A farm bill that, among other things, seeks to provide new incentives to
boost biofuel production and distribution was unanimously approved by the US
Senate Agriculture Committee Thursday, and could be taken up soon by the full
Senate.

Congress reauthorizes the farm bill every five years, and it usually
is laden with crop subsidies and other incentives for farmers. This year was
no exception, but the wide-ranging bill also sought to pave the way for
America's farmers to grow crops that will be used to fuel cars and generate
electricity.

The legislation, written largely by panel chairman Tom Harkin, a
Democrat from Iowa, provides grants and loans to develop and build biofuel
refineries, seeks to expand markets for bio-based products, invests in
farm-based energy research and development, and helps farmers move to
renewable energy and energy efficiency.

At least $300 million must be spent over the next five years to develop
biorefineries, according to the bill's language. Specifically, the bill sets
up a loan guarantee program that will provide 80% of total project cost (up to
$250 million) for building a cellulosic ethanol refinery.

The legislation also provides competitive grants to cover half the
project costs to develop pilot and demonstration-scale biorefineries. Matching
funds for feasibility studies and competitive grants for up to 20% of total
project costs would be available for the repowering of fossil-fueled biomass
conversion facilities, power plants, or manufacturing facilities with
renewable resources, like biomass, solar or wind.

In addition, the legislation provides $130 million in mandatory funding
to "provide technical assistance and to assist with establishment costs" for
farmers growing bioenergy crops that will be used in a biomass conversion
facility.

The bill also includes a requirement that the secretaries of agriculture,
energy and transportation conduct feasibility studies on the construction of
dedicated ethanol pipelines to transport up to 40 billion gallons annually
from the Midwest to the consumer markets on the East and West coasts by 2020.

--Cathy Landry, cathy_landry@platts.com