[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
ON-FARM ENERGY PRODUCTION: IMPACTS ON
FARM INCOME AND RURAL COMMUNITIES
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HEARING
BEFORE THE
SUBCOMMITTEE ON COMMODITY EXCHANGES, ENERGY, AND CREDIT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
JULY 23, 2020
__________
Serial No. 116-35
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
42-614 PDF WASHINGTON : 2020
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COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
DAVID SCOTT, Georgia K. MICHAEL CONAWAY, Texas, Ranking
JIM COSTA, California Minority Member
MARCIA L. FUDGE, Ohio GLENN THOMPSON, Pennsylvania
JAMES P. McGOVERN, Massachusetts AUSTIN SCOTT, Georgia
FILEMON VELA, Texas ERIC A. ``RICK'' CRAWFORD,
STACEY E. PLASKETT, Virgin Islands Arkansas
ALMA S. ADAMS, North Carolina SCOTT DesJARLAIS, Tennessee
Vice Chair VICKY HARTZLER, Missouri
ABIGAIL DAVIS SPANBERGER, Virginia DOUG LaMALFA, California
JAHANA HAYES, Connecticut RODNEY DAVIS, Illinois
ANTONIO DELGADO, New York TED S. YOHO, Florida
TJ COX, California RICK W. ALLEN, Georgia
ANGIE CRAIG, Minnesota MIKE BOST, Illinois
ANTHONY BRINDISI, New York DAVID ROUZER, North Carolina
JOSH HARDER, California RALPH LEE ABRAHAM, Louisiana
KIM SCHRIER, Washington TRENT KELLY, Mississippi
CHELLIE PINGREE, Maine ROGER W. MARSHALL, Kansas
CHERI BUSTOS, Illinois DON BACON, Nebraska
SEAN PATRICK MALONEY, New York NEAL P. DUNN, Florida
SALUD O. CARBAJAL, California DUSTY JOHNSON, South Dakota
AL LAWSON, Jr., Florida JAMES R. BAIRD, Indiana
TOM O'HALLERAN, Arizona JIM HAGEDORN, Minnesota
JIMMY PANETTA, California CHRIS JACOBS, New York
ANN KIRKPATRICK, Arizona
CYNTHIA AXNE, Iowa
XOCHITL TORRES SMALL, New Mexico
______
Anne Simmons, Staff Director
Matthew S. Schertz, Minority Staff Director
______
Subcommittee on Commodity Exchanges, Energy, and Credit
DAVID SCOTT, Georgia, Chairman
FILEMON VELA, Texas AUSTIN SCOTT, Georgia, Ranking
STACEY E. PLASKETT, Virgin Islands Minority Member
ABIGAIL DAVIS SPANBERGER, Virginia ERIC A. ``RICK'' CRAWFORD,
ANTONIO DELGADO, New York Arkansas
ANGIE CRAIG, Minnesota MIKE BOST, Illinois
SEAN PATRICK MALONEY, New York DAVID ROUZER, North Carolina
ANN KIRKPATRICK, Arizona ROGER W. MARSHALL, Kansas
CYNTHIA AXNE, Iowa NEAL P. DUNN, Florida
---- DUSTY JOHNSON, South Dakota
JAMES R. BAIRD, Indiana
Ashley Smith, Subcommittee Staff Director
(ii)
C O N T E N T S
----------
Page
Brindisi, Hon. Anthony, a Representative in Congress from New
York; submitted statement on behalf of Dairy Farmers of America 64
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 6
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 5
Scott, Hon. Austin, a Representative in Congress from Georgia,
opening statement.............................................. 3
Submitted article............................................ 63
Scott, Hon. David, a Representative in Congress from Georgia,
opening statement.............................................. 1
Prepared statement........................................... 3
Witnesses
Falk, Jim, President, Falk's Seed Farm, Inc.; Co-Owner, Falk
Farm, Murdock, MN; on behalf of Minnesota Farmers Union,
National Farmers Union......................................... 8
Prepared statement........................................... 9
Submitted questions.......................................... 65
Sievers, Hon. Bryan J., Owner, Sievers Family Farms; Chief
Operating Officer, AgriReNew; Vice Chair, Board of Directors,
America Biogas Council, Stockton, IA........................... 11
Prepared statement........................................... 13
Submitted questions.......................................... 67
Harris, Will, Owner, White Oak Pastures, Bluffton, GA............ 22
Prepared statement........................................... 24
McCloskey, D.V.M., Michael J., Founder and Chairman, Fair Oaks
Farms; Owner/Partner, Prairies Edge Dairy Farm; Chair,
Environmental Issues Committee, National Milk Producers
Federation, Fair Oaks, IN...................................... 43
Prepared statement........................................... 45
ON-FARM ENERGY PRODUCTION: IMPACTS ON FARM INCOME AND RURAL COMMUNITIES
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THURSDAY, JULY 23, 2020
House of Representatives,
Subcommittee on Commodity Exchanges, Energy, and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:05 a.m., in
Room 1300 of the Longworth House Office Building, Hon. David
Scott of Georgia [Chairman of the Subcommittee] presiding.
Members present: Representatives David Scott of Georgia,
Spanberger, Delgado, Craig, Axne, Peterson (ex officio), Austin
Scott of Georgia, Crawford, Rouzer, Johnson, Baird, Hartzler,
and Conaway (ex officio).
Staff present: Lyron Blum-Evitts, Patrick Delaney, Ross
Hettervig, Isabel Rosa, Anne Simmons, Ashley Smith, Anna
Brightwell, Josh Maxwell, Ricki Schroeder, Patricia Straughn,
John Konya, Dana Sandman, and Justina Graff.
OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
The Chairman. This hearing will come to order. Today, what
I would like to do is to open this hearing up with a word of
prayer, and I would like to ask if my good friend, brother, and
cousin, Austin Scott, would lead us in a moment.
Mr. Austin Scott of Georgia. I would be honored to.
The Chairman. Okay.
Mr. Austin Scott of Georgia. Let us pray.
Lord, we love you and we know you love us. You have given
us so many things to be thankful for, Lord, and as we reflect
upon the life of our dear friend and brother, John Lewis, we
want to thank You for allowing us to experience him and for the
walk that he walked, and the faith that he had in You to, Lord,
let people attack him and to change them in his peaceful manner
by never attacking back. And Lord, we know that we just have so
much to be thankful for in this country and this world. We
would ask that You would bless the leadership, and that You
would put Your hand on us, Lord, and that You would help guide
us in a direction that let us lead this country and this world,
and in a direction that will be pleasing to You. Lord, I make
this prayer in the name of Your Holy Son, Jesus Christ. Amen.
The Chairman. Thank you, Austin. I appreciate that.
Excellent prayer to get us started off right.
This hearing of the Subcommittee on Commodity Exchanges,
Energy, and Credit entitled, On-Farm Energy Production: Impacts
on Farm Income and Rural Communities, will come to order. And
welcome and thank you for joining us at this hearing today.
After brief opening remarks, the hearing will be open to
questions. Members will be recognized in order of seniority,
alternating between Majority and Minority Members. For those
participating remotely today, when you are recognized, you will
be asked to unmute your microphone and you will have 5 minutes
to ask your questions, or make a comment. And in order to get
as many questions in as possible, the timer will stay
consistently visible on the screen, and when 1 minute is left,
the light will turn yellow signaling time is close to expiring.
Let me begin with my opening remarks, and I want to say
good morning to everyone who is here in the committee room,
those of you who are out, and other means of communicating in
this, our very first hybrid hearing of the Subcommittee on
Commodity Exchanges, Energy, and Credit.
We are going to talk today about an exciting and very, very
important subject, especially in context of what is going on in
our country today.
As the economy continues to struggle the effects of the
coronavirus pandemic, Americans in towns both large and small
are keeping an eye on not only their own health, but also on
their financial bottom line. For all Americans, that includes
thinking about the cost of energy that powers our homes, our
cars. But for that American farmer, that also includes thinking
about additional ways that our farmers can boost their incomes
as the farm economy continues to lag. There could be no more
important issue than the one we are going to deal with today.
We can do without a lot of things, but we cannot do without
food and without water.
Today's topic touches on both of those things, because we
are talking about on-farm energy. Energy is a particular
concern for farmers, and for ranchers, as approximately 15
percent of production costs for U.S. farms is tied up in energy
costs. By comparison, the average American household spends a
little over two percent of its budget on electricity and the
same amount for gas. The better a farm operation is able to
manage its energy costs, the better it can weather the tough
times like what we are seeing clearly today.
I am excited to have four innovative farmers here with us
today. Our witnesses are going to talk about the pioneering
work underway on their own farms to explore ways of reducing
their energy use, develop alternative sources of energy, and
grow more diverse income streams. This is a discussion that I
know will benefit every farmer and rancher who is watching.
And our discussion of how these folks are going to work on
homegrown energy sources on the farm is one that I hope will
help move our climate discussion forward as well, highlighting
especially the capacity of agriculture as a source of clean,
domestic, renewable energy.
Today we will look at the programs in the 2018 Farm Bill
that help to encourage investment and exploration in the field
of on-farm energy creation, storage, and use. These programs in
the energy and conservation titles range from ones that help
producers transition to cleaner and more efficient energy
systems and ones on the cutting edge of new biobased energy
feedstocks. We will also look at other ways farmers are helping
to move the renewable energy forward by exploring solutions
like our wind, our solar, within their operations as well.
[The prepared statement of Mr. David Scott follows:]
Prepared Statement of Hon. David Scott, a Representative in Congress
from Georgia
Good morning, and thank you for joining us at the first hybrid
hearing of the Subcommittee on Commodity Exchanges, Energy, and Credit.
We're going to talk today about an important subject, especially in the
context of what's going on in our country today. As the economy
continues to struggle with the effects of the coronavirus pandemic,
Americans in towns large and small are keeping an eye not only on their
health, but also on their financial bottom line. For all Americans that
includes thinking about the cost of the energy that powers their homes
and cars. For American farmers, that also includes thinking about
additional ways they can boost their incomes as the farm economy
continues to lag.
Today's topic touches on both of those things, because we're
talking about on-farm energy. Energy is a particular concern for
farmers and ranchers, as approximately 15 percent of production costs
for U.S. farms is tied up in energy costs. By comparison, the average
American household spends a little over two percent of its budget on
electricity and the same amount for gas. The better a farm operation is
able to manage its energy costs, the better it can weather the tough
times that we're seeing so clearly today.
I am excited to have four innovative farmers here with us today.
Our witnesses are going to talk about the exciting work underway on
their own farms to explore ways of reducing their energy use, develop
alternative sources of energy, and grow more diverse income streams.
This is a discussion that I know will benefit every farmer and rancher
watching.
And our discussion of how these folks are working on homegrown
energy sources on the farm is one that I hope will help move our
climate discussion forward as well, highlighting especially the
capacity of agriculture as a source of clean, domestic, renewable
energy.
Today we'll look at programs in the 2018 Farm Bill that help to
encourage investment and exploration in the field of on-farm energy
creation, storage, and use. These programs--in the energy and
conservation titles--range from ones that help producers transition to
cleaner and more efficient energy systems and ones on the cutting edge
of new biobased energy feedstocks. We'll also look at other ways
farmers are helping to move the renewable energy forward by exploring
solutions like wind and solar within their operations as well.
With that, I will recognize my Ranking Member, Mr. Scott of
Georgia, for any opening comments he'd like to make.
The Chairman. In consultation with the Ranking Member and
pursuant to Rule XI(e), I wanted to make Members of the
Subcommittee aware that other Members of the full Committee may
join us today.
Now, I recognize Ranking Member Austin Scott for his
opening statement.
OPENING STATEMENT OF HON. AUSTIN SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and
thank you for calling today's hearing to review on-farm energy
production. I believe this hearing is very timely, given the
current discussions taking place on the future of U.S. energy
policy, and the future of U.S. agriculture.
Recently, the Majority staff, about 3 weeks ago, of the
Select Committee on Climate Crisis released a report, a very
large report as I just held up,* recommending Congressional
action needed to meet a goal of reaching net zero greenhouse
gas emissions economy-wide no later than 2050. And while I
think that a lot of the recommendations focus too much on
reducing America's dependence on fossil fuels and not enough on
emissions, in other words, if we could move from diesel to
natural gas, that certainly is a benefit to the environment,
that the focus on emissions would be more productive than the
focus on simply eliminating fossil fuels.
---------------------------------------------------------------------------
* Editor's note: the report referred to is retained in Committee
file, and it is available at: https://climatecrisis.house.gov/sites/
climatecrisis.house.gov/files/Climate%20Crisis%20Action
%20Plan.pdf.
---------------------------------------------------------------------------
But specifically, this report outlines principles for
Federal carbon price, which is a direct tax on businesses and
consumers. I want to make this clear. I believe that we can and
we should do a better job of taking care of the environment.
And in taking care of the environment, we have to acknowledge
that the habitat is important to the wildlife of this country.
I am prepared to work in a bipartisan manner to improve
upon current programs and find new solutions, but I cannot
support an extreme climate agenda that fails to consider rural
Americans who have to shoulder the burden of the majority of
the staff proposals that have come out in this report. Many of
these proposals are aimed at the basic underpinning of our
farming, manufacturing, energy, and transportation systems, and
require changes of marginal or unknown benefit that would have
significant implications for the profitability of U.S.
agriculture and the U.S. economy. The report recognizes these
glaring consequences and makes several recommendations for
funding economic transition payments. In other words, the
report's authors know and acknowledge that there are harmful
consequences to their proposals, and rather than develop
better, more thoughtful proposals in a bipartisan nature, they
continue to recommend Federal overreach and dismantling of
strong business and agricultural communities.
Many of the agricultural recommendations do highlight the
benefits farm bill programs play in assisting farmers,
ranchers, and foresters in being the best stewards of the land.
However, some of the recommendations also uncover what seems to
be a hidden agenda: increased compliance and government control
of our producers' land and livelihood. This is in direct
conflict with the bipartisan principles that on-farm
stewardship should be locally-led, voluntary, and incentive-
based. The 2018 Farm Bill has voluntary farm programs that help
farmers implement new practices that sequester carbon, reduce
emissions, and adopt more energy efficient farming practices.
One of these programs proven to be effective is the
Environmental Quality Incentives Program. The Natural Resources
Conservation Service, or the NRCS, has adopted anaerobic
digesters as a conservation practice, and provides cost-share
assistance to producers. This allows farmers and ranchers to
voluntarily implement this innovative on-farm energy production
practice by receiving financial and technical assistance
through EQIP.
Another important program in the farm bill is the Rural
Energy for America Program, which promotes energy efficiency
and renewable energy development through grants and guaranteed
loans. Grants may be used to finance energy audits for
renewable energy technical assistance and site assessment,
while the guaranteed loans may be used for construction of
renewable energy systems, like anaerobic digesters, wind
turbines, or solar panels.
As mentioned before, making these improvements on the farm
can produce a variety of benefits for farmers and ranchers. For
example, using an anaerobic digester turns waste into energy,
which can then be used for several purposes, including
generating electricity to help run the farm, processing it
further into high quality fuels, or even sold to the local
power grid. These improvements will allow farmers and ranchers
to reduce input costs needed to operate their farm and can even
help increase income.
While it is easy to talk about the benefits of on-farm
energy production for farmers and ranchers, I would be remiss
if I did not mention barriers to entry. There are generally
extremely high costs to build the infrastructure needed for on-
farm energy production. While the farm bill programs help cover
some of the costs involved, many farmers and ranchers do not
have the ability to take on these additional up-front costs
today to make farm improvements due the current state of the
farm economy.
Mr. Chairman, we have a great panel of witnesses that I
look forward to hearing from. They have extensive knowledge of
on-farm energy production. I want to thank them for joining us
today. I am looking forward to a productive discussion on what
we can do to improve access to these programs, and let me once
again say, I think that we can and should do a better job of
taking care of the environment.
With that said, Mr. Chairman, I am committed to working
with you to find the path forward.
The Chairman. Thank you, Ranking Member Scott.
All Members are reminded that face coverings are required
for attendance at meetings longer than 15 minutes in committee
hearing rooms. This is in accordance with Section 3.2.1 of the
Attending Physician's Guidelines.
Now I would like to recognize Chairman Peterson for any
opening comments he would like to make.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
Mr. Peterson. Thank you very much, Mr. Chairman, and thank
you for your leadership on this issue. This is something that I
have worked on, been involved in for a long time.
There is no question that we can produce energy on the
farm. We have been able to in a number of different ways do
that over the years. The problem has been to be able to make
the economics work long-term. And to some extent, this is
scale. To some extent, it is technology. To some extent, it is
a problem with what happens with other energy sources. When oil
collapses, then that changes the equation in terms of how the
rest of this stuff works.
I am all in favor of doing whatever we can to exploit this
and to be able to do as much as possible on the farm with
renewable energy. I have told a lot of people this over the
years, it has to be able to be, at some point, stand on its
own. I am okay with helping it get started and okay with having
some ability to get it going. But there has to be a light at
the end of the tunnel. It can't be something that the
government is going to subsidize forever. And we have some of
that going on in some of these areas. Like I say, I am for all
energy whatever it is. Whether it is oil, gas, ethanol,
whatever it is, as long as it makes economic sense. It works
and that it is viable for the long-term.
And so, I hope that as we provide support that we do it in
a way that we are supporting things that have the ability to be
viable in the long-term. And that has been a challenge, with
some of the stuff that has happened, and I just think we need
to keep that focus on it.
Mr. Chairman, I appreciate your leadership in calling this
hearing today. I look forward to hearing what the witnesses
have to say. I have other hearings going on, so I may not be
here the whole time, but again, thank you for what you are
doing, and I yield back.
The Chairman. Thank you, Chairman Peterson. I appreciate
your comments.
And now, I would like to recognize our distinguished
Ranking Member, Congressman Mike Conaway, for any opening
comments he would like to make.
OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
IN CONGRESS FROM TEXAS
Mr. Conaway. Thank you, Mr. Chairman. I, too, appreciate
you having this hearing. I also appreciate you starting with a
prayer. I think we deliberate better when we start that way, so
thank you for doing that.
I agree with most everything that has been said. The real
question for me, though, is who pays for it? The Chairman
mentioned the government pays for it. It is really the
taxpayers that ultimately fund all of those programs that we
put in place, and whether it is a tax subsidy that goes out
directly, or whether it is some sort of transfer payment
between the folks that are in the system, all of those things,
at the end of the day, the Chairman is exactly right. Can we
afford it? Does it make sense?
I noticed recently when the price of oil collapsed in
March, some of the anti-oil folks were gleeful about that. The
truth of the matter is, they really should want really high oil
prices, really high gasoline prices because it makes all of
these other alternatives competitive against the current
system. Whatever that utopia looks like out there that doesn't
use fossil fuels--and maybe that is centuries from now we will
get there. But in the meantime, we have to afford it. We have
to be able to live. We have to be able to sustain it, keep our
families alive, and those kinds of things. As we go up about
these projects, figuring out who pays for it, where that cost
gets ultimately settled is really a key to making this thing
work.
So again, Mr. Chairman, thank you for having this hearing.
I appreciate our witnesses being here, and I yield back.
The Chairman. Thank you very much, Ranking Member Conaway.
