Congress Ponders Switchgrass Incentives

Congress may have to establish incentives in the upcoming farm bill for farmers to grow cellulosic ethanol, if only to keep peace within the U.S. farming community.

That, at least, is the view of Georgia Republican Saxby Chambliss, the ranking minority member of the Senate Committee on Agriculture, Nutrition and Forestry.

As a matter of fact, Chambliss believes that these types of provisions may turn out to be the only area in which Congress can afford to be generous. When work ensued on the 2002 farm bill, Chambliss was a vocal supporter of the farm safety net, while conceding the need for more market incentives that ensured farmers managed their resources more frugally. But that was in 2002, when Congress worked within a balanced budget context.

That is not the case today — far from it — and is the reason why Chambliss believes frugality will be a guiding sentiment throughout the 2007 farm bill deliberation.

As a matter of fact, Chambliss believes some provision for cellulosic ethanol likely may be all Congress can afford to give U.S. producers in the new farm bill. Indeed, the energy title is only one of a handful of areas in which lawmakers in the House and Senate seem to share similar views.

He says the House and Senate Agriculture Committees already are considering adding incentives to the conservation title of the pending farm bill to encourage the production of more cellulosic-based feedstocks. Congress also may move some Conservation Reserve Program land to the production of switchgrass or other biomass products, Chambliss says.

Chambliss’ Democratic colleague, Iowa Sen. Tom Harkin, has been a leading proponent of cellulosic ethanol incentives and has proposed as much as $1 billion over the next few years for supporting cellulosic ethanol crops.

Farm policy observers have speculated that some of this money would be drawn from the $26 billion that otherwise would be spent during the next 5 years as direct payments to farmers. In public remarks, Harkin has intimated that cellulosic ethanol payments would resemble direct payments.

In the past, Harkin has evinced a strong dislike for direct payments, which historically have gone to lands associated with the production of corn, cotton and rice. He believes the payments not only do not benefit renters but also contribute to higher land prices.

Biofuels experts, including Mark Hall, an Alabama Cooperative Extension System renewable energy specialist, have stressed that the provisions intimated in the upcoming farm bill may be just what the industry needs — a jump start.

While biofuels hold great promise for producers, particularly Alabama producers, Hall says no technology is readily available to convert the woody fibers of the cellulose into sugars and, ultimately, into fuel.

Establishing more incentives for farmers to grow types of feedstocks may provide just enough economic impetus for more venture capitalists to begin investing in this type of readily available conversion technology.

If that proves to be the case, Hall says the payoff for Alabama producers may be considerable.

As Hall has stated time and again in remarks to civic groups, Alabama, largely because of its long growing season and usually ample rainfall, constitutes a potential treasure trove of cellulosic energy. What’s lacking now, he says, is a way to capitalize on the type of energy.

Posted by Jim Langcuster at June 7, 2007 02:42 PM | TrackBack