Report posted June 17, 2009, at 10:46 a.m. CST
 
 With the U.S. EPA updating renewable fuel standard regulations and with California having adopted a low carbon fuel standard, incentives for ethanol producers to replace natural gas or coal with biogas are on the rise and government programs are available to assist with financing, according to speakers at the 25th annual International Fuel Ethanol Workshop and Expo in Denver.

 
 With 90 percent of energy inputs at a typical ethanol plant coming from natural gas or coal, a producer might capture as much as $6 million per year in carbon credits and premiums for producing ethanol with a lower carbon footprint at a 50 MMgy plant using biogas as the primary energy source, according to Beau Griffey, account executive at U.S. Energy Services Inc., which manages $9 million per year in biogas purchases and sales.
 
 If an ethanol producer is located proximate to a landfill, there is a good chance the biogas might be available for use, according to Matt Haakenstad, commercial services manager at U.S. Energy. Haakenstad said Americans, on average, send 2.5 pounds of garbage to landfills each day and there is currently 9.4 billion tons of trash in landfills, with only 5.2 billion tons committed to landfill biogas use projects. 
 
 To fund tapping in to landfill biogas or other biomass energy source projects, there is federal money available for ethanol producers in the form of grants, tax credits, and guaranteed loans, according to Joel Laubenstein, a senior consultant at Baker Tilly International. 
 
 Laubenstein said with the demand for price-volatile natural gas expected to increase 66 percent over the next 25 years, biomass and biogas energy is a long-term, physical hedge that an ethanol producer can implement to manage risk; using biogas can also help to reduce an ethanol producer's carbon footprint and help to keep more money in the local economy, he said. There are multiple sources of funds available to assist with financing. "It's not inconceivable that you could fund one of these projects with a lot of government money and very little equity," Laubenstein said.
 
 Federal funding options include an "open-loop" biomass investment tax credit that can be used to recover 30 percent of capital costs and a combined heat and power investment tax credit can be used to recover 10 percent, Laubenstein said. There is also new market tax credit available to capture $2 million for every $10 million in capital expenditures. For loan guarantees, Laubenstein said the U.S. DOE offers 100 percent loan guarantees on 20 percent equity and the USDA offers loan guarantees of up to $25 million. The Rural Energy for America program offers up to $25 million in loan guarantees or $500,000 grants, he said, and has money available for completing feasibility studies. There is also the opportunity to depreciate the assets over five years and many states have incentives available, Laubenstein said.

FEW: Incentives, funding for ethanol producers to use biogas, biomass

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FEW: Incentives, funding for ethanol producers to use biogas, biomass