The chair would request that other Members submit their
opening statements for the record so the witnesses may begin
their testimony, and to ensure that we have ample time for
questions.
I would like to welcome all of our distinguished witnesses.
Thank you for being here on this, our very first hybrid
Committee hearing.
Our witnesses today, first, Mr. Jim Falk, who is President
of Falk Seed Farm, Incorporated, co-owner of Falk Farm, on
behalf of the Minnesota Farmers Union and National Farmers
Union from Murdock, Minnesota.
Next, we have Mr. Brian Sievers. Mr. Brian J. Sievers, who
is the owner of Sievers Family Farms, Chief Operating Officer,
AgriReNew, on behalf of America Biogas Council, Stockton, Iowa.
And we have Mr. Will Harris, who is the owner of White Oak
Pastures, Bluffton, Georgia, from our beloved State of Georgia.
Of course, all of our states are beloved.
I will recognize the gentleman from Indiana, Mr. Baird, to
make an introduction of our final witness.
Mr. Baird. Thank you, Chairman Scott, Ranking Member Scott,
and Members of the Subcommittee, as well as Chairman Peterson
of the Agriculture Committee and Ranking Member Conaway of the
Agriculture Committee. It is definitely my privilege to
introduce to you today the founder and Chairman of Fair Oaks
Farms, Dr. Mike McCloskey. Dr. McCloskey has followed his
passion for animal agriculture since the early 1980s when he
ran a successful veterinary clinic, and this passion has led
him to creating Fair Oaks Farm, along with one of the nation's
largest dairy cooperatives, and in that process, the creation
of a dairy-based wellness product.
In addition to being Chairman of Fair Oaks Farms, Dr.
McCloskey has worked tirelessly in the agricultural community
by serving on numerous boards and associations. He is the
Chairman of the Environmental Issues Committee within the
National Milk Producers Federation. And like all farmers, Dr.
McCloskey understands the need to be good stewards of our
environment. He has been able to seek out opportunities for
environmentally sustainable practices that are beneficial to
agriculture, and a good example is that he installed their
first anaerobic digester in 2002, which processed cow manure
and food waste into electricity. Seven years later, they built
their second digester with the goal of creating renewable
biogas, and that is some of the information that he is going to
share with us here today.
In partnership with Cummins and Kenworth, Dr. McCloskey has
a fleet of over 40 trucks that run on renewable, compressed
natural gas from the biogas, and each truck has traveled over 1
million miles transporting milk from farms to processing
facilities. This record of achievement is why Dr. McCloskey is
before us and before this Committee today. He possesses an
expertise from decades of working in the dairy industry and the
agricultural industry in general.
I really look forward to hearing his testimony before this
Committee and how we can improve the lives of farmers and rural
communities. I want to welcome Dr. McCloskey.
Thank you. I yield back.
The Chairman. Thank you very much.
The chair would request that any other Members submit their
opening statements for the record so that our witnesses may
begin their testimony to ensure we have ample time for
questions.
Let me, if I may, start off with my questions. Before I do
that, Ashley, excuse me for a minute, what would I do without
ample good staff?
Now, we will recognize Mr. Falk for 5 minutes.
STATEMENT OF JIM FALK, PRESIDENT, FALK'S SEED FARM, INC.; CO-
OWNER, FALK FARM, MURDOCK, MN; ON BEHALF OF MINNESOTA FARMERS
UNION, NATIONAL FARMERS UNION
Mr. Falk. Chairman Scott, Ranking Member Scott, and Members
of the Committee, thank you for giving me the opportunity to
testify today. I'm Jim Falk, a fourth generation farmer from
Swift County, Minnesota. I farm with my son, Andrew, who is the
fifth generation to work our land. I am also a member of
Minnesota Farmers Union and am testifying today on behalf of
the National Farmers Union.
Our farm includes about 1,000 acres, of which approximately
550 are in crop production, 250 in pasture and hay meadow, and
the balance in conservation programs and wetlands. Since 1985,
we have also owned a seed cleaning facility, Falk's Seed Farm,
Inc., which is now a key part of our operation. We are a small
regional seed company, with the majority of our customers
farming within a 150 mile radius of our business.
The energy consumption of the seed plant is significant due
to the electrical motors needed for processing. We process seed
or grain for approximately 10 months of the year, with October
through May being our peak season.
From 2016 through 2019, the average annual cost of power
from both sources was $14,332 per year. My wife, Karen, and I
have been interested in utilizing renewable energy to offset
our power consumption for quite a while. We wanted to do our
part to offset our carbon footprint and power the majority of
the seed plant from renewable energy produced onsite. In
addition, as the cost of power continues to rise, there should
be a cost savings for us after the equipment is paid for. In
2016, we installed a 30-kW wind turbine to connect to our
three-phase power, and in 2017, we installed a 33-kW solar
system on the seed plant roof that is connected to our single-
phase power. The tax credits for small wind and solar were
forecast to be reduced, so we felt we needed to proceed while
those credits were available. While we applied for grants from
USDA's Rural Energy for America Program to help fund both
projects, our applications were unsuccessful. It seems the
demand for REAP grants far exceeds the funding available.
With both our wind and solar systems functioning, today we
are producing approximately 73.7 percent of the seed plant's
power needs on an annual basis. This hits our target of
producing approximately 70 percent of the seed plant's power
needs when we initially made our plan and I believe provides
long-term sustainability to help reduce our energy cost.
I was asked to testify today to speak about my experience
with on-farm wind energy, but my experience also includes on-
farm solar energy as well. As a result, I am familiar with the
positives and negatives of both.
To be sure, both energy systems have their place. Wind can
produce power any time of the day or night if the wind is
blowing. However, our turbine, in our local wind resources, is
under performing in comparison to what was projected when I
purchased the machine. My tower height is 100, and other
installations with taller towers may likely have higher outputs
than mine. Our solar system, meanwhile, is performing above
what was projected as our likely output for power per year.
The hybrid system I have works well for me; however, I feel
solar is the safer investment for farmers to produce their own
renewable energy with a system that fits their operation. It
makes good sense that farmers and ranchers are able to produce
their own clean energy onsite. It makes good sense for farmers
and ranchers to produce their own clean energy onsite. To
accomplish this, we need tax incentives, including an extension
of the tax credits for small wind and solar, along with
increased and targeted research spending, and additionally,
more funding and farmer access for REAP are needed to get more
renewable energy systems installed on private lands.
On-farm renewable energy systems are vital tools for U.S.
farmers and ranchers and their businesses as they work towards
economic and environmental sustainability and combat climate
change. My farm and business are just one example of that.
Thank you for allowing me to share my experience with you
today.
[The prepared statement of Mr. Falk follows:]
Prepared Statement of Jim Falk, President, Falk's Seed Farm, Inc.; Co-
Owner, Falk Farm, Murdock, MN; on Behalf of Minnesota Farmers Union,
National Farmers Union
Chairman Scott, Ranking Member Scott, and Members of the Committee,
thank you for providing me the opportunity to testify today regarding
``On-Farm Energy Production: Impacts on Farm Income and Rural
Communities.''
I am Jim Falk, a fourth-generation family farmer from Swift County,
Minnesota. I farm with my son, Andrew, who is the fifth generation to
work our land. I am also a member of Minnesota Farmers Union and am
testifying today on behalf of the National Farmers Union (NFU).
Our farm includes about 1,000 acres, of which approximately 550 are
in crop production, 250 in pasture and hay meadow, and the balance in
conservation programs and wetlands. Since 1985, we have also owned and
operated a seed cleaning facility, Falk's Seed Farm, Inc., which is now
a key part of our operation. We are a small regional seed company, with
the majority of our customers farming within a 150 mile radius of our
business.
The energy consumption of the seed plant is significant due to the
electric motors needed for processing. We process seed or grain for
approximately 10 months of the year--October through May is our peak
season. The seed plant uses three-phase power for most of the motors
within the plant. We also use single-phase power for all other seed
plant electrical needs, including lighting, heat, and temperature
control for our office. From 2016 through 2019, the average annual cost
of power from both sources was $14,332 per year.
My wife, Karen, and I have been interested in utilizing renewable
energy to offset our power consumption for quite a while. We wanted to
do our part to offset our carbon footprint and power the majority of
the seed plant from renewable energy produced onsite. In addition, as
the cost of power continues to rise, there should be a cost savings for
us after the equipment is paid for. Minnesota has a net metering law
that allows for renewable energy systems under 40 kilowatts (kW) to be
installed for each meter onsite. In 2016, we installed a 30 kW wind
turbine to connect to our three-phase power, and in 2017, we installed
a 33 kW solar system on the seed plant roof that is connected to our
single-phase power. The tax credits for small wind and solar were
forecast to be reduced, so we felt we needed to proceed while those
credits were available. While we applied for grants from USDA's Rural
Energy for America Program to help fund both projects, our applications
were unsuccessful. It seems the demand for REAP grants far exceeds the
funding available.
With both our wind and solar systems functioning, today we are
producing approximately 73.7 percent of the seed plant's power needs on
an annual basis. This hits our target of producing approximately 70
percent of the seed plant's power when we initially made our plan and I
believe provides long-term sustainability to help reduce our energy
cost.
I was asked to testify today to speak about my experience with on-
farm wind energy, but my experience also includes on-farm solar energy
production. As a result, I am familiar with the positives and negatives
of both. To be sure, both energy systems have their place. Wind can
produce power any time of the day or night if the wind is blowing.
However, our turbine, in our local wind resource, is under performing
in comparison to what was projected when I purchased the machine. My
tower height is 100, and other installations with taller towers may
likely have a higher power output than mine. Our turbine suffered
damage from a severe weather event in 2019, and it took about 7 months
to complete the repairs. There is a need for more service technicians
trained to work on turbine repairs. The turbine is functional again,
producing power for the seed plant, but it was offline for quite some
time and is an example of the performance and reliability issues that
have plagued the small wind industry for some time.
Solar power generation doesn't face these challenges. Our solar
system is performing above what was projected as our likely output of
power per year. The solar panels I have installed have a 25 year
warranty, and because they are mounted on our roof, there are no moving
parts to wear or break. Repair and maintenance issues for a solar
system are minimal compared to a wind turbine. As the cost of solar
continues to come down, solar will be more appealing to farmers and it
will be harder for small wind companies to compete.
The hybrid system I have works well for me, but, in my opinion,
solar is the safer investment for farmers who wish to install a
renewable energy system. The fact is, both these systems work and there
is a lot of interest in using both wind and solar on the farm. However,
I feel there needs to be a greater effort to encourage farmers to
produce their own renewable energy. It just makes good sense that
farmers and ranchers are able to produce their own clean energy onsite.
To be sure, renewable energy production presents a lot of
opportunities for farmers.\1\ Between 2012 and 2017, there was a 132
percent increase in the number of farms that were generating their own
power from renewable sources.\2\ The number of farms with wind turbines
increased by 56 percent during that time period, while solar panel
installations increased by 148 percent. Farmers also invested in
geothermal/geoexchange systems and a small number of methane
digest[e]rs during that time.
---------------------------------------------------------------------------
\1\ NFU staff provided background research and assisted in the
compilation of this document.
\2\ USDA 2017 Census of Agriculture:https://www.nass.usda.gov/
Publications/AgCensus/2017/Full_Report/Volume_1,_Chapter_1_US/
st99_1_0049_0050.pdf.
---------------------------------------------------------------------------
As of 2017, there were about 81,000 small-scale wind turbines
installed at homes, farms, and other facilities across the United
States--about \1/4\ of which were for agricultural uses.\3\ The center
of the United States, from Texas to North Dakota, has particularly good
conditions for wind energy production.\4\ Minnesota ranked third in
2017 for distributed wind generation capacity, behind Iowa and Texas.
---------------------------------------------------------------------------
\3\ DOE 2017 Distributed Wind Market Report: https://
www.energy.gov/eere/wind/downloads/2017-distributedwind-market-report.
\4\ U.S. Energy Information Administration: https://www.eia.gov/
todayinenergy/detail.php?id=31032#tab2.
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NFU supports policies that expand the production and use of on-farm
renewable energy. NFU, which is a member of the AgEnergy Coalition,
supports making renewable energy development, and reducing U.S.
dependence on fossils fuels, a top priority. This includes through
ambitious national investments renewable energy production. Our
nation's farmers and ranchers will be a key player in reaching these
necessary goals. Private agricultural lands can host wind and solar
infrastructure that can power farms and, if large enough, sell energy
back to the grid. The production of biofuels feedstocks can help to
ease America's reliance on petroleum to fuel our vehicle fleet, while
woody biomass is a sustainable source for heating and power generation.
A combination of these and other renewable energy production
technologies will be needed to ensure a sustainable and climate
friendly future for America.
Tax incentives, including an extension of tax credits for small
wind and solar, increased and targeted research spending, limits on
consolidation in the renewable energy sector, and more funding and
farmer access for REAP are needed to get more renewable energy systems,
especially promising but underutilized technologies, installed on
private lands across the country. Lawmakers should also protect and
expand the Renewable Fuel Standard, recognizing its importance as both
a key tool for curbing the effects of climate change and a market for
U.S. farmers.
All told, on-farm renewable energy and biofuels production are
vital tools for U.S. farmers and ranchers and their businesses as they
work toward economic and environmental sustainability and combat
climate change. Our farm and business are just one example of that.
Thank you for allowing me to share my experience with you today.
The Chairman. Mr. Brian J. Sievers, owner of Sievers Family
Farms, Chief Operating Officer, AgriReNew, on behalf of America
Biogas Council, Stockton, Iowa. We will hear your 5 minutes.
STATEMENT OF HON. BRYAN J. SIEVERS, OWNER, SIEVERS FAMILY
FARMS; CHIEF OPERATING OFFICER, AgriReNew; VICE CHAIR, BOARD OF
DIRECTORS, AMERICA BIOGAS COUNCIL, STOCKTON, IA
Mr. Sievers. Chairman Scott, Ranking Minority Member Scott,
Chairman Peterson, Ranking Member Conaway, and Members of the
Committee, thank you for asking me to testify today.
During these especially unsettling times, I am grateful to
share with you how farm energy production has helped my bottom
line, improved the risk-bearing ability of our farm, and
benefitted the community around us.
My wife Lisa and I are fifth generation owners of a farm
near Stockton, Iowa. We run a 2,400 head beef cattle feedlot.
We produce corn, soybeans, and hay on approximately 2,200
acres. Our farm operates two complete mix anaerobic digesters,
which produces biogas that is used to generate electricity
which is sold to Alliant Energy, as well as reclaimed heat,
which is used to heat our digesters and other outbuildings. We
use a variety of feedstocks in the digesters, including beef
cattle manure, biomass from our farm fields, organic food
residuals left over from processing food, and purpose-grown
cover crops. Conservation and environmental stewardship are
paramount to our operation. We have implemented numerous water
and soil quality practices over the years, including grassed
waterways, field borders, buffer strips, terraces, contour
farming, no-till, strip-till, grid soil sampling, and cover
crops.
When my wife and I constructed our digesters and renewable
energy facility on our farm in 2013, we were grateful to
receive support from the Federal Government through a few
programs: the Renewable Energy for America Program, or REAP;
the Environmental Quality Incentives Program, or EQIP; a
Section 1603 energy grant through the American Recovery and
Reinvestment Act; and an energy efficiency rebate from our
local service provider, Alliant Energy. We also participated in
the Biomass Crop Assistance Program, where the biomass we
captured from our cornfields was first used as bedding for our
cattle, and then as a substrate in our digesters. Without the
significant support we received from the Federal Government
from programs like REAP and EQIP, as well as the BCAP Program,
we would not have been able to build our highly functioning
biogas systems, which generate renewable energy and soil
products, while making our farm more sustainable and protecting
our air, water, and soil.
From an investment standpoint, we leveraged these Federal
programs to secure $4.8 million in private investments to
construct our digester facilities so that for every Federal
dollar spent, almost $5 in new private investment has been
made.
Unfortunately, funding for many of these programs has
disappeared since 2013. Reinstating the funding for these and
other valuable programs will allow farmers and ranchers to
design and construct on-farm anaerobic digester facilities so
they can realize the benefits we have received which have
helped us weather financial challenges due to falling commodity
prices, to improve our water quality, soil health, and
management of organic waste streams from our beef cattle
feedlot, as well as other agricultural processing facilities in
our region.
When it comes to addressing our changing climate, enhancing
water and air quality, improving soil health, increasing
agriculture sustainability, while providing valuable economic
benefits, I genuinely believe on-farm anaerobic digesters can
play a vital and significant role.
I serve as Vice Chair and board member of the American
Biogas Council, which represents over 200 companies in all
parts of the biogas supply chain. We also collaborate with the
AgEnergy Coalition, and Solutions from the Land. These
organizations believe that strengthening on-farm economies is
key to advancing the deployment of renewable energy, and the
production of biofuels and renewable chemicals.
Many aspects of the 2018 Farm Bill support on-farm energy
production, most of which are included in the energy title.
These programs create high value jobs and new income streams
for American farmers, accelerate the commercialization of new
technologies, and support the construction of biogas systems
and biorefinery systems in rural communities. I urge the
Committee to push for full implementation of the farm bill and
support robust annual appropriations for these exceptionally
impactful programs.
We are especially pleased to see that the appropriators
have recognized the need to support technologies that have been
historically under-funded within REAP by establishing a REAP
reserve fund for under-served technologies such as biogas and
small wind energy. This House Appropriations Committee
encouraged USDA to establish the reserve fund and provided $10
million in funding for a pilot program to be created at the
USDA. We are hopeful that this will improve access and we will
see greater deployment of these exceptionally valuable
technologies.
The farm bill also contained two initiatives of importance
to the biogas industry. Section 9011, the Carbon Utilization
and Biogas Education Program, was established and recognized
that digesters are one of the greatest methods available to
trap methane-emitting waste products and convert it to
renewable energy and nutrient-rich soil amendments. However,
this program has yet to receive funding. Another priority
highlighted by the Committee in the conference report, the
establishment of the Biogas Opportunities Roadmap Taskforce,
has yet to be acted upon by the USDA. While outside of the
jurisdiction of this Committee, we also urge the Committee to
support the Renewable Fuel Standard as it continues to provide
value to on-farm energy producers. A strong and properly
administered RFS not undermined by the unscrupulous issuances
of small refinery exemptions raises all boats in the rural
economy. We also urge the Committee to support efforts to
extend tax policies that support on-farm energy production such
as the PTC and ITC for renewable energy, and to take under
advisement the recent recommendations pertaining to sustainable
agriculture released by the House Select Committee on Climate.
Thank you for your time today, and I will be happy to
answer any questions.
[The prepared statement of Mr. Sievers follows:]
Prepared Statement of Hon. Bryan J. Sievers, Owner, Sievers Family
Farms; Chief Operating Officer, AgriReNew; Vice Chair, Board of
Directors, America Biogas Council, Stockton, IA
Introduction
Chairman Scott, Ranking Minority Member Scott, and Members of the
Committee, thank you for asking me to testify at today's hearing
regarding On-Farm Energy Production: Impacts on Farm Income and Rural
Communities.
