November 1, 2000
A new $300 million program to encourage expanded production of environmentally-friendly fuels made from corn, soybeans and other crops will be launched by USDA. The program is designed to help expand markets for agricultural commodities and promote use of bio-fuels like ethanol and soy-based biodiesel.
Ethanol, a major biofuel and practically non-existent 20 years ago, now accounts for 1.2% of the nation's gasoline supply. Already, 567 million bushels of corn, more than 5% of U.S. production, are grown annually for use in biofuels. President Clinton issued an executive order last summer that set a goal of tripling the U.S. use of renewable energy.
Under the latest program, USDA will make cash payments to bioenergy companies that increase their purchases of corn, soybeans and other commodities to expand production of ethanol, biodiesel or other biofuels. The program will provide higher payments to small and new-to-market processors, including cooperatives, to encourage the expansion of domestic bioenergy production capacity. USDA will provide up to $150 million for the program this fiscal year and another $150 million in fiscal 2002.
The new regulation, under development during this past year, was finalized under a USDA rule-making process. A proposed rule was issued this summer, followed by a public comment period. Sign-up for the program will begin in December. Further information will be available on the web at http://www.fsa.usda.gov/daco/bioenergy/bioenergy.htm.
Glickman also announced that USDA is soliciting proposals for pilot projects that use harvested vegetation to produce energy. Biomass, plant materials containing cellulose and lignin, can be burned, converted into combustible gas, or used to produce liquid fuels. The land must be enrolled in USDA's Conservation Reserve Program and the vegetative cover, such as grass, must be an approved cover for use in the conservation program. Pilot projects will be for a minimum period of 10 years and the total acreage per project may not exceed 50,000 acres.
The maximum acreage for all pilot projects will not exceed 250,000 acres. No more than one project will be approved in any state. Those interested in submitting proposals for biomass projects should contact their State Farm Service Agency.
Eric Vaughn, president of the Renewable Fuels Association, said increasing the production of ethanol will provide "a vital value-added market for farmers and will reduce farm program costs at the same time." The RFA appreciates USDA's effort to increase ethanol production, Vaughn added, but "we (also) will continue to urge them to work with other agencies, like the Department of Energy and EPA (Environmental Protection Agency), to increase the demand for ethanol. It's important to remember the ethanol industry is on pace to set record production in 2000 and we also have record amounts of ethanol in storage."