Updates on Illinois Clean Energy–great news for farmers

Updates on Illinois Clean Energy–great news for farmers

By Hans Detweiler

By Hans Detweiller

Policy Advocate

1) Farm Bill emerges with new “Clean Energy Title” advocated by ELPC and other clean energy and sustainable agriculture advocates. The legislation includes significant new incentives for rural wind power, biomass energy, and energy efficiency improvements, with over $400 million appropriated over five years for the new Clean Energy Title. Furthermore, financing opportunities for farmer equity participation in wind development co-ops has been rolled into the Rural Development Title of the Farm Bill, expanding existing ethanol projects to make wind energy projects eligible as well. Another new provision includes the authorization of biomass harvesting and wind turbine installations on Conservation Reserve Program land. An extended summary of the Clean Energy Title follows below.

2) Residential Customer Deregulation arrived with a whimper in Illinois on May 1st. Remember the idea of residential deregulation, with Illinois residential customers eligible to choose between different providers? Well,

it formally began May 1, and the number of alternative companies entering the residential market was precisely zero. Find out more about why from the Citizens Utility Board Executive Director Marty Cohen.

3) Spire Solar Chicago assembly facility Grand Opening was Saturday, May 4. Everybody was invited to the Grand Opening of the Chicago Center for Green Technology (including anchor tenant Spire Solar Chicago) Saturday, May 4, at 445 N. Sacramento. The opening ran from noon to 4 p.m. For more information, call Spire at (773) 638-8700.

“Clean Energy Title” passes as part of 2002 Farm Bill”

Earlier this week, in a significant and precedent-setting victory for clean energy advocates, the Farm Bill Conference Committee approved the final Clean Energy Title (Title IX of the Farm Bill) as part of the 2002 Farm

Bill. The legislation, and other sections in the Farm Bill, includes significant new incentives for rural wind power, biomass energy, and energy efficiency improvements, with more than $400 million appropriated over five years for the new Clean Energy Title. Half of that amount will go to fund Clean Energy Title programs such as direct financial assistance to farmers, ranchers, and rural small businesses for renewable energy system purchases and EE improvements and for appropriations for the Biomass Research and Development Act. The other half will go to the Commodity Credit Corporation (“CCC”) Bioenergy Program to increase production of ethanol and biodiesel. Some of the other provisions of the Clean Energy Title are staying in as authorizations, without mandatory appropriations. Also, another Senate-passed Clean Energy Title provision — financing opportunities for farmer equity participation in wind development co-ops — has been, in effect, rolled into the Rural Development Title of the Farm Bill. Other new provisions include the authorization of biomass harvesting and wind turbine installations on Conservation Reserve Program land, and new emphasis on farm and ranch energy efficiency research.

The Clean Energy Title puts real money into real programs and moves beyond research and analysis. It transforms the policy recommendations of Repowering the Midwest into action in rural communities, and it puts into practice ELPC’s and our colleagues’ longstanding policy views, expressed in Repowering the Midwest and other media, that “clean energy cash crops” can provide a new income stream to help support small and medium-sized family farmers and ranchers, enhance rural economic development, and improve environmental quality for everyone by avoiding pollution. This is sustainable development in action. The key renewable energy and energy efficiency sections in the Farm Bill, including the new Title IX, are as follows:

Titile IX of the Farm Bill

Section 9001 – Definitions

l “Biomass” is defined as any organic material that is available on a renewable or recurring basis including agricultural crops, trees grown for energy production, wood waste and wood residues, plants (including aquatic plants), residues, fiber, animal wastes and other waste materials, and fats, oils, and greases. The statutory definition standard builds upon language in the Biomass Research and Development Act of 2000, and excludes “paper that is commonly recycled” and “unsegregated solid waste.”

l “Renewable energy” is defined as energy derived from a wind, solar, biomass, or geothermal source, and hydrogen derived from biomass or water using a renewable energy source.

l “Rural small business” has the meaning that the Secretary shall prescribe by regulation.

Section 9002 – Federal Procurement of Biobased Products

l Federal Agencies are required to purchase items containing the highest percentage of biobased products whenever practicable and available.

l Within six months after passage of the Farm Bill, the USDA is to establish guidelines designating items that can be produced with biobased products and providing economic and environmental information on the products and items.

l Includes a voluntary label program under which producers can label eligible an product as a “USDA Certified Biobased Product.”

l The program is funded at $1 million each year from 2002 through 2007 for biobased product testing. Other implementation funding is subject to appropriation.

Section 9003 – Biorefinery Development Grants

l Support for commercialization of new and emerging technologies for converting biomass into transportation and other fuels, chemicals, and electricity from renewable resources, by making available USDA grants to competitively fund development and construction costs (up to 30 percent) of new biorefinery projects.

l Up to 25% of the grantee’s share of the project may consist of in-kind contributions.

l The program’s funding is subject to appropriation.

Section 9004 – Biodiesel Fuel Education Program

l USDA grants for public education on the benefits of biodiesel fuel use. Eligible recipients are nonprofit organizations that have demonstrated expertise in biodiesel fuel production, use, and distribution. This program is funded at $1,000,000 per year, 2003-2007.

Section 9005 – Energy Audit and Renewable Energy Development Program

l New grants for organizations to conduct whole-farm energy efficiency audits and renewable energy assessments linked in part to incentives available under Section 9006.

l Selection criteria for the grantees include professional qualifications, the geographic scope of the planned programs, the number of farmers, ranchers, and rural small businesses to be assisted by the program, the potential energy and environmental benefits, and the entity’s business plan for educating its customers on the benefits of energy efficiency and renewable energy development.

l Farmers, ranchers, and rural small businesses must pay at least 25 percent of the cost of an energy efficiency audit. * The USDA is to submit a report to Congress on program implementation within four years of enactment of the Farm Bill. * Funding for the program is subject to appropriation.

