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USDA pays big for cellulosic biofuels

09/27/2011 @ 4:25pm

The U.S. Department of Agriculture announced Tuesday it is giving out about $80 million this year to 163 companies that produce biofuel from alternative sources like animal fats and wood chips.

The payments this year go to companies like Ever Cat Fuels in Isanti, Minn., which makes biodiesel from plant oils and animal fat.

Ever Cat will get a check for $98,507, but other companies will get a lot more, according to the USDA. The amount is based on how much biofuel the company produces from sources other than corn.

Pennsylvania-based Smarter Fuel, Inc., will get about $4.8 million because it produces fuel from waste products and Kansas-based Ese Alcohol will get about $81,000 because it uses leftover seed to make ethanol.

"The payments I am announcing today represent the continuing commitment of the Obama administration to work with producers to provide the biofuel necessary to reduce our nation's dependence on foreign energy sources," said U.S. Department of Agriculture Secretary Tom Vilsack. "The payments support America's growing advanced biofuel industry."

The $80 million worth of payments announced Tuesday are the fiscal year 2010 installment for the "Advanced Biofuel Producer Payments" program and the USDA is already evaluating companies for FY 2011 payments, a spokesman said.

The payments are authorized in the 2008 farm bill by Congress, according to the National Biodiesel Board, and meant to "ensure an expanding supply of domestic energy."

"These payments will create jobs and economic activity while helping the biodiesel industry advance new technologies and improve efficiency," said Anne Steckel, a vice president for the biodiesel group.

Most of the biofuel produced in the U.S. now is corn-based ethanol, a heavily subsidized fuel that consumes about 40% of the corn grown in the U.S. Ethanol producers are expected to use about 5 billion bushels of corn this year to make the fuel.

The U.S. spends about $6 billion per year subsidizing ethanol-blended gasoline with a tax credit of 45 cents per gallon. There is also a tax of 54 cents per gallon on imported ethanol.

-By Bill Tomson, Dow Jones Newswires; 202-646-0088; bill.tomson@dowjones.com

(END) Dow Jones Newswires

September 27, 2011 17:17 ET (21:17 GMT)

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