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On-farm energy support needs to be in viable solutions

House hearing features discussion on need to make smart investments as energy discussions continue on Capitol Hill.

Government support for on-farm renewable energy projects must invest in those that have long-term viability and avoid  partisan-driven agendas, according to comments made Thursday at a hearing of the House Agriculture Committee commodity exchanges, energy and credit subcommittee held to examine the impacts of farm energy production on farm income and rural communities.

Energy is a particular concern for farmers and ranchers, as approximately 15% of production costs for U.S. farms are tied up in energy costs. By comparison, the average American household spends a little over 2% 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,” subcommittee chairman Rep. David Scott (D., Ga.) said.

Subcommittee ranking member Rep. Austin Scott (R., Ga.) said the hearing was timely, given the increase in discussions on U.S. energy policy and the future of U.S. agriculture. Recently, the majority staff of the Select Committee on the Climate Crisis released a report detailing congressional actions recommended to meet a goal of reaching net-zero greenhouse gas emissions economy-wide by no later than 2050.

“I am prepared to work in a bipartisan manner to improve upon current programs and find new solutions. However, I will not support an extreme climate agenda that fails to consider that rural Americans will have to shoulder the burden of these staff proposals,” Austin Scott said.

“As conversations about the future of U.S. energy policy continue, it is vital that we work in a bipartisan manner to prevent rural America from shouldering the burden of an extreme climate agenda," he added. "America’s farmers and ranchers are already rising to the occasion, taking advantage of voluntary stewardship programs included in the 2018 farm bill to sequester carbon, reduce emissions and adopt more energy-efficient farming practices. Expanding these programs, including reducing barriers to access, should be our priority as these discussions move forward.”

House Agriculture Committee chairman Collin Peterson (D., Minn.) said he’s “all in favor" of doing "as much as possible on the farm with renewable energy, but it’s got to be able, at some point, to stand on its own” and can’t be subsidized forever.

Encouraging adoption

The hearing featured testimony from four farmers who have implemented different environmental steps on their farms for on-farm energy production utilizing U.S. Department of Agriculture funds and grants as well as farm bill conservation programs to offset the costs of the implementation.

Indiana dairy farmer Mike McCloskey, founder and chairman of Fair Oaks Farms, which markets fairlife milk, shared steps his farm has taken toward the dairy industry’s commitment to be a net emitter of greenhouse gas emissions by 2050 and advocated for public/private partnership to advance environmental efforts.

In 2002, Fair Oaks installed its first digester to process both its cows’ manure and local pre-consumer food waste into electricity that is used on its farms. In 2009, a second digester was built 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, Fair Oaks pioneered the first commercial fleet of 42 tractor trailers running on renewable compressed natural gas from biogas, hauling milk from its farms to processing facilities up to 350 miles away. Every year since beginning the operations from that digester, Fair Oaks displaced 2,000,000 gal. of diesel from having to be mined as fossil fuel.

There are currently 254 digesters operating on livestock farms in the U.S., and 204 of those are on dairy farms, McCloskey said in his written testimony. He added 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,” McCloskey said.

“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,” he said.

U.S. Department of Agriculture data show that from 2002 to 2019, the agency made 631 investments in anaerobic digestion worth $198 million, compared to 6,179 investments in solar worth $2.93 billion and 696 in wind worth $468 million. USDA has provided more than 10 times as much in grants, loans, loan guarantees and payments for solar production than it has for anaerobic digestion.

McCloskey said aligning the incentives needed for dairy to widely adopt anaerobic digesters and other emissions-mitigation technologies deserves greater attention, as it will only enhance the energy transition already encouraged by federal support for better-known clean-energy sources.

McCloskey advocated for tax credits included in the bipartisan Agriculture Environmental Stewardship Act (H.R. 3744), which was introduced last year in both chambers of Congress, that would create a 30% investment tax credit for biogas used as renewable gas in vehicles or as renewable heat as well as for manure resource recovery technologies.

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 the Environmental Protection Agency to process the backlog of applications for the electric pathway under the Renewable Fuel Standard (RFS), McCloskey said, noting that estimates indicate that as many as 20 million electric vehicles could be on the road by 2030.

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 “eRINs.” 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, he said.

Rep. Mike Conaway (R., Texas) expressed some concerns with the eRINs program and also said there are concerns with how electric vehicles can continue to help pay for highways and roads differently from how the current gas tax structure does today.

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