BCAP to Boost Biomass Harvest

It will take time to determine if the Biomass Crop Assistance Program is a success. In the meantime, despite questions and concerns, the list of eligible biomass projects is growing by leaps and bounds.
By Anna Austin
A crucial question for farmers when weighing the benefits of growing biocrops or collecting ag residue is "What's in it for me?" Not knowing if there will be a market for these crops has been the biggest deterrent for farmers when deciding to grow and harvest switchgrass, wheat straw, corn stover or other biomass crops. Farmers also have to consider the cost of harvesting, transportation and storage.

On the flip side, there's also been uncertainty on the part of end users of the biomass materials, regarding whether the materials will be too costly or consistently available.

To alleviate those concerns, the Biomass Crop Assistance Program was created in the 2008 Farm Bill to provide financial assistance to eligible material owners providing biomass to facilities that convert or propose to convert biomass to heat, power, biobased products or advanced biofuels. The Congressional Budget Office estimates the cost of the program will top out at $70 million, including $14 million in 2009 and 2010, and $21 million during each of the remaining two years of the program.
Since its inception, to say the program is popular would be an understatement. As of the end of November, the qualified biomass conversion facility list was at 250, ranging from pellet producers to biomass power plants to pulp and paper mills.

Although the program has been received positively for the most part, it hasn't escaped criticism. In August, the USDA Farm Service Agency began accepting comments on the draft programmatic environmental impact statement (EIS) on BCAP to collect suggestions on the program and any ideas for rulemaking, and plans to release more program rules later this year.

Meanwhile, the program continues to gain momentum. Jonathan Groveman, USDA FSA public affairs specialist, says the overwhelming interest in the new program has been the greatest surprise with inquiries coming from all levels and sectors of the biomass industry.

Taking Off

"The best part [of BCAP] has been hearing from all the innovative start-up facilities trying to figure out how they fit into the program and to get the indirect benefits, such as a small tree farm that is installing a hydronic unit to power its operations," Groveman says. He adds that it's been a surprise to learn that many facilities already in operation, during pressing economic times, see their indirect benefits as a way for them to move toward more efficient bioenergy production. "Eligible material owners (EMOs), too, appear to see their direct benefit as an opportunity to make their operations more efficient, such as using mobile briquetting which cuts the bulk and cost of transporting biomass," he says.

One of the aspects of the program that might have led to its popularity was the easy application process. Applying to the program wasn't difficult, says Gerry DeNotto, president of Indeck Energy Services. Indeck Energy has two biomass conversion facilities in BCAP-a 16 megawatt wood-to-energy plant in Alexandria, N.H., and a 90,000 ton per year wood pellet plant in Wisconsin. "The [initial] rules came out piecemeal, although, I must give the FSA credit for getting them out quickly," he adds.
So far, the list doesn't include many facilities in the Midwest, which is touted as the country's agriculture belt. Groveman points out that it's important to remember that while a biomass conversion facility may be located in one state, the eligible material may come from several states. "The initial trend of sign ups for qualification of the biomass conversion facilities came from the forestry and paper industry and now a variety of sectors are beginning to submit applications," he says. "We're receiving applications from schools and universities, smaller entrepreneurial start-ups, various biobased product and advanced biofuel producers and cooperatives."

Most bioconversion facilities that have applied to the program have qualified, only a few facilities have been turned away because the facilities convert only ineligible materials or there were no conversion processes, according to Groveman. "Several facilities have been unable to qualify based on their inability to provide environmental compliance with federal, state or local laws," Groveman says. "Many applications have had to be returned for deficiencies, meaning they were incomplete."
If an application is returned, however, the applicant may reapply. "And most have reapplied, or intend to apply when licenses and permits are in place," he adds.

Questions and Concerns

As with any new program, kinks in the BCAP program still need to be worked out. Charlie Niebling, general manager for BCAP qualifier New England Wood Pellet and chairman of the board of directors for the Biomass Thermal Energy Council, believes BCAP will benefit the pellet industry in the Northeast, as it is a critical revenue enhancement for wood suppliers, many of whom are struggling in the down economy. However, Niebling says he has a healthy skepticism about subsidy programs such as BCAP because markets often adjust quickly to the presence of subsidies, and the benefits of the program diminish as a result. "I'm also concerned about what happens in two years when most current EMO's no longer qualify to participate," he says. "Will they be in a position to adjust their businesses to the absence of the subsidy at that time? I think all companies participating in the program have to keep expectations realistic and not view BCAP as a panacea."

Across the biomass industry, questions have been raised, such as whether using wood waste or residue should count as eligible material, as most established conventional facilities most likely already have established suppliers of woody biomass. The Institute for Agriculture and Trade Policy says funding is being used to pay for existing biomass supplies used for renewable energy, rather than focusing on the BCAP program goal of helping to jump-start the growth of new biomass energy crops. IATP recommends that perennial and multiple-species biomass feedstocks be a focus and, if funds allow, then annual crops in a resource-conserving crop rotation.

A commodities manager for a qualified ethanol facility employing a biomass gasification system told Biomass Magazine that though the goal of the program has been made clear, he's not sure if they're "doing a great job in meeting that goal." He says he's also had questions about the 0 percent moisture rule in the BCAP.

"No other crop assistance program that I'm aware of has had that requirement," he says. Under BCAP, payments for the sale and delivery of eligible material to a qualified facility rate $1 for each $1 per dry ton, limited to a maximum of $45 per dry ton. For example, 45.3 actual tons of biomass with 11.6 percent total moisture content has a dry ton equivalent of 40 tons, and so the EMO would get paid only for those 40 tons.

Seth Voyles, manager of government affairs for the Pellet Fuels Institute, says there are also concerns with the popularity of the program, which could be a problem because the money allocated might not be enough-and the dollar for dollar won't be achieved because of the high amount of people applying for the money.

As the debate over the effectiveness of the program continues, most view the biomass-focused program as signaling a change in the energy focus of the federal government.

Future of BCAP

BCAP's incentives are likely to give farmers contemplating growing biomass crops the final push needed to do so, and established woody biomass suppliers struggling with the downturn in housing markets may be able to regain their footing. Additionally, the program's many indirect benefits are being realized.

"The pellet industry is looking at it optimistically and supportively because one thing we're worrying about is feedstock, especially with suppliers," Voyles says. "Feedstocks have been hard to come by. Realistically, for the pellet industry, prices will be the same or just a little lower, but on the positive side, with pellet mills signing up people will want to sell to them because they have the potential to get that dollar for dollar."

A proposed rule for full BCAP implementation is expected after the EIS is complete sometime in November, and full implementation of the program is expected in 2010. Until then, those working toward commercialization of innovative renewable fuel and energy technologies utilizing biomass can rest a little easier knowing that realizing a secure, steady feedstock supply in the future is a near certainty, and those planning to provide the materials are poised for steady demand.

More information about BCAP can be found at www.fsa.usda.gov. BIO

Anna Austin is a Biomass Magazine associate editor. Reach her at aaustin@bbiinternational.com or (701) 738-4968.