On Thursday, October 21, USDA Secretary Tom Vilsack announced a series of measures to expand and develop infrastructure and incentives for the production of  biofuels, including a rule to implement the Farm Bill’s Biomass Crop Assistance Program (BCAP).  He also called on Congress to extend the Volumetric Ethanol Excise Tax which in the near term will subsidize more corn starch ethanol production.

The USDA measures announced by Secretary Vilsack include the establishment of five regional Centers to assist USDA Rural Development staff in the development and construction of biofineries in each of the regions.  The funding would come from the Farm Bill’s Biorefinery Assistance Program.

Vilsack also announced that USDA would provide financial assistance from Rural Development programs for the installation of 10,000 blender pumps and storage systems at gas stations to sell gasoline blended with ethanol.  USDA is also working with the Navy on biofuels to power its ships and planes and with the Federal Aviation Administration to develop biofuels suitable for jet engines.

All of these announcements add up to a potential drastic increase in the use of agricultural and forest resources for fuel production.  Secretary Vilsack’s speech was accompanied by an Economic Research Service Report which painted a rosy economic future for biofuel production.  But NSAC was greatly disappointed to see that the Report acknowledged that it contained no information or analysis of impacts associated with environmental change, including impacts on the nation’s water resources.

The Report also acknowledged that obtaining actual production data for second-generation energy crops and other advanced biofuels is still premature; that how energy crops might affect regional allocation of land deserves more study; and that the underlying cost structure of energy crops and the differences in production costs by region could influence regional shifts in crop production.  In addition, the Report  did not consider additional land that could potentially be used that is currently under the Conservation Reserve Program (CRP) or forest land.  Furthermore, it does not consider future developments in the rest of the world that could affect commodity supply and demand for the U.S. farm and food sector.  The Report also did not consider the impacts of ramped up biofuel production on fertilizer resources and prices, despite recent fertilizer price spikes and growing concerns about world reserves of phosphate for food production.

Secretary Vilsack also announced that the Final Rule for the 2008 Farm Bill’s Biomass Crop Assistance Program was ready for release.  An advance copy of the Final Rule, which will published in the Federal Register next Wednesday, October 27, was posted late today on the Public Inspection Desk website of the Federal Register.   NSAC staff are working through the Final Rule and will report on its content in a blog on Monday October 25.