Bioenergy Program for Advanced Biofuels Fact Sheet | Taxpayers for Common Sense

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Bioenergy Program for Advanced Biofuels Fact Sheet

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July 06, 2017

 


Established by an Executive Order in 1999, the Bioenergy Program for Advanced Biofuels (BPAB) is intended to pay advanced biofuels producers to expand their production levels.[1]

Other than corn starch ethanol, nearly every other type of biofuel is eligible for the program, including ethanol, biogas, butanol, or biodiesel derived from cellulose (like perennial grasses or agricultural residues), sugar or starches, waste materials, sugarcane, or woody biomass.[2] In addition, mature corn ethanol facilities that also produce ethanol from sorghum receive subsidies through BPAB. BPAB is administered by the U.S. Department of Agriculture’s (USDA) Rural Development office. As compared to the 2008 farm bill, the 2014 farm bill provided significantly less mandatory funding of $15 million for each Fiscal Year 2014-18 and discretionary (optional) funding of $20 million annually.[3]                    

Background

BPAB is funded though the energy title of the farm bill. The farm bill, renewed approximately every five years, is a wide ranging piece of legislation that funds everything from nutrition assistance programs and broadband internet to agricultural subsidies for the production of crops such as corn and soybeans. More specifically, the energy title of the farm bill, first introduced in 2002, provides grants, loans, and other subsidies to energy efficiency, biofuels, and bioenergy (heat and power) projects. In total, the 2014 farm bill energy title’s programs are projected to cost taxpayers $879 million from FY14-23.[4]

In particular, BPAB provides taxpayer subsidies to a range of facilities to increase annual production of biofuels. Other farm bill energy title programs provide taxpayer support for research and development grants to investigate new uses for biomass sources such as wood and agricultural residues; the collection, storage, harvest, and transportation of biomass sources to bioenergy or biofuels facilities; anaerobic digesters that create heat and power from animal waste; grants and loans to individuals or companies that install wind, solar, and geothermal systems; and federally backed loan guarantees for so-called next generation biofuels facilities that produce biofuels other than corn ethanol. While intended to support the next generation of biofuels derived from non-food sources and other renewable forms of energy, the farm bill energy title has also spent taxpayer dollars on the mature corn ethanol industry, supporting biomass sources with numerous unintended consequences, and even paying for updates to farmers’ irrigation equipment and grain dryers.

Feedstocks Receiving Taxpayer Funding

Over $275 million in taxpayer dollars was dispensed from 2009 to May 2016 through the BPAB program via spending authorized in the 2008 and 2014 farm bills.[5] Figure 1 and Table 1 below illustrate which types of feedstocks received the most taxpayer subsidies over this timeframe. Together, soy biodiesel and corn ethanol facilities were awarded over half of all BPAB funding even though the program was intended to spur production of next-generation advanced biofuels from non-food sources. Facilities converting animal fats, canola oil, vegetable oil, used cooking oil, or a combination of these received another 45 percent of funding. Those feedstocks or technologies collecting the few remaining dollars include wood pellets, seed waste, landfill gas, and anaerobic digesters. Notably absent from the list of subsidies are feedstocks such as perennial grasses and agricultural residues that were promised to be funded through advanced biofuel programs such as BPAB since the industry has not taken off as once envisioned and mandated by Congress.[6]

Table 1:  Types of Feedstocks Subsidized in Bioenergy Program for Advanced Biofuels, 2009 – 2016

Type of Feedstock

Number of Projects

Pct. of Projects

Total Payments

Pct. of Total

Ave. Payment per Project

Animal fats, vegetable, canola, or used cooking oil, or a combination

101

30%

$122,906,222

45%

$1,216,893

Soybean oil (& animal fats)

33

10%

$82,361,994

30%

$2,495,818

Corn (with milo or sorghum) or corn & soy

27

8%

$60,225,920

22%

$2,230,590

Wood

59

18%

$5,279,002

2%

$89,475

Digesters

63

19%

$1,778,209

1%

$28,226

Others/unknown - landfill gas, seed and beverage waste, sorghum

52

16%

$2,883,062

1%

$55,443.50

TOTAL

335

 

$275,434,409

 

 

 

Large Corn-Based Biofuels Facilities Receiving Taxpayer Funding

The highest average payments per project by far have been awarded to large agribusinesses operating corn and soy biofuels facilities. This is despite the fact that corn ethanol facilities are not even eligible for funding through this program or defined as an advanced biofuel in any current federal legislation. Regardless, USDA is still providing money to this mature industry. From 2009 to 2016, 25 corn ethanol facilities and two corn oil biodiesel facilities received over $60 million in federal subsidies, an average of $2.2 million per project. See Table 2 for more information. The corn ethanol industry has already received more than its fair share of federal subsidies over the past 40 years, including energy and commodity subsidies in the farm bill, production tax credits, import tariffs, taxpayer-backed loans, and infrastructure support. In addition, corn ethanol production is mandated through the federal Renewable Fuel Standard (RFS). The RFS requires that 15 billion gallons of corn ethanol be blended with U.S. motor gasoline from 2015 to 2022.

