Senate bill would stop biomass crop subsidy

WASHINGTON Wed Dec 15, 2010 7:13pm EST

WASHINGTON (Reuters) - A mammoth government funding bill awaiting a Senate vote would cut off funding for a program that pays farmers to experiment with biomass crops.

Spending on the Biomass Crop Assistance Program, or BCAP, would be halted less than two months after the Obama administration unveiled rules for it.

The Agriculture Department, which runs BCAP, urged senators on Wednesday "to make the corrections necessary so there are resources to continue building a sustainable biofuels industry."

BCAP spending was estimated for $196 million this fiscal year, which ends on Sept 30. The Senate planned to vote on the $1.1 trillion bill on Saturday, with the House to act later.

Congress created BCAP in 2008 to help bring next-generation biofuels to market. Right now corn-based ethanol is the leading biofuel in the United States.

The goal is to assure a supply of raw materials for the advanced biofuels industry, which is putting its first commercial-size plants into operation.

Advanced biofuels include ethanol made from cellulose, found in grasses, woody plants, algae and crop debris.

Biofuels, farm and forestry groups said elimination of funding, "just as advanced biofuels and other clean energy development projects are taking root, would thwart our nation's economic and environmental goals and hurt rural economies."

There were complaints an earlier version of BCAP, at $250 million for forestland products, was unduly costly.

The Senate Appropriations Committee said BCAP was cut, along with other programs, to help pay legal claims against USDA. USDA can keep make any BCAP spending that is obligated before the cutoff takes effect, it said. USDA said it has not obligated any funds since it published the BCAP rule.

All the same, appropriators said it was unlikely all spending would be shut down.

Biomass is supposed to leapfrog corn as the leading feedstock for making fuel ethanol, according to a 2007 law that guarantees renewable fuels a share of the motor fuel market of at least 36 billion gallons from 2022.

Privately owned POET, the largest U.S. ethanol maker, has said it would apply to list three of its plants as biomass conversion facilities. Approval would allow payments of up to $45 per dry ton to farmers for gathering and hauling corn stover and other cellulosic materials to biorefineries.

BCAP also would pay growers up to 75 percent of the cost of planting a biomass crop as well as annual payments for maintaining the crop for up to five years for grassy crops and up to 15 years for woody crops.

The program is scheduled to expire on Sept 30, 2012.

(Reporting by Charles Abbott; editing by Sofina Mirza-Reid)

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