13.7 Bioeconomy and Energy
Agriculture historically has provided food and fiber to America. Now, with the development of new biofuels such as ethanol and biodiesel, and with greater commercial interest in wind and solar energy, America’s farms and ranches are increasingly seen as a promising source of clean, renewable, home-grown energy. This role is expected to take on increasing prominence in years to come, given mounting concerns over oil prices and availability, and the environmental and geo-political implications of America’s continued reliance on foreign sources of fossil fuels.
Replacing the use of imported petroleum with domestically produced sources of energy made from biomass, would address many economic, environmental and national security issues. Development of a biomass industry will also ensure that U.S. agricultural producers have profitable new markets for their products, and that agricultural land is kept in productive use. Emphasis should be placed on the development of alternative fuels from agricultural commodities, livestock manures, forest products, agricultural crop residues, food processing byproducts, waste stream products, and other biomass products.
Beyond food, fiber and even energy, many people see agriculture as having potential as a new method of manufacturing pharmaceuticals and other products previously made through chemical or industrial processes. The emerging industrial biotechnology field is exploring how the building blocks in cellulose can be used to create a whole host of products, such as plastics, polymers, pharmaceuticals, solvents, paints, and other industrial chemicals.
The economic value of these potential markets for agricultural “feedstocks” might someday surpass the value of the food and fiber market. Rather than producing these products from finite fossil fuel resources, the U.S. can use its land base and natural resources to provide a continually renewable resource for industrial processing.
NASDA supports a national strategy that addresses the gaps in research and financing so that biomass feedstocks can be grown, harvested, and processed to maximum efficiency. This would result in an industry that produces goods that can compete with petroleum based products on price and availability.
NASDA supports increasing the Renewable Fuels Standard (RFS) to 7.5 billion gallons of renewable fuels by 2008 and increased to 30 billion gallons per year by 2025. Just as the current RFS provides for a portion of this amount to be met by cellulosic ethanol, any increases to the RFS should include a corresponding increase in the amount that must be derived from cellulosic feedstocks.
NASDA supports the implementation of the 25 X ’25 initiative as proposed by the Ag Energy Working Group, which states that “Agriculture will provide 25 percent of the total energy consumed in the United States by 2025 while continuing to produce abundant, safe and affordable food and fiber.”
NASDA supports the establishment of on-farm incentives to produce and utilize solar energy, wind energy, biodiesel fuel, methane, and any other biopowers, biofuels and bioproducts. NASDA also supports emphasis and funding for carbon sequestration research and the implementation of a trading system for carbon credits.
The members of NASDA also support the continuation of existing federal tax credits for the ethanol, biodiesel, and wind production. The members of NASDA also support the minimum oxygen standard of the 1990 Clean Air Act Amendments and the replacement of MTBE with ethanol to meet that standard.
NASDA supports allowing Conservation Reserve Program (CRP) acres to be used for energy and biobased crops, with commensurate payment reductions. In addition, a cellulosic/energy feedstock base should be established. Participants could enroll their land by entering into long-term contracts, at least 10 years, to grow certain perennials, such as, but not limited to, switchgrass and trees. Such land use should also benefit the environment, wildlife and recreation. NASDA also supports providing more financial resources for the federal multi-agency Biomass Research and Development program, with additional resources specifically designated for commercialization. This program requires the USDA Secretary to conduct an inventory of biomass resources on a county-by-county basis. Additionally, NASDA supports an Energy Council in the Office of the Secretary to coordinate energy policy at USDA.
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Carbon Emission Cap and Trade System
Last updated: February 09, 2012
Carbon Emission Cap and Trade System — NASDA supports a national carbon emission cap and trade system to offset non-farm greenhouse gas emissions and which allows the agriculture sector to receive credits for greenhouse gas reductions. Such a system should include provisions for standardized, cost-effective protocols for estimating greenhouse gas emission reductions from agriculture. NASDA also urges continuation and expansion of the Chicago Climate Exchange or other similar markets to provide financial compensation to farmers and ranchers for environmentally sound practices.
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Comprehensive Agricultural Energy Initiative
Last updated: February 09, 2012
Comprehensive Agricultural Energy Initiative – NASDA supports the development of a “comprehensive agricultural energy initiative” by the Administration that considers the renewable resources of this nation’s agriculture industry. There is a tremendous opportunity to formulate and propose agriculture-based energy initiatives that could be used as a “new opportunity” to promote ethanol, biodiesel and other bioenergy sources and the economic contribution to agriculture. Oxydiesel alternatives and others also provide an opportunity to share clean energy biomass electricity alternatives to a nation looking for more energy.
NASDA supports loan guarantee authority for biorefineries, with half going to loans less than $100 million, and the other half for loans up to $250 million. Loan guaranteed may cover up to $2 billion in loans. NASDA supports Congress to require that construction contractors and subcontractors on federally assisted guarantee projects pay their employees not less than the prevailing wage.