Section 9006 – Renewable Energy Systems and Energy Efficiency Improvements

l Low-interest loans, loan guarantees, and grants to farmers, ranchers, and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements.

l The need-based grants and loans can fund up to a total of 50 percent of the cost of the activity.

l Identifies factors that USDA shall consider in determining the amount of a grant or loan, including the type of renewable energy system, the unit’s capacity, the environmental benefits, and the extent to which the system is replicable.

l The loan interest rate shall be the same as the interest rate for Treasury securities of comparable maturity.

l This program is funded at $23,000,000 per year, 2003-2007.

Section 9007 – Hydrogen and Fuel Cell Technologies

l Directs the USDA and the Department of Energy to cooperate in the development and promotion of hydrogen and fuel cell technology programs for rural communities and agricultural producers.

Section 9008 – Biomass Research and Development

l Extends the authority of the Biomass Research and Development Act of 2000 through September 30, 2007, and funds the Act at $5,000,000 in 2002, and $14 million each year in 2003-2007. Also includes $49 million in annual authorized but not appropriated funds.

Section 9009 – Cooperative Research and Extension Projects [Carbon Sequestration]

l Amends the Agricultural Risk Protection Act of 2000 by authorizing research and development programs for the quantification and measurement of carbon and other greenhouse gases in soil, plants and other agricultural settings. l Research will focus on carbon losses and gains, the relationship of agricultural practices to carbon sequestration, measuring changes in carbon pools, and the impact of federal conservation programs on carbon sequestration.

l Extension agents and other experts and local organizations may implement extension projects to monitor the carbon sequestration benefits of conservation practices and the exchange of greenhouse gases from agriculture.

l Funding for the programs is subject to appropriation.

Section 9010 – Continuation of Bioenergy Program

l Authorizes the continuation of the Commodity Credit Corporation’s payment support program for producers of ethanol and biodiesel (collectively, “bioenergy”) derived from corn, wheat, and other agricultural commodities. (See 7 C.F.R. §§ 1424.1 – 1424.13.)

l Payments are based on yearly increases of bioenergy production: (1) Each producer of less than 65 million gallons of bioenergy shall be reimbursed 1 feedstock unit for every 2.5 feedstock units of eligible commodities used for increased production (relevant commodity prices are used to calculate amount); (2) producers of more than 65 million gallons of bioenergy shall be reimbursed 1 feedstock unit for every 3.5 feedstock units of eligible commodities used for increased production.

l No one producer shall receive more than 5 percent of the total amount of funds available.

l Up to $150 million of annual funding is available from 2003 to 2006 (this amount is based on existing limits; in practice, the program has cost $40 to $50 million per year).

Other Farm Bill Clean Energy Programs and Incentives

Section 2101 – Conservation Reserve Program: Biomass and Wind Turbines on CRP Land

l Biomass and wind turbine installations are permitted on Conservation Reserve Program land.

l Biomass harvesting must be consistent with soil, water quality, and wildlife habitat conservation, and CRP payments shall be reduced by an amount commensurate with the economic value of the activity.

l Wind turbine installation subject to USDA approval, taking into account the site location, habitat, and the purposes of the CRP.

l Amends the Food Security Act of 1985, 16 U.S.C. § 3831 et seq. The biomass and wind turbine amendments are new Section 1232(a)(7) of the Food Security Act. Section 6013 – Rural Development: Expands Loan Eligibility to Include Renewable Energy Projects

l Extends the scope of loans and loan guarantees under the Consolidated Farm and Rural Development Act to include renewable energy systems, including wind energy systems and anaerobic digesters used to produce energy. l Amends Section 310(a)(3) of the Consolidated Farm and Rural Development Act, 7 U.S.C. § 1932(a)(3).

Section 6017 – Rural Development: Better Loan Conditions

l Liberalizes the Business and Industry Direct and Guaranteed Loan requirements for farmer and rancher rural development projects, including equity ownership in wind energy projects.

l Loan limits range from $25 million to $40 million per project. * Replaces Section 310B(g) of the Consolidated Farm and Rural Development Act, 7 U.S.C. § 1932(g).

l Renewable energy facilities are among the priority projects identified for funding in the Farm Bill Conference Committee Managers’ Statement. (Statement at p. 146.)

Section 6407 – Rural Development: Start-Up Funding for Renewable Energy Projects

l Defines the term “value-added agricultural product” to include farm-or ranch-based renewable energy.

l Authorizes competitive grants to assist producers of value-added agricultural products (including renewable energy systems) in developing feasibility studies, business plans, and marketing strategies for the product. Recipients also can use the grant to provide capital to establish alliances or business ventures.

l Maximum grant amount is $500,000 per project.

l The amendments are to Section 231 of the Agricultural Risk Protection Act of 2000, 7 U.S.C. § 1621 note).

l These grants can be used for projects that receive financing for construction costs under the Business and Industry Direct and Guaranteed Loan program (see above under Section 6017).

Section 7207 – Research: Energy Efficiency

Amends the Agricultural Research, Extension, and Education Reform Act of 1998 (7 U.S.C. § 7623) by including farm energy efficiency as a priority research area for Precision Agriculture, and in related farm research programs.

Hans Detweiler may be reached at: Environmental Law & Policy Center 35 E. Wacker, Suite 1300 Chicago, IL 60601 312-795-3720 312-795-3730 (fax)

Hdetweiler@ELPC.org

www.elpc.org

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