USDA to invest $500M in biofuels growth after industry pushback

Dive Brief:

The U.S. Department of Agriculture on Monday said it plans to invest up to $500 million on biofuels infrastructure projects after stagnant blending volume targets for corn-based ethanol disappointed farm advocates.
USDA Secretary Tom Vilsack announced $25 million in funds for a total of 59 projects that would expand the use and availability of higher blend biofuels, with plans to add more grant recipients at a later date. USDA said it also will start accepting applications next month for $450 million in grants for other biofuels infrastructure projects and upgrades.
The funds are being provided by the Biden administration’s Inflation Reduction Act through USDA’s Higher Blends Infrastructure Incentive Program, which promotes the use of ethanol and biodiesel. Last week, industry advocates pushed back against the Environmental Protection Agency’s final rule that reduced biofuel blending volumes for ethanol by 250 million gallons compared to a previous proposal.

Dive Insight:

The production of biofuels, or fuels derived from renewable resources such as crops or livestock, has been touted by many as a clean energy source that would reduce the country’s reliance on foreign energy supplies. It is also expected to soften oil demand and prices along with it, according to a USDA report.

“By expanding the availability of homegrown biofuels, we are strengthening our energy independence, creating new market opportunities and revenue streams for American producers, and bringing good-paying jobs and other economic benefits to rural and farm communities,” Vilsack said in a statement.

The first round of grant recipients earned as much as $3 million from HBIIP for infrastructure improvements expected to grow sales of ethanol and other biofuels by hundreds of millions of gallons, according to USDA. Recipients plan to use the funds for new dispensers, piping, pumps, storage tanks and other technologies.

In December, USDA earmarked $50 million in funds to expand the use and availability of higher blend biofuels. So far the agency has allocated $25 million to the first round of recipients and plans to award more grants in the coming weeks.

The National Corn Growers Association applauded USDA’s commitment to biofuels growth. President Tom Haag said in a statement that “continued access to ethanol lowers fuel prices for drivers and increases our domestic fuel supply.”