GOP puts biofuels on the chopping block

Source: By Zack Colman, • Posted: Thursday, July 12, 2012

The biofuels industry is at loggerheads with House Republicans, who are eyeing its funding for elimination in the farm bill.

Biomass and biofuels groups warn that the loss of $800 million in guaranteed federal support would stall progress in developing the fuel source and cause job losses in rural communities that can least afford it.

The industry claims interest groups such as fossil fuel producers and livestock owners have hijacked the process as the House Agriculture Committee begins a markup of the bill this week.

“What is probably more broadly at play is a concerted effort by livestock groups, oil groups and some in the environmental community to denigrate biofuel production,” said Matt Hartwig, a spokesman for the Renewable Fuels Association. “They spend more money. They have a big microphone.”

While the Senate farm bill included mandatory funding of $800 million over five years for energy programs, the House bill offers only discretionary spending on energy programs, while cutting $500 million from the funding level in the 2008 farm bill.

House Republicans say the plans to choke off funding for biofuels and biomass projects reflect the basic fiscal reality that cuts have to come from somewhere.

“I think the bottom line is that we had more money when the ’08 farm bill was written than we have today,” said Rep. Glenn Thompson (R-Pa.), the chairman of the House Agriculture subcommittee on Conservation, Energy and Forestry. “Under the House Agriculture Committee’s discussion draft, every program that is eliminated, aside from Repowering Assistance, were one-time studies or programs that were never funded and received no mandatory baseline.”

Biofuel groups are lobbying the committee to restore the funding, but might have a tough time making the case to the GOP members of the House Agriculture Committee. Of the 23 Republicans on the panel, 16 are freshman members who are eager to prove their fiscal bona fides by slashing from the big-spending farm bill.

The funding goes toward a variety of loans and grants for bio-refineries and renewable-energy programs, as well as subsidies for dedicated energy crops.

When the Senate Agriculture panel first rolled out its draft farm bill, it did not contain mandatory funding for the energy programs. A bipartisan group of 11 senators pushed successfully to restore the guaranteed funding stream.

Leaders on the Senate Agriculture Committee argue they’re looking out for the nation’s long-term energy needs by reauthorizing the biofuel funding.

“To abruptly reduce research, financing options and investment in renewable energy would pull the rug out from burgeoning industries that can drive economic growth and job creation in rural America for decades to come,” said Sen. Sherrod Brown (D-Ohio), the chairman of a Senate Agriculture subcommittee.

But Thompson said it’s time for the industry to stand on its own two feet. He said the funding in the 2008 farm bill should have been sufficient to drive biofuel and biomass production forward.

Bruce Dale, a Michigan State University professor who advises on a biomass research program created by the 2008 farm bill, said the House bill “is merely reflecting budget realities.”

“I don’t think that there’s really any reason to think that overall the biofuels, bio-refineries are going to be any less important,” Dale said. “I suppose these are practical and political calculations of what needs to end.”

The Energy Information Administration (EIA) has predicted strong growth for biofuels and biomass companies even without targeted tax incentives.

Between 2010 and 2035, biofuels will expand at an annual 4.6 percent clip, making it the second-fastest-growing energy source in the nation, the EIA projected in its “Annual Energy Outlook 2012” report released last month. Similarly, biomass production will yield the nation’s fastest production increase, at 3.3 percent annual growth.

But that study assumes the continuation of policies that would face an uncertain future under the House farm bill, according to Matt Carr, a managing director at the Biotechnology Industry Organization.

“The House bill contains no mandatory funding for programs, and if history is any guide, we’re not likely to get a lot of appropriations through the appropriations process,” Carr said. “The House bill as it now stands is a serious risk to energy title programs.”

Hartwig of the Renewable Fuels Association said oil and natural-gas interests have waged a “multiyear, multimillion-dollar campaign” against the renewable fuel standard that tipped the scale against biofuels in the House.

The charge against oil, coal and gas interests is familiar, but proponents for biofuels and biomass have faced another unusual roadblock — a coalition of fiscal conservatives and environmentalists who have rallied to stop the funding.

Michal Rosenoer, an advocate with Friends of the Earth, said biofuels such as corn-based ethanol have been linked to rising food prices, and argued there’s no guarantee that a shift to more advanced cellulosic-based sources would be better for the environment.

“The Obama administration is obviously very interested in propping up the industry,” Rosenoer said. “But the question is: Do we want an alternative to oil, or do we want a sustainable alternative to oil?”