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Renewable energy in form of wind, ethanol, biodiesel, bioenergy crops one way farmers can prevent climate change, says ACGF chief

(Thursday, Oct. 2, 2003 -- CropChoice news) -- Dan McGuire, CEO of the American Corn Growers Foundation, delivered the following presentation, "Renewable Energy… Wind, Ethanol, Biodiesel and Bioenergy Crops," to a Senate briefing and national press conference earlier this week. His testimony was part of "The Potential Impacts of Climate Change on U.S. Agriculture and What Can Farmers Do About It?" that was organized by the The Center for Health and the Global Environment at the Harvard Medical School.

You'll find information about the other presenters at the end of this speech.

by Dan McGuire.

Thank you to Dr. Chivian and the Center for Health and the Global Environment at Harvard Medical School for inviting the ACGF to be on this panel today. Thanks also to the Energy Foundation who supports our Wealth From The Wind program.

The Energy Foundation’s, Program Officer for Power, Mr. Bentham Paulos recently suggested that wind power be viewed as an extraction industry like oil, natural gas, coal, etc. Whereas those energy resources are extracted from below the earth for economic and societal needs, wind power offers inexhaustible energy to be extracted as the wind moves above the earth, but without the environmental impact.

The American Corn Growers support wind farming for many reasons. The most compelling is the U.S. Dept. of Agriculture’s Sept. 2003 farm income forecast (Statistical Indicators Table 31---Average Income to Farm Operator Households), which shows that only 6% of average farm operator household income comes from farming activities…including federal farm program payments. 94% of total farm household income is coming from off-farm sources…no surprise to farm operations where both spouses and other family members work off-farm jobs in addition to farming and watch corn and soybeans prices every day to see if they might ever cover production costs. That’s the problem, low commodity prices and high production costs, including the cost of energy: oil, electricity, natural gas, fertilizers, etc.

Renewable energy sources…wind, ethanol, biodiesel and bioenergy crops, such as switchgrass can help address the problem. They’re abundant, sustainable and homegrown. A recent report from the Agricultural Policy Analysis Center of the University of Tennessee, shows that acres in bioenergy crops also help raise grain prices.

Wind energy: Wind turbines reduce greenhouse gas emissions. According to the American Wind Energy Association, of which we’re a member, a single 750-kilowatt wind turbine, operated for one year at wind speeds, averaging 12.5-13.4 mph (at 10 meters height), can displace nearly 2.7 million pounds of carbon dioxide, 14,172 pounds of sulfur dioxide, and 8,688 pounds of nitrogen oxides, based on the U.S. average utility generation fuel mix. That’s a major positive contribution toward dealing with greenhouse gas concerns. And, the Wind Powering America program of the U.S. Department of Energy, with which we partner, reports that wind power can displace 35 million tons of atmospheric carbon by year 2020.

The good news for farmers, who also want a clean environment, is that wind farming does pay. A case study from Minnesota, a leader in wind energy, shows why it makes sense for farmers to get involved in wind energy as a new income stream. Kas Brothers’ Wind Farm at Pipestone, Minnesota, completed in 2001, was the first farmer-owned commercial wind farm. Developer Dan Juhl installed two NEG Micon 750-kW turbines with an installed capacity of 1.5-MW and estimated annual electricity production of 4.5 million kWh. That wind farm now yields $30,000-$40,000 annually for the first 10 years of operation. It’s expected to yield $110,000-$130,000 annually thereafter, depending on the level of electricity production. The farmer-owned projects do receive the federal production tax credit. In addition, Minnesota has a production incentive of 1.5 cents/kWh for projects under 2 MW. The incentives are extremely important. The annual avoided emissions from this one wind farm are about: 4.8 million pounds of carbon; 25,000 lbs. of sulfur dioxide; and 15,000 lbs. of nitrogen oxides. And, it’s truly community-based, economic development. Local contractors were used including Olsen Electric and K-Wind. Xcel Energy contracted to purchase the electricity. Local banks provided the financing. The wind turbine, the power contract, the maintenance agreement and insurance allow the banks to make the loans with little risk. Local ownership also keeps the electricity revenue circulating in the community. This wind farm model is so successful that Mr. Juhl has multiple new projects in the works this year, bringing the total capacity of the community-based projects he has facilitated to about 85 MW. Earlier this month I, and our American Corn Growers’ national leadership toured his projects. In addition to Xcel, Alliant Energy and Great River Energy are contracting to purchase the power. Another advantage of the smaller farmer-owned projects is that most of them tie in to the electricity grid at the distribution level, instead of at the higher-voltage transmission level as many larger wind farms do. Attaching to the distribution lines means lower interconnection costs as well as voltage support for rural distribution lines.

