Energy groups propose biomass recommendations

By Erin Voegele
Web exclusive posted Dec. 18, 2008, at 4:34 p.m. CST

The Environmental Law and Policy Center, in cooperation with other organizations including the National 25x'25 Alliance Steering Committee, has offered U.S. President-Elect Barack Obama and Congress a package of 12 new recommendations to bolster the U.S. economy, create jobs and insure a clean energy future through additional investments in federal renewable energy programs.

The recommendations call for additional investments of $4.14 billion to boost various federal renewable energy programs. The proposals target programs that are designed to accelerate markets for biomass, wind, solar power, geothermal, hydropower and the biofuels industries.

A statement announcing the policy recommendation package cited a study conducted by the University of Tennessee's Department of Agriculture Economics. According to the study, if America's farms, ranches and forestlands are empowered with policies and incentives needed to meet 25 percent of the nation's energy needs with renewable resources, an estimated $700 billion in new annual economic activity would be generated and up to five million new jobs could be created.

Of the 12 recommendations, 10 relate specifically to the biomass industry.

One recommendation calls for increased funding for the Rural Energy for America Program (REAP). Authorized under the Farm Bill, the program provides grants or loan guarantees for renewable energy systems and energy efficiency improvements for agricultural producers and rural small business. The program is currently funded at $255 million over four years, with an additional annual authorization of $25 million. According to the Steering Committee, the program is continuously oversubscribed and many valid projects are rejected due to limitations on USDA funding. The committee proposes funding the program at $250 million annually, $500 million over two years.

A second recommendation calls for increased funding for the Repowering Assistance Program, which was also authorized under the Farm Bill. The program provides loans and loan guarantees to help biofuel plants convert their heating and power systems to use biomass rather than fossil fuels. The program is currently funded at $300 million over four years, with an additional $35 million in annual authorization. The Steering Committee's proposed funding for the program is $150 million over two years. According to the recommendation, increased funding would generate construction and maintenance jobs and contribute to cleaner air and a cleaner environment.

A third recommendation calls for increased funding and broadened authority of the Biorefinery Assistance Program. The program, also authorized under the Farm Bill, provides loans and loan guarantees to construct commercial-scale advanced biofuel facilities. It also provides grants for demonstration-scale advanced biofuels plants. According to the Steering Committee's recommendation, the collapse of the credit market has stalled construction of the nation's first commercial-scale cellulosic biorefineries. The committee projects the economic recession may delay progress toward meeting cellulosic and advanced biofuel targets in the renewable fuels standard and slow progress in reducing greenhouse gas emissions. The recommendation states that additional funding for the Biorefinery Assistance Program would reduce investor risk and provide construction and operations jobs in rural communities. The Steering Committee's recommendation for the program is to increase and fully fund mandatory and discretionary levels at $500 million in year one and $1 billion in year two. It also recommends considering expanding the use of the grants to facilitate the construction of first-generation cellulosic biofuels plants.

A fourth recommendation calls for funding the Bioenergy Crop Assistance program, which was authorized under the Farm Bill. The program supports the establishment and production of eligible crops for conversion to bioenergy. It's also designed to assist agricultural and forest landowners with collection, harvest, storage, and transportation of energy crops to conversion facilities. To date, the rules for the program have not been developed and no mandatory funding is provided in the authorizing legislation. The proposal calls for implementing the program in 2009 and providing $500 million over two years, $250 million per year.

A fifth recommendation calls for funding the Community Wood Energy Program, which is authorized under the Food, Conservation, and Security Act of 2008. The program provides grants to state and local governments and communities to develop wood energy plans and acquire and upgrade community wood energy systems in communal facilities, such as schools.

A sixth recommendation calls for increased funding and the extension of Renewable Energy Bonds, which can be issued by electric cooperatives and public power systems. The CREB is a renewable incentive for not-for-profit utilities, and is comparable to the Production Tax Credit that is available to investor-owned utilities. The Steering Committee recommends extending the program through 2010 and providing additional bonding authority of $2.5 billion.

Three recommendations relate to the Production Tax Credit and Investment Tax Credit. The Steering Committee recommends restructuring the PTC and ITC for all sources of renewable electricity to allow for accelerated depreciation, refundable credits and transfers between persons/entities, and enable projects to utilize other financial incentives without a reduction in the amount of ITC and PTC that an entity can claim. Furthermore, the committee recommends extending the PTC and ITC for renewable electricity sources for five years. In addition, to create a level playing field, the committee recommends increasing the PTC for biomass, marine, hydro, green gas, waste and other renewable energy sources to a level equivalent to that received by wind and geothermal energy producers.

Finally, the Steering Committee recommends the government appropriate funds for the Smart Grid Investment Matching Grant Program, which was created under the Energy Independence and Security Act of 2007. The program provides reimbursement for 20 percent of Smart Grid Investments. The committee proposes $1.3 billion in funding for smart grid investment.

To learn more about the 25x'25's recommendations, visit the organization's Web site,