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Keep pushing biofuels

Agriculture.com Staff 01/10/2008 @ 12:00pm

I could thank all of you who read my December column and then called or e-mailed your senators and representatives to urge passage of a new energy bill that contains a higher renewable fuels standard (RFS). We could all claim victory. Just about the time that column came out, Congress appeared on the verge of passing a new energy bill.

Sounds good. The truth is, under magazine publishing schedules, these columns are written about a month in advance. So my last one was based partly on hunches, as well as the obvious importance of supporting a biofuels industry that's now a big market for your crops. I hope some of you contacted members of Congress, anyway, and that you're still watching to make sure it follows through. An energy bill is that important.

Just as Congress got back to work in early December, it began voting on energy bills - even before the Senate returned to debating a farm bill previously stalled by partisan maneuvering.

The House quickly passed a sweeping version of its own energy bill. The National Corn Growers Association (NCGA) was pleased that the House RFS of 36 billion gallons by 2022 also included 15 billion gallons of corn-based ethanol by 2015. That would be twice as big as the 7.5-billion- gallon RFS current law requires by 2012.

"We hope to see the RFS quickly move through the Senate and to the president's desk," NCGA president, Ron Litterer, said at the time. "The passage of the RFS is our number one priority"

An energy bill with a higher RFS is just as important to the farm economy as the farm bill. As we've seen, demand for energy crops is a rising tide that lifts nearly all commodity prices. Growth in the ethanol and biodiesel industries is more likely to continue with a higher RFS.

The House energy bill would require a 9 billion gallon RFS this year.

If an energy bill didn't pass at the end of 2007, getting it into law this year will be harder, due to election year politics, predicts influential Republican Senator Chuck Grassley of Iowa.

I don't want to suggest that the farm bill isn't important. By now, I hope that both an energy bill and farm bill are on their way to President Bush for his signature. The farm bill has an energy title of its own that will help foster a healthy renewable fuels industry.

The Senate version revives a Commodity Credit Corporation program that would help biodiesel plants and new cellulosic ethanol plants buy feedstock crops.

It couldn't come too soon for the struggling biodiesel industry. New plants like East Fork Biodiesel in Algona, Iowa, continue to open. It's part of the network of plants run by the Renewable Energy Group.

But the high cost of soybean oil and a tightening credit market are causing delays or even closures of other biodiesel plants. One that would have joined the REG network, Heartland Biodiesel of Rock Port, Missouri, didn't get off the ground.

"We have raised $20 million in private equity and $6 million in Missouri tax credits. Yet subprime woes and an overall conservative outlook by lenders made it impossible to source $20 million in borrowed capital necessary to complete construction," says Richard Oswald, a farmer who invested in Heartland.

A crucial $1-a-gallon tax credit for biodiesel also expires at the end of this year unless it's extended in either a farm bill or an energy bill.

You've already heard lots of reasons from commodity and farm groups why a new farm bill is needed. Its energy title is another one. If either the energy bill or farm bill is still bogged down by the time you read this, it might be good to fire off another e-mail to Washington.

I could thank all of you who read my December column and then called or e-mailed your senators and representatives to urge passage of a new energy bill that contains a higher renewable fuels standard (RFS). We could all claim victory. Just about the time that column came out, Congress appeared on the verge of passing a new energy bill.

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