Washington Watch: The 2007 Farm Bill

By | November 20, 2007
In late October, the U.S. Senate Committee on Agriculture, Nutrition and Forestry approved the Food and Energy Security Act, which is the committee's version of the 2007 Farm Bill. In addition to continuing farm income protection, conservation, nutrition and rural development, the program makes investments in the future of renewable energy. The bill must now be considered by the full Senate, and was scheduled for the floor of the Senate as early as the last week of October.

The energy title of the Farm Bill includes the Bioenergy Program for Advanced Biofuels, which generally continues the Commodity Credit Corp.'s Bioenergy Program. The Senate version of the program includes a handful of limits that will make it difficult for biodiesel producers to use. First, the program has been limited to $245 million for the duration of the Farm Bill. Secondly, the program is limited to new production, which means current production would likely not qualify. Finally, the program is being offset against the "small agri-biodiesel production tax credit," which allows small agri-biodiesel producers producing less than 60 MMgy to claim up to $1.5 million in income tax credit on the first 15 million gallons of production each year. The National Biodiesel Board is working with the Senate committee to improve the program.

Additionally, the energy title continues the Biodiesel Education Program, which is funded at $2 million per year. The Biodiesel Education Program was originally established as part of 2002 Farm Bill and provides educational funding to support increased fuel quality measures. The program also assists the USDA and NBB in developing the acceptance of biodiesel by engine and equipment manufacturers, petroleum partners, users and the general public. For example, a recent survey done to benchmark the program's progress showed that the public's awareness of biodiesel rose from 27 percent in August 2004 to 45 percent in December 2006.

As Congress continues to consider the Farm Bill, the NBB will continue working to reauthorize the CCC Bioenergy Program and modify the program's structure so that it provides maximum benefits to help biodiesel producers offset feedstock costs. Specifically, NBB will continue to advocate a program that provides support for all gallons of production, is financed by mandatory funding, and does not require biodiesel producers to choose between tax incentives and the CCC Bioenergy Program.

Last, when the full Senate considers the Farm Bill, it is anticipated that the tax bill crafted by the Senate Finance Committee for consideration in tandem with the Farm Bill, the Heartland, Habitat, Harvest and Horticulture Act of 2007, will be incorporated into the Farm Bill. The 4-H Act contains a host of provisions that are of importance to the biodiesel industry, including an extension of the $1 per gallon biodiesel tax incentive through 2010.

Key members of the House of Representatives and the Senate continue to work behind the scenes on an informal "energy conference." Both the House and the Senate have passed their respective versions of energy legislation, which at some point will need to be combined into one energy bill. Speaker of the House Nancy Pelosi, D-Calif., has agreed to work with Senate Majority Leader Harry Reid, D-Nev., on an informal process designed to reconcile the differences between the House and Senate energy bills and ultimately yield a single product that can be considered by both chambers and forwarded to the White House.

The effort to expand the renewable fuels standard will be discussed as part of this process. NBB believes that an expanded RFS must have a renewable requirement as part of the diesel pool, and the NBB is working to include language similar to the Biodiesel Promotion and Quality Assurance Act of 2007, which was introduced as S. 1616 in the Senate and H.R. 3781 in the House of Representatives.

Keystone State considering incentives
A lack of incentives has stalled demand of Pennsylvania-produced biodiesel within the commonwealth, according to Pennsylvania biodiesel producers.At press time, those producers were hoping for help from a special legislative session held during the final few months of 2007. The National Biodiesel Board state regulatory affairs team has been working with the Pennsylvania Biodiesel Producers Group on producer incentives.

The special session was held primarily at the behest of Gov. Ed Rendell to address the use-namely with requirement language-of more renewable energy in Pennsylvania. "We are optimistic that although this session was started for a Pennsylvania renewable energy initiative-a gubernatorial proposed order, which includes a mandate-it will also address incentives for production," says Ben Wootton, founding member of the Pennsylvania Biodiesel Producers Group. "We are most concerned with the type of support that will help keep pre-existing plants' doors open. We need to be on a level playing field with other nearby states that do have an incentive to produce (and whose producers) then sell their product in Pennsylvania."