Table 2:  Corn-Based Biofuels Facilities Receiving Advanced Biofuels Payments, 2009-2016

Facility Name (* facility also produces biodiesel)

State

Feedstock

Total Payments

White Energy, Inc.

TX

corn/milo

$10,623,924

Arkalon Ethanol, LLC

KS

corn/milo

$10,015,914

Western Plains Energy LLC

KS

corn/milo

$8,331,119

Kansas Ethanol, LLC

KS

corn/milo

$5,949,346

Pinal Energy, LLC

AZ

corn

$4,652,688

Prairie Horizon Agri-Energy, LLC

KS

corn/milo

$4,446,288

Levelland/Hockley County Ethanol, LLC (renamed Diamond Ethanol)

TX

corn/milo

$3,393,856

Bonanza Bioenergy, LLC

KS

corn/milo

$3,131,689

Abengoa Bioenergy Corporation

MO

corn/milo

$3,108,385

Chief Ethanol Fuel Inc

NE

corn/milo

$2,308,795

Reeve Agri Energy Inc

KS

corn/milo

$1,728,593

Nesika Energy, LLC

KS

corn

$776,062

Central Indiana Ethanol, LLC.

IN

corn

$506,369

Corn Plus LP

MN

corn

$311,081

Walsh Bio Fuels, LLC

WI

corn

$271,431

Trenton Agri Products LLC

KS

corn/milo

$234,855

Pacific Ethanol Holding Co., LLC

CA

corn

$165,043

Nugen Energy, LLC.

SD

corn

$99,765

East Kansas Agri-Energy LLC

KS

corn

$58,834

Pratt Energy LLC

KS

corn/milo

$34,280

Aventine Renewable Energy

IL

corn

$18,175

Cornhusker Energy Lexington, LLC

NE

corn

$15,795

Chippewa Valley Ethanol Coop LLP

MN

corn

$14,597

Best Biodiesel Cashton, LLC*

WI

corn/soy

$10,487

Kaapa Ethanol, LLC.

NE

corn

$8,693

Maple River Energy, LLC*

IA

corn/soy

$7,845

Quad County Corn Processors Co-Op

IA

corn

$2,011

TOTAL

   

$60,225,920

 

Not only is corn ethanol taking federal BPAB subsidies that were intended to be for next-generation, non-food-based biofuels, corn ethanol is also undermining environmental standards attached to the RFS.

Since BPAB subsidy recipients are not required to reduce GHG emissions by any amount (as compared to the RFS which requires 20% reductions for conventional corn ethanol and higher reductions for advanced and cellulosic biofuels), federal subsidies are being spent on a biofuel that has increased long-term taxpayer liabilities. BPAB recipients are also not required to meet other environmental standards in the RFS such as land use protections that were intended to prevent conversion of wetlands and grasslands to biofuels crops (although the government has failed to properly implement and enforce even this basic standards). Just a few of corn ethanol’s unintended consequences include higher food prices, greater water pollution and soil erosion, greater expenditures on federal crop insurance subsidies as sensitive land such as grasslands are torn up to plant more corn, and higher greenhouse gas (GHG) emissions (instead of reductions that were promised when the RFS was expanded in 2007). Continued subsidies to the mature corn ethanol industry through the farm bill energy title are only undermining other federal policies aimed at reducing GHG emissions, limiting water pollution, etc.

Large Agribusinesses Receiving Subsidies for Biodiesel Production

Table 3 lists the top 30 agribusinesses receiving BPAB subsidies for biodiesel production. Biodiesel can be produced from corn oil, feedstocks such as soybeans and other types of vegetable oil, animal fats, recycled cooking oil, etc. Notable companies receiving taxpayer support from 2009-2016 include the Renewable Energy Group, Louis Dreyfus, Ag Processing, Archer Daniels Midland, MN Soybean Processors, and Cargill Inc. The average BPAB subsidy from 2009-2016 for biodiesel facilities was $2.5 million, with some facilities receiving over $15 million. Similar to the generous taxpayer support corn ethanol has enjoyed for the past 40 years, biodiesel companies have also benefited from a $1-per-gallon production tax credit since 2004.[7] Similar to BPAB, the biodiesel tax credit has no requirements for recipients to prove that they are reducing GHG emissions, one of the original goals of government supports for biofuels.

Table 3:  Top 30 Biodiesel Facilities Receiving Advanced Biofuels Payments, 2009-16

Facility Name

State

Feedstock

Total Payment

Lake Erie Biofuels, LLC. Dba Hero Bx

PA

multi

$17,050,533

Renewable Energy Group, Inc.