Potential biomass production by using advanced gasification technology (not burning), biomass from switch grass crop residues and solid waste could produce a significant amount of clean, sustainable power. The economic benefits for biomass electricity and biofuels would create jobs. NASDA supports establishment of a Farm Energy Production Pilot Program to provide grants to farmers to demonstrate the feasibility of making farms energy neutral using existing technologies. Within the Rural Energy Self-Sufficiency Initiative, USDA is authorized to make cost-share grants for eligible rural communities in order for them to develop renewable energy systems and increase their energy self-sufficiency. NASDA supports increased funding for the Renewable Energy and Efficiency Improvements Program, to be renamed the Rural Energy for America Program. Biomass energy will keep energy dollars in the U.S. and provide for the positive environmental impacts needed.
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Energy Costs
Last updated: February 09, 2012
Energy Costs – Historically changes in cost of production have been due primarily to changes in the cost of land. More recently farmers have been especially hard hit by sharp increases in fuel prices because of their extensive use of oil and gas products in agricultural production. Agriculture already has a low return on investment and equity when compared to many sectors of the American economy, so volatile swings in energy and other input costs can drastically alter farmers’ net revenue. USDA’s projection for farmers’ expenditures for fuels and oils, electricity, fertilizer, and pesticides in 2007 is $41.0 billion, up $4.1 billion from 2006 or 11 percent, and up $6.9 billion or 23 percent from 2001. That equals a decrease in net cash income of about 10 percent.
Increased energy prices, especially fuel prices, immediately impact farmers’ costs of production. Even though farmers are more energy efficient than ever before, spikes in energy costs hit particularly hard their already tight profit margins. But when considering the impact of higher energy prices on agriculture, it is also important to remember that the amount of energy used in agriculture is significant beyond the traditional gas and diesel for vehicle and machinery use. They use heating oil, natural gas, propane, kerosene and/or electricity to heat or regulate temperature in their hog or chicken facilities and dry their crops. Even pesticide costs are directly related to petroleum. As a general rule, it takes the equivalent of one gallon of diesel fuel to make one pound of active ingredient of pesticides.
Farmers are limited in what they can do to mitigate the effects of higher energy prices. When and where possible, producers are limited to employing different production strategies, such as reducing field operations by switching from conventional tillage practices to reduced till, adjusting fertilizer application rates, changing the timing of fertilizer applications and using animal manure and green fertilizer. Unfortunately, however, for the foreseeable future the costs of energy will remain relatively high and it is in the nation’s best interest to deal with how to adjust to the increased prices.
NASDA recommends that government support for alternative fuel sources to fossil fuels continue, focusing on the use of ethanol, biodiesel and biomass production. Further, NASDA urges the government to keep a high priority for research related to bioenergy and biobased products. NASDA also urges USDA to complete the rulemaking on labeling regulation, to increase testing and labeling of biobased products and to expand awareness of the BioPreferred program. In addition, NASDA supports continuation of USDA’s Biodiesel Fuel Education Program.
In the interim period, there should be a renewable fuels content standard in energy legislation, and preferential tax treatment for ethanol, such as in the small ethanol producer tax credit. Congress should also provide funds to continue the USDA Commodity Credit Corporation Bioenergy Program, which provides production incentives for increases in production of ethanol and biodiesel made from agriculture and forestry crops and associate waste materials, including animal manure and livestock/food processing waste. Specifically, the Biomass Energy Reserve Program establishes a program to encourage the production of feedstocks for cellulosic ethanol and other energy production and provides for five year contracts for producers to grow dedicated energy crops. It provides an incentive for producers to harvest, store and transport biomass to bioenergy facilities. It also helps farmers learn how to plant and cultivate these feedstocks in a cost-effective manner. NASDA supports the Forest Bioenergy Research Program that creates a program to address the specific issues facing the use of woody biomass for bioenergy production. Renewable fuels such as ethanol and biodiesel are the cornerstones in assisting American agriculture in terms of the use of its product and energy requirements.
NASDA supports the renewable biomass definition as passed in the Food, Conservation, and Energy Act of 2008 (Farm Bill). In order to ensure the future development and expansion of our nation’s biomass industry, it is critical to allow for a comprehensive range of potential feedstocks.
As directed by the 2008 Farm Bill, the following products may be utilized as biomass:
- Materials that are byproducts of preventive treatments (e.g., trees, wood) that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore ecosystem health; would not otherwise be used for higher value products; and are harvested from National Forest System land or public lands in accordance with public laws, land management plans, and requirements for olddâgrowth maintenance.
- Any organic matter that is available on a renewable or recurring basis from nonnâFederal land or land belonging to Indian tribes, including renewable plant materials (feed grains, other agricultural commodities, other plants and trees, algae), waste material (crop residue, other vegetative waste material including wood waste and wood residue), animal waste and byproducts (fats, oils, greases, and manure), construction waste, and food waste/yard waste.