ABC webinar details state, federal policy/programs for biogas

By Anna Austin | July 15, 2011

Though there are some programs and policies in place to help support the developing U.S. biogas industry, the playing field for biogas and other renewables is not level, according to the American Biogas Council.

Presenters of a July 12 webinar hosted by the ABC gave an overview of available incentives that biogas/anaerobic digestion (AD) projects might be able to take advantage of, discussed current initiatives and goals of the ABC, as well as some permitting problems that developers experienced when trying to implement projects.

Brian Stockton of ML Strategies discussed several USDA programs that the biogas industry is taking advantage of, including the Section 9007 Rural Energy for America Program. REAP has three components, he said, which are grants for energy audits and developments, feasibility grant programs and a guaranteed loan program. “The program is no longer restricted to rural areas, but there are some funding issues with REAP,” he said. “Originally funding was zeroed out in the House ag appropriations bill, but $2.3 million was added in. The final level has yet to be seen when the Senate picks the bill up, but traditionally it’s usually $70 million to $75 million.”

Other programs include the Environmental Quality Incentives Program through the National Resources Conservation Service, which provides financial and technical assistance to ag producers through contracts up to a maximum of 10 years, and the renewable fuels standard, as biogas as a transportation fuel qualifies for the Renewable Identification Number System or RINS.

An existing production tax credit (PTC) through section 45 of Internal Revenue code provides a 1.1-cent per kilowatt hour PTC for qualified energy sources including open-loop biomass facilities, Stockton said, adding that through the end of the year the PTC can be taken in the form of an investment tax credit or a grant in lieu of the tax credit through the 1603 Program implemented in Recovery Act of 2009. “While it’s proven popular amongst the renewable energy industry community, it has a placed into service requirement before Dec. 31 of this year,” Stockton said. “It was originally supposed to expire at end of last year and was given a one year extension, but it’s unclear whether it’ll be extended again through the end of 2012.”

Webinar presenter Maureen Walsh of ML Strategies discussed a few initiatives that ML and the ABC is working on, the first of which is to establish a tax credit for biogas used in its gaseous form. “We are also focused on ensuring that biogas receives fair and equal treatment when it comes to any renewable energy standard or clean energy standard,” she said.   

Another area of focus is trying to ensure there is sufficient funding for biogas. This includes pushing for the continued funding of REAP, according to Walsh, trying to get the in-service date of the 1603 Program pushed back, and working with the U.S. DOE to make its biomass program more friendly toward biomass technologies beyond drop-in fuels.

Helping Congress, policymakers, and nongovernmental groups who shape legislation to increase their understanding of and the profile of biogas and AD will be key in helping the ABC achieve its goals, Walsh said. “There’s quite a bit of education that needs to go on, and we’ve been talking to folks at agencies and on the hill, to show them the promise of biogas,” she said.

Graham Noyes of Stoel Rives LLC touched on state policies in the biogas arena and gave a snapshot of the industry across the states, including digesters in existence, key state drivers and policy tools being used to assist industry development. “The devil is in the details in terms of understanding eligibility factors, to what degree money will be available and what the time horizon is on the [given] program,” Noyes said.

As of April 2011, there were 146 operating digesters in the U.S., according to Noyes. Wisconsin leads with 26, followed by New York and Pennsylvania. He added that in terms of state policies, the most important category to look at is renewable portfolio standards.

Speaking about the development of specific AD/biogas projects, Bob Joblin, an investor in AgPower Group, discussed issues the company has faced when trying to get digester projects permitted.

AgPower developed its first AD facility at a 4,700-cow dairy in Idaho, and the company is currently constructing another Idaho project on a 15,000-cow dairy as well as on a 3,000-cow dairy in California. “We were [also] working on a project in Washington, but confusion over who owns the carbon credits from sequestration of methane in the digester was one of the key issues that stopped negotiations with the utility that we were going to sell the power to,” Joblin said. “It’s a very difficult issue; the way the legislation was written will cause it to be difficult to develop AD projects in Washington until it’s cleared up.”  

For the two projects in Idaho, Joblin said they were permitted at the same time through the Department of Environmental Quality and there were no problems with permitting. “We went ahead with the first project with Dean Foods, but didn’t have funding for a second project at that time,” he said. “When we did get it, going into construction, we found we had to reapply for our environmental permitting.

Because a different person at the DEQ reviewed the project, they had a different perspective, according to Joblin. “We ended up with a formaldehyde problem, excessive quantities coming off of the gensets,” he said. “We solved the problem and got the permit, but it was interesting to note it was the same set of regulations at the same agency, just a different person looking at it a different way. We’ve found that’s a significant issue in every state we’re working in or have attempted to work in.”

A similar situation occurred during the development of a project in California, which took AgPower 2½ years to get permitted. During the permitting process, the company was told by the [state] water board that it didn’t need a water permit, Joblin said. After AgPower received its air permit, it asked the water board to send a letter confirming that it did not need a water permit. “A different person wrote the letter and said because we were a partially in-ground structure, our digester was redefined as a pond so we had to double line the concrete vessel. We overcame that and are getting our permit, but again, it was the interpretation of a different person in the same agency looking at the same regulations. We’ve found that to be the biggest problem state-by-state.”