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Wednesday, February 6, 2013

Renewable Energy Programs and the Farm Bill: Status and Issues

Randy Schnepf
Specialist in Agricultural Policy

All of the major Title IX bioenergy programs expired at the end of FY2012 and lacked baseline funding going forward. The American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) extends the 2008 farm bill through FY2013. However, all major bioenergy provisions of Title IX—with the exception of the Feedstock Flexibility Program for Bioenergy Producers—have no new mandatory funding in FY2013 under the ATRA farm bill extension. Although most of the bioenergy programs are reauthorized for FY2013, their mandatory funding expired at the end of FY2012. If policymakers want to continue these programs under either the 2008 farm bill extension or in the next farm bill, they will need to pay for the program with offsets.

U.S. Department of Agriculture (USDA) renewable energy programs have been used to incentivize research, development, and adoption of renewable energy projects, including solar, wind, and anaerobic digesters. However, the primary focus of USDA renewable energy programs has been to promote U.S. biofuels production and use—including corn starch-based ethanol, cellulosic ethanol, and soybean-based biodiesel.

An energy title first appeared in the 2002 farm bill, and was both extended and expanded by the 2008 farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110-246). Like the 2002 farm bill, the 2008 farm bill contained a distinct energy title (Title IX) that significantly expanded the number and types of programs available to support renewable energy production and use. In addition, new renewable-energy provisions were included in the rural development (Title VI), research (Title VII), livestock (Title XI), and tax (Title XV) titles of the 2008 farm bill.

The 2008 farm bill authorized slightly over $1 billion in mandatory funding for energy programs for FY2008 through FY2012, compared with $800 million in the 2002 farm bill (FY2002- FY2007). Discretionary funding in the 2008 farm bill totaled $1.7 billion, up sharply from $245 million in the 2002 farm bill. However, all discretionary program funding is subject to the annual appropriations process, which may or may not appropriate funds due to budget constraints. Actual discretionary appropriations to Title IX energy programs have been substantially below authorized levels through FY2012.

Corn starch-based ethanol dominates the U.S. biofuels industry. However, in response to growing concerns about the emerging spillover effects of increasing corn use for ethanol production, the 2008 farm bill attempted to refocus U.S. biofuels policy initiatives in favor of non-corn feedstocks; the most critical program to this end is the Biomass Crop Assistance Program (BCAP), which assists farmers in developing nontraditional crops for use as feedstocks for the eventual production of cellulosic ethanol or other second-generation biofuels.

The primary energy-related issue for the next farm bill is the expiration at the end of FY2012 and lack of baseline funding going forward for all major energy-related provisions of Title IX. In addition, the appearance of substantial redundancy across renewable energy programs at USDA and DOE, the slow development of the U.S. cellulosic biofuels sector, and continued concerns about spillover effects of corn use for ethanol production are issues that are likely to emerge during the next farm bill debate.

This report focuses both on those policies contained in the 2008 farm bill that support agriculturebased renewable energy, especially biofuels, and on the outlook for bioenergy programs in the next farm bill.

Date of Report: January 18, 2013
Number of Pages: 45
Order Number: R41985
Price: $29.95

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