My wife Lisa and I own and operate Sievers Family Farms near
Stockton, Iowa. We are fifth generation Iowa farmers that run a 2,400
head beef cattle feedlot, produce corn, soybeans, and hay on
approximately 2,200 acres. Our farm operates two complete-mix anaerobic
digesters where we produce biogas that is used to generate renewable
electricity, which is sold to Alliant Energy, and reclaimed heat, which
is used to heat our digesters and other buildings on our farm. We focus
on stewardship and conservation of our natural resources in our
operations and have implemented numerous water quality and soil health
practices over the years, including grassed waterways, field borders,
buffer strips, terraces, contour-farming, no-till and strip-till, grid
soil sampling, and cover crops.
When my wife and I constructed our digesters and renewable energy
facility on our farm in 2013 we were grateful to receive support from
the Federal Government through a few programs: the Rural Energy for
America Program (REAP), Environmental Quality Incentives Program
(EQIP), a Section 1603 Energy grant through the American Recovery and
Reinvestment Act, and an energy efficiency rebate from our local
service provider, Alliant Energy. We also participated in the Biomass
Crop Assistance Program (BCAP) where the biomass we captured from our
corn fields was used first as bedding for our cattle and then as a
substrate in our digesters. Without the significant support we received
from the Federal Government for programs like REAP and EQIP, as well as
the BCAP program, we would not have been able to build our highly
functioning biogas system which generates renewable energy and soil
products while making our farm more sustainable and protecting our air,
water, and soil. From an investment standpoint, we leveraged these
Federal programs to secure $4.8 million in private investments to
construct our digester facilities, so that for every Federal dollar
spent, almost $5 in new private investment have been made.
As a result of my experience in agriculture and anaerobic
digestion, I also serve as a Vice-Chair on the Board of Directors of
the American Biogas Council (ABC) which is the only national trade
association representing the entire biogas industry in the U.S. We
represent over 220 companies in all parts of the biogas supply chain
who are dedicated to maximizing the production and use of biogas from
organic waste. The mission of the ABC is to grow biogas business in the
United States which creates jobs, protects our air, water and soil and
catalyzes energy independence and new investments. Biogas systems
provide waste management solutions for organic material, recycle
nutrients, create soil products, and produce energy, most often in the
form of either electricity or biogas, which can be upgraded into
renewable natural gas (RNG).
Biogas systems are one of the most comprehensive ways to recycle
organic waste streams. At their core, biogas systems recycle organic
wastes into renewable energy and soil amendment products using the
natural process of anaerobic digestion. Biogas systems create
sustainable recovered materials management solutions for organic wastes
such as food waste, animal manures, wastewater treatment biosolids,
yard trimmings, and organic waste from the industrial processing of
food. Biogas systems also recycle nutrients like nitrogen, phosphorus,
potassium, calcium, and sulfur which reduce the need to produce
synthetic fertilizers for our agriculture industry. Biogas systems
reduce odor and greenhouse gas emissions both from the organic wastes
they recycle and the fossil fuels they replace. On the energy side,
biogas systems are unique among renewable energy technologies because
they produce energy 24/7 365 days a year with a 95% combined efficiency
rate producing electricity, heat, and/or renewable natural gas (RNG).
Biogas systems produce energy and other products while providing solid
waste recycling infrastructure and protecting our air, water and soil.
Biogas systems are a powerful tool for managing organic waste
streams and creating on farm renewable energy. When biogas systems are
coupled together with other renewable energy technologies like solar,
wind, and energy storage they can provide 24/7 baseload power during
the times that intermittent technologies are not producing power.
Furthermore, biorefineries that are joined to or use an auxiliary
biogas system can produce renewable natural gas from the waste product
remains from the production of ethanol or grain alcohol. The renewable
natural gas produced from the biogas system is then used to power the
ethanol or grain alcohol plant and as a result, greatly lowers the
greenhouse gas intensity of the biorefinery.
The ABC is in turn a member of the AgEnergy Coalition, a group of
organizations committed to a strong, bipartisan support of on-farm
energy production. The ABC and the AgEnergy Coalition believe that
strengthening rural America and on-farm economies are two key ways to
advance the deployment of renewable energy, and the production of
biofuels and renewable chemicals.
Over the past few years, I have become very involved in Federal
policy affecting the digester industry. I have also been and remain
involved in advocating for state polices that affect the agricultural
and rural economy. The experiences I gained while serving in the Iowa
House of Representatives (2001-2003) and the Iowa Senate (2003-2004)
helped me draft legislation in 2011 which expanded Iowa's renewable
energy tax credit program for anaerobic digesters and biogas producers
that generated electricity for re-sale to the electric utilities. This
bill passed the Legislature and was signed into law by Governor
Branstad in 2011.
I also served as Chair of the Biomass Conversion Committee. This
committee was created by the Iowa Economic Development Authority as a
result of the 2016 Iowa Energy Plan which was developed under the
authority of then Lieutenant Governor Kim Reynolds. Our Biomass
Conversion Committee prepared a Biomass Action Plan in the spring of
2018, now included in Iowa's comprehensive renewable energy policy. The
Biomass Action Plan focuses on ways to enhance water quality, air
quality, and soil health. Producing renewable electricity and renewable
natural gas from the biogas produced through the anaerobic digestion of
organic waste streams and manure is a key part of the Plan to reach
those goals.
Supporting the BioEconomy
I come before you today to urge the Committee to continue to
support On-Farm Energy Production. One of the best ways to do so is to
closely oversee the implementation of the 2018 Farm Bill especially the
energy title programs which encourages on farm energy production. This
important piece of legislation contains many programs intended to help
farmers diversify their income streams. In the midst of trade wars, the
Administration's actions to undermine the Renewable Fuel Standard (RFS)
and the effects of [COVID-19], the farm bill energy title programs
continue to provide value to farmers, agricultural producers and small
rural businesses. American farmers and rural communities are hurting.
The challenges farmers are facing between low commodity prices caused
by escalating trade wars, [COVID-19], and the gutting of the RFS caused
by issuing more Small Refinery Exemptions than ever before has created
significant financial pressures on farmers and ranchers. In both cases,
the Trump Administration's actions have dramatically decreased the
value of several of the products we and our fellow farmers produce
which dramatically reduces the revenue we need to keep our farm
operating.
Members of Congress have labored over numerous farm bills to craft
policies that minimize fluctuations caused by commodity price
volatility. As Members of this Committee continue to implement the 2018
Farm Bill, we ask Members to keep in mind the value of our 21st century
biobased economy which can help offset some of the earlier discussed
headwinds affecting our farms, families and the agriculture economy.
Chief among these policies is the energy title, title IX, which creates
high-value jobs and new income streams for American farmers,
accelerates the commercialization of new technologies and products
derived from agriculture, and supports construction of biogas systems
and biorefinery manufacturing facilities in rural communities.
Conventional and advanced biofuels (including renewable natural gas
derived from biogas), chemicals, and biobased products made with
biotechnology can drive the demand for crops (including cover crops)
and crop residuals. This can boost on-farm revenue.
The 2018 Farm Bill (Agriculture Improvement Act of 2018; P.L. 115-
334) extends most of the 2014 Farm Bill energy title programs through
FY 2023 and provides new mandatory funding. It establishes one new
program of great interest to the American Biogas Council--the Carbon
Utilization and Biogas Education Program. Unfortunately, however, the
2018 Farm Bill provides less mandatory funding than previous farm bills
for energy title programs. For instance, the 2018 Farm Bill energy
title programs mandatory funding level ($375 million) is approximately
46% less than the mandatory funding provided in the 2014 Farm Bill
($694 million). Alternatively, the total discretionary authorization
provided by the 2018 Farm Bill ($1.7 billion) is approximately 13% more
than what was authorized in the 2014 Farm Bill ($1.5 billion) for the
energy programs. While the latter increase sounds positive, most energy
title programs have not received discretionary appropriations under
previous appropriation bills, something that should change.
To ensure the American bioeconomy and on farm energy generation
continues to expand, Congress must continue to oversee the
implementation of the 2018 Farm Bill. Given the discrepancy in
mandatory energy title funding between the 2014 and 2018 Farm Bill, we
urge Congress to increase annual discretionary funding to ensure the
success of these programs. We ask that this Committee continue to work
with Appropriators to encourage robust funding of the discretionary
amounts for energy title programs. Robust discretionary funding will
support additional deployment of on-farm renewable energy and catalyze
the development of American biotechnologies that convert domestic crops
and agricultural residues to energy and value-added products, while
also creating high paying rural jobs, encouraging economic growth, and
improving the health of our environment.
The following are the programs contained within title IX of the
2018 Farm Bill which support our industry and for each one:
a description of how the programs work;
products these programs have helped develop; and
how the ABC believes these programs can be improved in their
implementation.
Farm Bill Energy Title Programs
Section 9002 Biobased Markets Program, known as the
BioPreferred' Program
Section 9003 Biorefinery, Renewable Chemical, and Biobased
Product Assistance Program (BAP)
Section 9005 Bioenergy Program for Advanced Biofuels
Section 9007 Rural Energy for America Program (REAP)
Section 9008 Biomass Research and Development (BRDI)
Section 9010 Biomass Crop Assistance Program (BCAP)
Section 9011 Carbon Utilization and Biogas Education Program
Section 9002, the Biobased Market Program, or the
BioPreferred' Program
The goal of the BioPreferred' Program is to increase the
purchase and use of biobased products from agricultural feedstocks. The
program's purpose is to spur economic development, create new jobs and
provide new markets for farm commodities. The increased development,
purchase, and use of biobased products reduces our nation's reliance on
petroleum, increases the use of renewable agricultural resources, and
mitigates adverse environmental and health impacts.\1\
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\1\ USDA BioPreferred https://www.biopreferred.gov/BioPreferred/
faces/Welcome.xhtml.
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BioPreferred' achieves these goals through two
initiatives: (1) a mandatory purchasing requirement for Federal
agencies and their contractors and (2) a voluntary labeling initiative
for biobased products. Products that meet the minimum biobased content
criteria may display the USDA Certified Biobased Product label.\2\
---------------------------------------------------------------------------
\2\ Ibid.
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Under the Biobased Markets Program, Federal agencies and their
contractors are generally required to purchase biobased products from
109 categories of goods--among which are cleaners, carpets, lubricants,
office supplies, and paints--when an agency procures $10,000 or more
worth of an item within these categories during the course of a fiscal
year, or where the quantity of such items or of functionally equivalent
items purchased during the preceding fiscal year was $10,000 or
more.\3\
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\3\ Ibid, Product Categories.
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The 2018 Farm Bill extended the Biobased Markets Program through FY
2023, while adding some new implementation requirements. It requires
the Secretary to update the eligibility criteria for determining which
renewable chemicals will qualify for a ``USDA Certified Biobased
Product'' label. It also requires the Secretary and the Secretary of
Commerce to develop new North American Industry Classification System
(NAICS) codes for both renewable chemical manufacturers and biobased
product manufacturers, and for the Secretary to establish a national
registry of testing centers for biobased products. Additionally, it
requires USDA to establish an expedited approval process for products
to be determined eligible for the procurement program and to receive a
biobased product label. Finally, the 2018 Farm Bill prohibits a
procuring agency from establishing procurement guidelines for biobased
products that are more restrictive than what the Secretary has
established. The 2018 Farm Bill authorized mandatory funding of $3
million for each of FY 2019-FY 2023 for biobased products testing and
labeling. Discretionary funding of $3 million was authorized to be
appropriated for each of FY 2019-FY 2023. We urge the Committee's
support of fully annual discretionary funding.
Recommendations
The BioPreferred' Program could be better utilized to
create an initial market for the full range of products from a biogas
system including fiber, nutrient products, digestate. The promotion of
nutrient recycling is especially important in watersheds designated as
distressed. The U.S. is witnessing significant water quality issues
which could be addressed by processing manures and extracting the
nutrients. These nutrients can then be further processed, taken out of
the water shed, and be sold as sustainable fertilizer. The ABC
encourages the BioPreferred' Program to be more inclusive of
biogas system products, especially those generated from digestate, the
digested organic material from an anaerobic digester.
Furthermore, we encourage USDA to increase outreach and education
to augment public awareness and acceptance of renewable chemicals and
biobased products through BioPreferred' program's voluntary
labeling and procurement system. Finally, we ask that the Committee
support the full annual appropriation of $3 million in discretionary
funding for FY 2020-2023.
Section 9003 Biorefinery, Renewable Chemical, and Biobased Product
Assistance Program
This program assists in the development of new and emerging
technologies for advanced biofuels, renewable chemicals, and biobased
products. Competitive grants and loan guarantees are available for
construction and/or retrofitting of demonstration-scale biorefineries
to demonstrate the commercial viability of one or more processes for
converting renewable biomass to advanced biofuels.\4\
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\4\ USDA Biorefinery Renewable Chemical and Biobased Product
Manufacturing Assistance Program https://www.rd.usda.gov/programs-
services/biorefinery-renewable-chemical-and-bio
based-product-manufacturing-assistance.
---------------------------------------------------------------------------
This loan guarantee program enables producers to access capital for
large-scale projects in rural communities. Without the loan guarantee
program, new technologies might never be able to pool sufficient
capital to commence development of a project in a rural community with
a small population.
The 2018 Farm Bill extended the program through FY 2023. It
expanded the definition of eligible technology to include technologies
that produce one or more of the following, or a combination thereof: an
advanced biofuel, a renewable chemical, or a biobased product. The 2018
Farm Bill authorized mandatory funding of $50 million for FY 2019 and
$25 million for FY 2020 for the cost of loan guarantees. Discretionary
funding of $75 million was authorized to be appropriated for each of FY
2019-FY 2023. We urge the Committee to support providing an additional
$75 million to this impactful program. support of fully annual
discretionary funding.
Recommendations
This incredibly impactful program has allowed companies to put
steel in the ground for first-of-their-kind biorefineries. These
biorefineries are proven job and economic growth drivers for rural
communities. We urge the Committee to support appropriating the maximum
funding authorized--$75 million annually--through 2023.
Section 9005 Bioenergy Program for Advanced Biofuels
This program encourages production of advanced biofuels, other than
corn starch ethanol. The policy goal is to create long-term, sustained
increases in advanced biofuels production. Awards are made through
Rural Development to biofuels producers, based on the amount of
advanced biofuels produced from renewable biomass. Feedstocks
incentivized by this program include crop residue, food and yard waste,
vegetable oil and animal fat. The program has promoted the development
of biogas, wood pellets, biodiesel, and advanced and cellulosic
ethanol.\5\
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\5\ USDA Advanced Biofuel Payment Program https://www.rd.usda.gov/
programs-services/advanced-biofuel-payment-program.
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Section 9005 funding helps stakeholders increase their return on
investment, which is needed to proceed with constructing a new plant or
expanding capacity at an existing facility. Without Section 9005
mandatory funding, companies working on advanced biofuel technologies
have one less tool to support innovation and commercialization of the
cleanest fuels in the world. Current USDA funding programs help
advanced biofuels succeed; the industry cannot afford to be without one
of these programs.
The 2018 Farm Bill authorized mandatory funding of $7 million for
each of FY 2019-FY 2023. Discretionary funding of $20 million was
authorized to be appropriated for each of FY 2019-FY 2023. We ask the
Committee to continue to support the appropriation of full
discretionary funding for the Bioenergy Program for Advanced Biofuels
through FY 2023.
Section 9007 Rural Energy for America (REAP)
This outstandingly popular, successful, and constructive program
supports every state and region and renewable energy and energy
efficiency technology. REAP provides benefits to the full agricultural
value chain, from producers and co-ops, to biotechnology and clean
energy companies operating across rural America.\6\ Over 13,000
projects across all 50 states have received awards since its inception
in the 2008 Farm Bill, leveraging more than $3 billion in private
investment. REAP is one of the rural economy's best methods to drive
growth in America's energy infrastructure and resiliency.
---------------------------------------------------------------------------
\6\ USDA Rural Energy for America Program https://www.rd.usda.gov/
programs-services/rural-energy-america-program-renewable-energy-
systems-energy-efficiency.
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The program has been instrumental in helping deploy biogas systems
throughout the rural economy allowing agricultural producers, through
the use of digesters, to make products from waste streams--manure and
crop residues--that would otherwise be viewed as an environmental
challenge. Farmers can now take these wastes streams and make on-farm
renewable energy, nutrient-rich soil amendments, fertilizers, renewable
natural gas, and even feedstocks for renewable chemicals and
bioplastics. The sale of all these products helps protect the
agricultural producer from swings in commodity prices.
The 2018 Farm Bill extends the program through FY 2023. It also
retains mandatory funding of $50 million for FY 2014 and each fiscal
year thereafter (thus, unlike other farm bill renewable energy
programs, REAP's mandatory funding authority does not expire with the
2018 Farm Bill). Mandatory funds are to remain available until
expended. Discretionary funding is authorized to be appropriated at $20
million annually for each of FY 2019-FY 2023. We urge the Committee's
support of fully annual discretionary funding.
Recommendations
This widely popular program has been oversubscribed year after
year. We urge the Committee to support appropriating the maximum
funding authorized--$20 million annually--through 2023.
Historically, digesters and other under-served technologies such as
small-scale wind have disproportionately been unsuccessful in securing
REAP funding. The ABC and the AgEnergy Coalition encouraged the
establishment of a reserve fund that would better support these
``under-served technologies,'' by setting aside no more than 10% of the
funding for these under-served technologies and returning any unused
funds back into the applicant pool. We understand that this concept is
something the Committee recognizes, and that USDA has used similar
structures in the past.
In the FY 2021 Agriculture Appropriations bill, the Committee
encouraged USDA to establish the reserve fund and provided $10 million
in funding for a pilot program to effectuate the same goals as the
reserve fund. We support both improving REAP for undeserved
technologies and the new pilot at USDA to address this problem. We are
hopeful that these two efforts fund for under-served technologies such
as biogas will improve access and that farmers, ranchers and small
rural businesses can further deploy this exceptionally valuable
technology. USDA should be in the business of promoting development of
lessmarket mature but proven technologies like biogas and small-scale
wind in REAP, as it does in other programs.
Section 9008 Biomass Research and Development Initiative (BRDI)
The Biomass Research and Development Initiative (BRDI) seeks to
foster significant commercial production of biofuels, biobased energy
innovations, development of biobased feedstocks, and biobased products
and processes, including cost-competitive cellulosic ethanol. The
program provides competitive funding in the form of grants, contracts,
and financial assistance for research, development, and demonstration
of technologies and processes. Eligibility is limited to institutions
of higher learning, national laboratories, Federal or state research
agencies, private sector entities, and nonprofit organizations.\7\
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\7\ USDA National Institute of Food and Agriculture BRDI https://
nifa.usda.gov/funding-opportunity/biomass-research-and-development-
initiative-brdi.
BRDI provides coordination of biomass research and development,
including life-cycle analysis of biofuels, between USDA and DOE by
creating the Biomass Research and Development Board to coordinate
government activities in biomass research, and the Biomass Research and
Development Technical Advisory Committee to advise on proposal
direction and evaluation.\8\
---------------------------------------------------------------------------
\8\ Ibid.
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Applicants seeking BRDI funding must propose projects that
integrate science and engineering research in the following three
technical areas that are critical to the broader success of alternative
biofuels production: feedstock development, biofuels and biobased
products development, and biofuels development analysis.
