Sapphire Energy, which received a loan from a rural lender backed by the USDA loan guarantee. Sapphire built a 100-acre algae farm in Columbus, New Mexico, southeast of Las Cruces, creating more than 600 jobs during construction. After Sapphire received equity from private investors in 2013, it repaid its loan in full. Eventually, Texas-based Qualitas Health purchased the Sapphire plant to produce algae for human and animal nutrition, retaining the employment opportunities and ongoing economic activity for the region.
Most recently, Ryze Renewables Reno closed a loan from Jefferson Financial Federal Credit Union, in partnership with the USDA loan guarantee program. Ryze is rehabilitating an existing, mothballed biodiesel plant in Storey County, Nev., and plans to convert distillers’ corn oil from ethanol plants along with other non-food raw materials into about 4,500 barrels per day of renewable diesel. The plant is expected to create 67 permanent local jobs for residents of North Las Vegas.
Many more new, innovative biobased manufacturing technologies are poised for similar success. Rural companies and lenders deserve competitive access to capital to get these projects built and create jobs. Members of Congress from both sides of the aisle should continue to recognize that the farm bill needs an ongoing energy title with fair funding for its vital programs.
Brent Erickson is executive vice president of the Industrial and Environmental Section at the Biotechnology Innovation Organization, which represents more than 900 biotechnology companies, academic institutions and state biotechnology centers across the United States and in more than 30 other nations. He previously was involved in fossil fuel research for three years at the U.S. Department of Energy’s Laramie Energy and is a former legislative director to Sen. Alan K. Simpson (R-Wyo.).