Minnesota’s TRIMONT Area Wind Farm, LLC provides an example of a larger wind farm but also locally-owned. It’s 100 megawatts and the local citizens who comprise TRIMONT are also electric cooperative customers of South Central Electric Association. This project is a blend of local participation and scale.

Attached to my written remarks is the Kas Brothers’ Wind Farm case study summary and other one page case project summaries ranging in size from 2 wind turbines totaling 2.6 MW in South Dakota to three hundred ninety nine, 660 kW turbines on the state line of Washington and Oregon. Project summaries in Wyoming and Texas are also provided. Wind farms are being developed in Iowa and other states, thanks to their wind energy leaders and champions: Consider these wind energy fast economic facts:

  • The 240 MW of wind capacity installed in Iowa in 1998 and 1999 produced: 200 six-month long construction jobs and 40 permanent maintenance and operations jobs; $2 million per year in tax payments to counties an school districts; $640,000 per year in direct lease payments to landowners.
  • A January 2000 study found that Iowa’s electric utility customers could save $300 million over a 25-year period if a proposal to meet 10% of the state’s electric demand through wind energy is adopted. The savings result because the cost of fossil fuels is expected to rise over time, while wind’s costs declines.
  • LM Glasfiber, a Danish wind turbine manufacturer, became one of North Dakota’s largest employers at a single stroke in March 1999, when it opened a new factory in Grand Forks, N.D., that will employ 130 workers.

New employment and enhanced state and local tax bases are serious economic and policy drivers in support of wind energy as an industry. Plus, wind energy and other renewables take the pressure of off natural gas demand and help reduce natural gas prices. Natural gas is used for fertilizer production, irrigation engines, grain drying and other farm purposes so that helps farmers. A new analysis released on Sept. 7th, Impacts of Energy Efficiency and Renewable Energy on Natural Gas Markets, by the American Council for an Energy-Efficient Economy and funded by the Energy Foundation concludes that, "In just 12 months, nationwide efforts to expand energy efficiency and renewable energy could reduce wholesale natural gas prices by 20% and save consumers $15 billion/year in retail gas and electric power costs. Over the next 5 years, the cumulative savings to residential, commercial and industrial consumers could exceed $75 billion." The same report called for a portfolio of policy solution strategies including:

  • Energy efficiency performance targets
  • Expanded federal funding for energy efficiency and renewable energy implementation programs of DOE and EPA
  • Appliance efficiency standards
  • Insuring more efficient buildings though codes
  • Support of clean and efficient distributed generation
  • Renewable portfolio standards
  • Public awareness campaigns by state and national leaders

Regarding the report, the American Wind Energy Association stated, "We agree that energy efficiency and renewable energy offer the quickest and most economical way to deal with the gyrating prices in the natural gas market. We also believe that an aggressive program to spur the growth of wind energy can go even further, and virtually eliminate, over the next five years, the natural gas shortage that is currently threatening our nation’s economic recovery." The ACGF supports that statement and urges both state and federal incentives for the longer term to facilitate wind energy.

The 2002 farm law included an Energy Title that’s proving very instrumental in establishing new wind farm projects. Grants and loan guarantees are available. The grant application process needs to be streamlined and it’s important that the Administration request full funding of the Energy Title in the future to facilitate new and faster wind farm development.

Other policy solutions that need to move forward quickly include:

  • Extension of the wind energy production tax credit (PTC) for multiple years
  • Removal of the passive requirements connected with the wind PTC so that it’s not subject to the alternative minimum tax (AMT). This will make it more possible for average citizens to invest in wind projects.
  • Adoption of the American Wind Energy Association’s concept of the Trans-Prairie and Interior West Wind ‘Pipelines’ aimed at (1) dealing quickly with the natural gas shortage; and (2) increasing overall reliability of the national electricity transmission system.

U.S. farmers are strong supporters of wind energy. A national, random and scientific poll of corn farmers conducted for the ACGF in April of 2003 by Robinson and Muenster Associates, Inc. of Sioux Falls, South Dakota found that:

  • 93% support the development of wind energy
  • 82% want the farm bill Energy Title funded at current or greater levels
  • 89% want farmers, industry and public institutions to promote wind power
  • 78% support production tax credits for wind energy
  • 77% want the Administration and Congress to make a major commitment toward the promotion of wind energy for national security reasons.
  • 78% want the Minnesota model of state incentives for wind energy adopted by other states
  • 82% want rural electric cooperatives to help support and promote wind energy
  • 76% support action by Congress and the federal government to encourage new transmission capacity to move electricity from wind farms to consumer markets
  • 88% agree that electric utility companies should be required to accept electricity generated by wind farms as part of their power generation mix

Keep in mind that this survey of 511 corn farmers in the states representing about 90% of total U.S. corn production was random. Those surveyed could have been a member of any farm organization or not a member of any farm group at all. Survey results are attached to my remarks and located at http://www.acgf.org (Programs).