Wootton says Senate Bill 10 would provide a $1 per gallon incentive for Pennsylvania biodiesel producers. It would be a three-year program for ASTM D 6751 fuel, capping out at $10 million, or $4 million per facility. Wootton says he is also hopeful for a reported companion bill in the House. The Senate is Republican-run, and the House is controlled by Democrats. Wootton adds that the measure is bipartisan.

The governor's proposal calls for a commonwealth-wide 2 percent biodiesel blend once Pennsylvania production capacity reaches 30 MMgy. The blend level may also be ramped up. The proposal contains support for construction of new renewable energy facilities.

There are six biodiesel producers in Pennsylvania who are part of the Pennsylvania Biodiesel Producers Group. Wootton is president of Keystone Biofuels, a 2 MMgy biodiesel producer in Shiremanstown, Pa.

BQ-9000 welcomes two producers
Two new biodiesel producers-Central Iowa Energy LLC and Mid-America Biofuels-joined the BQ-9000 biodiesel quality assurance program. Renewable Energy Group Inc. announced that Central Iowa Energy earned BQ-9000 accreditation. The announcement came during a visit from Sen. Hilary Clinton, D-N.Y., who toured the Newton, Iowa, plant and shared her thoughts about biodiesel's role in addressing the nation's energy needs.

"BQ-9000 accredited producer certification distinguishes Central Iowa Energy as one of the most respected biodiesel production facilities in the nation," said General Manager Derek Winkel. "Customers can be confident in knowing that when they work with (Central Iowa Energy), they are working with the very best in the nation. We were honored to have Sen. Clinton on site to share in this important recognition."

Mid-America Biofuels of Mexico, Mo., also earned accreditation. The plant has a nameplate production capacity of 30 MMgy.

BQ-9000 is a voluntary fuel quality assurance program adopted by the National Biodiesel Board and the Canadian Renewable Fuels Association. BQ-9000 couples the foundation of universally accepted quality management systems with the product specification ASTM D 6751. The program, which has become the premier quality designation in the industry, covers storage, sampling, testing, blending, shipping, distribution and fuel management practices. Producers and marketers are eligible to become either an accredited producer or certified marketer under BQ-9000.

Feedstock focus at National Biodiesel Conference
Nothing drives innovation like need, and as the biodiesel industry grows, honing a cost-effective and diverse feedstock supply stands out as a top challenge. The National Biodiesel Conference & Expo, Feb. 3-6 in Orlando, Fla., will address feedstock developments.

Alan Weber, economic consultant to the National Biodiesel Board, will lead the conference's final general session, titled "Biodiesel: The Next Generation." What innovations in feedstock development appear on the horizon? Many view algae as biodiesel's parallel to cellulosic ethanol, but just how close is it to commercialization? A panel of experts from academia and the private sector will discuss algae and several other exciting potential sources for biodiesel as the "next generation" of biodiesel enters the vast frontier. The panel includes Jack Brown, a prominent plant scientist at the University of Idaho, who will discuss emerging feedstocks such as camelina.

The conference has offered top-notch general sessions and speakers, and this year will be no different. NBB CEO Joe Jobe and long-term trends analyst Don Reynolds will open the event with by discussing the conference's theme, "Navigating a Changing Landscape." Astronaut Jim Lovell will speak about the challenges that faced space exploration and how that relates to the challenges facing the biodiesel industry.

The 2008 conference tracks feature production, technical, fuel distribution, policy/regulations, markets and users, and auto and engine manufacturers. Networking events, including a golf tournament, help strike the right balance of work and play.

Call (407) 586-2000 to reserve a room at the Gaylord Palms Resort & Convention Center. To ensure the discounted room rate of $220, mention "National Biodiesel Conference & Expo 2008." Reservations must be made by Jan. 3 to secure discounted rates. A one-night room deposit is required. Rooms are based on availability, so make reservations soon.
Pre-registration ends Jan. 25, after which attendees must register on-site at a higher rate.

Member profile: Innovative Northwestern retailer's tale
Iceberg Hugger. The simple statement on a T-shirt explains one reason why Propel Biofuels was formed, and it does so in a way the public can now understand thanks to education on global warming. Propel Biofuels created the T-shirt to draw attention to the primary product-biodiesel-it helps sell to the public.

