2008 Farm Bill Renewable Energy Programs

The four titles that primarily affect renewable energy are described here.

 

Title II: Conservation

This title invests in conservation programs that preserve natural resources. Total spending on conservation programs is increased to $7.9 billion dollars from the 2002 Farm Bill and includes programs for the conservation of wetlands and grasslands, environmental quality incentives, farm protection, wildlife habitat and small watershed rehabilitation. Specifically under this title the Environmental Quality Incentives Program (EQuIP) address energy conservation. More detail

 

Title VI: Rural Development

This title invests in rural communities to address the health care, emergency, first responder and telecommunications needs of rural communities. It also provides opportunities for local, organic and small producers while attracting new business and renewing rural infrastructure. This title also provides loans for renewable energy and grants for value-added agricultural products. More detail

 

Title VII: Research

This title stimulates research in order to advance agriculture by establishing programs in agricultural research and energy. The title also provides grants to encourage minority researchers as well as research in specialty crops and organics. Renewable energy is specifically addressed by the title through the Renewable Energy Committee, the Agricultural Bioenergy Feedstock and Energy Efficiency Research and Extension Initiative, the Agricultural Experiment Station Research Facilities Act and the Research, Education and Economics Office. More detail

 

Title IX: Energy

This title is the most important in terms of renewable energy. It promotes energy independence and renewable energy programs with an overall fund of $1 billion. The title establishes programs focused on rural energy, bioenergy, biomass research and development, sugar-to-ethanol, biobased markets and biodesiel education. For non-bio-based energy, Section 9007 establishes a Rural Energy for America Program ("REAP") that provides over $350 million in funding for rural energy development and replaces the current 2002 Farm Bill Section 9006 program. More detail

 

Important Changes from Section 9006 in the 2002 Farm Bill to the REAP program (Section 9007) in the 2008 Farm Bill

  • No separate Energy Audit Program, it is now folded into the Rural Energy for America Program (Section 9007)
  • Expands funding recipients to include organizations that assist rural landowners to develop renewable energy as well as public power entities and state agencies
  • Expands eligible programs to include the sale of renewable energy
  • Increases the maximum combined award amount from 50% to 75% of the cost of the program
  • Allows up to 10% of the funds to be used to conduct feasibility studies
  • Specifically reserves a set amount of money for small projects requesting not more than $20,000
  • Funds increased from $3 million for 2007 to almost $350 million for 2009-2012 including mandatory and discretionary funds

 

 

 

 

 

In-depth descriptions of the programs

Title II: Conservation

Subtitle F: Environmental Quality Incentives Program

The purpose of this section is to provide flexible assistance to agricultural producers to install and maintain conservation practices designed to sustain production and enhance soil, water, related natural resources, wetlands, and wildlife, and also conserve energy.

The practices that are covered under this title include:

  • improvements to eligible land in structural practices,
  • land management,
  • vegetation,
  • forest management,
  • conservation (including development plans), and
  • any other plan that the Secretary determines would further the purposes of the program.

The agricultural producer enters into a contract with the Secretary before obtaining payment under this Title. These payments are considered as an addition to any other payments from different programs, not as a replacement.

Applications will be prioritized based on the following criteria:

  • overall level of cost-effectiveness,
  • how effective and comprehensively the project addresses the concern,
  • whether it best fulfills the purposes of the program, and
  • improvements to practices or systems in place at the time the contract offer is accepted.

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Title VI: Rural Development

Section 6108: Electric Loans for Renewable Energy

This section of the 2008 Farm Bill amends Title III of the Rural Electrification Act of 1936 by including loans for renewable energy sources (defined as solar, wind, hydropower, biomass, or geothermal). These loans would be in addition to any other loans available. Appropriate projects will now include electric generation from renewable energy resources for resale to rural and non-rural residents.

Section 6202: Value-Added Agricultural Market Development Program Grants

A value-added agricultural product is defined to include any agricultural commodity or product that is the source of farm or ranch based renewable energy. This section now has a simplified application process for applications requesting less than $50,000 and a limited term for grants awarded to three years. The priority in awarding grants follows projects that contribute to increasing opportunities for:

  • beginning farmers or ranchers,
  • socially disadvantaged farmers or ranchers, and
  • operators of small and medium sized farms and ranches that are structured as a family farm.

