Biomass panelists provide project finance options

By Rona Johnson | November 03, 2010

Biomass project developers looking to participate in the Biomass Crop Assistance Program will want to be in contact with their local USDA Farm Service Agency agents as the final rule is implemented. That was the advice Tom Kimmerer, senior scientist with Moore Ventures LLC passed on to attendees at the Southeast Biomass Conference & Trade Show.

Kimmerer participated in a biomass project development and finance panel titled Leveraging Alternative Financing Mechanisms to Capitalize Bioenergy Projects. His presentation centered on some of the changes that were made to the BCAP, which has had a rocky start, but the final rule was finally published in the Federal Register on Oct. 27.

BCAP provides financial assistance to landowners who wish to establish, produce or deliver biomass feedstocks to a qualified biomass conversion facility (BCF). The program directs the Commodity Credit Corp. to pay eligible biomass material suppliers $1 per $1 paid per ton delivered to qualified biomass conversion facilities, and to provide landowners with 75 percent of the cost to establish energy crops that will be used to produce bioenergy.

Although the final rule provides a list of eligible biomass materials, the local FSA office will be responsible for determining when a waste material is eligible because there is no local alternative market, which is why Kimmerer advised the audience to get to know their local FSA agent.

According to the final rule, eligible biomass materials must be harvested or collected “from the land.” In the case of woody biomass, that means only the wood collected from the forest floor is eligible for the program, any wood that is transported to a wood product plant, however, and processed in any way probably won’t be eligible, Kimmerer said.

In addition: “Biomass conversion facilities will be required to certify that eligible materials that are not crop residues are byproducts of preventative treatments that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore ecosystem health.

Although this requirement sounds as though it would omit any type of woody biomass that’s not the case, because “good forestry restores ecosystem health,” Kimmerer said.

Kimmerer believes the real value of the BCAP is that it will reduce the risk to farmers and landowners who want to establish crops such as switchgrass or miscanthus or fast-growing trees. Producers can receive payment for up to five years for annual or non-woody perennial crops and up to 15 years for woody perennial crops. Project area proposals will be accepted by the FSA, another reason for producers to be in touch with their local FSA office.

Kimmerer was joined on the panel by Gregory Jenner of Stoel Rives LLP, who provided details about about meeting the requirements of the U.S. Treasury’s Section 1603 grant program; Hamang Patel of Michael Best & Friedrich LLP, who explained how new market tax credit financing could be used to help finance biomass projects; and Jordan Solomon of Ecostrat, who talked about the benefits of using biomass credit wraps to mitigate biomass supply risks. The panel was moderated by John Eustermann of Stoel Rives LLP.