Propel Biofuels recently celebrated the opening of two biodiesel retail locations. Propel sets up what it calls "clean fuel points" to sell the fuel at pre-existing fuel stations under its own stand-alone Propel canopy. Beyond offering this unique service, the NBB member-company's recent pump opening touted a special guest of honor, Sen. Maria Cantwell, D-Wash.

The Seattle-based company's clean fuel points are unique, stand alone, renewable fuel stations. Propel owns and manages the sites, partnering with the retail/convenience store at which they are placed. Clean fuel points are built to make fueling with biofuels safe and convenient, in locations where drivers are demanding biodiesel. Consisting of an aboveground tank and dispenser system, the clean fuel point does not require drivers to learn new fueling habits, nor does it require station owners to disrupt operations to make biodiesel a profitable part of their business. The result is a product that complements the current fuel market.

Although young (Propel was established in 2004), the company hopes its growth will continue with Washington's biodiesel industry. "I'm proud that Washington state is at the cutting edge of the growing biodiesel marketplace, but we can do more," said Cantwell, a member of the Senate Energy and Finance Committees. "That's why I'm fighting to get the landmark energy bill that we passed in the Senate recently to the President's desk. Biodiesel is part of the answer to curbing our nation's over-dependence on fossil fuels, cleaning up our air and combating climate change."

In addition to the recently opened pumps in Ballard and Kenmore, Propel has plans for 15 more locations. "Convenience is critical for widespread biodiesel adoption," says Wash., Propel President and founder Rob Elam. "We have projects in Washington, Oregon and California, launching new stations in multiple markets. I expect 2008 to be a big year for public biodiesel access."

Propel is showing drivers using its biodiesel pumps just how they are helping the environment, compared to burning regular diesel. CleanDrive is Propel's emissions reporting program. Individuals and businesses can measure the emission reductions and economic benefits of using clean fuels. CleanDrive is available free, enabling any customer to track his or her carbon dioxide reductions whenever they fill at Propel's growing network of pumps. By choosing to fuel at a Propel clean fuel point, drivers can decrease their contribution to greenhouse gas emissions by nearly 80 percent, contribute to improved community air quality and spend energy dollars locally, according to propelbiofuels.com.

Like the icebergs, at least figuratively, that's an idea people can really put their arms around.

NBB launches Producers' Workgroup
The National Biodiesel Board introduced its Producers' Workgroup, a new group formed as the result of ongoing discussions within NBB related to production issues. The industry is at a critical point, facing rapidly increasing capacity, high feedstock costs and other challenges. Chaired by Lisa Ryan of Georgia-based Alterra Bioenergy, the work group has held its first two meetings. The first was held via conference call and the second at the NBB meeting in mid-November.

"I am really excited and honored to be the chair of this new, timely committee for the National Biodiesel Board," Ryan says. "I want to accurately capture and present concerns related to producers, making sure they are addressed in a way that helps the industry to meet its goals."

The Producers' Workgroup is an ad hoc committee formed to address producers' industry concerns. Priority items will be moved to the full board for consideration. Some already identified focus items include integrating sustainability into the development of new feedstocks and establishing formal safety guidelines.

"Producer issues have always been extremely important for the board to address, but as the industry and the NBB have grown, those issues have grown as well," says former NBB Chairman Darryl Brinkmann, who established the work group. "We want to make sure that we are doing everything we can as a trade association to serve our members well and move the industry down the right path. This will provide a constructive forum for biodiesel producers."

NBB Technical and Regulatory Engineer Don Scott is the Producers' Workgroup staff contact. All NBB producer-member individuals are invited to its meetings.

NBB welcomes new members
Fredrikson and Byron P.A.-Minneapolis
Mike Joannes-Farley, Mo.
New Energy Fuels Inc.-Waller, Texas
Provista Renewable Fuels Marketing-Inver Grove Heights, Minn.
Revnova Biofuels LLC-Fairfax Station, Va.
The Penray Companies Inc.-Wheeling, Ill.
U.S. Biodiesel Group II LLC-San Francisco
U.S. Canola Association-Washington, D.C.
Vitol Inc.-Houston
Weitz Industrial Services Group-Cedar Rapids, Iowa
Wright Biofuels Inc.-San Jacinto, Calif.
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