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2008 Farm Bill: Energy Provisions Joel Schumacher

2008 Farm Bill: Energy Provisions Joel Schumacher. Energy Why Do We Care?. Energy Why Do We Care?. Farm Bill. Old Policy for Ethanol Volumetric Ethanol Excise Tax Credit $0.51 per gallon of ethanol New Policy for Ethanol Volumetric Ethanol Excise Tax Credit $0.45 per gallon of ethanol

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2008 Farm Bill: Energy Provisions Joel Schumacher

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  1. 2008 Farm Bill:Energy ProvisionsJoel Schumacher

  2. Energy Why Do We Care?

  3. Energy Why Do We Care?

  4. Farm Bill • Old Policy for Ethanol • Volumetric Ethanol Excise Tax Credit • $0.51 per gallon of ethanol • New Policy for Ethanol • Volumetric Ethanol Excise Tax Credit • $0.45 per gallon of ethanol • Effective calendar year after annual production & imports reach 7.5 billion gallons

  5. Implications • In 2008 (estimates): • US Production 8.6 billion gallons • Imports 0.5 billion gallons • Current Blender’s Credit $0.51 per gallon costs $4.6 billion • If this policy was effective for 2008 • Reducing the Tax Credit by $0.06 would reduced the cost by about $550 million

  6. Farm Bill • Ethanol Tariff • Old Rule • $0.54 per gallon for ethanol from non-Caribbean Basin countries: expires 12.31.2008 • New Rule • Extended until 12.31.2010 • In 2007 ≈ 50% of imports were subject to the tariff (Total revenue ≈ $110 million in 2007) • Top Importers in 2007 • Brazil: 40% Jamaica: 15% • El Salvador: 15% Trinidad & Tobago: 10% • Costa Rica: 10%

  7. Farm Bill • Credit for Production of Cellulosic Biofuels • $1.01 per gallon of alcohol produced • Current corn based ethanol technology is not eligible for this credit • Fuel must be produced and used in the US • Effective 1.1.2009 to 12.31.2012

  8. Farm Bill • Small Producer Tax Credit (Ethanol & Biodiesel) • Old Rule: $0.10/gallon on the first 15 million gallons for facilities that produce less than 60 million gallons • ≈ 25% of ethanol facilities have production capacities of over 60 million gallons • New Rule: cellulosic ethanol is not subject to the 15 million gallon limit

  9. Farm Bill • Biofuels Infrastructure Study (Section 9002) • USDA, DOE, EPA and DOT will be involved • Identify infrastructure needs from now until 2025 • Evaluate current and future feed stocks • Evaluate water resource needs • Evaluate shipping and storage needs for biomass feed stocks • Evaluate shipping methods

  10. Farm Bill • Bio-Refinery Assistance (Section 9003*) • Competitive Grants • Loan Guarantees of up to $250 million • Mandatory Funding (From CCC) • $75 million in 2009 • $245 million for 2010 • Additional authorized funding • $150 annually (2009-2012)

  11. Farm Bill • Repowering Assistance (Section 9004*) • Assist Bio-Refineries in using biomass to produce heat/power to run the bio-refinery • Mandatory Funding (from CCC) • $35 million for 2009 • Additional Authorized Funding • $15 million annually (2009-2012)

  12. Farm Bill • Bio-Energy Program for Advanced Biofuels (Section 9005) • Payments to producers of advanced biofuels • Mandatory Funding (From CCC) • $55 million for 2009 • $55 million for 2010 • $85 million for 2011 • $105 million for 2012 • Additional Authorized Funding of $25 million annually (2009-2012)

  13. Farm Bill • Biodiesel Fuel Education Program (Section 9006) • Provides Grants for Biodiesel Education Programs • Funding of $1 million annually (2008-2012) • Previous grant recipients include: • The National Biodiesel Board ($770 Million): Education • University of Idaho ($190 Million): Technical Research

  14. Farm Bill • Rural Energy for America Program (USDA) (Section 9007) • Grants for Energy Audits and Renewable Energy Development (Universities, etc.) • Loan Guarantees and Grants to Ag Producers • For renewable energy systems and energy efficiency improvements • Grants a limited to a maximum of 25% of project costs • Mandatory Funding • $55 million for 2009, $60 million for 2010, $70 million for 2011, $70 million for 2012 • http://www.rurdev.usda.gov/rbs/busp/9006grant.htm

  15. Farm Bill • Biomass Research and Development (Section 9008) • Secretaries of Ag.& Energy coordinate policies to promote biofuels & bio-based products • Mandatory Funding • $20 million for 2009, $28 million for 2010, $30 million for 2011, $40 million for 2012 • Additional Authorized Funding • $35 million annually (2009-2012) • http://www.rurdev.usda.gov/rbs/busp/9008.htm

  16. Farm Bill • Rural Energy Self Sufficiency Initiative (Section 9009*) • Grants for “rural energy” projects • 50% cost sharing is required • No Mandatory Funding as of 11.10.08 • Authorized funding • $5 million annually (2009-2012)

  17. Farm Bill • Biomass Crop Assistance Program (Section 9011*) • Pays for part of the costs of planting, harvesting & storing biomass crops • Funding from Commodity Credit Corporation (2008-12) • Forest Biomass Program (Section 9012*) • R & D Program • Authorized Funds of $15 million annually (2009-2012) • Community Wood Energy Program (Section 9013*) • Offers grants ($50,000 max) to state & local governments for wood energy systems • Authorized Funds of $5 million annually (2009-2012)

  18. Farm Bill • “Comprehensive Study of Biofuels” will attempt to determine (Section 15322): • Current biofuels production & future projections • Biofuel production capability for US forests & farmland • Domestic effects on fuel prices, land prices, land use allocations, feed prices, environmental implications, crop prices, agricultural imports/exports, cost to taxpayers & refining capacity • Comparative analysis of corn ethanol vs. other biofuel & renewable energy sources

  19. Farm Bill • NRCS Conservation Innovation Grant Program • Extended through 2012 • Funding of $37.5 million each year • USDA Value-Added Producer Grant Program • Extended through 2012 • Funding of $15 million each year • Authorized Funding of $40 million each year

  20. Questions?

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