The Good And Ugly Of Farm Biomass And Green Energy

Nor' east Thinkin'

USDA's $10 million grant for biomass energy here beats many millions lost on green energy give-aways there

Published on: October 17, 2012

We must be ramping up to an election. Almost daily, I receive USDA emails touting how the Obama administration is increasing jobs and building our energy independence – as it should! However, the timing of this week’s announcement of a $10 million grant to fuel biofuel development in the Northeast may be a little suspect – actually a little more than little.

The grant to fund a Northeast Woody/Warm-season Biomass Consortium comes more than a year after similar regional projects were funded for the Pacific Northwest, North, South and the Southeast. These regions, plus the Northeast, were targeted before March 2010, according to USDA’s Agriculture and Food Research Initiative documents, the agency charged with dishing out the grants.

None the less, the purpose and potential of the NEWBio Consortium grant is unquestionable. Catch the details posted Wednesday by clicking on biofuel.

USDA's $10 million to build the Northeast’s farm-to-fuel tank biofuel system will spread pretty thin over 20 partners in more than 10 states. Even so, enthusiasm and investor interest in Northeast biomass-to-biofuel ventures is likely to catch fire and build momentum.

That’s solely because Northeast entrepreneurs like Ernst Conservation Seeds and Double A Willow, farmer-run groups such as New York Farm Viability Institute, educational institutions such as Penn State and Cornell and state ag departments have built sound businesses with their own dollars. The industrial collaborators have demonstrated clear fiscal profitability and success.

No similarity to the green energy boondoggles

Unfortunately, we can’t say that about Uncle Sam’s stimulus package gifts to green energy companies. Via the Obama administration’s stimulus package, more than $862 million went to green energy companies that filed for bankruptcy within three years of receiving loan guarantees.

So far, Uncle Sam is on the hook for $400 million from Solyndra, $249 million from A123 Systems, $100 million from EnerDel, $70 million from Abound Solar and $43 million from Beacon Power.

Only 47% of total approved funding, a mere $4.9 billion, had gone out the door by August 31 for the 19 projects receiving loans directly from the Federal Financing Bank, a division of the Treasury Department. That’s a 17.6% failure rate.

That rate simply wouldn’t happen with USDA loan programs. Commercial ag loan failures are miniscule by any measure.

In agriculture, when you go for a big money business loan, you’re required to present a business plan, have adequate equity value plus demonstrated cash flow. What’s more, a loan officer watches over your shoulder. That didn’t happen with the stimulus package.

The Bible offers some wisdom about planting seeds in good soil, versus rocks and thorns. If you’re unfamiliar with how that rule of farming plays out, check out Matthew13. Be sure to read all the way through verse 23.

Uncle Sam, specifically the White House, would do well to consider that rule a little closer a lot more of the time.

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