The Repowering Assistance Program, administered by the U.S. Department of Agriculture’s (USDA) Rural Development office, reimburses biorefineries for using biomass sources like wood chips as a heat and power source instead of fossil fuels.

Facilities can receive up to 50 percent of the total project cost.[1] Due to a lack of interest in the Repowering Assistance Program (no new projects have received subsidies since 2012), both the House and Senate Agriculture Committees voted in 2012 to eliminate the program since it failed to achieve its stated goals. However, the 2014 farm bill still reauthorized the program, providing $12 million of mandatory funding for FY2014 to remain available until expended, in addition to $10 million annually from FY2014-18 in discretionary (optional) funding.[2]

Background

The Repowering Assistance Program is funded though the energy title of the farm bill. The farm bill, renewed approximately every five years, is a wide ranging piece of legislation that funds everything from nutrition assistance programs and broadband internet to agricultural subsidies for the production of crops such as corn and soybeans. Specifically, the energy title of the farm bill, first introduced in 2002, provides grants, loans, and other subsidies to energy efficiency, biofuels, and bioenergy/biomass (heat and power) projects. In total, the 2014 farm bill energy title’s programs were projected to cost taxpayers $879 million from FY14-23.[3]

Facilities that receive taxpayer support range from universities receiving research and development grants to investigate new uses for biomass sources such as wood and agricultural residues, to large established corn ethanol companies receiving grants for annual production of biofuel. Other energy title projects funded by taxpayers include:

• collection, storage, harvest, and transportation of biomass sources to bioenergy or biofuels facilities
• anaerobic digesters that create heat and power from animal waste
• grants and loans to individuals or companies installing wind, solar, and geothermal systems
• federally backed loan guarantees for “next generation” biofuels facilities that produce renewable chemicals or biofuels other than corn ethanol

While intended to support the next generation of biofuels derived from non-food sources and other renewable forms of energy, the farm bill energy title has also spent taxpayer dollars on the mature corn ethanol industry, supporting biomass sources with numerous unintended consequences, and even paying for updates to farmers’ irrigation equipment and grain dryers.

Taxpayer Support for Corn Ethanol Facilities

Since 2009, only $7 million of taxpayer funding has been dispensed from the Repowering Assistance Program, all of which has been spent on two corn ethanol facilities – Lincolnway Energy, LLC in Iowa and Western Plains Energy, LLC in Kansas. In Sept. 2010, Lincolnway received $1.9 million to install a boiler which converts wood and other biomass to energy. In April 2012, Western Plains received $5 million to replace its natural gas energy source with a biogas digester; the digester will be powered with manure from a local feedlot. (See Table 1.) USDA previously considered four other biorefineries for Repowering Assistance payments, three of which are corn ethanol facilities. However, the USDA website previously listing these potential recipients is no longer available, so it is assumed that they are no longer being considered for taxpayer subsidies.[4]

For over 30 years, the corn ethanol industry has benefited from generous subsidies, tax breaks, an import tariff, and a production mandate called the Renewable Fuel Standard (RFS). Thankfully, the tax credit and tariff expired at the end of 2011, but the RFS mandate still exists, requiring that 15 billion gallons of corn ethanol be used by 2015 and in years thereafter. In addition to these generous supports, the corn ethanol industry is still able to qualify for additional subsidies within the farm bill’s energy title that were intended to be targeted toward next-generation biofuels produced from non-food crops. The mature corn ethanol industry has also received subsidies through the Repowering Assistance Program, even though payments are supposed to support facilities utilizing next-generation biomass feedstocks.

Conclusion

The Repowering Assistance Program has failed to meet its stated goals of spurring the use of next generation biofuels and biomass sources, instead subsidizing the mature corn ethanol industry which has caused numerous unintended consequences such as greater greenhouse gas (GHG) emissions, higher food prices, small engine damage, and other taxpayer and consumer costs. USDA has also failed to fund any new Repowering Assistance Program projects since 2012. For these reasons, both the House and Senate Agriculture Committees already recommended that the program be eliminated in the 2014 farm bill. Instead of continuing a program that has a history of subsidizing the corn ethanol industry, the Repowering Assistance Program should instead be ended once and for all.

For more information, contact Taxpayers for Common Sense at 202-546-8500.

References in Table 1:

http://ethanolproducer.com/plants/listplants/USA/

https://energy.gov/eere/geothermal/articles/usda-offers-renewable-energy-feasibility-studies-rural-businesses

https://energy.gov/sites/prod/files/2013/07/f2/Retech_Crooks.pdf