Mandatory funding for these grants will total $15,000,000 starting October 1, 2008 and the funds will come from the Commodity Credit Corporation. This money is available until expended. There is also authorization for an additional discretionary fund of $40,000,000 each fiscal year.

In addition, a reserve fund is established for beginning, socially disadvantaged farmers and ranchers and mid-tier value chains (local/regional supply networks that are structured as a family farm that link independent producers with businesses and cooperatives that market value-added agricultural products). Of the total funds under this section made available each year, 10% will be reserved for beginning or socially disadvantaged farmers and ranchers, and 10% will be reserved for mid-tier value chains until June 30th. Starting July 1 of each fiscal year, any non-obligated money from the reserve funds will be available for any project applying for a grant.

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Title VII: Research

Section 7104: Renewable Energy Committee

This section establishes a permanent committee to study the scope and effectiveness of research, extension and economic programs that affect the renewable energy industry. The committee is ordered to produce a report after the first six months and then every year after that. The report must include their findings and recommendations on renewable energy. Each fiscal year the Secretary must also file a report that describes the way that each recommendation of the committee was addressed in the annual budget proposal.

Section 7207: Agricultural Bioenergy Feedstock and Energy Efficiency Research and Extension Initiative

This initiative is established to enhance the production of biomass energy crops and the energy efficiency of agricultural operations by awarding competitive grants. On-farm energy efficiency research and extension activities funded under this program shall be focused on developing and demonstrating technologies and production practices relating to

  • improving on-farm renewable energy production
  • encouraging efficient on-farm energy use
  • promoting on-farm energy conservation
  • making a farm or ranch energy neutral, and
  • enhancing on-farm usage of advanced technology to promote energy efficiency

Priority will be given to projects that have scientific merit and that involve cooperation among multiple entities and with agricultural producers.

The Secretary is directed to consult with grants made under Section 9008 of the Farm Security and Rural Investment Act of 2002 to ensure that unnecessary duplication of efforts are avoided and that the respective strengths of the Department of Agriculture and the Department of Energy are appropriately used.

For each fiscal year there is $50,000,000 authorized to carry out this section. The recipient of a grant under this program is required, as a condition to receiving the grant, to provide funds or in-kind support from non-Federal sources that are at least equal to the amount received from the Federal government.

Section 7405: Agricultural Experiment Station Research Facilities Act

This section establishes an Agriculture and Food Research Initiative that awards competitive grants for fundamental and applied research, extension and education in food and agricultural sciences. The priority areas include renewable energy, natural resources and the environment that will focus on projects relating to

  • fundamental structures and functions of ecosystems
  • biological and physical basis of sustainable production systems
  • minimizing soil and water losses and sustaining water quality
  • global climate effects on agriculture, and
  • forestry and biological diversity

These grants are limited to 10 years and are restricted to state agricultural experiment stations, colleges and universities, university research foundations, other research institutions and organizations, federal agencies, national laboratories, private organizations or corporations, individuals or any combination of the above.

There is $70,000,000 authorized each fiscal year to carry out this section and is divided as follows

  • at least 30% for integrated research under Section 406 of the Agricultural Research, Extension and Education Reform Act of 1998 (7 U.S.C. 7626)
  • no more than 4% may be retained by the Secretary to pay administrative costs incurred while carrying out this section

Funds will be made available for 2-year periods starting in October and will be available for the entire two-year period until expended.

Section 7511: Research, Education and Economics

This section re-establishes a Research, Education and Economics Office ("REEO") that will coordinate the research programs and activities of the Department. The office will now also have a renewable energy, natural resources and environment division.

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Title IX: Energy

The majority of Title IX focuses on bio-energy programs and includes $320 million in loan guarantees for biorefineries, $35 million to help existing ethanol facilities reduce their use of fossil fuels, money to establish and fund a Biomass Program and establishes a sugar-to-ethanol program.

