Senate bid to halt Pentagon purchases a blow to rural areas — Vilsack

Source: Gabriel Nelson, E&E reporter • Posted: Friday, June 1, 2012

Agriculture Secretary Tom Vilsack today slammed a surprise move by the Senate last week aimed at stopping some Pentagon biofuel purchases, saying that it “turns its back” on the rural areas that stand to gain.

Vilsack, a former governor of Iowa who now serves as the Obama administration’s main diplomat to rural America, told reporters that lawmakers and the oil industry are standing in the way of helping farmers make money by growing crops for fuel.

Most recent were the votes by the Senate Armed Services Committee during a closed-door markup of a key defense policy bill. Put forward by Sens. John McCain (R-Ariz.) and James Inhofe (R-Okla.), the amendments would stop the Department of Defense from funding biofuel refineries or buying biofuels that are more expensive than petroleum, except in small amounts when testing them for military use (E&E Daily, May 25).

The proposal hasn’t gone to the full Senate, but the Republican-controlled House has already voted to take similar steps, saying using new types of biofuels is needlessly raising energy costs. Vilsack said the administration will resist the bills.

“We are transitioning from an economy that has been reliant on fossil fuels to one that has greater diversity,” he said. “That’s a good thing for the country, and it’s a great thing for rural America.”

A few years ago, the debate over biofuels incentives would have started and ended with corn ethanol, but Vilsack was speaking with the media to back President Obama on soon-to-expire tax credits for renewable energy and advanced manufacturing. They have grown the rural economy, Vilsack said, pointing to an ethanol enzymes plant that officially opened this week in Nebraska.

The $200 million manufacturing plant in the town of Blair, north of Omaha, was opened by the biotech firm Novozymes, which makes enzymes that convert sugar and starch into biofuels.

Novozymes, which also makes chemicals for food, cleaning and textile products, does 16 percent of its business in biofuels. The company says it expects that segment of its business to grow as cellulosic ethanol joins corn ethanol as a substantial source of fuel on the marketplace.

Adam Monroe, the president of the company’s North American division, told reporters that a $28.4 million credit Novozymes received under a stimulus-funded program for advanced energy manufacturing was one of the main reasons the Danish-based company chose to build its plant in the United States rather than abroad. The company picked Nebraska after a global search that included China, which is aggressively courting foreign energy companies with a variety of incentives.

Obama has called on Congress to extend renewable energy tax credits and follow up the $2.3 billion manufacturing program with an additional $5 billion, but it has stalled along with other tax provisions because many key lawmakers are waiting to take action on tax policy until after November’s presidential election.

Every business wants tax credits, but biofuels are a growing sector, and there’s no denying “this makes a difference in your decisionmaking” in where to invest, Monroe said.