Biomass Crop Policy Response Research

(Project Leaders: Richard Perrin and Lilyan Fulginiti)

Background/Justification. Federal energy policy adopted in 2007 lays down the challenge for the farm sector to produce a major new commodity: biomass for energy. Policies and programs to support this development will therefore be an increasing element related to federal farm commodity programs. The magnitude of the challenge is clarified by the USDA roadmap for meeting the federal Renewable Fuels Standard (RFS) [USDA, 2010]. It calls for 527 new cellulosic ethanol biorefineries of 40 m gal/yr capacity, each requiring about a half-million tons of biomass annually and each involving 100,000-200,000 acres of cropland and perhaps hundreds of crop producers.

Overall, this plan would utilize land equivalent to 9% of the total harvested cropland in the U.S. The Biomass Crop Assistance Program (BCAP) has spent about $250 million in the past three years to facilitate progress toward these goals, but less than 1% has gone to crop projects (virtually all the funds were allocated to forest product projects). Crop producers could not respond to compete effectively in this program because of the high transaction costs of bringing together producers and processors, because it is a new crop that producers are not familiar with, and likely because of undesirable features of the program (e.g., two-year limitation for perennial crops). It is evident that if federal policy is to facilitate progress toward the RFS, more must be known about how potential biomass crop producers would respond to policy alternatives. The proposed research will contribute to that knowledge by identifying least-taxpayer-cost policies for enticing Great Plains producers to provide biomass in the amounts required by a biorefinery.

Objective: This project will identify policy components for energy crops that would result in sustainable, full-scale biomass delivery systems in the Great Plains, at least cost to taxpayers.