BIOMASS INTEL

On February 8, USDA issued its proposed rule to implement the 2008 Farm Bill’s Biomass Crop Assistance Program (BCAP), which is designed to boost production of non-food biomass crops for renewable energy.  The new proposed rule follows up President Obama’s February 3 biofuels announcement, which outlined three measures to boost production in the U.S.

Authorized in 2008 by the Farm Bill, BCAP provides incentive payments for those investing in new first-generation energy crops that can displace fossil fuels.  Congress intended for BCAP to jumpstart the non-food cellulosic and advanced biofuels production industry by encouraging the development of a robust feedstock market.  BCAP is not capped so if it ultimately costs as much as USDA predicts, it will become the highest-funded program in the 2008 Farm Bill’s Energy Title.

The program funds two main areas:

1. Collection, harvest, storage, & transpo (CHST) — provides matching payment for “eligible material owners upon delivery to qualified conversion facility” which must be utilized “to produce biofuel or bio-based products”
2. Project Areas program — provides 75 percent of cost to establish perennial biomass crops

Key changes to the existing law:

CHST Matching Payments

The BCAP program has already begun to provide matching payments for the collection, harvest, storage, and transportation (CHST) of biomass to eligible biomass conversion facilities.  As Biomass Intel reported here, BCAP got off to a rocky start and was heavily criticized for diverting waste forest products from the composite wood industry.  To avoid this problem in the future, USDA is proposing to disallow matching payments for wood wastes and mill residues typically used to produce higher value-added products such as particle board.  USDA also is proposing several options to further restrict matching payments for all forms of eligible renewable biomass material.  The new proposed rule terminates CHST matching payments temporarily and will start up again when the final rule is in place.

In another departure from its June 2009 matching payments NOFA, USDA is dropping the 20% cap on Farm Bill Title I commodity crop agricultural residues (for example, corn stover and straw), on the basis that that the cap is inconsistent with the 2008 Farm Bill.

Project Areas

The new proposed rules will implement the Project Areas program under BCAP by establishing an annual payment program to guarantee feedstock supplies.  Either producers or “biomass conversion facilities” can propose BCAP project areas to the Farm Service Administration (acting on behalf of the federal Commodity Credit Corporation).

Some of the key requirements/conditions that will be used to assess project area proposals include:

• Long-term economic viability
• Specific geographic boundaries
• Compliance with other criteria in the 2008 Farm Bill, including consideration of impact on soil, water and related resources

Eligible Crops

BCAP is intended to fund new uses of waste biomass.  As such, “eligible materials” is defined narrowly under the program so that renewable biomass excludes the whole grain derived from any crop that is eligible to receive payments under Title I of the 2008 Farm Bill.  Those crops that are subject to the provisions of Title I of the 2008 Farm Bill would therefore not be included as eligible materials or crops for either component of BCAP.

These crops include the whole grain derived from a crop of barley, corn, grain sorghum, oats, rice, and wheat; oilseeds such as canola, crambe, flaxseed, mustard seed, rapeseed, safflower seed, soybeans, sesame seed, and sunflower seeds;
peanuts, pulse crops such as small chickpeas, lentils, and dry peas; dairy products; sugar; wool; and, cotton boll fiber.

That means the biodiesel industry is not eligible for BCAP payments for the conversion of oilseed crops like soy, canola, or camelina into fuel.

As required by the 2008 Farm Bill, the following renewable biomass materials would also be excluded from BCAP matching payments, although they would be eligible crops for BCAP establishment and annual payments:

• Animal waste and byproducts (including fats, oils, greases, and manure)
• Food waste such as food processing scraps and yard waste such as debris removal originating from municipal or commercial yard, lawns, landscaped areas or related sites
• Algae

More information on eligible crops will be made available here.

The USDA’s proposed BCAP rule is available as a PDF here (from the Federal Register).

Image: Flickr/Horia Varlan