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.

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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