Should Biofuel Subsidies in the Farm Bill Be Eliminated? (H.R. 82)

What is H.R. 82?

(Updated September 2, 2019)

This bill, the Farewell to Unnecessary Energy Lifelines (FUEL) Reform Act, would eliminate the biofuel energy subsidies in title IX of the Farm Bill.

The subsidies that’d be eliminated would be:

• Biobased Markets Program;

• Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program;

• Repowering Assistance Program;

• Biorefinery Program for Advanced Biofuels;

• Biodiesel Fuel Education Program;

• Rural Energy for America Program;

• Biomass Research and Development Initiative;

• Feedstock Flexibility Program for Bioenergy Producers;

• Biomass Crop Assistance Program; and

• Community Wood Energy Program.

Argument in favor

Energy subsidies distort the market, allowing non-competitive fuels (such as biofuels) to look like better solutions than they actually are. The federal government shouldn’t be providing any energy subsidies at all — instead, it should let the free market determine and invest in the best energy solutions.

Argument opposed

Federal investment has enabled significant advances in biofuel technologies. Given the growing impacts of climate change, and the biofuel industry’s growth, now is the wrong time to back away from federal support for biofuels.

Impact

Energy industry; biofuels; farm bill; DOE; and USDA.

Cost of H.R. 82

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Rep. Andy Biggs (R-AZ) reintroduced this bill from the 115th Congress to save American taxpayers money and end the market perversions created by biofuels subsidies:

“The biofuels subsidies in the farm bill don’t benefit the market; instead, they pervert it. If biofuels succeed, it should be based on their benefit to our nation’s energy economy, not because they have received taxpayer-funded handouts. I’ve introduced this bill to end this wasteful D.C. giveaway once and for all.”

The Heritage Foundation’s Nicolas Loris argues that this bill ends “energy cronyism”:

“The farm bill, which moves through the legislative process every five years, is a major vehicle for energy subsidization. Since 2002, farm bills have contained an energy title that primarily funds biofuels, but also include so-called green technologies such as wind and solar energies. The FUEL Reform Act moves energy policy in the right direction by eliminating energy cronyism in the farm bill. Examination of the farm bill’s energy programs reveals that these programs have squandered taxpayer money on economic failures and promoted corporate welfare by distributing funds to established and successful companies. The use of policy to prop up one energy source over another is misguided—regardless of the outcome of a government-funded project… Energy subsidies themselves are an inappropriate function of the federal government. The subsidies distort energy markets and the flow of investments. Projects promoted by the government draw interest from the private sector, taking money away from other potential investments. Historically, the market has always met America’s energy needs, and it will continue to do so without the government’s help. Congress should eliminate Title IX and the Sun Grant Program in the farm bill and aggressively pursue reforms that will eliminate subsidies for all energy sources.”

In testimony to the House Science, Space, and Technology Subcommittee in July 2017, Dr. Paul Gilna, Director of the BioEnergy Science Center (BECA) and Deputy-Division Director of Biosciences at Oak Ridge National Laboratory, argued that federal support is necessary for biofuel development:

“Federal leadership in scientific research has resulted in substantial progress toward a better understanding of the fundamentals behind the biofuels production process. That progress will continue with the new generation of BRCs, focused on new bioproducts and advanced biofuels. We have demonstrated that improvements in plants, microbes, and processes can lead to more efficient production of domestic biofuels, further diversifying the nation’s portfolio of reliable, clean energy and making possible a new menu of bioproducts. Currently, the U.S. is the leader in both research, development and deployment of the rural bio-based economy. However, others are accelerating their efforts. Together, we can succeed in bringing the best of our nation’s scientific understanding and engineering prowess to bear on deploying the next generation of bioproducts and clean energy technologies for strengthening our economic foundation, U.S. competitiveness, and our way of life.”

Emily Skor, CEO of Growth Energy, added in the same House testimony that the biofuels industry has begun to meaningfully contribute to the American fuel supply and jobs:

“We are producing more than 10 percent of our nation’s fuel supply, providing 339,000 American jobs and reducing our dependence on foreign oil. Under the RFS, ethanol production continues to become more efficient while advancing more toward second generation biofuels and increased sustainability, and we continue to find new, innovative ways to increase our product mix. Now is the time to give biofuels more access to the marketplace, so that we can compete and provide additional fuel certainty and stability. It is the wrong time to back away from [biofuels]... Doing so would only harm further investment, jeopardize the market for American farmers and producers, and potentially threaten the significant environmental progress that has been made with the introduction of ethanol and renewable fuels.”

This bill has no cosponsors in the current Congress. In the 115th Congress, it had the support of eight cosponsors, all of whom were Republicans.

Of Note: Opponents of energy subsidies argue that the farm bill’s energy programs have “squandered taxpayer money on economic failures” such as Range Fuels, a wood-to-ethanol producer that cost taxpayers over $75 million in Dept. of Energy and Dept. of Agriculture (USDA) loans when it closed in 2011. They also argue that farm bill energy programs have “promoted corporate welfare by distributing funds to established and successful companies” such as Coskata, an energy company that received $250 million from the USDA while also having backing from General Motors and billionaire venture capitalist Vinod Khosla.

Media:

• Sponsoring Rep. Andy Biggs (R-AZ) Press Release (115th Congress)

• The Heritage Foundation (In Favor)

• Heritage Action (In Favor)

• The Hill Op-Ed (In Favor)