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USDA: Incentives available for drop-in biofuel delivered to Navy

By Erin Voegele | January 02, 2017

The USDA Commodity Credit Corp. has announced funding is available to pay a biofuel production incentive (BPI) under the Farm-to-Fleet program to companies producing drop-in biofuels from certain feedstocks.

A notice published in the Federal Register explains the USDA Farm Service Agency will use CCC funds to pay a per-gallon incentive for JP-5 and F-76 blended biofuels produced from eligible feedstocks and delivered to the U.S. Department of Navy. The BPI payment rate will range from 8.335 cents to 25 cents per blended gallon of biofuel, depending on the blend rate. Payments will not be based on which eligible feedstock is used to produce the biofuel. The notice also states that total BPI payment will be determined by multiplying the payment rate by the number of gallons of qualifying biofuel blend delivered under a Defense Logistics Agency Energy contract.

According to the CCC, up to $50 million is expected to be available for the incentive program through fiscal year 2018. The USDA does not expect funding to be a constraint through fiscal year 2018. The department, however, indicated it would consider requesting additional funds be made available for BPI payments if demand is in excess of $50 million.

The Farm-to-Fleet Program was first announced in December 2013. According to the USDA, it is taking action to improve transparency and simplify the process by which CCC funds are administered through the program. To date, the CCC said the BPI has had limited use by claimants and minimal impact expanding or development biofuel markets for agricultural commodities. The notice of funds availability (NOFA) published on Dec. 29 simplifies the use of CCC funds and improves transparency by identifying a specific PBI payment rate. “This allows claimants to quantify the PBI on a per gallon basis, thus making it easier for potential claimants to understand how the BPI funding process works when they consider submitting an offer to provide JP-5 and F-76 blended biofuels on DLA Energy domestic bulk fuel procurements,” said the CCC in the Federal Register notice.

The 8.335-cent-per-gallon payment rate applies to eligible blends that contain a minimum of 10 percent biofuel. The rate increases 0.8335 cents for every 1 percent of biofuel content above 10 percent, up to a maximum BPI payment rate of 25 cents per gallon.

Additional information is available on the Federal Register website.