Washington (Platts)--17May2007

The US House Agriculture Subcommittee on Conservation, Credit and Energy
is to debate on Tuesday the energy title portion of an agriculture bill that
would direct billions of dollars in oil and gas tax breaks toward research and
development into biofuels.

     Agriculture Committee Chairman Collin Peterson, Democrat-Minnesota, told
reporters Thursday that money to fund farm bill energy initiatives will come
from an energy bill the House passed in January (H.R. 6) as part of the
Democratic majority's first 100 hours legislative package. That bill, which
would repeal billions of dollars in tax breaks for oil and gas companies and
direct the money toward renewable energy, has been stuck in the Senate.

     "We are going to get offsets from H.R. 6 for the energy part of this. I
think the money is going to be there. The bigger challenge for us is going to
be getting the right policy," Peterson said.

     Peterson said while he believed the energy title would be funded, the
farm bill budget allocation of $20 billion, which will have to be offset with
revenues, could be billions of dollars short of what the committee says it
needs.

     Peterson said the energy portion would fund research into converting
cellulose into ethanol and encourage renewable electricity production. He also
said that the research title of the bill could be merged with the energy title
to put more emphasis on the need for breakthroughs on cellulosic ethanol. 

     The bill currently does not set a target for biofuels production. A
Senate version of the measure is likely to shoot for 60 billion gallons of
annual biofuels production by 2030.

     The House Agriculture Committee Thursday did approve a so-called "25 by
25" resolution stating that not later than January 1, 2025, renewable
resources should account for 25% of the total energy consumed in the US.

     Peterson also criticized the Department of Energy (DOE) over its
management of the loan guarantee program for energy infrastructure. He said he
believed that the agriculture bill could direct authority over at least part
of the program to the Department of Agriculture (USDA).

     The Energy Policy Act of 2005 established the loan guarantee program
under DOE that would direct billions of dollars towards clean energy projects.
But loan guarantees have been delayed by a lack of funding and mismanagement,
according to DOE critics.    

     Peterson said he believes it will be at least a year before DOE, which
has the authority to provide loan support for up to $4 billion, begins taking
applications for loan guarantees.

     "We can't wait another couple of years while they are trying to stand up
the department," Peterson said "This thing is ready to go. If we just gave the
USDA the authority, they could start making those loans in short order."

		--Daniel Whitten, daniel_whitten@platts.com