Section 9008 - Biomass Research & Development Act

Recommendations

Since the last Farm Bill was passed, there has been scant progress in expanding energy crop plantings and production. Energy crops suffer from the familiar “chicken and egg” dilemma; farmers won’t plant the crops without a market but energy markets won’t develop without a demonstrated and reliable energy crop fuel supply.

 

If Congress expands Section 9008 to include energy crop demonstration projects, the Farm Bill Energy Title could spur the first generation of energy crop projects. An effective energy crop commercialization program should:

  • Include incentives for the entire fuel cycle of growing, harvesting, transport and usage.
  • Encourage innovators to take reasonable risks and in the process help to bring energy crops onto a competitive playing field with other fuels.

Suggested Incentives for Growers

  • One-time cost-share grants of up to 50% of the establishment costs and lost income related to converting a portion of land to energy crop production. Grants would be limited to a single year, and would be based on the producer’s previous income per acre, a contract or established local market for the harvested energy crop and additional limits to be determined administratively.
  • Incentive payments to cover the difference in net income per acre between the farmer’s previous grain crop and the energy crop. Payments would require documented sale of the energy crop, would decline over time, and should cover the first several years of production.
  • Ability to harvest CRP acreage on a periodic basis (every two years) for sale to energy crop end-users while losing only a small portion (25%) of contracted CRP payment rates. This authority was given in Section 2101 of the 2002 Farm Bill but never fully implemented.

Further Recommendations

It is also important to build an end-use market for energy crops. The best potential short-term market are operators of gas-fired boilers and heating systems that could modify their systems to accommodate biomass fuels, either through gasifiers or direct combustion units. To encourage these investments, Section 9008 incentives should include grants and loan guarantees to help boiler owners modify their boilers to accept solid fuel energy crops as a fuel source. Necessary modifications would include fuel storage, boiler modifications, construction of a biomass gasifier, and modifications to any related ash and waste handling systems.

 

Annual spending for these programs should begin at $10 million in 2008, ramping up to $50 million by 2012.