Committee Looks at Energy Barriers

While Producing Energy on Farm Has Benefits, Farmers Face Barriers to Entry

Todd Neeley
By  Todd Neeley , DTN Environmental Editor
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Though anaerobic digesters help many farmers to produce their own energy, many producers need help getting started. An anaerobic digester produced power and reduced odors for this hog farm near Dodge, Nebraska. (DTN/Progressive Farmer file photo by Matt Miller)

OMAHA (DTN) -- With climate action increasingly taking center stage among federal lawmakers and policymakers in Washington, an agriculture subcommittee hearing in the U.S. House of Representatives on Thursday explored ways on-farm energy production can fit into the big picture.

On June 30, a House select committee on climate released a 547-page congressional action plan, including a 32-page section on agriculture. Overall, the plan calls for a net-zero greenhouse emissions economy before 2050.

While there is a partisan divide among Democratic and Republican lawmakers on how to achieve such reductions, members of the House Ag Subcommittee on Commodity Exchanges, Energy, and Credit, found some common ground.

On-farm energy production would be good for farmers' bottom lines and would reduce agriculture's carbon footprint if widely adopted.

Using anaerobic digesters on farm, for example, turns ag waste into energy and helps farmers cut energy costs and generate income.

With the agriculture economy on the ropes, however, there are barriers to wide adoption.

"There are generally high costs to build the infrastructure needed for on-farm energy production," Rep. Austin Scott, R-Georgia, said during the hearing. Scott added, "While farm bill programs help cover some of the costs involved, many farmers and ranchers do not have the ability to take on these additional upfront costs to make on-farm improvements due to the current state of the farm economy."

HELPED WITH COSTS

Stockton, Iowa, farmer Bryan Sievers, who owns and operates a fifth-generation 2,400-head beef cattle feedlot and produces corn, soybeans and hay on 2,200 acres, said his farm was able to build anaerobic digesters in 2013 as a result of both public and private dollars.

Sievers said his project was made possible through a variety of government programs including the Rural Energy for America Program and the Biomass Crop Assistant Program.

"From an investment standpoint, we leveraged these federal programs to secure $4.8 million in private investments to construct our digester facilities, so that for every federal dollar spent, almost $5 in new private investment have been made," he said.

NOT ENOUGH FUNDS

The 2018 farm bill maintained a permanent $50 million baseline for USDA's Rural Energy for America Program, which is used to fund digester, wind turbine and solar energy projects on farms. But the program always has more requests for funding than it does funds.

In addition, Sievers said although biogas qualifies for the production tax credit at a half-credit rate, the tax credit has faced repeated lapses.

The credit expired at the end of 2016 and was then retroactively extended in 2017, but was allowed to expire in 2018 and 2019, before receiving a retroactive extension in 2020 for the 2018 and 2019 years.

"The temporary nature of the incentive combined with the long project lead times have historically limited the efficacy and utilization of the incentive for biogas," Sievers said.

DIGESTER INVESTMENTS LIMITED

Indiana dairy farmer Mike McCloskey, who runs a 15,000-cow dairy, told the committee since 2002 USDA has provided far more funds for solar projects than for digesters and wind turbines.

The dairy industry as a whole recently adopted a net-zero initiative with the goal of becoming a carbon-neutral industry by 2050.

Between 2002 and 2019, however, USDA made 631 investments in anaerobic digestion worth $198 million, compared to 6,179 in solar worth $2.93 billion and 696 in wind worth $468 million.

"The primary impediment to on-farm digester adoption is the lack of financial incentives available to farmers," McCloskey said.

"I strongly believe that once the proper incentives are in place, digesters will be adopted throughout the industry. Our industry has been significantly impacted by the uncertain farm economy and digesters, which inherently entail long-term planning and significant capital costs, are simply out of reach for most farmers."

REGENERATIVE AGRICULTURE

Bluffton, Georgia, farmer Will Harris operates a regenerative 153-year-old farm producing beef, pork, lamb, poultry, goat, eggs, organic vegetables and honey, operating as a zero-waste farm.

The farm has had a peer-reviewed, third-party scientific study finding the operation sequesters more carbon than it emits, he said.

"The organic matter of our soil has increased from 0.5% to 5% over the last two decades," Harris said.

"Each 1% of organic matter will absorb over 20,000 gallons of water. Our 3,200 acres of land will absorb a 5-inch rain event. Our farm has sequestered over 1 ton of carbon per acre, per year for the last 20 years. During this period of time, our farm has pulled the carbon equivalent of about 500,000 barrels of crude oil out of our atmosphere."

As a result of a $50,000 USDA grant, the farm built a solar array to help power its operations. In recent years, Harris said, his farm has partnered with Silicon Ranch. The company constructed a nearby solar farm where Harris helps farm the land.

"The White Oak Pastures/Silicon Ranch partnership model is replicable anywhere willing farmers and solar energy intersect," he said.

"Solar is a decentralized form of power generation that can support the decentralization of agriculture by providing regenerative farmers with finance-free access to land and a new source of income."

LIMITS ON WHAT CAN BE DONE

Rep. Collin Peterson, D-Minn., chairman of the House Ag Committee, said while on-farm energy production is viable and beneficial, there are limits as to what the federal government can do.

"We can produce energy on the farm," Peterson said. "The problem has been to make the economics work long-term. I am all in favor of doing all we can to exploit this, but it's gotta be able to at some point stand on its own. There's gotta be a light at the end of the tunnel. The government can't be subsidizing it forever."

In the short term, many segments of the agriculture economy continue to struggle as a result of COVID-19.

Congress continues work on a possible additional economic stimulus package, and nearly all farm sectors have been making requests for aid.

"There's not a farmer who can survive $3 corn," Scott said.

"Any additional COVID packages needs a fully funded market facilitation payments. Of the $4 trillion spent on COVID, less than one-half of 1% has gone to ag."

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley

Todd Neeley
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