After a two year delay and a marathon slog, the US House and Senate finally agreed and passed a Farm Bill in January. It was met with bouquets and boos from various sectors, but for clean energy it looks like a clear win.
What does the new Farm Bill do for clean energy in the Southeast?
The Energy Title of the Agricultural Act of 2014 holds most of the clean energy provisions. In terms of total funding, compared to the 2008 Farm Bill Energy Title, in 2014 we lost some momentum. The ’08 Energy Title total had mandatory and discretionary funding over four years totaling almost $1 billion; in the ’14 Energy Title, all funding over five years totals approximately $694 million.
But the good news is that many rural clean energy programs were extended with mandatory funding, which means they will be shielded from the winds of politics and fits of austerity.
For example, the Rural Energy for America Program (REAP) is one we’ve reported on before. REAP received $50 million in mandatory funding each year for five years, coupled with an authorization of possibly $20 million per year in discretionary funds (which may or may not be appropriated). The Environmental Law and Policy Center (ELPC) reports that in the 2014 grant cycle, USDA’s available funds are likely to be $78 million because of funds carried over from projects that never got finished in previous years. So get your applications in soon! USDA state contact persons can be found here.
REAP is a great program for the Southeast. It’s helping poultry farmers improve the efficiency of their barns, helping dairy farms decrease their hot water bills with solar, and helping crop farmers diversify into photon (solar) farming. The beauty of REAP is that it is technology-neutral, merely requiring commercial viability (i.e., no experimental boondoggles). Eligible technologies include solar, wind, geothermal, biomass, biogas, and energy efficiency.
REAP will now have reduced paperwork. Both the Senate and House versions ask the Secretary to develop a 3-tiered application process. The smaller the project cost, the less detailed are the requirements for information disclosure and reporting. This will make the application process less burdensome for small family farmers, while maintaining the rigor of applications from medium-scale and larger farms.
Our friends at ELPC have a helpful breakdown of the changes in the new Energy Title, here.
Another important program for our region is BCAP or the Biomass Crops Assistance Program. Farmers interested in diversification look to BCAP to help overcome the chicken-or-egg dilemma of how to finance planting energy crops before the market is developed. Cellulosic biofuels developers support BCAP because it will help establish production of their specialized feedstocks. An example in the Southeast is the BCAP project area in Eastern North Carolina.
BCAP funding in 2014 is $25 million per year, mandatory funding, with zero discretionary funds authorized. These funds are coming too late for 2014 planting decisions, but there is a bright note. An excellent new development in BCAP is that the program now requires conservation and/or stewardship planning in the contract for each participating farmer. This will encourage more people to think about wildlife, environmental impacts, and future generations.
For those who’d like to read more about BCAP’s history, successes and failures, here is a nice progress report from USDA’s Farm Service Agency (FSA).
Some Other Observations from the New Farm Bill
- Biorefinery Assistance Program Broadened
Another interesting new feature to the Farm Bill is that the Biorefinery Assistance Program ($100 m in 2014, $50 m for each year thereafter till 2018; plus discretionary funding of $75 m per year) was expanded to include eligibility for renewable chemical and biobased product manufacturing. This will incentivize biomass companies to strive to produce a range of valuable products (not just biofuels) — “the rest of the barrel” as DOE describes the effort to make bio-based products along the entire petro-chemicals industry value chain.
- Biomass Consumer Cooperatives Established
The old Community Wood Energy Program was altered to allow for grants of up to $50,000 to establish or expand biomass consumer cooperatives to facilitate purchase of biomass heating systems or products (including their delivery and storage). The program was authorized at $5 million annually, but no mandatory funds were allotted.
- Value Added Producer Grant funding increased more than 300%
Since 2008 the USDA’s Value Added Producer Grant (VAPG) program has supported renewable energy and efficiency projects with grants for both working capital and planning. In USDA’s view, successful farm-energy applicants “realize value by transforming natural resources into energy on the farmstead.” VAPG grants have supported farmer-owned wind turbines, on-farm biodiesel plants, methane from animal waste projects, and a slew of energy efficiency measures, among others. The exciting news is that VAPG funding was increased from $15 million to $63 million per year — in mandatory funding! The deadline has already passed for the 2014 competition, but now is not too soon to begin preparing an application for 2015.
- Rural Energy Savings Program Established
After the success of the South Carolina pilot project called “Help My House,” the 2014 Farm Bill established the Rural Energy Savings Program (RESP) within the U.S. Department of Agriculture’s Rural Utility Service. This new program provides funding for RESP at $75 million per year over five years, to provide zero percent loans to rural electric cooperatives for the purpose of relending the funds to co-op members to make energy efficiency improvements (such as air sealing, duct repair, HVAC upgrades, insulation improvements, etc.). RESP will support “on-bill financing” programs, in which energy efficiency loans are repaid through the beneficiary’s electric bills.
This new RESP sounds a lot like the current Energy Efficiency and Conservation Loan Program (EECLP). There are three big differences: First, the RESP will offer zero percent interest loans, whereas EECLP is Treasury rate plus 1%. Second, RESP will require annual appropriations of funds to offset the losses to the Treasury of the subsidized interest rate, whereas EECLP uses existing lending authority with credit subsidy (thus no annual appropriations required). Third, RESP is a new program for which rules must be developed and approved by OMB, whereas EECLP is already approved and available.
If you are still reading by this point, you must be pretty deeply interested in rural energy efficiency! So let me inform you of an upcoming webinar by our friends at the 25x’25 Alliance, on April 9th. Officials from USDA will review the latest program updates from the USDA on renewable energy and energy efficiency programs and tools along with financing programs available through the Rural Utility Service. For more information on this webinar, click here.
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