USDA to award $100 million under biofuels infrastructure program

By Erin Voegele | May 04, 2020

The USDA announced on May 4 it intends to make available up to $100 million in competitive grants under the Higher Blends Infrastructure Incentive Program to support activities designed to expand the availability and sale of ethanol and biodiesel.

According to the USDA, funds will be made directly available to assist transportation and fueling and biodiesel distribution facilities with converting to higher ethanol and biodiesel blends by sharing the costs related to and/or offering sales incentives for the installation of fuel pumps, related equipment and infrastructure.  

Grants for up to 50 percent of total eligible projects costs, up to $5 million, are available to vehicle fueling facilities, including local fueling stations/locations, convenience stores, hypermarket fueling stations, fleet facilities, fuel terminal operations, midstream partners and/or distribution facilities.

According to the USDA, $86 million will be available for implementation activities related to ethanol blends above E10. The remaining $14 million will be available for implementation activities related to blends of biodiesel above B5.

The USDA is set to publish a notice in the Federal Register on May 5 regarding the HBIIP. A due date for applications has not yet been finalized. In the notice, the agency said it will finalize the application window for enrollment in the HBIIP by notice in the Federal Register and subject to future opening of the program’s electronic application system. 

The USDA said it expects the $100 million in funding to support approximately 150 awards and provide assistance to approximately 1,500 locations.

“America’s energy independence is critical to our economic security, and President Trump fully recognizes the importance of our ethanol and biofuels industries and the positive impacts they deliver to consumers and farmers with an affordable, abundant, and clean burning fuel,” said Agriculture Secretary Sonny Perdue. “American ethanol and biofuel producers have been affected by decreased energy demands due to the coronavirus, and these grants to expand their availability will help increase their use during our economic resurgence.”

The Renewable Fuels Association released a statement welcoming details on the HBIIP program. “U.S. ethanol producers today are facing the worst economic conditions in the industry’s 40-year history due to COVID-19, and they need immediate emergency relief to survive this catastrophe,” said Geoff Cooper, president and CEO of the RFA. “Once the pandemic is over and fuel markets are showing signs of recovery, expanding infrastructure via the Higher Blends Infrastructure Incentive Program will be important to the long-term future of the ethanol industry and rural America. We thank the USDA for its efforts to support the future of renewable fuels.”

Growth Energy also welcomed the launch of the program. “We applaud Secretary Perdue and USDA for their continued work to support homegrown fuels, as well as our congressional champions who are pressing ahead with legislation to accelerate our progress," said Emily Skor, CEO of Growth Energy. “Growth Energy’s pioneering work with Prime the Pump helped make the original Biofuels Infrastructure Partnership a resounding success, supporting the installation of E15 at more than 2,000 retail locations. Our experience proves that the USDA’s investment will pay dividends for years to come – for retailers, farmers, biofuel produces, and motorists alike.

“Due to COVID-19, American farmers and biofuel producers are facing an economic crisis that threatens the very heart of U.S. agriculture,” Skor continued. “While we work to secure support needed to ensure that we come out of this strong and ready to rebuild the farm economy, we know that continued progress on long-term investments like HBIIP are critical to show that the light at this end of this tunnel is brighter than ever.”

The American Coalition for Ethanol said it is ready to assist fuel retailers as USDA rolls out details on the HBIIP. “ACE is gratified to see many policies we recommended to USDA to make the program more accessible to single store and small chain operators were included in the final program,” said Ron Lamberty, senior vice president and market development director of ACE. In particular, we appreciate the Targeted Assistance Goal (TAG) which makes approximately 40 percent of funds available specifically for applicants owning 10 fueling stations/locations or fewer. USDA is also offering applicants ‘consideration for geographical diversity and markets underserved by higher blends’ to help establish higher blend retail facilities in a broader geographic area, which ACE identified as critical to widespread E15 use in our recommendations to USDA.

“A very high percentage of existing stations could add E15 using mostly existing equipment, and USDA is structuring these grants so all fuel retailers — including single store and small chain owners — can receive assistance whether they need to perform simple conversions, upgrades or new infrastructure,” Lamberty continued. “Widespread E15 use is going to rely on conversions more than new construction, and ACE will focus on helping stations determine compatibility so they can add higher ethanol blends as quickly as they are able.  Retailers may also need assistance with the application process, which USDA has assured us has been simplified as much as possible for a federal grant program. ACE will be helping retailers navigate the grant process by providing expertise, and when needed, financial assistance to give stations the best chance of receiving grant funding.

“ACE is uniquely suited to assist single-store operators — who own 62 percent of U.S. convenience stores according to recent NACS data,” he said. “From its inception, ACE's market development program has focused on helping station owners, primarily single store and small chain retailers, understand ethanol as an easy product addition that can provide a competitive advantage and a healthier bottom line. Owners who act now can use the USDA HBIIP to reduce their cost of getting ahead or keeping up with the competition, and ACE stands ready to help fuel marketers complete the application process and make the switch.

“While ACE continues to focus on securing immediate aid for the ethanol industry struggling to survive the catastrophic economic fallout of COVID-19, investments in infrastructure now will help secure long-term growth and help ethanol demand recover more quickly once the economy starts to open back up,” Lamberty said.

Additional information is available on the USDA website.