PDF _ RL32712 - Agriculture-Based Renewable Energy Production
16-Oct-2007; Randy Schnepf; 62 p.

Update: Previous Releases:
January 8, 2007
August 4, 2006
May 18, 2006

Abstract: Since the late 1970s, U.S. policy makers at both the federal and state levels have enacted a variety of incentives, regulations, and programs to encourage the production and use of agriculture-based renewable energy. Motivations cited for these legislative initiatives include energy security concerns, reduction in greenhouse gas emissions, and raising domestic demand for U.S.-produced farm products. Agricultural households and rural communities have responded to these government incentives and have expanded their production of renewable energy, primarily in the form of biofuels and wind power, every year since 1996. The production of ethanol (the primary biofuel produced by the agricultural sector) has risen from about 175 million gallons in 1980 to 3.9 billion gallons per year in 2005. However, U.S. ethanol production capacity has been expanding rapidly. Current ethanol production capacity is 5.4 billion gallons per year (as of December 29, 2006), with another 6.0 billion gallons of capacity under construction and potentially online by early 2008. Biodiesel production is at a much smaller level, but has also shown growth rising from 0.5 million gallons in 1999 to an estimated 75 million gallons in 2005. Wind energy systems production capacity has also grown rapidly, rising from 1,706 megawatts in 1997 to an estimated 10,492 megawatts by October 23, 2006. Despite this rapid growth, agriculture- and rural-based energy production accounted for only about 0.6% of total U.S. energy consumption in 2004.

Key points that emerge from this report are:

! substantial federal and state programs and incentives have facilitated the rapid development of agriculture’s renewable energy production capacity (primarily as biofuels and wind);
! rising fossil fuel prices improve renewable energy’s market competitiveness, whereas higher costs for feedstock and plant operating fuel (e.g., natural gas) dampen profitability;
! improvement of existing technology and development of new technology for biofuel production (e.g., cellulosic conversion) further enhance its economic competitiveness with fossil fuels;
! farm-based energy production is unlikely to be able to substantially reduce the nation’s dependence on petroleum imports unless there is a significant decline in energy consumption; and
! ethanol-driven higher corn prices have raised concerns from certain quarters (e.g., other corn users) over rising feed costs, as well as the potential for increased soil erosion and chemical usage from substantially expanded corn production.

This report provides background information on farm-based energy production and how this fits into the national energy-use picture. It briefly reviews the primary agriculture-based renewable energy types and issues of concern associated with their production, particularly their economic and energy efficiencies and long-run supply. Finally, this report examines the major legislation related to farm-based energy production and use. This report will be updated as events warrant.

 [read report]

Topics: Agriculture, Energy, Natural Resources

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