Proposed budget affects ethanol industry

By | April 01, 2006
President George W. Bush's "America is addicted to oil" remark in his State of the Union address certainly made those in the ethanol industry perk up. However, those with experience in the industry know goals and funding don't always match up. Legislation, such as the Energy Policy Act of 2005, adopts good programs, but it needs to be fully backed by appropriations in order to be successful.

Shortly after his address, Bush released his fiscal year (FY) 2007 federal budget, which indicates proposed funding for many ethanol-related programs. For one, Bush said his administration will accelerate research into making cellulosic ethanol practical. "I'm incredibly pleased to hear him say that," said Brian Jennings, executive vice president of the American Coalition for Ethanol. "Some criticize him for not being ambitious enough. We applaud the president for his statement."

The president's FY2007 budget includes $150 million to help develop biobased transportation fuels from agricultural waste products. As expected, the Commodity Credit Corp.'s expiring Bioenergy Program, which offered $60 million for FY2006, was eliminated from the budget.

According to the Washington, D.C.-based Environmental and Energy Study Institute, the U.S. DOE's proposed FY2007 budget includes $149.7 million for its Biomass and Biorefinery Systems R&D Program. FY2006 appropriations totaled $91 million, 57 percent of which Congress earmarked.

The Biomass Research and Development Act of 2002 received $12 million in the budget. This is the same level of funding as in FY2006, which was $56 million below its authorization.

The Renewable Energy and Energy Efficiency Improvement Program received $2 million for loans and $8 million for grants. This is a reduction of $13 million from the original authorization of $23 million.

The budget also proposes $1 million for the federal procurement of biobased products and another $1 million for a biodiesel fuel education program.

The Clean Fuels Grant Program received a request for $45 million in funding, which is the first time the Department of Transportation has requested separate funding for the program since it was authorized in 1999.

Jennings indicated this will likely be a difficult budget year, so Congressional appropriations are difficult to project. He and other policy analysts suggest the DOE, USDA and U.S. EPA FY2007 budgets will have a major impact on the discussions regarding the upcoming reauthorization of the Farm Bill.