The farm bill, which passed in the Senate yesterday, has little to do with farming and a lot to do with handouts. Energy subsidies? The farm bill’s full of ‘em, particularly in the Title IX energy section, and they all need to go.
The legislation includes direct handouts and loan guarantees for advanced biofuels and bio-refineries, renewable chemicals, and bio-based product manufacturers. It also reauthorizes the Rural Energy for America Program, which “provides grants for energy audits and renewable energy development assistance. It also provides funds to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements.” In other words, more wasteful green subsidies.
Also included in the bill are the Biomass Research and Development Initiative and the Biomass Crop Assistance Program (BCAP). BCAP is a handout to farmers and ranchers who produce biomass for heat, power, bio-based products, or biofuels. From the U.S. Department of Agriculture’s website:
BCAP addresses a classic chicken-or-egg challenge around the start up of commercial scale bioenergy activities. If commercial-scale biomass facilities are to have sufficient feedstocks, then a large-scale energy crop must exist. Conversely, if profitable crop production is to occur, then viable consumers must exist to purchase the crop. Many bioenergy facilities need several years to reach commercial scale. BCAP serves as catalyst to unite these dynamics by reducing the financial risk for landowners who decide to grow unconventional crops for these new markets.
Good economic ideas overcome the chicken-and-egg program all the time without government assistance. It doesn’t matter how many cell phones you have if there’s no place to obtain a signal. But producers built cell phone towers and sold cell phones without a massive subsidy from Washington. The same can happen with biofuels if it’s an economically viable idea.
All of these handouts are wasteful and unnecessary. We have a robust, diverse energy market that can supply consumers with affordable and reliable energy without the taxpayers’ help. The subsidies are also a product of trying to bail out another disastrous policy: the Renewable Fuel Standard, which mandates production of 36 billion gallons of biofuels (21 billion gallons of that being non-cornstarch) by 2022.
When President Bush signed the 2007 Energy Independence and Security Act, the law mandated that 500 million gallons of cellulosic ethanol be produced in the year 2012. Thus far, zero gallons have been produced, because no companies have been able to produce commercially viable cellulosic ethanol. Because of the government’s inability to predict what the market will produce, the government is handing out even more money in a failed attempt to generate a market.
Another program, the Rural Energy Savings Program (Section 6202), provides loans for energy efficiency investments. Businesses do not need public investment to improve efficiency and cut costs; they make those investments regularly with their own money. Technological advancements do often improve efficiency, but those investments should not be subsidized by the taxpayer, much less selected by Washington bureaucrats.
Senator Pat Toomey (R–PA) offered an amendment to repeal the Biorefinery Assistance Program, but the Senate defeated the amendment 33–63. While the farm bill needs much fixing, from an energy standpoint, Congress should repeal all of Title IX from the farm bill as well as the Rural Energy Savings Program.