The 2018 Farm Bill extended the program through FY 2023. It amends
the definition of biobased product to include carbon dioxide, and it
requires the Initiative's technical advisory committee to include an
individual with expertise in carbon capture, utilization, and storage.
Furthermore, it expands the objectives of the Initiative to include the
development of high-value biobased products that permanently sequester
or utilize carbon dioxide. The 2018 Farm Bill provided no mandatory
funding for the program. Discretionary funding of $20 million is
authorized to be appropriated annual for FY 2019-FY 2023. However, no
discretionary funding has been appropriated for BRDI through FY 2020.
Recommendations
Further research into feedstock development and technology
optimization will help encourage far greater deployment of
biotechnologies including anaerobic digesters throughout the U.S. We
urge the Committee to support full annual discretionary funding of BRDI
at $20 million for FY 2020-2023. Appropriations cuts in past years have
led to smaller grants, limiting the diversity of projects.
Section 9010 Biomass Crop Assistance Program (BCAP)
The Biomass Crop Assistance Program (BCAP) provides financial
assistance to owners and operators of agricultural and non-industrial
private forestland who wish to establish, produce, and deliver biomass
feedstocks.\9\ BCAP provides assistance by either (1) establishment of
annual payments or (2) matching payments.
---------------------------------------------------------------------------
\9\ USDA BCAP https://www.fsa.usda.gov/programs-and-services/
energy-programs/BCAP/.
---------------------------------------------------------------------------
Establishment and annual payments are available to certain
producers who enter into contracts with USDA to produce eligible
biomass crops on contract acres within designated BCAP project
areas.\10\ Eligible land for BCAP project area contracts includes
agricultural land and nonindustrial private forestland, but does not
include Federal or state-owned land, or land that is native sod. Lands
enrolled in existing land retirement programs for conservation
purposes--the Conservation Reserve Program (CRP) or the Agricultural
Conservation Easement Program (ACEP)--also become eligible during the
fiscal year that their land retirement contract expires. Generally,
crops that receive payments under title I, the commodity title, of the
farm bill (e.g., corn, wheat, rice, and soybeans), plus noxious weeds
and invasive species are not eligible for annual payments.
---------------------------------------------------------------------------
\10\ See FSA, USDA, ``BCAP Project Area Information,'' at https://
www.fsa.usda.gov/programs-andservices/energyprograms/BCAP/bcap-project-
area/index.
---------------------------------------------------------------------------
Matching payments are available to eligible material owners who
deliver that material to qualified biomass conversion facilities.
Eligible material must be harvested directly from the land and
separated from a higher-value product (e.g., title I crops). Invasive
and noxious species are considered eligible material, and land
ownership (private, state, Federal, etc.) is not a limiting factor to
receive matching payments.
Despite initial challenges, this program remains crucial to
developing the feedstocks necessary for the biobased economy. The
program's regionally appropriate biomass feedstocks are key to the
development of sustainable systems for biofuels, renewable chemicals,
and biobased products.
BCAP has incentivized nearly 1,000 growers and landowners farming
nearly 49,000 acres to establish and produce dedicated, non-food energy
crops for delivery to energy conversion facilities.\11\ In 2014 and
2015, USDA approved 209 contracts for matching payments of $15.8
million toward the collection or harvest of approximately 300,000 dry
tons of forest residues from National Forest Service and Bureau of Land
Management public lands. Forest residues are removed for the reduction
or containment of disease or insect infestation and reduction of
wildfire threat, the last of which is a significant threat to the
Western U.S.\12\
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\11\ Biomass Crop Assistance Program (BCAP) Qualified Biomass
Conversion Facilities (BCF's) FY 2017 https://www.fsa.usda.gov/Assets/
USDA-FSA-Public/usdafiles/Energy/BCAP%20
Facility%20Listing%20FY2017.pdf.
\12\ USDA Resumes Incentives to Grow the Bioeconomy and Improve
Forest Health. https://www.fsa.usda.gov/news-room/news-releases/2016/
nr_20161110_rel_185.
---------------------------------------------------------------------------
The 2018 Farm Bill extended BCAP through FY 2023 and expanded the
definition for eligible material to include algae. Unfortunately, the
2018 Farm Bill provided no mandatory funding for the program.
Discretionary funding of $25 million was authorized to be appropriated
for each of FY 2019-FY 2023. No discretionary funding was provided for
FY 2020.
Recommendations
When well-funded, BCAP has the potential to be a huge benefit to
the development of the biobased economy and to farmers and agricultural
producers looking to diversify their income streams. We urge the
Committee to support full annual discretionary funding of BCAP at $25
million for FY 2020-2023.
Section 9011 Carbon Utilization and Biogas Education Program
This new program was established in the 2018 Farm Bill and requires
the Secretary to award competitive grants to eligible entities for two
purposes:
1. education to the public and biogas producers about the benefits
of carbon utilization and sequestration; and
2. education about the opportunities to aggregate multiple sources
of organic waste into a single biogas system.
The 2018 Farm Bill provided no mandatory funding for the program
but authorized discretionary funding of $2 million annual for each of
FY 2019-FY 2023. No funds have been appropriated through FY 2020.
Recommendations
While anaerobic digestion technology is mature, greater deployment
throughout the rural economy has been slowed due to a lack of awareness
and farmer education about how they work and their benefits. Digesters
are one of the greatest methods available to trap methane emitting
waste products such as manure and crop residues and convert it to
renewable energy, nutrient-rich soil amendments, fertilizers, renewable
natural gas, and feedstocks for renewable chemicals and bioplastics.
Providing greater education and outreach to farmers and agricultural
producers could greatly increase the deployment of digesters as well as
the utilization of farm bill energy title programs that support
digesters. We urge the Committee to support fully funding the $2
million authorized annually for this program.
Biogas Opportunities Task Force
Language directing USDA, EPA and DOE to establish an Interagency
Biogas Opportunities Task Force (building upon the existing Biogas
Opportunities Working Group) was contained in the conference report
accompanying the 2018 Farm Bill.
This provision states that no later than 180 days after the date of
enactment of the Agriculture Improvement Act of 2018, the USDA
Secretary in coordination with the Secretary of Energy and the EPA
Administrator will establish an Interagency Biogas Opportunities Task
Force to coordinate policies, programs, and research to accelerate
biogas research and investment in cost-effective biogas systems.
The Task Force is to be composed of the head of each Federal office
responsible for biogas research or biogas system financing, including a
representative from the Department of Agriculture, the Department of
Energy, the Environmental Protection Agency (EPA), and National
Renewable Energy Laboratory. The Task Force will also have one or more
representatives of state or local governments, one or more
nongovernmental or industry stakeholders, and a community stakeholder.
The Task Force will evaluate and improve the coordination of loan
and grant programs of the Federal agencies represented on the Task
Force to broaden the financing options available for biogas systems. It
will also explore how to enhance opportunities for private financing of
biogas systems; review Federal procurement guidelines to ensure that
products of biogas systems are eligible for and promoted by applicable
procurement programs of the Federal Government; evaluate the
development of North American Industry Classification System and North
American Product Classification System codes for biogas and biogas
system products; review opportunities and develop strategies to
overcome barriers to integrating biogas into electricity and renewable
natural gas markets; develop tools to broaden the market for non-energy
biogas system products; provide information on the ability of biogas
system products to participate in markets that provide environmental
benefits; identify and investigate research gaps in biogas and
anaerobic digestion technology; including research gaps in
environmental benefits, market assessment; and performance standards;
assess the most cost-effective voluntary investments in biogas to
reduce waste and methane emissions; and identify and advance additional
priorities, as determined by the Task Force.
Not later than 18 months after the date of the establishment of the
Task Force, the Task Force will submit to Congress a report that
identifies whether it was able to carry out the duties outlined above
and include recommendations on how Congress should prioritize policies
and technological opportunities, aimed at expanding the biogas
industry. The report will also consider recommendations on how to
eliminate barriers to investment in biogas systems in the landfill,
livestock, wastewater, and other relevant sectors; and to enhance
opportunities for private- and public-sector partnerships to finance
biogas systems. Two years after the establishment of the Task Force it
will identify, collect, and analyze environmental, technical, and
economic performance data relating to biogas systems, including the
production of energy from biogas systems, co-products, greenhouse gas
and other emissions, water quality benefits, and other data necessary
to develop markets for biogas and biogas system co-products. The data
will be made public.
To date, this language has not been acted upon. We have been told
by USDA Administration that unless the language is statutory or unless
Congress provides additional funding to implement this provision that
it will continue to be ignored.
Recommendations
Implementation of the Biogas Opportunities Task Force will help
drive research, collaboration, innovation, education, outreach and
deployment of anaerobic digestion technologies. As the Biogas
Opportunities Working Group recognized, these technologies help turn
agricultural challenges into opportunities by converting manure and
other agricultural wastes into renewable energy, nutrient-rich soil
amendments, fertilizers, a renewable natural gas, and even feedstocks
for renewable chemicals and bioplastics.\13\ We urge the Committee to
support this language and work with the Agency to oversee its
implementation.
---------------------------------------------------------------------------
\13\ Biogas Opportunities Roadmap, Voluntary Actions to Reduce
Methane Emissions and Increase Energy Independence, August 2014.
https://www.energy.gov/sites/prod/files/2014/08/f18/
Biogas%20Opportunities%20Roadmap%208-1-14_0.pdf.
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Non-USDA/Non-Farm Bill Programs
Renewable energy production plays a key role not just in
agricultural policy, but also in energy, tax, and environmental policy.
As a result, many of the Federal programs that support renewable energy
production in general, and agriculture-based energy production in
particular, are outside the purview of USDA and have origins outside of
omnibus farm bill legislation. The Renewable Fuel Standard, for
example, was established outside of farm bill legislation.
The Renewable Fuel Standard
The RFS mandates an increasing volume of biofuels use and has its
origins in the Energy Policy Act of 2005 (P.L. 109-58). The RFS was
expanded in the Energy Independence and Security Act of 2007 (EISA;
P.L. 110-140) and divided into four distinct, but nested, biofuel
categories--total, advanced, cellulosic, and biodiesel--each with its
own mandated volume. Biogas qualifies as both a cellulosic and advanced
biofuel, depending on the feedstock. In fact, biogas makes up well over
90% of the annual cellulosic volumes. Additionally, biogas from non-
cellulosic feedstocks such as food waste is a growing category. While
not a USDA administered program, the RFS significantly impacts the on-
farm and rural economy because it can be a significant source of
revenue to farms when administered properly by EPA. Additionally, USDA
recommendations assist in the calculations of annual renewable fuel
volume targets. When the RFS is being administrated well and running
smoothly, it provides an additional stream of income that can help
buffer the effects of on-going trade disputes or the impacts of bad
weather. When the RFS is being administered poorly, it can add to the
farmers and agricultural producers' woes.
Waivers
We strongly argue that the continued abuse of the small refinery
exemptions undermines the integrity of the RFS and is in direct
contravention of the statute passed by Congress in 2007. We urge the
EPA to limit the use of these waivers to only their intended purpose.
Biomass Derived Renewable Electricity
When reauthorized and expanded through the Energy Independence and
Security Act of 2007 (EISA; P.L. 110-140), Congress included
electricity made from renewable biomass as part of the fuel mix in the
RFS. One of the main goals of the RFS is to incentivize the development
and deployment of new American produced biofuels, which will create
energy independence and new markets for producers including the
electricity produced from biomass.
Furthermore, EPA included electricity derived from biogas in the
Renewable Fuel Standard Program.\14\ Yet, while numerous applications
to generate biogas derived electricity have been submitted, none have
been approved. The EPA has yet to set up the processes necessary for
producers to generate Renewable Identification Numbers (RINs). As
shrinking markets and trade wars increasingly strap small farmers, the
revenue that they should generate from the sale of these e-RINs may be
the difference between shutting down and staying open.
---------------------------------------------------------------------------
\14\ Approved Pathways for Renewable Fuel https://www.epa.gov/
renewable-fuel-standard-program/approved-pathways-renewable-fuel.
---------------------------------------------------------------------------
Building electricity into the RFS is not a way to incentivize
electric vehicles. One may only look to how the ethanol market works to
understand. The producer of ethanol receives the RIN credit for fuel
blended into the larger gasoline supply. This in no way encourages or
discourages the use of traditional vehicles; it simply ensures the
producer of biofuels gets the credit to which they are entitled under
the RFS. The same applies to renewable electricity powering electric
vehicles. Biofuels, such as the biogas produced from anaerobic
digesters, are already being ``blended'' into the electricity supply
but the producers of these biofuels are not able to receive the RINs
credit. The use of the biogas, which consists of methane and carbon
dioxide, as a fuel to generate renewable electricity helps improve our
air quality, water quality, soil health, and the environment while
mitigating the effects agricultural production has on our climate.
Incorporating electricity into the RFS is also not a threat to
ethanol producers. The majority of the fuel would be added to the
cellulosic biofuel category (D3 RIN), which is separate from the
ethanol market's D6 RIN.
Recommendations
If Congress is looking for a way to help farmers during the time of
trade wards, competing interests of the oil industry, and the effects
of [COVID-19], supporting the RFS would be an ideal way of doing so.
Ensure the integrity of the RFS by only granting waivers to those small
refiners who truly qualify. We also ask Congress to uphold the letter
and intent of the RFS by directing EPA to include renewable biomass
derived electricity to the annual blending requirements. Agricultural
producers should be allowed to participate in the RFS as Congress
originally intended, and it would help producers stay afloat even with
other uncertainties.
Tax Policy
While Tax Policy is underneath the jurisdiction of the House Ways
and Means Committee, it nevertheless affects on Farm Energy Production.
Biogas produces firm, reliable baseload power that can be easily
incorporated into existing energy infrastructure. Power from biogas and
other baseload technologies is critical to the stability of the
nation's electric grid, creates high-paying jobs, and helps the country
meet its environmental and energy policy objectives.
Biogas qualifies for the Section 45 Production Tax Credit (``PTC'')
at a \1/2\ credit rate. The PTC lapsed on December 31, 2016. The
Bipartisan Budget act retroactively extended the PTC for 2017 was
expired for 2018 and 2019. In late December of 2019, this credit was
extended retroactively in the FY 2020 Appropriations bills for 2018 and
2019 and for 1 year in the future, 2020. The temporary nature of the
incentive combined with the long project lead times have historically
limited the efficacy and utilization of the incentive for biogas. The
ability of other renewable technologies to readily utilize the PTC and
the Section 48 Investment Tax Credit (``ITC'') while our technologies
have effectively been denied similar tax treatment under current law
has had the practical impact of putting this otherwise economically
competitive technology at a distinct competitive disadvantage in the
energy marketplace.
Recommendation
To provide parity in tax policy and energy markets, technologies
whose eligibility for the PTC and the ITC has been intermittent should
be eligible for the same tax treatment that has been afforded other
renewable energy technologies. We strongly urge this Committee to
support the extension of the Production Tax Credit (PTC) ( 45 and
48(a)(5)) for Renewable Electricity and the expansion of the Investment
Tax Credit for Biogas 48 for biogas properties. Biogas property has
been defined as property that converts biomass into a gas (which is at
least 52% methane) for productive use. Electricity produced from
property receiving an ITC under this provision is not also eligible for
benefit under the PTC. We also ask that this Committee support the
extension of the alternative fuel excise tax credit and the effort to
provide an Elective Payment for energy property and electricity
produced from certain renewable sources. These four tax policy
recommendations were contained in the Moving Forward Act (H.R. 2),
which was recently passed by the House.
House Select Committee on the Climate Crisis
The House Select Committee on Climate Crisis recently released its
Action Plan for a Clean Energy Economy and Healthy, Resilient, and Just
America. This wide ranging forward looking plan outlines many policy
priorities including many under the jurisdiction of this Committee. In
general, the ABC is supportive of the recommendations contained within
this report and believes that if implemented, we can transition our
economy to a more sustainable model which values workers and forward-
thinking agricultural producers, advances sustainable environmental
policies and goals, and is prepared to meet the challenges of the
climate crisis.
Conclusion
The production of On-Farm Energy is driven by numerous factors
included among them is policy formulated by this Committee. Farm bill
energy title programs have been incredibly successful in growing the
on-farm and rural economy. Because of the research, loans, and grants
provided by these programs, biogas and biotechnology companies are
developing new technologies and feedstocks for the conversion of
biomass for the production of renewable energy, advanced biofuels,
renewable chemicals, renewable fertilizers and biobased products.
The biogas industry is on the cusp of creating a robust biobased
economy through U.S. biobased production, which strengthens rural and
on-farm economies. Biogas systems encompass a value chain from
agriculture through the manufacture of consumer goods that provides a
cost-competitive alternative to petroleum's value chain and brings
environmental, economic and other benefits.
Encouraging growth of our industry provides new markets for farmers
and agricultural producers, promotes innovation in domestic
manufacturing and exports, and stimulates sustainable economic growth.
In turn, because the inputs and technologies are domestically
developed, this sector will boost the incomes of America's farmers,
revitalize rural communities, create high-skilled jobs in the
manufacturing sector, and provide sustainable employment.
The ABC and the AgEnergy Coalition are ready to serve as a resource
to the Committee and you continue to support On Farm Energy Production.
Please do not hesitate to call on our organizations if we can be of
service.
The Chairman. Thank you very much, Mr. Sievers.
And now, I recognize Mr. Will Harris, for 5 minutes, from
Georgia.
STATEMENT OF WILL HARRIS, OWNER, WHITE OAK PASTURES, BLUFFTON,
GA
Mr. Harris. Chairman Scott, Ranking Member Scott, and
Members of the Subcommittee, thank you for inviting me to be
here today.
White Oak Pastures is a 153 year old family farm that
geographically surrounds our town of Bluffton, Georgia. It is a
vertically integrated, multi-generational farm where we utilize
multi-species rotational grazing practices, produce beef, pork,
lamb, poultry, eggs, organic vegetables, and honey. The fourth,
fifth, and sixth generation of the Harris family are currently
living and working on the farm.
There are three topics I want to cover with you today:
regenerative farming as an economic driver; and as a tool to
help mitigate climate change; and paired with renewable energy,
to create more economic opportunities for rural America.
First, as an economic driver. Every conscious American
recognizes the decay that has occurred in rural communities
over the last half century. Prior to World War II, most rural
communities enjoyed a fairly consistent agrarian economy. But
after the war, the centralization of our food processing system
began, and new mega-plants, owned by large multinational
companies started to starve out small, hometown, locally-owned
processing businesses.
When I was growing up in rural Georgia in the 1960s, every
county had at least one family-owned slaughter plant. Today,
almost every one of these is gone from our 159 county state.
And this is a tragedy being replicated all across the United
States.
Regenerative farming at White Oak Pastures has revitalized
the economy of our county, and it can do the same for other
communities across the nation. White Oak Pastures is the
largest private employer in our county. In the last 20 years,
our farm has grown from four full-time employees and $1 million
in annual revenue, to 155 full-time employees and $20 million
in annual revenues. We write payroll checks for over $100,000
every week, in a county that has fewer than 3,000 residents.
