USDA announces grants for blender pumps, E85 pumps

By Kris Bevill | April 08, 2011

Secretary of Agriculture Tom Vilsack announced April 8 that his agency is clarifying language in the Rural Energy of America Program in order to make blender pump and E85 pump distribution systems eligible for funding. Vilsack said making funding available through REAP is part of the USDA’s strategy announced last fall to partially finance 10,000 blender pump installations over the next five years, a plan with was recently re-iterated by President Barack Obama as part of a comprehensive strategy to reduce dependence on foreign oil.

Expanding market availability is essential to the continued growth of the biofuels industry. During a conference call to announce the funding availability, Vilsack highlighted the important sequence of events that could be sparked by making these funds available to retailers. “Our theory is that if we can build out the distribution system effectively, that will increase demand for the product, which will encourage Detroit and other auto manufacturers to continue to produce flex-fuel vehicles (FFVs) and perhaps look for ways in which they can add the $100-$150 part that would make virtually every new vehicles a FFV,” he said. “That in turn creates the momentum to reach the 36 billion gallon standard set by the renewable fuel standard, which in turn will give us the opportunity to create what we believe are hundreds of thousands of jobs in rural America.”

The USDA expects to issue a Notice of Funding Availability for the revised program “soon,” but was unable to provide an exact date as to when retailers will be allowed to begin applying for grants and loan guarantees.

Vilsack was originally scheduled to make the funding announcement from the headquarters of Gilbarco Veeder-Root in Greensboro, N.C., but had to cancel the trip due to ongoing budget negotiations at the Capitol to try to prevent a federal government shutdown at midnight on April 8. Gilbarco is one of a handful of blender pump manufacturers in the country. Vilsack said the pump manufacturers have expressed confidence that they will be meet increased demand for these pumps as needed.

It is unknown what amount of REAP funds will be devoted to blender pump and E85 pump systems. Vilsack noted that a complete system, including pump and storage tank, originally could cost about $120,000. The amount of REAP funds delivered to retailers to reduce those costs will depend on how many retailers apply for assistance. Vilsack said he hopes a “good number” of retailers will take advantage of the offer. If similar programs launched on a smaller scale serve as any indicator, chances are that retailers will happily take advantage of the program. North Dakota launched a blender pump installation incentive program for retailers in 2009 and achieved instant success. The number of blender pumps within the state grew from zero to more than 200 within two years.

The USDA plans to offer additional assistance for biofuel infrastructure growth, according to Vilsack. “Our goal is to get to that 10,000 number as quickly as possible,” he said. “This is one vehicle, but perhaps not the only vehicle that we’ll be able to use.” He also suggested that money currently used to provide Volumetric Ethanol Excise Tax Credits could be reformed to instead provide additional assistance to build out biofuels infrastructure.

Funding from the REAP program is distributed by the USDA’s office of rural development. For more information, visit www.rurdev.usda.gov.