Vilsack: Biofuels $700M Still on Way

Secretary of Agriculture Says USDA Biofuels Aid in Hands of OMB

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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U.S. Secretary of Agriculture Tom Vilsack said $700 million in aid for biofuels producers is still on the way. (DTN file photo by Chris Clayton)

LINCOLN, Neb. (DTN) -- About $700 million designed to help biofuels producers is still on the way three months after the USDA made the announcement to help producers hurt by the COVID-19 economic shutdown.

U.S. Secretary of Agriculture Tom Vilsack told reporters Thursday the proposal still is being reviewed by the Office of Management and Budget.

While USDA made the announcement in June, OMB has the final say, the secretary said.

"We don't have the capacity at USDA -- or for that matter any federal agency -- to spend a single dime until OMB has signed off on it," Vilsack said. "Now, if OMB's only responsibility was the U.S. Department of Agriculture, we probably could have moved through many of these more quickly. We're doing the best we can to try to move these things forward and hopefully we get to announce the resources and the structure in which we're going to allocate those resources in the very near future. I don't want to commit to a date certain because it's not totally in my control. The reality is help is going to be there."

In recent months the biofuels industry has expressed concerns about the Biden administration's plans to electrify the vehicle fleet while seemingly providing few opportunities for ethanol and biodiesel to expand their role in greenhouse gas emissions reduction.

The ethanol industry was hit hard by the COVID-19 economic shutdown last year, as many plants either cut or stopped production in response to lower gasoline demand. Though Congress approved financial aid packages in response to the shutdown, biofuels companies by and large did not receive aid.

Vilsack said the biofuels industry should remain "patient" as help is on the way.

"I appreciate the question about the biofuels, because I think it gives me an opportunity to showcase and emphasize that there are a lot of ways in this administration to provide help and assistance to the industry," he said.

"First and foremost, it can provide stability in the industry from the standpoint that it doesn't grant, as the previous administration did, a series of waivers" to the Renewable Fuel Standard. "In addition to that, we are also having an opportunity to provide additional support for the infrastructure necessary to make sure that higher blends are more readily available to consumers, providing some infrastructure funding that's going to be announced very shortly."

Vilsack announced Thursday that USDA is providing more than $460 million to improve energy efficiency in rural America including a carbon-capture project at an ethanol plant, to help with the installation of wind turbines on some farms, among other projects.

USDA is providing $129 million in grants and loans through the Rural Energy for America Program, or REAP, targeted for farmers and rural small businesses to make energy-efficiency improvements. In addition, the agency announced it was financing $335 million through the Electric Loan Program, designed to help expand smart-grid technologies and to strengthen power lines in rural areas.

Included in the list of projects funded through the REAP program is a $25 million loan to ethanol producer Red Trail Energy LLC in North Dakota, to build a carbon-capture processing and storage facility. USDA said in its announcement the project is expected to reduce the plant's carbon-intensity score by 40% to 50% and will enable the company to sell its ethanol in low-carbon fuel standard markets such as California.

Red Trail Energy is the only ethanol producer receiving money as part of USDA's announcement.

Also on Thursday, USDA joined a government-wide sustainable aviation fuels challenge to meet 100% of U.S. aviation fuel demand by 2050.

The initiative was announced during a White House roundtable with Vilsack, U.S. Department of Energy Secretary Jennifer Granholm and U.S. Department of Transportation Secretary Pete Buttigieg.

As part of a memorandum of understanding, the USDA is expected to provide research, development, demonstration and deployment of technologies to annually produce 3 billion gallons of sustainable aviation fuel by 2030 and advance to 35 billion gallons by 2050.

"USDA will work to ensure farmers, foresters, small businesses and rural economies benefit from these opportunities with attention to cost, quality and quantity of agricultural-based feedstock for producing SAF," USDA said in a news release.

Read the full list of grant and loan recipients announced: https://www.rd.usda.gov/…

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

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Todd Neeley