The average salary of our employees is almost twice that of the
average employee in the county. There could, and should, be a
White Oak Pastures in every agricultural county in the United
States. It is a highly replicable business model.
Second topic is regenerative ag farming to mitigate climate
change. This has been scientifically proven by the lifecycle
assessment, and I provided the link to that in my written
comments. White Oak Pastures may be the only farm in the world
that has a peer-reviewed, third-party scientific study that
verifies and validates that we sequester more carbon than we
emit. We are a contributor to the mitigation of climate change.
Our farm has sequestered over a ton of carbon per acre per
year on 3,200 acres of land for the last 20 years. During this
period of time, our farm has pulled the carbon equivalent of
almost \1/2\ million barrels of crude oil out of our atmosphere
and sequestered it in the soil. White Oak Pastures used a
$50,000 USDA REAP Grant to construct a 50,000-watt solar array
in 2010. It provides our farm with energy resilience and helps
power our on-farm red meat and poultry slaughter plants, both
of which are USDA-inspected.
A couple of years ago, I learned that Silicon Ranch, one of
the largest owner-operators of solar power plants in the
country, would be building a solar array on over a thousand
acres of land next to my farm. I invited my new neighbors to
visit, and during the visit, we discussed the opportunity for a
mutually beneficial partnership: I would use my livestock and
regenerative farm practices to manage the vegetation on their
solar farm. It worked. White Oak Pastures will be bringing
regenerative land management to 2,400 acres of solar farmland
in southwest Georgia. Twenty years from now, Silicon Ranch's
land will have five percent organic matter, just like mine
does. The White Oak Pastures-Silicon Ranch partnership model is
replicable anywhere. It is win-win for the solar developers and
farmers and rural communities.
Adding regenerative cattle grazing to the model would
greatly expand the opportunity. Integrating cattle grazing over
these large-scale solar farms is not an option without more
research and development.
In partnership with the National Renewable Energy Lab,
White Oak Pastures and Silicon Ranch have applied to work with
the Department of Energy through a grant to construct a
prototype on my land to power my slaughter facility. It will
demonstrate cattle and solar compatibility.
White Oak Pastures is honored to have been able to
transform renewable energy into regenerative energy. I want to
thank the Members of the House Agriculture Committee for giving
me the opportunity to share our story today. It is a story of
hope and innovation, and a story of how we can bring prosperity
back to impoverished rural America. Thank you very much.
[The prepared statement of Mr. Harris follows:]
Prepared Statement of Will Harris, Owner, White Oak Pastures, Bluffton,
GA
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee, thank you for inviting me to be here today--
White Oak Pastures is a 153 year old radically traditional family
farm that geographically surrounds the town of Bluffton, Georgia. It is
a vertically integrated, multi-generational farm that uses the multi-
species rotational grazing practices of our forefathers to produce
beef, pork, lamb, poultry, goat, eggs, organic vegetables, and honey.
We have not used pesticides, chemical fertilizers, tillage, or GMO's in
the last 20 years and we operate as a zero waste facility. The fourth,
fifth, and sixth generation of the Harris family are currently living
and working on the farm.
There are three topics that I want to cover today that I hope you
will consider to be important:
1. Regenerative Farming as an Economic Driver
2. Regenerative Farming as a Tool To Help Mitigate Climate Change
3. Regenerative Farming Paired With Renewable Energy To Create More
Economic Opportunities for Farmers and Rural America
First, regenerative farming is an economic driver, proven as a
workable business model in Bluffton, Georgia--
Every conscious American has some level of recognition of the decay
that has occurred in our rural communities in the last half century.
Prior to World War II, most rural communities enjoyed a fairly
constant agrarian economy.
But after the war, the centralization of our food processing system
began, and new mega-plants, owned by large multinational companies and
operated with great ``economic efficiency'' started to starve out our
small, hometown, locally-owned and operated processing businesses.
When I was growing up in rural Georgia in the 1960s, every county
had at least one family-owned abattoir [artisan slaughter plant].
Today, almost every single one is gone from our 159 county state. And
this tragedy has been replicated across the rural United States.
Regenerative farming at White Oak Pastures has revitalized the
economy in our county, and it can do the same for other communities
across this great nation.
White Oak Pastures is the largest private employer in our county.
In the last 20 years, our farm has grown from four full time employees,
and a million dollars in annual revenue, to 155 full time employees,
and twenty million dollars in annual revenues. We write payroll checks
for over $100,000 each week, in a county that has fewer than 3000
residents. The average salary of our employees is approximately twice
that of the average salary in the county.
There could, and should, be a White Oak Pastures in every
agricultural county in the United States. Maybe two or three of them.
It is a highly replicable business model.
And now for the second topic I wish to share with you all today.
regenerative farming helps to mitigate climate change, proven
scientifically by the life cycle assessment that I have provided for
you--
https://blog.whiteoakpastures.com/hubfs/WOP-LCA-Quantis-
2019.pdf?hsCta
Tracking=6d515b16-e2ed-4bea-a286-a7433c983b81%7C7a0781f6-8e32-4e28-
89e9-563565ab2eea
White Oak Pastures is likely the only farm in the world that has a
peer reviewed, third-party scientific study that verifies and validates
that we sequester more carbon than we emit. We are a contributor to the
mitigation of climate change.
The organic matter of our soil has increased from 0.5% to 5.0% over
the last 2 decades. Each 1% of organic matter will absorb over 20,000
gallons of water. Our 3,200 acres of land will absorb a 5" rain event.
The neighboring farms can only absorb a \1/2\" rain event, which has
enormous downstream impact.
Our farm has sequestered over 1 ton of carbon per acre per year, on
3,200 acres of land, for the last 20 years. During this period of time,
our farm has pulled the carbon equivalent of about 500,000 barrels of
crude oil out of our atmosphere.
White Oak Pastures used a $50,000 USDA-REAP Grant to construct a
50,000 kW solar array in 2010. It provides our farm with energy
resilience and helps to power our on-farm red meat and poultry
slaughter plants, both USDA-inspected.
While this on-site solar array introduced us firsthand to the
benefits of renewable energy, for my third topic I want to share how
regenerative farming paired with renewable energy creates even more
economic opportunities for rural America--
A couple of years ago, I learned that Silicon Ranch, one of the
largest owner-operators of solar power plants in the country and the
leader in our state of Georgia, would be building a solar farm on over
a thousand acres of land next to my operations. I liked solar, but I
didn't like what it typically meant for the land it occupied--un-
natural, unhealthy monoculture--and dead dirt.
I invited my new neighbors to visit. And during the visit, we
discussed the opportunity for a mutually beneficial partnership: I
could use my livestock and regenerative farming practices to manage the
vegetation on Silicon Ranch's solar farm--a big operational challenge
for them usually managed with mowing and spraying--and at the same time
I could access more grazing land without additional investment and
improve my bottom line.
Following months of collaborative discussions, White Oak Pastures
has formed a meaningful partnership with Silicon Ranch, and they have
transformed their approach to managing the land under their arrays
across the country.
For our part, White Oak Pastures will be bringing regenerative land
management to close to 2,400 acres of solar farm land in southwest
Georgia. Twenty years from now, Silicon Ranch's land will have five
percent organic matter like mine does and even more economic value per
acre by layering clean energy generation, food production, and
ecosystem services.
The White Oak Pastures-Silicon Ranch partnership model is
replicable anywhere willing farmers and solar energy intersect. Solar
is a decentralized form of power generation that can support the
decentralization of agriculture by providing regenerative farmers with
finance-free access to land and a new source of income. The co-location
of renewable energy generation and regenerative agricultural production
is a win-win-win: for the solar developers, the farmers, and the
community.
And the replication process has already begun: Silicon Ranch has
replicated this model in Mississippi, Tennessee, Arkansas, and
Colorado, and will be implementing it in additional states in the
coming years.
To date, Silicon Ranch's co-location model has integrated
regenerative sheep grazing, as well as pasture-raised poultry, on its
solar farms. This innovation has created a unique and significant
opportunity for farmers and rural America.
Adding regenerative cattle grazing to the model would greatly
expand this opportunity to even more farmers and communities because
cattle are by far the most widely consumed ruminant in the country.
Nearly \1/4\ of all land in the U.S. is dedicated to cattle grazing.
Integrating cattle grazing on large-scale solar farms is not an
option without new research and development due to current solar power
plant design and limitations related to the financing of untested new
designs.
In partnership with the National Renewable Energy Lab and experts
from three renowned academic research institutions, White Oak Pastures
and Silicon Ranch have applied to work with the Department of Energy,
through a grant from the Solar Energy Technologies Office, to custom
build a 250kW Outdoor Test Lab on my land to power my USDA slaughter
facility, and to demonstrate cattle and solar compatibility. If the DOE
awards our grant application it would be yet another example of how
targeted Federal programs can help support innovation and progress to
advance the mission of our family farm.
Moreover, if our Test Lab is successful, Silicon Ranch intends to
scale and replicate this new model, the CattleTracker model, across the
country, keeping even more land in ag production while supporting and
leading the transition to clean energy.
White Oak Pastures is honored to have helped Silicon Ranch
transform ``renewable energy production'' into ``regenerative energy
production'' and we look forward to expanding the positive impacts of
energy projects through building a CattleTracker project on our farm.
I want to thank the Members of the House Agricultur[e] Committee
for giving me the opportunity to share our story today. It is indeed a
story of hope and innovation, and it is a story of how we can bring
prosperity back to impoverished rural America. Thank you.
Will Harris, Owner, White Oak Pastures.
Attachment
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Harris. Let me just say that
your testimony was very revealing, and I agree with you 100
percent.
Now, in your testimony you said so much, oh, I am sorry.
Mr. Harris, you got me so excited about what you were
saying that I skipped the script. Thank you, Mr. Harris, and
thank you, Ranking Member, for pulling my coattail on that.
I now recognize Dr. Mike McCloskey for 5 minutes.
STATEMENT OF MICHAEL J. McCLOSKEY, D.V.M., FOUNDER AND
CHAIRMAN, FAIR OAKS FARMS; OWNER/PARTNER,
PRAIRIES EDGE DAIRY FARM; CHAIR, ENVIRONMENTAL ISSUES
COMMITTEE, NATIONAL MILK PRODUCERS
FEDERATION, FAIR OAKS, IN
Dr. McCloskey. Thank you, Mr. Chairman, and I want to thank
also the Subcommittee Members for inviting us here today to be
able to share with you our experience. Also, I would like to
thank Congressman Baird for such a kind introduction today.
Listening to the previous colleague speakers today, I don't
want to dwell a lot on past projects. It is clear that a lot of
us over the years have heavily invested, our capital, on
renewable energies on our farms, because we believe that is the
right thing to do. And as we have done those investments, I
want to assure you, and I think you have heard that from the
other speakers, that the technology now is at a level that it
is reliable and trustworthy, and that is the first thing that I
hope this Committee fully embraces.
Therefore, our big challenge is how do we make it
mainstream? How do we take what some of us who have scale who
are able to take our capital and invest in and prove out these
technologies, and now grow it for all industry?
In the dairy industry, for example, we as an industry
through our trade organization, through our check-off dollars,
we have come together and made a commitment to a net zero
industry by 2050. We have a challenge for us to take everything
that we have learned, that we know we can do, and drive it into
all of our farms industry-wide. Now, this commitment is a
collective commitment. Not everyone will hit net zero. Some
people will sequester, as one of my colleagues just presented,
which I agree 100 percent with. A lot of us will be able to
sequester and do better than net zero. Some will hit net zero
and some may not get to net zero. But as a collective industry,
we have committed in the dairy industry that we are going to go
to net zero.
Let me just take one big example that I believe that we can
get there with your support, and some of this is truly outside
of your jurisdiction. But it is your influence in Congress that
can help create an atmosphere of investment in biogas, nutrient
recovery, and clean water.
Let me start with the two main issues that we need to
resolve is the need for helping with the capital costs.
Chairman Peterson said it very well a little while ago. We need
to find ways to help with these capital costs so we can take
this mainstream, but there have to be ways that over time, we
get out of that. And I am 100 percent for that comment. Let me
explain what I mean here. We have to have an environment where
we support an ITC, or an investment tax credit, of 30 percent
for this type of equipment that deals with biogas, nutrients,
and clean water. And an ITC, the way that it works, is when an
industry is right, to be able to move forward, it can really
stimulate thousands of jobs and self-pay for itself. An ITC
credit is really not a cost. It actually brings additional
money into the Treasury by creating thousands of jobs and
creating an industry. This industry today is right to receive
an ITC of 30 percent. I hope Congress can consider that, and I
encourage you to.
I am not going to dwell a lot on USDA because my colleagues
have expressed it very well. Through Rural Development, there
are tremendous opportunities there, and also through NRCS. And
the important thing there is to be able to stack these
programs. We need to, and USDA has done a great job of that,
but we still have states where we cannot stack different types
of programs together to help medium size and small farmers
participate. Those two things, an ITC and stacking, will be a
tremendous help to be able to get small farmers, medium size
farmers to be able to get capital to be able to invest in this
technology.
The second thing that we need is a reliable market, and my
colleagues also expressed the issues about reliable markets
that have fallen apart over the years, and great projects
therefore have disappeared. And we need to have a reliable
market. Well again here, we have an example where we already
have a reliable market and we haven't put it to work well
enough, and that is through our Renewable Fuel Standard that
lies there at EPA. We have a pathway, the electric pathway,
that we need to put to use. By 2030, there will be a total of
20 million electric vehicles, including trucks, 18-wheeler
trucks, on the road. And we can use this pathway, this
electricity pathway through the RIN process and be able to
subsidize the income of the electric produced to these farmers
in a fantastic way. If you do a conversion of a RIN, the
renewable identification numbers, if you do a conversion that
we are getting in gas today, where we are selling gas into the
low carbon fuel standards, if that 77,000 BTUs, if you convert
that into electricity, which I have, by getting a RIN that can
move an electrical vehicle that is already in place, that we
are not using, it sits there at EPA. By getting that amount of
money coming back to the electrical generation would be
sufficient to be able to justify that investment that the
farmer could make. And we could take this whole concept from
just people like ourselves who have scale, we could take this
to the mainstream U.S. farmers to be able to take advantage of
it.
I thank the Committee for listening to this. It is a simple
future approach that we can have. By applying these two
concepts, I believe we can get to more than 50 percent of our
dairy industry commitment of a net zero by 2050. I believe we
can be there by 2040, or even sooner if we can have support at
this level.
Thank you very much.
[The prepared statement of Dr. McCloskey follows:]
Prepared Statement of Michael J. McCloskey, D.V.M., Founder and
Chairman, Fair Oaks Farms; Owner/Partner, Prairies Edge Dairy Farm;
Chair, Environmental Issues Committee, National Milk Producers
Federation, Fair Oaks, IN
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee, thank you for the opportunity to testify at today's
hearing. My name is Mike McCloskey. Together with my partners, I milk
over 15,000 cows in the great State of Indiana. Thanks to the many days
I spent as a young boy accompanying my veterinarian uncle on farm
visits, I learned to understand and appreciate the blessings that
animals provide us. My love and fascination with animal agriculture
culminated in a successful and respected dairy-centric veterinary
practice in Southern California through the 1980s. Here, I partnered in
my first dairy farm of 300 cows, and from there continued to grow while
also founding the nation's sixth largest dairy cooperative, Select Milk
Producers, and the dairy-based health and wellness brand, fairlife. I
am also proud to serve as Chairman of the Environmental Issues
Committee within the National Milk Producers Federation, which
represents the nation's dairy farmers and the cooperatives they own.
In 2002 we installed our farm's first digester, processing both our
cows' manure along with local pre-consumer food waste into electricity
that we use on our farms. In 2009, we built a second digester with the
purpose of creating a renewable biogas to be used in transportation.
Through key partnerships with Cummins, Kenworth, and the State of
Indiana, and with the majority of funding coming from private
investment, we pioneered the first commercial fleet of 42 tractor
trailers running on renewable compressed natural gas from biogas,
hauling milk from our farms to processing facilities up to 350 miles
away. Every year since beginning the operations from that digester, we
have displaced 2,000,000 gallons of diesel from having to be mined as
fossil fuel.
In 2019, as technology improved the cost and efficiency of
anaerobic digesters, we replaced our first electricity-providing
digester. The concept of remains the same: microorganisms in the
digester break down the waste, thereby producing methane and carbon
dioxide. However, now we power a 1-megawatt generator. This digester
operates around the clock and provides enough electricity to power
about 900 homes. Our digesters are integral to our farm's environmental
and economic sustainability because they allow us to take both animal
and pre-consumer food waste and turn it into an array of value-added
products. In addition to defraying our energy costs and allowing us to
earn tipping fees for accepting food waste, the digester also outputs
Grade A compost, bedding for cows, and renewable fertilizer that we use
on our cropland to grow feed.
There are currently 254 digesters operating on livestock farms in
the U.S., of which 204 are on dairy farms. When we installed our
digester, there were significantly fewer in operation and far less
shared knowledge about biogas generation among farmers, cooperatives,
USDA, EPA, digester engineers, and energy companies to help get a
digester project from concept to installation and profitability. In the
interim, the dairy industry worked with USDA, DOE, and EPA to develop a
Biogas Opportunities Roadmap, which has helped many more dairy farmers
and the U.S. dairy industry work toward meeting the voluntary goal of
reducing greenhouse gas (GHG) emissions from fluid milk by 25 percent
by 2020. Biogas production is also critical to the Net Zero Initiative,
a new industry-wide initiative to help the U.S. dairy sector reach the
goal of carbon neutrality by 2050 while also optimizing our water use
and improving water quality. Biogas is part of a larger systems
approach to sustaining dairy farms, and it must be incentivized along
with improving soil health, 4R practices for feed production, animal
care, precision feed management, and manure management.
Before going any further, I'd like to thank this Committee for the
work you've done to incentivize biogas production on farms while urging
you to continue helping dairy producers of all sizes to generate biogas
and improve their environmental and economic sustainability. The Biogas
Opportunities Roadmap estimates that over 8,000 potential livestock
farms, of which 2,704 are dairy operations, could host a biogas system,
producing 13.1 billion kWh per year, or enough to power 1,089,000 homes
for a year. To meet this potential capacity, however, we must overcome
a variety of financial and regulatory roadblocks. I will quickly
outline the difficulties I encountered in installing my digesters as
well as the challenges that persist for my fellow dairy farmers who
want to install their own.
The primary impediment to on-farm digester adoption is the lack of
financial incentives available to farmers. I strongly believe that once
the proper incentives are in place, digesters will be adopted
throughout the industry. It is the proper role of government to help
facilitate early adoption to the point that economies of scale develop,
technologies advance, and capital costs drop. Our industry has been
significantly impacted by the uncertain farm economy (even before
COVID-19), and digesters, which inherently entail long-term planning
and significant capital costs, are simply out of reach for most
farmers. Dairy farmers strive to be part of the solution to the climate
and water quality challenges facing U.S. agriculture, but our voluntary
efforts can only go so far without the continued support of Congress,
USDA, DOE, and EPA.
