By SARAH B. AUBREY
Indiana Correspondent WASHINGTON, D.C. — Over the last two weeks, the USDA has released three programs offering loan guarantees or payments aimed at boosting renewable energy production.
The agency is accepting applications for loan guarantees with the Biorefinery Assistance Program and offering payments to eligible producers through the Repowering Assistance Program and the Bioenergy Program for Advanced Biofuels.
According to press releases issued by USDA on March 14, Secretary Tom Vilsack called the programs important steps to “out-innovating” U.S. competitors and said they aim to encourage green jobs and American energy self-sufficiency. Each program is funded via USDA Rural Development (RD), authorized by the Food, Conservation and Energy Act of 2008 (the most recent farm bill).
In the country, state offices for RD) agree that the programs have had an impact on bioproduction in rural areas. “I believe the dollars received in the programs improved the cash flow in these refineries and allowed the production of biofuels to continue,” said Jerry Hay, state energy coordinator for RD in Indiana.
Speaking specifically of the program that has so far worked for bioproducers in Illinois, Molly Hammond, rural energy coordinator, expects to receive more applications in 2011.
“The Advanced Biofuel Payment Program has been used in Illinois primarily by biodiesel plants. We expect to receive applications from those biodiesel plants again this year. To date, we do not know of any active applications for the other two programs,” Hammond explained.
“Though we have only received and funded applications under the Advanced Biofuel Payment Program in Illinois, it has definitely benefited some biodiesel producers in the state.”
Each program is subject to technology that uses or creates what USDA calls “advanced biofuels.” According to USDA documents widely available, advanced biofuels are defined as “derived from renewable biomass to include cellulose, sugar and starch, crop residue, vegetative waste material, animal waste, food and yard waste, vegetable oil, animal fat and biogas (including landfill gas and sewage waste treatment gas).”
The Biorefinery Assistance Program offers loan guarantees, not grants or payments. Applications are due May 10, with $463 million available in one round of funding.
“Section 9003 of the farm bill is the Biorefinery Assistance Program. This program provides guaranteed loan assistance to applicants wanting to build a commercial-scale biorefinery. Applications are accepted and processed by the Rural Development office in Washington, D.C.,” explained Mark Beckman, business programs specialist with RD in Indiana.
He added that applicants need a feasibility study and viable business plan. “Applicants will need to work with a local commercial lender. The lender submits the application for guarantee, provides the funds and services the loan,” he explained.
“The federal government is in the position of guarantor on the loan. Credit enhancements such as loan guarantees can allow a lender to expand access to credit and may benefit the borrower by allowing for improved loan terms,” said Beckman, who has worked extensively with loan guarantees for a variety of USDA programs.
These loan guarantees can be applied toward projects with new construction, as dollars are eligible for development and construction costs. Retrofits to existing facilities are also eligible, assuming the facility will be used to produce advanced biofuels as defined by USDA.
Also due May 10 are applications for the Bioenergy Program for Advanced Biofuels. Under Notice of Contract Proposal, USDA has available up to $85 million to make payments directly to advanced biofuel producers, subject to eligibility criteria.
“The program is designed to support and expand the production of advanced biofuels. The amount of the awards is tied directly to the level of production attained during the period covered,” Beckman said.
Producers interested in this money should note that fuels cannot have been derived from corn kernel starch and must be produced from the eligible renewable biomass sources.
Finally, the Repowering Assistance Program is available to eligible biorefineries looking to retrofit current facilities and offset fossil fuels used in the production of biofuel. Through this program, USDA will provide payments (up to $25 million available) to facilities that utilize a renewable biomass as a replacement for fossil fuel used to power the biorefinery.
This program is available to existing biorefineries only, not new construction. Those facilities must have been in existence the day the most recent farm bill was enacted – June 18, 2008. The USDA posted the following eligible costs for payments: equipment, installation, engineering, design, site plans, associated professional fees, permits and financing fees.
June 9 is that deadline.
“Neither of the payment programs are reimbursement programs. The Repowering Assistance Program provides a payment to eligible biorefineries based on the quantity of fossil fuel a renewable biomass system is replacing,” explained Hammond. “The Advanced Biofuel Payment Program provides payments to eligible producers based on the actual production of biofuels in the previous fiscal year.”
Information on all programs can be obtained by visiting USDA’s website or by contacting your local USDA office. For Illinois, Molly Hammond can be reached at 217-403-6210 or by visiting www.rurdev.usda.gov/il
Jerry Hay, in Indiana, can be reached at 812-346-3411, ext 126. Mark Beckman, also in Indiana, can be reached at 317-290-3100, ext. 418. |
