USDA Announces More Biofuel Funds

LINCOLN, Neb. (DTN) -- In announcing another $450 million to bolster biofuels infrastructure on Monday, U.S. Secretary of Agriculture Tom Vilsack was asked about concerns raised by farmers and others that the EPA finalized Renewable Fuel Standard volumes that cut corn ethanol's volumes from proposed levels and set biomass-based diesel volumes below what companies say they can produce.

The EPA final volumes released last week set corn-ethanol volumes at 15 billion gallons for 2024 and 2025, down from a proposed 15.25 billion both years.

And despite repeated calls by industry groups to set volumes for biodiesel and renewable diesel much higher than proposed volumes, the agency set biodiesel and renewable diesel volumes even below proposed levels for 2024 and 2025.

The final numbers raised concerns about whether they were supportive of an industry that has continued to see growth.

"It's important and necessary for us to take a look at the totality of what this administration has done," Vilsack told reporters.

"In response to your question, when you combine that with the E15 waiver during the last two summers, the year-round availability starting next year for eight states, the limited use of refinery waivers that were used quite often by the previous administration that undercut production targets, the significant support for the potential 36-billion-gallon sustainable aviation fuel industry by the [SAF] Grand Challenge [program] and tax credits and now fueling-system infrastructure, putting to work literally hundreds of millions of dollars to build out the capacity.

"The reality is no administration in my 30 years of dealing with this issue, no administration has been more supportive of the biofuel industry than the Biden-Harris administration has."

On Monday, USDA announced it had awarded $25 million in 59 biofuels infrastructure projects.

In addition, USDA announced that beginning in July, it will begin to accept applications for $450 million in grants through the Higher Blends Infrastructure Incentive Program.

The grants are designed to lower costs for transportation fueling and distribution companies to install and upgrade biofuel-related infrastructure including pumps, dispensers and storage tanks.

In December 2022, USDA made available $50 million in Inflation Reduction Act funds to expand availability of higher-blend biofuels through the incentive program.

USDA provided a few examples of how the grant money is being spent.

In Iowa, for example, Kimmes Enterprises LLC will use a $510,500 grant to replace four E15 dispensers and four ethanol storage tanks at three fueling stations located in Carroll, Rockwell City and Baxter. This project is expected to increase annual sales of ethanol by about 635,000 gallons, according to USDA.

In Minnesota, Farmers Cooperative Oil Company will use a $623,500 grant to replace nine E85 dispensers, two B20 dispensers, two ethanol storage tanks and two biodiesel storage tanks at a fueling station in Barnesville. The project is expected to increase annual sales of biofuels by nearly 122,000 gallons, according to USDA.

With the added $450 million, Vilsack said USDA will make quarterly grant announcements beginning on July 1. The agency is expected to dole out about $90 million each quarter.

Grants cover up to 75% or $5 million of total project costs to help facilities convert to higher-blend fuels. The fuels must be above E10 for ethanol and higher than B5 for biodiesel.

Each quarter, about $67.5 million will be made available to transportation fueling facilities including fueling stations, convenience stores, larger retail stores that also sell fuel and transportation, freight, rail and marine fleet facilities.

About $18 million will be available to fuel distribution facilities, including terminal operations, depots and midstream operations.

Up to $4.5 million is expected to be available to home heating oil distribution facilities.

USDA said there will be five application windows for the incentive program between July 1, 2023, and Sept. 30, 2024, with a sixth opening if needed.

Growth Energy CEO Emily Skor said the USDA funds will help keep momentum the industry has built on the E15 front.

"Over the last two summers, we've seen E15 prove itself again and again as a proven source of savings for working families and a shield against volatile fossil fuel markets," she said in a statement.

"The grant funding announced today will help our retail partners to expand options at the pump so more American drivers can save money and reduce their carbon emissions."

Troy Bredenkamp, senior vice president for government and public affairs for the Renewable Fuels Association, said, "We're thrilled to see this new announcement from USDA Secretary Tom Vilsack, which will help bring lower-cost biofuel blends like E15 and E85 to more fuel retail locations around the country," he said in a statement.

"RFA has been proud to assist retailers in the application process and to move these grants forward. This program is instrumental in bringing the benefits of biofuels to drivers around the country who want access to lower-cost fuel that is better for the environment and public health."

Read more on DTN:

"EPA Finalizes Multi-Year RFS Volumes," https://www.dtnpf.com/…

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

Follow him on Twitter @DTNeeley

(c) Copyright 2023 DTN, LLC. All rights reserved.