BIOMASS HUB

By Biomass Intel Legal Analyst, Steve Squillario

As reported by the Washington Post, the Biomass Crop Assistance Program has led to some unintended economic repercussions.  Through subsidies of up to $45 per ton, this previously overlooked provision within Congress’ 2008 Farm Bill aimed to provide a financial incentive for the lumber industry to sell its waste – i.e., timber byproducts in the form of sawdust and wood shavings – for conversion into biofuels.  However, such “waste” represents a commodity for the nation’s composite wood manufacturers, which use this resource to produce wood panels for use in such products as entertainment centers and kitchen cabinets.  Because these subsidies have caused the cost of the byproduct to increase dramatically, these manufacturers are feeling an additional financial crunch.

Although this measure may represent a laudable component of a necessary multi-faceted effort to foster the country’s transition to energy independence, the Biomass Crop Assistance Program could also be unintentionally harming a sector of the economy, which happens to outnumber the U.S. biomass industry, at a time when the United States can ill-afford such damage.  While defending itself against attacks that the Farm Bill was a protectionist exercise of its power to regulate interstate commerce, Congress may be forced to revisit this provision in order to strike a necessary balance between the interests of these two industries, as well as the short-term goal of economic recovery with the long-term objective of relying on various sources of energy.  In the meantime, the Office of Management and Budget is in the midst of reviewing the federal rule for the program.

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