For some reason, repurposing cow manure does not have the same
shine as an array of solar panels or the grandeur of a wind farm on the
horizon. USDA's own data show that from 2002-2019, the Department made
631 investments in anaerobic digestion worth $198 million, compared to
6,179 in solar worth $2.93 billion and 696 in wind worth $468
million.\1\ USDA has provided more than ten times as much in grants,
loans, loan guarantees, and payments for solar production than it has
for anaerobic digestion.
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\1\ https://www.usda.gov/energy/maps/report.htm.
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To illustrate this disparity more concretely, consider the USDA
Rural Development's (RD) Rural Energy for America Program (REAP), which
provides important loan guarantees and grants for energy development.
REAP has provided nearly $100 million to solar development, compared to
only $36 million for anaerobic digestion. REAP prioritizes solar
development over biogas by not properly accounting for anaerobic
digestion's secondary benefits. Whereas anaerobic digestion provides
several other environmental benefits--such as avoided methane
emissions, mitigated odor and air pollution, and minimized nutrient
loading--solar panels provide nothing other than clean energy. While
wind and solar are important to the rural economy and America's energy
transition, they do not offer a systems approach to agriculture's
challenges the same way that anaerobic digestion does. And while the
dairy sector is fully supportive of solar and wind development, biogas
provides several additional income streams while addressing multiple
resource concerns. It should be valued as such by USDA and other
Federal agencies with a renewed focus on promoting the technology.
USDA has made significant progress in implementing REAP to the
benefit of anaerobic digestion by allowing stacking with the
Environmental Quality Incentives Program (EQIP). In addition to the
work on the Biogas Opportunities Roadmap, USDA's Natural Resource
Conservation Service (NRCS) and RD came to an agreement allowing
certain project costs to be covered by one program, with other costs
covered by the other. However, in two of the top five dairy producing
states, NRCS does not even offer the Anaerobic Digester (366) practice
to producers through EQIP. This is just one example wherein producers
would benefit from increased coordination among different agencies at
different levels.
To achieve the goals of the Net Zero Initiative, dairy farmers will
not be able to rely on Federal funds alone. However, access to private
capital to fund digesters has been limited. Federal funding, in the
form of cost-sharing, research investments, and loan guarantees will
remain critical to the expansion of the nation's biogas capacity, but
Congress can also help by creating an environment that facilitates
private capital investments into biogas. For instance, the bipartisan
Agriculture Environmental Stewardship Act (H.R. 3744), which was
introduced last year in both chambers of Congress, would create a 30
percent investment tax credit (ITC) for biogas used as renewable gas in
vehicles or as renewable heat as well as for manure resource recovery
technologies. The Section 48 production credit for biogas for
electricity expired at the end of 2019, and there have never been
production credits for biogas for fertilizer. This investment tax
credit is just one way to incentivize the expansion of on-farm biogas
capacity, and just one piece of the puzzle to helping U.S. dairy reach
net zero.
Another way to encourage investment is to create certainty that a
market for biogas will exist into the future. The first, and easiest,
way to increase certainty around biogas returns is to encourage EPA to
process the backlog of applications for the Electric Pathway under the
Renewable [Fuel] Standard (RFS). Under the RFS, electricity produced
with biogas is considered a renewable fuel when used for transportation
purposes. Therefore, electricity used to power electric vehicles is
eligible to generate and sell Renewable Identification Numbers (RINs)
under the RFS. That is the essence of the RFS ``electric pathway'' and
what have commonly been referred to as ``e-RINs.'' EPA finalized a rule
for this pathway in 2014 but has processed no registrations to date.
The electric pathway would allow agricultural digesters that are not
near a natural gas pipeline to participate in the RFS by generating
renewable electricity and putting those electrons onto the grid.
A simple illustration shows the potential value that activating the
electric pathway could generate for a farmer who is considering an
investment in an anaerobic digester to generate renewable energy.
Assume a standard vehicle with an internal combustion engine is driven
25 miles per day and achieves 25 miles per gallon fuel efficiency. One
gallon of gasoline consumed has the energy content of 115,000 BTUs. A
RIN has a defined value of 77,000 BTUs, so substituting an electric
vehicle would displace that 1 gallon of gasoline and thus would qualify
for 1.5 RINs. The electric vehicle, driven the same 25 miles per day,
would consume 8.5 kWh of electricity (equating to 0.34 kWh/mile). Using
the current D3 (Cellulosic) RIN market pricing of $1.58/RIN, the
incremental revenue associated with the RIN would equate to $0.28/kWh
(1.5 RINs * $1.58 = $2.37 / 8.5 kWh = $0.28). This incremental revenue
would need to cover the administrative costs associated with reporting
and verification of the e-RINs, with the remaining value being split
between the producer of the renewable energy (the farmer), the utility,
and the electric vehicle supplier/consumer, depending on the project
structure. A conservative estimate of 30 percent for administrative
costs would result in $0.20/kWh net incremental benefit, which would
be a sufficient incentive to attract additional investment in anaerobic
digesters to produce renewable electricity.
A practical illustration of how an electric pathway could be
administered is fairly straightforward. A clearinghouse entity could be
established to receive electricity production data from a utility on
the daily production of kWh of renewable energy from designated
projects. Note this would be similar to the existing process used for
reporting Renewable Energy Credits (RECs). The clearinghouse would also
receive telemetric data from electric vehicle manufacturers detailing
daily miles driven and kWh's consumed by each registered vehicle,
identified by vehicle identification number. The clearinghouse would
then use the two sets of data to calculate the equivalent quantity of
RINs generated and submit the required information to EPA. Once the
approved RINs are provided by EPA, the clearinghouse would sell the
RINs to an obligated party and distribute the revenue according to the
agreed-upon methodology. The clearinghouse would be responsible for
ensuring that all reporting and verification requirements of EPA are
satisfied.
Many digesters selling to the grid receive below-market rates for
their electricity, and these payments alone cannot sustain the
operation of a digester. To illustrate the potential impact of
activating the electric pathway, assume 8,000,000 dairy cows could
generate about 15 billion kWh's annually of renewable electricity.
Assuming that all of this incremental electricity qualified under the
electric pathway, the theoretical revenues from e-RINs would provide
about $4 billion in annual incentives. It's important to note that the
15 billion kWh's would equate to less than 0.5 percent of the total
U.S. electricity market and power only about 25 percent of the
projected 18,700,000 electric vehicles \2\ on the U.S. roads in 2030.
Activating this electric pathway would serve as a market signal to
producers, incentivizing them to expand biogas capacity. We appreciate
the support that many in Congress, including on this Committee, have
provided to efforts to resolve this issue.
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\2\ https://www.eei.org/resourcesandmedia/newsroom/Pages/Press
Releases/EEI Celebrates 1 Million Electric Vehicles on U-S- Roads.aspx.
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Digesters are expensive, and such a large investment means we are
in it for the long haul. As I, and others, look to pass our farms along
to the next generation, we need more certainty that the digesters we
decide to install today will remain viable for years to come. As an
industry, we have made the long-term commitment to continuously improve
until we reach net zero, and we hope that you will join us on that
path.
Biogas production is representative of the comprehensive systems
approach we are taking on our farms to work toward a goal of net-zero
emissions. A well-designed biogas system closes disconnected carbon and
nutrient cycles on a dairy farm, all while offering producers an
additional revenue stream. Manure is turned into electricity, bedding,
fertilizer, and compost while methane and carbon emissions as well as
nitrogen and phosphorus loading are reduced. The Net Zero Initiative is
about each dairy farm--regardless of size, region, or production
style--contributing what it can, where it can. No individual farm will
be held to the Net Zero target, yet all will play a part. I, and my
fellow dairy farmers, look forward to working with Congress, USDA, DOE,
and EPA to further the environmental and economic sustainability of
U.S. dairy.
In closing, thank you for the opportunity to testify here today. I
am happy to answer any questions Members of the Committee may have.
The Chairman. And thank you, and now my turn.
I tell you, this has really been so exciting to hear each
of your presentations, and I am very excited about this
project, as you can see, because I long have been advocating
that it is the agricultural industry that can lead the way in
terms of dealing with renewable fuels and our energy so and
each of your testimonies have certainly explained that.
Now, Mr. Harris, let me start with you because you gave
some very profound statistics, some very meaningful
information. You first of all said that, which is important,
that every week, you inject into Georgia's economy over
$100,000 in salaries with your employees, and then you made
another statement that really shocked me in a way. You said
that you were able to produce over \1/2\ million barrels of
crude oil out of the air, if I am not mistaken. I think that is
what you said.
Both of those statements really hit it on the nail of how
dynamic this whole issue is, and it rests in the hands of those
of us in the agricultural industry.
So, could you give us the top three or four things that we
here in Congress can do to help you and the others who are
literally pioneering in this effort? What is it that we in
Congress need to do most that will help you?
Mr. Harris. To be clear, the comment about the oil, we
didn't produce oil. We sequestered that equivalent. We
sequester about a barrel of oil a year per acre in carbon
dioxide equivalent, and that is where that came from, just to
be clear on that.
The Chairman. But the issue, to me, is not the amount, but
you were able to get it out of the air.
Mr. Harris. Yes.
The Chairman. Can you maybe explain that a bit?
Mr. Harris. Yes, sir. Regenerative agriculture is about
regenerating the cycles of nature. Cycles of nature are, to
name a few, the carbon cycle, which is what we are talking
about here, the mineral cycle, the energy cycle, the water
cycle, the microbial cycle, all the cycles that produce an
abundance in nature. That is how the oil got in the ground in
the first place is all those cycles working well since the time
of the dinosaurs, sequestering carbon, putting energy into the
soil.
Industrial farming practices breaks those cycles of nature.
The use of cultivation, chemical fertilizers, pesticides all
break those cycles that I mentioned and are disruptive. The
abundance is not there in the amount that it had been prior to
all those technologies.
The Chairman. And now, if you could share with us--and I
thank you for that explanation there. It is just profound.
But, could you share with us in my time that I have left,
what is it that you can tell us that we in Congress need to do
to help you?
Mr. Harris. First and foremost, I would say that a more
careful look at how foods are labeled would be very helpful. I
believe that there are intentional rules that mislead consumers
in terms of product labeling. I think consumers really struggle
to know what they are buying at the store.
Second, to do what we have done here is highly replicable.
It is not highly scalable. It won't operate in 20 states. It is
highly replicable. There can be many of us. The limitation is
financing. I was blessed in inheriting a nice farm, but I
leveraged through common bank financing, small town bank
financing. We borrowed $7.2 million, invested it in this
processing facility. I think that is important because what has
been done here was done by a proud ``C'' University of Georgia
College of Agriculture student with bank financing, not a
Rhodes Scholar with a trust fund. It is highly replicable, but
access to financing, more truth in--through USDA--Mike can
remember some more things. I did not anticipate that question.
The Chairman. Thank you very much.
And now I would like to recognize the Ranking Member,
Austin Scott.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and I
want to point one thing out that Mr. Harris said in his
testimony. I am from the great State of Georgia, and we do have
159 counties, and every county had at least one family-owned--
we don't like to call them this, but they are actually
slaughterhouses. And when we talk about the environment, I
think it is important to point out that today in Georgia--and
Mr. Harris can correct me on this if he feels I am wrong. But,
if you grow a hog in south Georgia, that hog is put on a truck.
And many of those trucks haul those hogs all the way to Tar
Heel, North Carolina before they are actually processed. And
certainly, there is a tremendous amount of diesel that is
burned by those semis that are hauling those trucks. And I
think that as those small businesses shut down around the
country, not only has it led to a damaging consolidation of the
supply chain in our food supply, but it does force a tremendous
amount of additional transportation costs because of that.
One of the things that I do think that we could do that
would be in the benefit of the country would be to help small
food processors around the country so that we don't have to
haul the products so far.
The other thing I want to do is mention that, as I said, we
can and should do a better job of taking care of the
environment. I think that all of these gentlemen have done some
extremely creative things, and I am proud of that. I do want to
mention my concerns, again, with solar subsidies, and I do
believe that when we see highly productive ag land, irrigated
cropland coming out of production and going into solar fields,
that that is an indication that perhaps the solar subsidies are
too generous, and I do think that those solar fields have
certainly a negative impact on the habitat that is so important
for our wildlife and other things.
I would like to ask to submit this to the record. This is
from Bloomberg, and it is an article that says ``Bill Gates
says wind and solar subsidies should go to something new,
encouraging us to move to newer, more productive technology.''
[The article referred to is located on p. 63.]
Mr. Austin Scott of Georgia. With that said, gentlemen, I
appreciate you being here and look forward to taking your
solutions for the environment and expanding on them.
I would note that all of the things that you have done and
your efforts are voluntary, and I appreciate that, and I
certainly support these practices remaining voluntary. But for
each of the witnesses, would you just briefly tell us what was
the reason you decided to take on the renewable energy projects
on your farm, and what environmental concerns do you feel your
particular project is helping to address?
Mr. Sievers. Ranking Member Scott, this is Brian Sievers. I
would be happy to go first, if that is okay.
Mr. Austin Scott of Georgia. Yes, sir.
Mr. Sievers. The driver behind the incentives that we
looked for in creating our renewable energy projects really
focused around a belief that our resources are natural, God-
given resources. The air, land, water, sun, and people are
something that we need to find the highest and best use for in
everything that we endeavor and strive to do, and that is why
looking at renewable energy projects achieves that objective,
and really, it helped fulfill maybe something that was more in
our heart, as well as in our head.
When you look at how can we protect our water, our soil,
our air, we think renewable energy production on-farm is
helping us to accomplish that. And if you look at some of the
history of what we have done on our farms and the various
conservation practices, why it is it just another way in which
we can advance that set of objectives or goals for our farming
operation.
In terms of the environmental solutions that we found,
really helping, and I joke sometimes with the falling energy
prices that we have seen. The price of electricity that we now
get for the electricity we sell to the grid is about 25 percent
less today than it was when we signed our power purchase
agreement back in 2012 with our power local service provider.
We are suffering financially because of low commodity prices,
if you will, for the energy we sell through electricity, but we
still receive tremendous value from those natural soil
amendments and soil products that we produce every day, 50,000
to 60,000 gallons a day of natural fertilizers that we are able
to use on our farms in our fields. And that is really the
environmental solution that we found is that we don't have to
purchase inorganic forms of fertilizer that is imported. In
many cases, we can produce those right on our own farm.
Dr. McCloskey was right, making sure we focus on ways to
help incentivize the trends that we produce through these
digesters and our biogas systems, but also if there is any way
in which can be helped through this Committee, encourage the
EPA to look at the e-RINs pathway, that would also be extremely
helpful, too. And again, it would help address environmental
challenges and climate challenges for all of these.
Mr. Austin Scott of Georgia. Thank you, and I appreciate
your answer. My time has expired, unfortunately. Maybe we will
have time for a second round.
Again, Mr. Chairman, I want to tell you, I think we can and
we should do a better job of taking care of the environment. I
do think that we have to keep in mind the habitat for the
wildlife and the animals. And let me commit, again, to working
with you. One of my primary concerns is that when something has
proved not to work, is that we don't ever seem to be able to
get rid of that. And while I would tell you, diesel particulate
filters on our equipment have done a good job of reducing
emissions, diesel exhaust fluid is something that has not, and
that is just an example of something that we continue to
effectively mandate with diesel exhaust fluid that there is
little to no benefit from.
The Chairman. Yes, and you have been doing outstanding work
on this, Austin, and providing great leadership, so I look
forward to working with you on this. This is a very exciting
and dynamic area, and our farmers are doing such fantastic
things, as we are witnessing here today.
Now, I would like to recognize our Ranking Member of the
full Committee, and our former Chairman of the full Agriculture
Committee, my friend, Mike Conaway.
Mr. Conaway. Thank you, Mr. Chairman. I appreciate that.
Dr. McCloskey, thank you for being here today. As you know,
I am an avid consumer of your chocolate milk, and when the
COVID-19 happened and the supply chains across everything was
disrupted, there is obviously no interest like self-interest. I
was concerned that the chocolate milk would not be available,
but your system worked wonders and I have not missed a day. And
I also need to thank you for your running commentary with my
good friend, Phil Fouche. I am forever indebted for that and
for you doing it.
When the COVID-19 issues happened and everything shut down,
let's back up a second. Obviously, all of these operations are
dependent on a normal business stream and normal operations,
normal cash flows that you have in place in order to make it
work. Can you visit with us a little bit about what happened to
you and your system when the disruptions in the supply chain
happened in March, April, and May, and how that affected your
ability to maintain the sustainable and environmental
stewardship programs that you had on your operations? Were
those affected by that disruption?
Dr. McCloskey. Thank you, Congressman.
Yes, it was devastating like it was for everyone in the
country. The problem of dumping, we had to dump milk on the
farms. We couldn't collect all the milk at all the farms, and
obviously the collapse on the whole pricing system because of
the shift from food service. The shutdown of food service
increased in retail, but not enough to offset the food service.
There was a lot of disruptions from the marketplace resulting
in unbelievably low prices. I mean, we saw numbers that were 50
percent below previous incomes. And we all know that all of us
farmers work on very thin margins, so when they take 50 percent
out of your gross pay, it is devastating. And it was
devastating for small producers, medium size producers, large
producers on an equal basis, because it is all relative to the
hundredweight of milk. There is some value in scale, as we all
know, but in a situation as devastating as we all went through,
that damage is felt all the way through. I don't care how big
you are. I don't care what your efficiencies are. I believe
that in those cases, all producers should be treated equal. We
do accept within many of our programs in USDA that there should
be help for smaller farms versus larger farms. There are some
differences in how these programs work. There are some
limitations these programs put on some larger farms. But I do
not believe that in cases of disasters and devastations like we
live, that that distinction should be made because I believe
that all farmers suffered equally through this, and that all
farmers should be helped in some way that is on an equal basis,
equal footing.
As far as our environmental efforts, Congressman, we
continue them all, obviously at a tremendous expense. But, we
always hope for a sunny day to come, and we kept on investing
in everything we invest, and we are back up and running, but
obviously with a big hole in our economic performance. And
hopefully, we can make that up in the years to come.
Thank you for asking.
Mr. Conaway. Thank you. I appreciate that. I know you also
run an agritourism program, and Fair Oaks as well had to be
affected.
Let me just make a comment about the e-RINs Program, and
both of you have talked about how that would help.
My concern is that simple shifts cost from one group to the
other in a particularly convoluted way. I am not sure where
that echo is coming from.
The Chairman. Can we have one of our technicians sort that
out.
Mr. Conaway. Anyway, it sort of shifts the costs around in
a very convoluted way.
You mentioned having a lot of electric vehicles on the
roads. We currently don't have a way for those electric
vehicles to share their impact on our road system, and so
finding a way to pass these extra electricity costs on to the
folks who want to drive cars and those kinds of things might be
a better solution than hiding it with the way the e-RINs
Program works, and I am really concerned about how that would
flow through. Because at some point in time, it has to get to a
customer, and if we keep it opaque, it makes it difficult to
figure that out. And so, having a more straightforward way to
do that, as well as, as you all promote electric trucks and
cars, you are going to have to be part of the conversation that
says how do those vehicles share the costs of our roads and
bridges the way that fossil fueled cars and trucks have
currently been supporting that program.
