Farmers Sign On to Energy Push - 3/15/2006

Farmers Sign On to Energy Push

Lobby Seeks Incentives, Aid
To Boost Use of Biofuels, Wind Power
By JOHN J. FIALKA
March 15, 2006; Page A4

WASHINGTON -- President Bush's call for Americans to use less oil and more agricultural waste to meet the nation's fuel demands is about to get a lift from the farm lobby.

In an unlikely alliance with the environmental movement, farm groups are seeking federal incentives for forms of renewable energy such as cellulosic ethanol -- a gasoline additive made from farm byproducts -- and electricity from farm wind turbines.


The target for the effort is a farm-support bill that Congress expects to pass in 2007. Two former farm-belt Senate majority leaders, Democrat Tom Daschle of South Dakota and Republican Bob Dole of Kansas, are among the strategists trying to reshape American agriculture to help farmers and ranchers produce so-called energy crops. The two are co-chairmen of the 21st Century Agriculture Policy Project and plan to meet in Washington today to announce their initiative.

The meeting comes just over a month after Mr. Bush used his State of the Union speech to brand the U.S. as "addicted to oil" and to call for replacing much of it with fuel from "wood chips, stalks, or switch grass." The groups are working to assemble the bipartisan muscle to push the policy through Congress.

"We want to create a broader coalition," says Mr. Daschle, who aims to bring industry and financial groups to the mix. He has a good track record. With Mr. Dole, he helped create the coalition that pushed the passage of a federal mandate to almost double the use of ethanol from corn as the centerpiece of last year's energy bill.

A similar coalition met in Washington a week ago to work out the details of getting the 70 farm groups it has assembled to lobby with church groups, labor unions and environmentalists.

"We want to redefine the core functions and the role of American agriculture," says J. Read Smith, a wheat farmer from Washington state and co-chairman of the "25 X '25" group, which is named for its goal of raising the use of renewable fuels to 25% of U.S. energy consumption by 2025 from 3% presently. Mr. Smith says one concern is that U.S. farm subsidies will shrink amid world trade negotiations. Getting more farm and ranch income from energy, he says, will ease the transition.


The politics won't be easy. In the previous farm bill, in 2002, Congress authorized $150 billion over five years for various programs. For the first time it included a portion of the money for energy incentives, but members of Congress's appropriations committees shifted much of the money back to more traditional programs. Despite Mr. Bush's sweeping rhetoric, he asked for only a modest amount of money to promote alternative energy in his budget proposal. And fiscal conservatives in his own party are getting antsy about budget deficits and pricey new government programs.

The policies that both groups are considering include:

Federal loan guarantees and other assistance for electricity-transmission lines from the Dakotas and Montana, which have the nation's greatest wind-power potential, to cities in the Midwest and along the West Coast.

Incentives for companies to build factories that make ethanol from corn stalks, wheat straw, rice hulls, wood chips and other farm wastes.

A federal mandate to require more use of biodiesel, or diesel fuels blended with soybean oil and other vegetable and animal fats.

Tax breaks to promote farm energy cooperatives that can broker sales of energy produced on farms and channel financial assistance to farmers to build wind turbines and other energy-producing devices, such as digesters that extract methane from animal waste.

The presence of environmental groups in the movement is unusual because they have battled with farm groups over the use of fertilizers and pesticides. The Sierra Club opposed incentives for ethanol made from corn as a waste of resources, but it has joined "25 X '25."

Carl Pope, executive director of the Sierra Club, says promoting cellulosic ethanol helps the environment. The farm fuels might ease dependence on oil imports and lessen the use of carbon-rich fuels believed to cause global warming.


Environmental groups previously have pushed more incentives for wind and solar energy and other renewable energy forms but lacked the clout to get them passed by Congress. "The environmental chorus was never big enough to sing this song. We needed a bigger chorus, so now we're adding the bass section," Mr. Pope says.

The goal of 25% renewable energy use by 2025 is ambitious. Currently, according to the U.S. Energy Department, only 3.3% of the nation's energy comes from the renewable fuels that the groups are considering. So far biodiesel has penetrated only 0.14% of the diesel market. Federally subsidized ethanol has captured just 3% of the gasoline market -- but its proven political appeal is the template that the new coalition wants to apply to other energy sources.

According to a study financed by the South Dakota Corn Growers Association, production of ethanol from corn has added more than $1 billion to the economy of Mr. Daschle's home state, creating what economists call a "multiplier effect" that has raised tax revenue, created jobs and prompted at least a 10% increase in the price farmers get for their corn.

Building a bigger coalition, Mr. Daschle says, also might give Congress an added push to regulate man-made releases of carbon dioxide, which are thought to accelerate climate change. Under some regulatory proposals, farmers would get income from selling credits they could receive for planting trees and taking measures to reduce carbons.

"There are still some open questions about the degree to which all of these dots will connect," says Mr. Daschle, whose group plans two more meetings to solicit ideas from farmers, ranchers and conservationists before issuing its policy options in October, on the eve of congressional elections.

Write to John J. Fialka at john.fialka@wsj.com