The Title also establishes a Rural Energy for America Program ("REAP") in Section 9007. The REAP program promotes energy efficiency and renewable energy development for agricultural producers and rural small businesses through grants and other financial assistance. The funds will be divided into two areas

  • Section 9007(b): Energy Audits and Renewable Energy Development Assistance
    • Available to entities who provide assistance to agricultural producers and rural small businesses to become more energy efficient and to use renewable energy technologies and resources
  • Section 9007(c): Financial Assistance for Energy Efficiency Improvements and Renewable Energy Systems
    • Available to the agricultural producers and rural business owners themselves

Section 9007(b): Energy Audits and Renewable Energy Development Assistance

Eligible recipients include state, tribal or local government, land-grant college or university, rural electric cooperative or public power entity. Selection criteria includes (but is not limited to)

  • ability of recipient in providing audits and assessments
  • scope of program in relation to identified need
  • number of persons assisted by the program
  • potential of program for energy savings and environmental benefits
  • plan for outreach and education to other agricultural producers and rural small businesses on benefits of renewable energy
  • ability to obtain other funding sources.

Funds are allowed to be used for conducting and promoting energy audits, providing recommendations on improving energy efficiency and using renewable energy sources in their operations. However, only 5% of the grant may be used for administration costs

The cost-sharing section requires a grant recipient that conducts an energy audit for an agricultural producer or rural small business owner to collect 25% of the cost of the audit from the producer or owner as a condition of that producer or owner obtaining the audit (note that audits are required for producers to obtain funding under Section 9007(c)).

Section 9007(c): Financial Assistance for Energy Efficiency Improvements and Renewable Energy Systems

This section provides loan guarantees and grants to agricultural producers and rural small businesses to purchase renewable energy systems (including those used to produce and sell electricity) and to make energy efficiency improvements. Selection criteria includes (but not limited to)

  • type of renewable energy system to be purchased
  • estimated quantity of energy to be produced
  • expected environmental benefits
  • quantity of savings expected, demonstrated by an energy audit (owner/producer will be expected to pay 25% of the cost of the audit)
  • estimated period of time for cost recovery
  • expected energy efficiency

Up to 10% of the money available for these grants may be given to producers and owners to conduct feasibility studies to determine whether a project that would be eligible for funding under the section would be feasible.

  • This is only available if recipient has NOT received Federal or State money for a similar study on the same project.

Limitations on awards

  • The maximum grant amount is 25% of the cost of the project
  • The maximum loan amount is $25,000,000
  • Maximum combined amount of a grant and loan cannot be more than 75% of the cost of the activity

A small project reserve fund requires that during each fiscal year, at least 20% of the funds must be used for projects requesting no more than $20,000.

  • Only until June 30 - during the 4th quarter of the fiscal year (July 1-Sept 30) any of the funds available may be used for any eligible project, regardless of how much money is requested.

The mandatory funds that will be available for these programs are as follows

  • $55,000,000 for fiscal year 2009 (October 2008 – September 2009)
  • $60,000,000 for fiscal year 2010
  • $70,000,000 for each fiscal year 2011 and 2012

Additionally there is a discretionary fund of $25,000,000 authorized for each fiscal year of 2009-2012 that can be used to further carry out the purpose of the section. This discretionary fund will be divided each fiscal year as follows

  • 4% dedicated to Section 9007(b), the rest of the funds available will be dedicated to Section 9007(c)
  • By April of each year, any of that 4% not already obligated to programs under §9007(b) will be available for programs under Section 9007(c)

Section 9009: Rural Energy Self-Sufficiency Initiative

The Rural Energy Self-Sufficiency Initiative is established to provide financial assistance to communities, in the form of a grant limited to 50% of the cost of the proposed activities, with the purpose of enabling rural communities to substantially increase their energy self-sufficiency. The grant may be used to conduct energy assessments of the community, formulate and analyze ideas for reducing energy use from conventional sources and for developing and installing an integrated renewable energy system. There is $5,000,000 authorized each fiscal year for these grants.

The community must submit an application detailing their plan for using the money in the described ways and priority will be given to applications that propose to carry out an activity in coordination with

  • Institutions and non-profit foundations of higher education
  • Federal, state, or local government agencies
  • Public or private power generation entities; or
  • Government entities with responsibility for water or natural resources

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