IA

canola

$15,903,285

Louis Dreyfus Agricultural Industries, LLC

IN

soy

$13,495,320

High Plains Bioenergy, LLC

OK

animal

$12,121,094

AG Processing Inc.

NE

soy

$12,096,398

Mid-America Biofuels, LLC

MO

soy

$10,758,251

Paseo Cargill Energy, LLC

MO

soy

$9,963,015

Archer Daniels Midland Company

IL

canola

$7,978,060

Rbf Port Neches, LLC

TX

multi

$7,792,780

Deerfield Energy LLC

MO

multi

$7,148,208

Owensboro Grain Company, LLC

KY

soy

$6,466,340

MN Soybean Processors

MN

soy

$6,077,606

Cargill Inc.

MN

soy

$5,771,316

Smarter Fuel, Inc.

PA

cooking oil

$5,202,080

Incobrasa Industries, Ltd.

IL

soy

$5,041,972

FutureFuels Chemical Company

AR

animal/soy

$4,865,974

Imperium Grays Harbor LLC

WA

canola

$4,107,931

Crimson Renewable Energy LP

CA

multi

$3,822,832

E Biofuels LLC

IN

animal/cooking oil

$3,440,667

Western Iowa Energy

IA

multi

$3,127,274

American Biodiesel, Inc.

CA

multi

$2,767,450

Western Dubuque Biodiesel, LLC

IA

canola

$2,655,639

Sequential‐Pacific Biodiesel

OR

cooking oil

$2,648,842

Jatrodiesel, Inc.

OH

multi

$2,144,479

Midwest Biodiesel Product, LLC

IL

soy

$2,033,961

Green Earth Fuels of Houston, LLC

TX

multi

$2,014,734

Scott Petroleum Corporation

MS

multi

$1,787,499

Environmental Energy Recycling Corp.

PA

cooking oil

$1,758,853

Imperial Western Products, Inc.

CA

animal/veg oil

$1,697,335

Iowa Renewable Energy, LLC

IA

animal/veg oil

$1,523,510

 

Other Feedstocks Receiving Taxpayer Subsidies

As Table 1 illustrated, projects receiving the smallest amount of BPAB payments converted either woody biomass, sorghum, or seed waste into biofuels or used anaerobic digesters or landfill gas to power bioenergy facilities. This also includes several projects in the unknown category since too little detail was provided by USDA to determine which types of feedstocks are used in the facilities. On average, these payments received $55,000 per project, while corn ethanol and soybean biodiesel facilities received well over $2 million on average from 2009-2016.

Conclusion

Even though BPAB was intended to spur production of advanced biofuels derived from non-food crops, as the program’s title suggests, its funding stream reveals a different story. Instead of helping the cellulosic/next-generation biofuels industry get off the ground, the program is instead funneling taxpayer dollars to large, profitable, and well-known agribusinesses to produce mature biofuels such as corn ethanol and soy biodiesel. Taxpayers should not be forced to fund corporate welfare or mature technologies that result in numerous unintended consequences. The decades of subsidies for these biofuels should be eliminated once and for all.


 

Table Sources:

http://www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&contentid=2010/03/0127.xml

http://www.usda.gov/wps/portal/usda/usdamediafb?contentid=2011/01/0021.xml&printable=true&contentidonly=true

http://www.rurdev.usda.gov/SupportDocuments/USDAAdvancedBiofuelProducerPaymentsSept.pdf

http://www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&contentid=2011/10/0466.xml

http://ethanolproducer.com/plants/listplants/USA/

http://usda.gov/wps/portal/usda/usdahome?contentid=2012/07/0254.xml&navid=NEWS_RELEASE&navtype=RT&parentnav=LATEST_RELEASES&edeployment_action=retrievecontent

http://www.rurdev.usda.gov/rhs/pss/ProgrammaticEA9003Final.pdf

http://biodiesel.org/production/plants/plants-listing

http://www.rurdev.usda.gov/mi/news%20releases/Energy2.htm

http://biomassmagazine.com/articles/8321/usda-announces-payments-to-pellet-biogas-producers

http://www.rurdev.usda.gov/SupportDocuments/rdBiofuels9005Nov2012.pdf

http://www.lsuagcenter.com/MCMS/RelatedFiles/%7BEE238FEB-BFC8-410B-A9C3-  3A6B41BED716%7D/AdvancedBiofuelPaymentsSept_2013.pdf

http://www.rurdev.usda.gov/supportdocuments/rdAdvancedBiofuelPPSept12_2013.pdf

http://www.rurdev.usda.gov/SupportDocuments/RBS-AdvanceBiofuelPayments3-14.pdf

http://www.rd.usda.gov/files/RD_AdvancedBiofuelsChart.pdf

http://www.rd.usda.gov/files/RD_AdvBiofuelsChart_2016.pdf

 

[5] See “Table Sources” above





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