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Thune Unveils Bipartisan Plan to Jumpstart Homegrown Cellulosic Ethanol Production

Thune Bill Would Provide Incentives for U.S. Farmers to Grow Energy-Dedicated Crops to Boost Ethanol Production, Make America More Energy Independent

May 23, 2007

Washington, D.C. —  Senator John Thune (R-SD), along with Senator Ben Nelson (D-NE), today unveiled bipartisan legislation that would spur the production of cellulosic ethanol, an alternative fuel produced from homegrown crops, which holds great potential to meet America's energy needs. Senator Thune's legislation, the Biofuels Innovation Program Act (BIP), takes a two-pronged approach to assist farmers and ranchers with the transition to biofuels production.

First, the BIP proposal allows for feasibility studies to be conducted to establish BIP project areas on land surrounding future biorefinery sites. These studies would evaluate the likelihood of construction of a future biorefinery; the local potential for production of biomass resources, such as switchgrass and fast-growing trees; the number of interested producers; and the economic impact a future biorefinery would have on the local community.

Once a BIP proposal is approved by the USDA, participating producers could enroll eligible land in the BIP program. During the first 5 years of their BIP contract, or during the timeframe for the biorefinery to be constructed and the establishment of the biofuels crops, producers would receive a cost share for planting energy-dedicated crops and a per-acre rental payment. Once the biorefinery is operational, the rental payment would end and the producer would receive a matching payment up to $45 for each ton of biomass delivered to the biorefinery for up to two years.

Secondly, this legislation also authorizes matching payments on a per-ton basis to producers anywhere in the United States who sell crop by-products and residues such as corn stover and straw to biofuels facilities for the production of ethanol or other alternative energy. These matching payments may be made for up to two years beginning with the date the biofuels facility begins purchasing the feedstock, and are also capped at $45 per ton.

"In South Dakota and in corn states across the country, corn-based ethanol is being produced at record levels. Because corn is also used as a food and feed source, the production of corn-based ethanol will be limited to approximately 15 billion gallons of ethanol each year, despite a rapidly growing consumer demand for this promising alternative fuel," Thune said. "Thanks to new technology and research, however, a new generation of ethanol is being developed that could supplement corn-based ethanol production and further reduce our nation's dependence on foreign oil.

"Cellulosic ethanol, produced from homegrown sources like corn stover, wheat straw, switchgrass and wood chips, has incredible potential to supplement corn-based ethanol. But if cellulosic ethanol is to achieve its potential, it is critical that Congress help this industry overcome initial market barriers. My legislation would spur the construction of biorefineries across the country and provide incentives to farmers in surrounding areas to grow energy dedicated crops that can eventually supply these biorefineries in a cost-effective, environment-friendly way.

"If we are going to be serious in this country about reducing our dependence on foreign oil, we have to be serious about giving the necessary jumpstart to America's budding alternative fuels industry and the farmers who will be expected to fuel it, so they can overcome initial economic and technical hurdles and transform this infant industry into the future answer to America's energy needs."

Senator Nelson said, "Celluosic ethanol has always faced a chicken-or-the-egg problem: it's difficult to start commercial production without a guaranteed supply of biomass, but it's hard to encourage farmers to grow the biomass unless they know they'll have a market. This legislation will help resolve that problem by the encouraging the construction of biofuel facilities while simultaneously pushing the production of biomass."

The BIP proposal would also reauthorize the Sun Grant Initiative through 2012. South Dakota State University is one of five Sun Grant universities nationwide conducting valuable research on the production and economical delivery of cellulosic ethanol from the field to the marketplace.

"I am pleased to have secured valuable funding for the Sun Grant Initiative as part of the Transportation Reauthorization Act of 2005, and I look forward to strengthening this program as part of the 2007 Farm Bill," Thune said.

Senator Thune is Ranking Member of the Energy Subcommittee of the Senate Agriculture Committee and will be working with his colleagues to incorporate this important initiative into this year's reauthorization of the Farm bill.

  • Demand is Growing for Renewable Fuels: Although the current Renewable Fuels Standard requires the use of 7.5 billion gallons of ethanol per year, rapid industry growth will far exceed this standard. Congress may soon increase this standard to 36 billion gallons by 2022.
  • USDA estimates that by 2030 1.3 billion tons of biomass could be available for bioenergy production (including electricity from biomass, and fuels from corn and cellulose). This amount of biomass could replace 70 billion gallons of gasoline per year.