Section 9010 - Cellulosic Ethanol Expansion Program

 

Recommendations

Section 9010 authorizes continuation of the Commodity Credit Corporation’s incentive program for producers of ethanol and biodiesel derived from corn, wheat, and other agricultural commodities, and cellulosic feedstocks (such as hybrid poplars and switchgrass), and fats, oils, greases and certain animal byproducts. It provided feedstock support for year-over-year change in production by biofuels facilities and was intended to improve facilities’ cash flow during early production years when debt loads were high.

 

Because of the strong market for ethanol, Section 9010 funding was eliminated in 2006 and there is broad consensus that Section 9010 is unnecessary as an incentive for corn ethanol. Section 9010 could, however, be re-designed as a Sustainable Ethanol Production program in two ways.

1) Provide feedstock purchase incentives

This would assist developers of new generation cellulosic ethanol plants in purchasing cellulosic biomass materials such as corn stover, wood chips and energy crops. Farmers need to receive net income per acre that is comparable with growing conventional crops while cellulosic plant operators need lower feedstock costs to offset the higher anticipated capital and operating costs of first generation cellulosic ethanol plants. 

2) Encourage the substitution of biomass for natural gas or coal as an energy source at ethanol and other biofuels facilities.

Ethanol plants have become a significant user of natural gas and high gas prices are leading some new plants to consider using coal which would have environmentally negative consequences.  Using biomass as a heat input would help:

  • Build the biomass market for eventual use in cellulosic ethanol.
  • Make conventional ethanol production more sustainable from an energy balance and environmental perspective.

This program would provide feedstock purchase support for the documented usage of biomass in renewable fuels facilities. 

 

Funding for this program should be $10 million per year in 2008, ramping up to $50 million per year in 2012 as more plants begin to use biomass as either a heat input or for cellulosic ethanol production.