I appreciate all four of you being here today and your
efforts to try to keep the environment clean. We all want to
breathe clean air and drink clean water, and I share the
Chairman and the Ranking Member's concerns in that regard, and
thank you for your roles in trying to push forward good policy.
With that, Mr. Chairman, I yield back.
The Chairman. Thank you very much, Ranking Member.
And now, I will recognize Mrs. Axne from Iowa.
Mrs. Axne. Thank you, Chairman Scott, and thank you all for
being here today and lending your expertise to the Committee.
Bryan, it is always great to see an Iowan before us at the
Committee, so thank you so much for joining us.
I appreciate all the different success stories on the
benefits of the farm energy programs, in particular, how it can
result in positive climate outcomes while creating more
economic opportunities for farmers. I have said this all along.
We can be sustainable and we can grow economic viability at the
same time. It is something I firmly believe we need to invest
in and improve access to. We know how successful REAP or the
Rural Energy for America Program has been, but also how
oversubscribed it is with strong demand.
Mr. Harris, I am pleased to hear that your business
received a REAP solar grant that helped make your operation
sustainable, so I have a couple of quick questions for you.
Number one, how did you find the REAP process worked for you,
and how was your solar array worked out? And then second, do
you think the program should be expanded so that more folks
like you around the country can deploy rural renewables like
solar, wind, and biogas systems?
Mr. Harris. Thank you for the question.
The REAP grant worked very well for us. We received a lot
of support from our USDA representative that hounded for us. He
smoothed and fed us and it worked well. When I built that
facility, it provided about 40 percent of the power for our
slaughter plants. We have expanded them and so it is down to
about 20 percent, and we are now applying for another grant
through the Department of Energy which will allow us to build a
prototype to use cattle under the array. We regenerate the
soil, increase the carbon amount in the soil to sequester more
carbon dioxide equivalent, as I mentioned earlier. It is a very
important experiment.
I would invite Mr. Scott to come and let me show you at
White Oak Pastures here in Georgia that I disagree, we are not
taking land out of agricultural production and putting it in
solar energy production. We are using the same land for food
production and energy production at the same time, and in doing
so, we are putting more water into the soil, increasing the
organic matter of the soil and carbon sequestered from the air.
This experiment that we are working with to apply for the grant
to build a new array on this farm to prove that it can further
work to get maximum benefit from the cycles of nature.
Mrs. Axne. Well, thank you so much for that.
And Jim, I noticed that you were turned down for REAP, so I
am curious to hear what your thoughts are of REAP, how you
would use it, what you think it could do if it were to be
funded to meet the demand? Can you hear me okay, Jim?
The Chairman. He may have to unmute. Who was the question
directed to? Mr. Falk?
Mr. Falk. There we go.
The Chairman. Oh, good.
Mr. Falk. Sorry. I apologize. We are breaking up
occasionally here with everything. The question was regarding
us not receiving a REAP grant?
Mrs. Axne. Right. I am curious to hear what your thoughts
are if we did fund to the level of demand that we have. What do
you think we would be looking like?
Mr. Falk. I don't know what that level would be, but it
would be significantly more than what it is because the amount
of proposals that come in for this funding far exceed what is
available.
It is a good program, it is a good tool. Not every project
needs to be funded, but there are projects that probably
shouldn't be funded. I would say the majority of the projects
that come in requesting a REAP grant have value, and
unfortunately when you don't--we are not able to fund your
project. We don't have enough funds to continue to fund
projects at that level.
Mrs. Axne. Thank you so much. I have so many other
questions, but my time is up. I yield back.
The Chairman. Thank you very much, Mrs. Axne.
And now, we will recognize Congressman Johnson from the
great State of South Dakota.
Mr. Johnson. Thank you, Mr. Chairman, for the shoutout for
the great state.
I will ask two questions for each of the panelists, and for
efficiency sake I will ask them both, and then you can each go
through and give your answers. We will go Falk, Sievers,
Harris, and McCloskey, so you kind of know where you are in the
batting order.
My question is, first, what kind of community response did
you get to the investments you were making in these projects?
Did people seem to understand them? Was there opposition? Were
people generally supportive? And then the second question is
what are you hearing with your colleagues in the ag industry?
Does it seem as though there is more interest in people making
investments like this? Obviously, policy plays a big role, but
if they got the right kind of economic and policy environment,
how much more projects like yours do you think we would see
from your colleagues?
With those two questions in mind, let's go ahead and look
to Mr. Falk first.
Mr. Falk. [inaudible] interest in doing renewable energy
on-site, but of course as the traffic of seed producers and
growers and a number of folks that--and everyone has questions
about is it viable? And so, there is a tremendous interest, and
I have had nothing but positive feedback about it.
I would make sure we have good access so that if we want a
project [inaudible] operation and a partnership with the
providing energy, so they have a role to play as a partner as
well.
Mr. Johnson. I think you are done, Mr. Falk. I heard a
little break-up there, but thank you for your answers.
How about Mr. Sievers?
Mr. Sievers. Thank you, Congressman. In Iowa, we
participate in a protocol when it comes to siting livestock
facilities like what we constructed, along with our renewable
energy facility that allowed public input through what is
called the Master Matrix Scoring process where the Department
of Natural Resources oversees the siting of a facility like
ours, and it allows for local or public input through the
county level. And so, we went through a discussion with all of
our neighbors. We voluntarily went to our neighbors, talked
about what we were wanting to do, got very good feedback,
positive feedback by and large, and we got a chance to meet
with our county board of supervisors, lay out our proposal, and
subsequently they recommended that we be able to move forward
to the Iowa Department of Natural Resources with our project.
So, by and large, the community response we received has been
positive.
With regard to the second question you raised and how our
colleagues in our industry are responding to the opportunities
to look at additional anaerobic digestion and biogas
facilities, we do see several projects starting to move forward
in Iowa. The opportunities are tremendous. In Iowa, we
currently have three on-farm anaerobic digesters. They all
utilize beef cattle manure as well as some offsite co-feeds in
their digesters. And our land mass in the State of Iowa is
pretty comparable to Germany, and in Germany, there are 9,000
digesters. The opportunities are tremendous for us to be able
to grow and develop and utilize many of these organic waste
streams in our anaerobic digester facilities. I don't expect to
ever see that many facilities, but certainly more than three,
is what we are going to hopefully look forward to here in the
State of Iowa, and I do think we are going to continue to see
more, especially with regard to livestock operations,
especially dairy farms. We would like also to see equitably
treated manure sources when it comes to scoring these
facilities in programs like California's Low Carbon Fuel
Standard. We think beef cattle manure, swine manure, dairy
manure, all should be treated equitably when it comes to the
scoring in those regulatory approaches, and that would help
provide some incentives as well for beef cattle producers to
also expand and develop more digester projects.
Mr. Johnson. Thanks very much, and we will just need to go
to Mr. Harris. You have about 30 seconds, and sorry, Dr.
McCloskey, we ran short on time.
Mr. Harris?
Mr. Harris. Today, we built a store. We renovated the
courthouse and the Methodist church, the offices, built a
restaurant. We have lodging, we have tourism. Bluffton, Georgia
did not have a single new housing starting from 1972 until
2015. Since then, we built or renovated a dozen houses in
Bluffton. So, it is well-received.
The question about colleagues embracing a different sort of
farming, I will tell you that industrial commodities,
centralized agriculture, it has not been good for our land or
our rural communities or most of our farmers. And I believe
that movement will be consumer-driven. But if consumers know
the truth about their food, they will offer a market and
entrepreneurial farmers will step up.
Thank you for your question.
Mr. Johnson. Thank you very much. Thank you, Mr. Chairman,
for your indulgence, and I yield back.
The Chairman. Thank you very much, Mr. Johnson, and now I
would like to recognize my friend, Ms. Spanberger of Virginia.
Ms. Spanberger. Thank you very much, Mr. Chairman, for
hosting this Committee hearing. I appreciate that we are having
this hearing today. If we are going to effectively combat the
climate crisis, farmers and producers have to be part of that
solution.
Dr. McCloskey, if you will indulge me, my colleague, Mr.
Johnson from South Dakota was on a train of questioning which I
found to be very interesting. I know he ran out of time, but I
would like to begin with using my time to give you the
opportunity to answer his question, which was about how did
your community respond, and then how did your colleagues and
counterparts respond to--well, I will defer to you, Dr.
McCloskey.
Dr. McCloskey. Thank you, Congresswoman. I appreciate that.
Yes, so the response was overwhelmingly positive. The nice
thing about digesters and our farms is we do produce renewable
energy, but besides that, it produces so many other things
beyond solar or wind or other sources would produce in
renewable energy.
We get the renewable energy, but we also are in the
beginning of a process of nutrient recovery of clean water, so
that is really important to state because through that nutrient
recovery, we are helping our Clean Water Act and avoiding the
serious issue of eutrophication in our waterways and our base.
And on top of that, on a local basis, it mitigates about 80 to
90 percent of the odor on a farm, and so it is a great help in
your fly control for neighbors as well. So, it is very, very
well-accepted. You get so much in one package versus some other
alternatives that I just--there has been a lot of investment in
solar, a lot of support for wind. I don't feel digesters have
received that same level of support that produces energy 24/7.
It is a constant source. If the sun is not shining or the wind
isn't blowing, we are still producing energy and we are doing
so many other great things at the farm level by producing these
great fertilizers that now can be handled in a much better way
by creating clean water, by eliminating odor, and other smaller
issues like fly control, which is a not small issue to a close
by neighbor, believe me. So, it has been very, very well-
accepted.
And as far as other colleagues wanting to do the same, I
have a visiting center at Fair Oaks. We have over 200,000
visitors a year that tour the farms and see the digester. A lot
of them are dairy farmers, and I get to interact with them.
They would embrace this immediately if the financial situation
was such. Again, we have the advantage of scale. Scale has been
very beneficial for us. We have invested because of scale. It
is a duty that we have, we believe, and we have to give back.
And therefore, we believe that regenerative farming,
sustainable farming, these digesters and these investments in
how we are farming is incredibly important. But not everyone
can afford them. If people look at this, they really wish they
could do it. My point today is we need to help with the capital
investment, ITC is something that is investment of the
government. It actually grows the Treasury because this
industry is ripe to explode. Thousands and thousands and
thousands of jobs will be created. Industries will grow, and
there will be an incredible amount of manufacturing.
I will tell you that in the dairy alone, based on the
proposal that I shared a little while ago, I would see no less
than 5,000 digesters created nationwide, and I wouldn't be
afraid to say that thousands more than that. But I will
conservatively tell you that if we had an ITC credit, if we
could use stacking properly from USDA, and if we had a secure
market through e-RINs, that this thing would explode for us,
and we would see digesters dotted all over our country. It
would help tremendously local farmers, local communities. These
digesters can take--besides another advantage of digesters that
I didn't mention is that we can take in substrates, so other
materials, organic materials, be it food waste or others, that
we can bring into the digesters and actually double the amount
of energy. I have done that on my digesters. You can double the
amount of energy that we are producing by bringing in this food
waste, and so you can become a community disposal for other
waste within your area.
Ms. Spanberger. Dr. McCloskey, I am very, very glad that I
spent my time following up on Mr. Johnson's question.
I was planning to ask about REAP and a variety of other
things, but I have found this to be fascinating. You have
provided us, all four of you, with your answers to his
questions, good feedback, and I am grateful.
Thank you to the Chairman for indulging me in going over,
and again, to the witnesses, thank you for being here. Thank
you for all that you do on your farms, and thank you for
helping to educate Members of Congress and the public in your
work.
Thank you.
The Chairman. And thank you.
And now, Mr. Baird, the gentleman from Indiana.
Mr. Baird. Dr. McCloskey is from Indiana, and my district.
Anyway, my question deals, Dr. McCloskey, you did not
mention the facilities that you have also have an educational
aspect. It is interesting to watch those children come to your
place from urban and suburban areas and see a calf born for the
first time. The educational benefits of your facility are also
important.
But, my question deals with this: Mike, do you feel that
multiple farms could participate in a single digester? And I am
going to tie----
The Chairman. Excuse me. Someone needs to mute, please.
Thank you.
Mr. Baird. Anyway, the question I have is, Mike, whether or
not several farms could participate in a single digester?
Dr. McCloskey. Yes, thank you, Congressman.
Absolutely. Actually, we have three separate farms that all
of the manure ends up on one single very large digester. We
have many models. If I work with the industry through several
of our trade organizations and businesses that we put together,
we have several models where we go into areas that have smaller
dairies, and we can then bring in manure from several dairies
that have proximity. You need to stay with some level of
proximity. I would say, within 10 miles you could create
clusters of digesters that could work very well. Once you get a
little further out than that, you have to be innovative of how
you can do that. It still can be done, but you can be
innovative. There is great opportunity in that as well is to be
able to aggregate several farms if they are close enough to do
a digester.
Mr. Baird. Do you feel there are any barriers or
regulations to being able to do that?
Dr. McCloskey. No, I don't necessarily. There would be more
a local type of regulation of moving manure in the proper
vehicles and moving that manure down the road, but that would
be more of a local. I have not encountered ourselves any
regulations in Indiana. Matter of fact, they are very
supportive of our efforts with all of our manure management in
Indiana. Nothing that comes to my mind, Congressman.
Mr. Baird. Thank you very much, and we really appreciate
you being here.
Mr. Sievers, do you have any thoughts?
The Chairman. Mr. Sievers, you may want to unmute.
Mr. Sievers. Yes, thank you. I am sorry about that.
The barriers that you bring up, that is a very good point.
Because of the financial challenges of selling electricity into
a market that is very, very competitive against solar and wind,
we have investigated and evaluated production of renewable
natural gas from our digesters.
One of the barriers that we have encountered is we would
like to even possibly transport biogas that is partially
cleaned and compressed not to the level that renewable natural
gas is typically compressed to a hub, if you will, that can
take that gas, finish the clean up and compression so that it
can be injected into a pipeline. And that is what we are
looking at here in Iowa is what is called a hub and spoke
approach, where you have an interconnect into a pipeline at,
say, a large landfill facility, for example, and then several
livestock operations in that region or neighborhood could pipe
or transport their biogas, partially cleaned, to a facility for
final clean up. As I understand, there may be some regulatory
hurdles with transportation of that type of, I don't want to
call it raw biogas, because it is partially cleaned and
compressed, but it is not fully cleaned and compressed
renewable natural gas either. So, that would be one area we
probably would want to look into to make sure that there are no
regulatory hurdles with that if the technology is available for
us to be able to do that. And that is one the things we are
evaluating.
Mr. Baird. Thank you very much, and I appreciate all the
witnesses being here today.
My time is up, and I yield back, Mr. Chairman.
The Chairman. Thank you very much, Congressman Baird.
Now we will hear from the distinguished Congresswoman from
Minnesota, my friend Ms. Craig.
Ms. Craig. Thank you so much, Mr. Chairman. It is a real
honor to be on your Subcommittee. It is also a pleasure to have
Mr. Falk here today representing Minnesota's Farmers Union, an
organization that I am proud to be a member of. I am a strong
supporter of the Rural Energy for America Program, and I was
proud to lead our efforts in the House to call for increased
appropriations, and I am pleased the proposed full year 2021 ag
appropriations bill provides a loan level of $20 million for
the Rural Energy for America Program, an increased level, and
an appropriation of $476,000 for the loan subsidy.
However, as Mr. Falk mentioned in his testimony, his farm's
REAP grants were unsuccessful because the nationwide demand far
outweighs the funding availability. I will continue to be a
champion to increase this funding. Minnesota has long been a
leader in the REAP Program, so Mr. Chairman, I appreciate that
we are taking time to work on the energy title today. These
farm bill energy title programs are prime examples of farmers
being part of the solution to our changing climate.
Mr. Falk, as we begin to move into recovering from COVID-
19, producers are looking for ways to increase on-farm income.
How have you seen renewable energy increase your bottom line,
and do you see it as a worthwhile investment for producers?
What are the most effective incentives Congress can continue to
provide? Mr. Falk?
Mr. Falk. You are going to have to repeat part of that. We
were breaking up. I apologize.
Ms. Craig. No, no, that is fine. Mr. Falk, if we move
toward recovering from COVID-19, we are looking for ways to
increase on-farm income. How have you seen renewable energy
increase your bottom line, and do you see it as a worthwhile
investment for producers? What are the most effective
incentives that Congress can continue to provide?
Mr. Falk, are you with us?
The Chairman. Mr. Falk, you may have to unmute.
Mr. Falk. I locked up, but I think I am understanding your
question is what would be the benefits, or what do we need to
do to enhance these programs? And the tax incentives are still
an extremely important component. We have had an on and off
system through the years, and industry needs to be able to be
reliant that there are [inaudible] government if they are going
to be investing in an industry. And then the REAP grants,
obviously, were under-funded and I appreciate [inaudible].
Ms. Craig. Well, as we all lock up today, I also want to
mention that I do support $100 billion investment in high-speed
internet across our nation.
Mr. Falk, if you can hear me, I am also interested in how
you think we can support biofuels and biobased manufacturer
sector in order to create a value-added market for commodities
and increase domestic manufacturing?
Mr. Falk. Well, all these tools are important to combat
climate change for our rural economy, and the price of corn was
$2.75 locally here last night when I looked, and [inaudible]
impact to our farmers on--with these low commodity prices. And
any time we can add value, and it is [inaudible].
Ms. Craig. Mr. Falk, thank you so much. I really appreciate
you being here and very proud of the State of Minnesota and the
work that we are doing.
With that, Mr. Chairman, I yield back.
The Chairman. Thank you very much.
And now I would like to recognize our Ranking Member, for
any closing remarks that you may have.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. I
just--did I hear Mr. Falk say correctly, I have not heard this,
that the price of corn locally for him was $2.75? Is that the
number he quoted? Wow.
Mr. Chairman, one is I think that this is an extremely
important issue, not just for agriculture, but for the country.
I want to commend the families that have been represented here
today for their work and what they have done and their
environmental stewardship. I, again, want to commit to you to
work with you. I believe that we can and we should do a better
job of taking care of the environment.
And before I turn it back over to you, I do want to mention
this. What Mr. Falk said with the price of corn and where
commodity prices are right now, if commodity prices across this
country stay where they are, regardless of what we do with the
ability to reduce energy prices on the farm, there is not a
farmer in this country that can survive with corn around $3 a
bushel. It is not possible for our ag communities to survive
with the commodity prices where they are in this country. I am
very concerned with, as we have another COVID-19 package come
forward, assuming that we are able to get to an agreement on a
COVID-19 package, I do believe--and while I don't believe this
is a long-term solution for our farmers, in fact, I will tell
you I know it is not a long-term solution for our farmers. But
I do think that any additional COVID package needs to have a
fully-funded round of Market Facilitation Payments, in addition
to the other funds that are being discussed for our rural
communities. Of the $4 trillion that the United States through
Congress and through the Fed have currently spent, less than
\1/2\ of 1 percent of that has gone to our agricultural
producers in this country. And let me just say, any additional
COVID-19 relief has to show the respect to the agricultural
producers in this country that they deserve, and the value that
they bring to our national security through our food security.
And with that, Mr. Chairman, I will turn it over to you,
but I want to thank the witnesses for being here.
