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|Articles - March 2011|
|Wednesday, March 02, 2011|
The growing pains of the federal Biomass Crop Assistance Program (BCAP) may be nearing an end, presenting an opportunity for those in Oregon’s biomass industry. The U.S. Department of Agriculture Farm Service Administration (FAS) has almost smoothed out the administrative rules of the 3-year-old program; Congress will consider funding in the next few months.
The BCAP was formed with the intent of jump-starting investor confidence in agricultural and woody biomass harvesting by offering matching payments of up to $45 per dry ton of biomass to producers who deliver the fuel source to a power plant. However, the vague administrative language of the program led to abuse.
“We didn’t have the parameters to make sure we followed the intent of the program,” says Oregon FSA representative Lois Loop. Some woody biomass producers across the nation diverted wood residues to biomass plants that would have gone to existing industries like particleboard furniture manufacturing because they could get matching BCAP payments. Congressman Peter DeFazio (D-Oregon) and other legislators protested this abuse of the program that led to higher costs in the existing industries and suspended it in February.
Of the $244 million of BCAP matching payments given out in FY 2009 and FY 2010, Oregon received $6 million, partly because the program qualification rules favored agricultural biomass producers. “It’s like trying to fit a square peg in a round hole,” says Loop of configuring the program for woody biomass producers. “We’re still rounding off the square corners.”
The FSA is educating people in Oregon’s biomass industry on how to use the program: If it receives funding, it could mean millions of dollars in subsidies for Oregon’s woody biomass producers.
“It’s an interesting program…it will bring a lot more interest in biomass,” says Tom Ludlow, CFO of Klamath Falls-based timber company JWTR. “[But] if a project doesn’t work without government subsidies, it’s probably not going to work.”
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