The Chairman. Well, I want to thank you for your comments,
and I want you to know I absolutely agree with you. We have to
do much more to elevate our farmers up at the top of the spear,
the lead point in the spear. And I have been telling people. I
mean, we need to make sure that our farmers have the financial
support to maintain through this situation. We definitely need
to make them a major part of the next COVID-19 funding package,
and I will be there with you on the floor fighting for this.
Folks, as I keep telling people, food is our most important
entity, and our farmers are the captains of the ship. But not
only that, we have the energy in the name of our Committee,
Commodity Exchanges, Energy, and Credit. That means our
Committee, Ranking Member, we are the engine to move this and
the first order of business is for us to move to start getting
this financial package together so we can start advocating it
right now. And I am sure I am speaking to staff. We need to be
the ones that lift up our farmers, given this pandemic.
Now, I have heard a lot about e-RINs. We need to make sure
that is alive and well. Our good friend, Mr. Harris, from down
in Georgia, when I asked him what he felt was the most
important thing, he said food labeling. A simple thing that can
happen. We need to make sure we take care of that. And getting
the type of financial backing to our farmers who are really out
there working in a pioneering way with renewable fuels.
And you mentioned another thing when we talked with a few
other people about the impending--when we had the possible food
shortages, the meat shortages, because of the processors, our
processing plants, Tyson and Smithfield, all went down because
of this and we had to move. There is so much out there, and we
need to be the Committee, and we are, as long as I am Chairman,
as long as you are Ranking Member, or if it goes the other way
and you become Chairman and I am Ranking Member, you can
believe that the Scott brothers, me and you, we are going to
make sure that our farmers are getting the financial respect
that they need and deserve, and that we make sure we lift them
up.
So, I want everyone to know how much we really appreciate
it. This was excellent testimony. I learned a lot today, and we
are going to carry this on and build on this, and our number
one priority, I think you and I agree, is to get a COVID-19
package ready for the next tranche that we have, and we have to
start on that right now. And Ashley, I know you are capable of
carrying that mission out. We have a great staff. I want to
thank you also for putting this together, our very first
hybrid. It looks like we may be doing this for quite a while,
and I have to get better. I got to get me a mask that will keep
up. But we will do it, simple things like that.
And now, under the Rules of the Committee, the record of
today's hearing will remain open for 10 calendar days to
receive additional material and supplementary written responses
from the witnesses to any questions posed by a Member.
This hearing of the Subcommittee of Commodity Exchanges,
Energy, and Credit is adjourned. Thank you all very much.
[Whereupon, at 11:51 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Article by Hon. Austin Scott, a Representative in Congress
from Georgia
[https://www.bloomberg.com/news/articles/2019-09-17/bill-gates-says-
wind-solar-subsidies-should-go-to-something-new]
Climate Changed
Bill Gates Says Wind, Solar Subsidies Should Go to Something New
By Chris Martin (https://www.bloomberg.com/authors/ABooutJPfdo/chris-
martin) and Erik Schatzker (https://www.bloomberg.com/authors/
AB7kAcfmyqc/erik-schatzker)
September 17, 2019, 12:01 AM EDT
Gates says more subsidies should go to renewable energy
storage and offshore wind.
Editor's note: the video is retained in Committee file and
available at: https://www.bloomberg.com/news/videos/2019-09-17/
bill-gates-calls-for-more-subsidies-for-energy-storage-
offshore-wind-video.
It's time wind and solar passed their subsidies along to emerging
technologies that need them more, Microsoft Corp. co-founder Bill Gates
says.
After decades of government incentives, wind and solar have been
deployed widely enough (https://www.bloomberg.com/news/articles/2019-
06-18/the-world-will-get-half-its-power-from-wind-and-solar-by-2050)
for manufacturers and developers to become increasingly efficient and
drive down costs. Now they can probably survive without them, Gates
said in an interview with Bloomberg Television.
``The tax benefits there should be shifted into things that are
more limiting, like energy storage, offshore wind--which still has a
huge premium price,'' said Gates, who co-chairs a global group (https:/
/gca.org/global-commission-on-adaptation/our-mission) of business,
political and scientific leaders formed in 2018 to push for investments
to help the world adapt to climate change.
U.S. states including New York, New Jersey and Massachusetts see
proposed offshore wind farms in the Atlantic Ocean as crucial
ingredients to phase out fossil fuels and fight climate change. But the
costs of building wind farms at sea are still nearly twice as high as
on land. Energy storage, meanwhile, is key to allowing wind and solar
plants to dispatch power even when the sun sets and breezes go slack.
But big batteries remain expensive, too.
``The progress in solar and wind is very helpful,'' Gates said.
``But the sun doesn't shine 24 hours a day.''
______
Submitted Statement by Hon. Anthony Brindisi, a Representative in
Congress from New York; on Behalf of Dairy Farmers of America
Dairy Farmers of America (DFA) appreciates the opportunity to
comment on the impacts on farm income and rural communities as a result
of on-farm energy production. In 2009, we formed DFA Energy
(www.dfaenergy.com), an entity created to assist DFA member-owners as
they navigate the complex field of on-farm energy conservation and
production. Since then, DFA has been invested in and promoting the
opportunity for on-farm energy production to member farms as a way to
diversify their income, address environmental issues and become more
energy independent.
DFA is the country's largest milk marketing cooperative, owned and
governed by 13,000 dairy farmers nationwide. DFA's member-owners are
invested in 87 processing facilities that produce a wide range of dairy
products, including fluid milk, cheese, butter, ice cream and dairy
ingredients.
Dairy farmers raise their families and their herds on the same
land. As thoughtful stewards of the land, they understand the value of
protecting and improving the resources on their farm to ensure future
generations have the opportunity to pursue the same profession. As
renewable energy alternatives have emerged and grown in the
marketplace, DFA has encouraged its members to consider options that
will both strengthen family farm finances and improve the environment.
The utilities that have provided electricity to farmers, and
society more generally, have traditionally relied on fossil fuel-based
generation. Most electricity consumers have had few, if any,
alternatives. The growth of renewable energy alternatives has created
an opportunity for consumers to choose the source of the energy they
consume.
When interested in learning more about energy opportunities on the
farm, DFA Energy encourages dairy farmers to begin with an energy
audit. Energy audits are partially reimbursable through the U.S.
Department of Agriculture's Environmental Quality Incentive Program
(EQIP). The audit creates a necessary baseline of analysis: how much
energy does the farm use? What machinery does the energy power? What is
the energy efficiency of this machinery? How can the farm operation
save money while increasing its efficiency? The audit helps farmers to
think more intentionally about their energy consumption. It also
outlines potential opportunities for energy production alternatives as
a source of cost reduction and income diversification.
A DFA member-farm in Massachusetts is a great example of how
agriculture can play a role in the creation of renewable energy. The
family began considering on-site energy production as a way to
diversify and grow their revenue. In 2012, the farm's energy audit
provided an analysis of its electricity usage on the 250-cow dairy and
determined that a 55-kW roof-mounted solar project could save the farm
$24,000 per year in electricity costs. In 2013, that same farming
operation leased 11 acres of marginal farmland to a solar development
company for a project that has generated $61,500 in income per year.
Massachusetts' state solar policy has been one of the most
progressive in the country; so, in 2016, this farm added 145 kW of
solar panels on a building it owned. The operation sold the power at
reduced rates to a nearby restaurant and was able to benefit from Solar
Renewable Energy Certificates. This project has generated this farm
family $20,000 annually. Now comfortable with the technology, the farm
invested in a 16-kW system at a small camp site the family owns next to
a local pond in 2017. This investment saves them $4,500 annually. Their
effort continued in 2019, when they entered into a 7 acre lease for
solar development, again on marginal farmland, which generates $27,000
in annual lease revenue. Most recently, this operation has entered into
lease options for energy storage projects that are still being
developed. If the economic benefits of these projects are summed, solar
electricity represents a significant net economic gain of $137,000 per
year for this dairy farm family.
This farm's owners have raised three children, now adults. Knowing
that land was limited in their area, they knew they had to identify
creative ways to grow farm income so their children would have
opportunities to return to the operation to raise their families on the
farm as well. This farm and the next generation have a robust future.
They are excited about the opportunities that have been created for
them and hope to expand into more energy storage and anaerobic
digestion. The farm continues to produce nutritious milk as it seeks to
expand its production of renewable energy.
On-farm energy production is size neutral. The Massachusetts farm
would be considered a small- to mid-sized operation, based on herd
size. Larger farms can also benefit from on-farm energy production. DFA
Energy has helped farms of all sizes realize their potential for energy
production through solar, wind and anaerobic digestion, which often
adds the benefit of odor mitigation and quality fertilizer as a by-
product.
It is important to note that as farms consider their options in the
renewable energy field, projects have more success and more impact if
state and Federal policy and incentives work together to support the
project's development. Again, Massachusetts has prioritized renewable
energy development, which has led to benefits on the farm and to
consumers. More consideration of supportive policy and infrastructure
will be needed to allow farmers nationwide to benefit from this
emerging field.
DFA Energy has worked diligently to identify partners to service
the diverse renewable energy needs of DFA member-farms. We seek
partners that are experts in the field, that understand the complexity
and priorities of dairy farms, and that will help farms solve problems
and meet their business goals. While there are many credible companies
in this field, DFA Energy has a trusted, preferred partnership with
Jordan Energy & Food Enterprises, a solar development company that
specializes in developing solar projects on farms. DFA Energy has a
similar relationship with Vanguard Renewables to promote and develop
anaerobic digester projects. The business model for anaerobic
digest[e]rs on farms is diverse. In projects with Vanguard, the company
oversees operating the digester, using the manure from the farmer's
herd as a feedstock. DFA dairy farmers who pursue these projects supply
the manure and also benefit from a lease payment for the land on which
the anaerobic digester sits. Vanguard then converts the manure into
usable gas. Vanguard and Jordan Energy have even begun conversations
relative to using the solar-generated electricity to supply the
anaerobic digesters' needs. In those cases, DFA member-farms can gain
benefit through development of both on-farm solar generation and
anaerobic digesters.
DFA's commitment to renewable energy extends beyond the farm. We
have been reviewing potential opportunities at our milk processing
operations as well. For example, DFA and Jordan Energy & Food have
entered into a Power Purchase Agreement at DFA's Middlebury Center,
Pa., facility. This agreement will result in our DFA plant having
access to a renewable source of energy to process milk into dairy
products for consumer consumption.
As DFA looks to the future of dairy farming, we believe it is
critical that we continue to provide farmers with opportunities for new
revenue streams. We believe there is great opportunity for all of rural
America in the continued development of on-farm renewable energy
generation. The impact to rural communities, to rural economies, can be
great and continued investment should be prioritized and supported.
DFA appreciates the opportunity to provide these comments. On-farm
energy production should be promoted and supported through state and
Federal policy that encourages farmers to investigate and pursue
opportunities in this field as they continue producing nutritious and
wholesome dairy products each and every day.
______
Submitted Questions
Questions Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Response by Jim Falk, President, Falk's Seed Farm, Inc.; Co-Owner, Falk
Farm; on Behalf of Minnesota Farmers Union, National Farmers
Union
Question 1. Thank you Chairman Scott for recognizing me and thank
you to the witnesses for sharing their experiences and best practices.
In 2012, the National Renewable Energy Laboratory did a site-
specific evaluation and analysis on wind power opportunities in the
U.S. Virgin Islands. The report concluded that St. Croix's geography
and access to trade winds may in some respects be the most viable place
for utility-scale wind generation.* This would contribute to our goal
of reducing fossil energy consumption by 60% by 2025. But, of course
any project of this magnitude would require new investments across
various sectors.
---------------------------------------------------------------------------
* Editor's note: the report referred to is retained in Committee
file and is available at https://www.nrel.gov/docs/fy12osti/55415.pdf.
---------------------------------------------------------------------------
You shared how a hybrid wind and solar system, especially the solar
system, has been a great investment that has produced significant
benefits. What would say is the main impediments in keeping farmers or
stakeholders from investing in renewable systems?
Answer. The significant up-front cost of installing a renewable
energy system is an impediment to a lot of farmers and ranchers. The
installation of a renewable energy system is a long-term investment,
projected to provide power for 20 years or longer. Tax incentives and
USDA's Rural Energy for America Program grants have helped stimulate
activity in the past. However, there has not been enough funding for
REAP grants to satisfy the demand of people applying with qualifying
projects. Many farmers and ranchers do not have the cash needed to
proceed with a project without knowing they will receive the REAP
grant. In addition, lenders are often skeptical of funding these
projects, not knowing if the grant will come through for their
customer. On farm renewable energy systems are the most efficient use
of power, when the energy produced is used directly on site, or in the
neighborhood through the local grid. That's why extended tax credits
for small wind and solar, along with more funding for REAP grants, are
so important to advance on farm renewable energy systems. On farm
renewable energy systems benefit the farmer or rancher, the local
electric distribution provider, and society in general in many ways,
including the offset of peak demand on the grid, locally and
nationwide. The on again/off again roller coaster approach to tax
incentives and REAP grant funding is negative to the small wind and
solar industry as they try to plan for demand in an uncertain market.
Therefore, some consistency, for an extended period of time, is
critical to advance this important energy policy of producing energy on
the farm where it is consumed. In addition, more research is needed to
integrate better and more efficient systems going forward, utilizing
the latest cutting-edge technologies.
Another impediment can be the lack of access to the local grid to
install a renewable energy system, or the cost associated with fees
charged by the electric distribution provider to allow the farmer or
rancher to connect to the local grid with a renewable energy system. In
many situations, the rural electric co-op or electric distribution
provider is charging the farmer or rancher a monthly fee for installing
a renewable energy system to offset their loss of revenue from that
farmer or rancher, who is now buying less power from the electric
distribution provider. This is an extremely negative development in my
opinion, as we try to address climate change, resolve peaking issues on
the local and national grid, and move to more efficient energy use by
producing power where we use it. If the fees charged to connect a
renewable energy system to the local grid are too high, the system will
not be profitable enough to be viable in the eyes of a lender. In
general, many electric energy providers incentivize their consumers to
purchase LED lighting, or more efficient motors, or off-peak heating/
cooling systems with rebates to use less electricity. Isn't it odd that
farmers and ranchers should be charged a fee, much like a penalty, for
reducing their energy demand with a renewable energy system? It seems
hypocritical to me, that farmers and ranchers are charged a fee for
actually helping mitigate the cost of peak demand by offsetting some of
the need for the electric energy providers to buy the more expensive
peak power to satisfy their local energy demand. Our goal should be to
make it easier, not harder, to advance these mutually beneficial energy
systems.
Question 2. The Virgin Islands largely produces food in sustainable
systems that rely little on off-farm inputs. On average, off-farm
income accounts for over 90% of farm operator household income in the
United States. It would be ideal for farmers across the country to rely
mostly on their on-farm income.
What risk would you consider in deciding to add on-farm energy
production to your operation and how do you manage those risks?
Answer. There are a number of risks that need consideration before
installing a renewable energy system. We addressed the risk of not
receiving the grant funding or not having tax incentives in your first
question. In our situation, we decided we wanted to reduce our carbon
footprint and that because of our power needs, we would proceed with
our wind and solar projects even though we did not receive the REAP
grant for either project. We also decided to proceed with both because
the level of tax incentive was projected to be declining, and that was
something we could count on, after not receiving the REAP grant. You
can see how important both of these tools are to advance the
installation of more on farm systems. Our business is well established,
and we expect to be continuing for many years, knowing that our
electric power needs are quite significant annually. Therefore, we felt
we could take the risk of installing both systems and we would
eventually be able to pay for them. Other operations might not have
such a consistent use of power annually and struggle to justify
proceeding with an install if they don't have both the REAP grant and
some tax incentive going forward. Repair and maintenance is a risk for
any system. Working with a reliable company that can provide
professional maintenance services is important over the projected life
of the system.
Response by Hon. Bryan J. Sievers, Owner, Sievers Family Farms; Chief
Operating Officer, AgriReNew; Vice Chair, Board of Directors,
America Biogas Council
Question 1. In 2012, the National Renewable Energy Laboratory did a
site-specific evaluation and analysis on wind power opportunities in
the U.S. Virgin Islands. The report concluded that St. Croix's
geography and access to trade winds may in some respects be the most
viable place for utility-scale wind generation.* This would contribute
to our goal of reducing fossil energy consumption by 60% by 2025. But,
of course any project of this magnitude would require new investments
across various sectors.
---------------------------------------------------------------------------
* Editor's note: the report referred to is retained in Committee
file and is available at https://www.nrel.gov/docs/fy12osti/55415.pdf.
---------------------------------------------------------------------------
You shared that for every dollar of Federal assistance you
received, you were able to secure almost an additional $5 in private
investments. Do you think your experience is typical? What advice would
you offer to farmers seeking investment on renewable energy?
Answer. For those anaerobic digester (AD) facilities that were
built after the passage of the American Recovery and Reinvestment Act
of 2009 I do believe our experience is typical. Because of this
important piece of legislation, we were able to leverage this
assistance, along with other government programs, such as USDA's REAP
and EQIP programs into an additional approximately $9 million in
private investment to finance the construction of our facilities.
Without this assistance we would not have been able to construct our AD
facility and would not have been economically viable.
My advice to others who are seeking investment opportunities in
anaerobic digestion and renewable energy facilities is to do your
homework and make sure your motives go beyond economic incentives. Our
family has always pursued the objective to ensure that the natural
resources we are blessed with (air, land, water, sun, and the people we
work with) are used for the highest and best use. We have always
focused on how we can provide solutions for the land we farm which will
ensure a more resilient, healthy resource for future generations to
produce, food, fuel, feed, fiber, and energy.
Question 2. The Virgin Islands largely produces food in sustainable
systems that rely little on off-farm inputs. On average, off-farm
income accounts for over 90% of farm operator household income in the
United States. It would be ideal for farmers across the country to rely
mostly on their on-farm income.
What risk would you consider in deciding to add on-farm energy
production to your operation and how do you manage those risks?
Answer. There are a number of risks and challenges that must be
considered such as management capabilities, labor resources, private
and outside capital availability, liquidity, grants, renewable energy
incentives, availability of feedstock for the anaerobic digesters,
management of output from the anaerobic digesters, whether to take off-
site feedstocks, and how are off-site feedstocks handled once they
arrive. Finally, the biggest risks revolve around the economic
viability of the on-farm renewable energy facility. Not only is the
price the producer receives for the renewable energy produced (biogas,
renewable natural gas, renewable electricity, renewable thermal energy,
and digestate produced from the digesters are all potential revenue
streams from the energy and material produced) an important
consideration but making sure you maximize uptime and minimize
downtime. The American Biogas Council is tremendous resource that
should be utilized that will help anyone interested in researching and
developing an an[a]erobic digester facility. The operators of these
facilities, along with the engineers, technicians, consultants,
management firms, private equity investment groups, and many others can
provide significant resources and help to those interested in pursuing
an an[a]erobic digester project. The one thing that none of these
organizations or resources cannot provide is the drive or passion for
doing the right thing with our natural resources for the protection,
preservation, and enhancement of our environment. As long as the drive
or desire is present, however, there will be significant resources
available to manage the risks involved with designing, developing,
engineering, constructing, and operating an on-farm anaerobic digester
facility.
[all]