Ethanol: Ethanol produced from corn, other grains and biomass is another clean energy fuel that means jobs and income for rural America. An economic impact report provided by the Nebraska Ethanol Board and done by the Nebraska Public Power District, Estimated Economic Effects for The Prospective Fagen Ethanol Project at Central City, Nebraska, showed the following positive annual impacts:

  • Production of 40 million gallons of ethanol
  • Production of 128,000 tons of distiller’s grain
  • 33 full time jobs and a payroll estimated at $1.2 million annually including benefits
  • Annual total indirect business taxes of $1,157,600 including $988,711 in property taxes and $168,900 of other taxes and fees.

Ethanol plants of this type can be expected to increase the price of corn by 3 to 8 cents per bushel. This case study of how ethanol plants help rural economies is attached. And, ethanol plays a major role as a clean fuel for our country’s environmental, economic and energy security future. That role is confirmed in the Sept. 16th 2003 letter from the Coalition for a Renewable Fuels Standard to the House and Senate Conference Committee dealing with the Renewable Fuels Standard (RFS) agreement as part of the energy bill. The agriculture and ethanol production industry is united through this coalition. They are calling for a revised RFS that will support a sustained capital investment in the ethanol industry to meet increased ethanol demands in later years. They point out that today:

  • 73 ethanol facilities have the capacity to produce more than 2.9 billion gallons of ethanol per year
  • 14 new facilities are under construction, and dozens more are in the planning stages.
  • 70% of the ethanol plants under construction are farmer-owned
  • The RFS agreement will lower the cost of gasoline to consumers by reducing refiner costs compared to the current law
  • The RFS will drive down consumer costs even further by ensuring additional domestic fuels supplies to replace MTBE.

Biodiesel: Here’s another homegrown, renewable fuel that’s good news for the environment and health. An October 2002 EPA report shows that biodiesel use provides significant reductions in most EPA-targeted emissions. The report shows a number of positive environmental findings including:

  • A 20% blend of biodiesel (B20) in 100 vehicles reduces more pollution than using pure biodiesel (B100) in 20 vehicles
  • Biodiesel itself is not the solution to NOx (nitrous oxides). However, other work is underway to address NOx:

    o New diesel after-treatment technology---technology enabled by fuels with less than 15 ppm sulfur like biodiesel---will soon (projected, 2007 model year) be capable of reducing NOx by more than 90%! This will help achieve NOx reduction while gaining the other environmental benefits of biodiesel use.

In May of 2000, biodiesel became the only alternative fuel in the country to have successfully completed the EPA’s Tier I (significant reductions in most currently regulated & unregulated emissions) and Tier II (non-toxic effect on health) Health Effects testing under Section 211 (b) of the Clean Air Act. The report also states that:

  • DOE and USDA have calculated carbon dioxide reductions of 78% for biodiesel when compared with petroleum diesel in a full life cycle analysis.
  • Biodiesel reduces the compounds linked to cancer by 80 – 90% compared to petroleum diesel.
  • Biodiesel essentially has no sulfur, thus already meets the 2006 ultra-low sulfur standard of 15 parts per million.

This information confirms that biodiesel, produced from soybeans and other vegetable oils provide tremendous benefits to the economy and the environment, therefore American society as a whole. Farmers also have another reason for supporting and promoting biodiesel. Soy biodiesel is a high-quality product to use in their farm equipment. Even low blends of biodiesel like B2 (2%) and B5 (5%) offer:

  • Exceptional lubricity
  • Longer equipment life
  • Lower maintenance costs and less equipment downtime
  • A cleaner-burning fuel that is friendlier to the user and the environment

Increased soybean demand should also increase soybean prices at the farm level and help the rural economy, all other factors being constant. Several recent studies have quantified economic and social benefits of the commercialization of biodiesel in the U.S. The economic benefits are shown to accrue to farmers, local communities, end users and the nation as a whole.

  • A study conducted by AUS Consultants shows that realizing a national goal of 4 percent renewable fuel use by 2016 would increase soybean production from 51 million bushels in 2002 to 318 million bushels by 2016. Soybean prices would increase an average of 68 cents per bushel, or 11.8 percent of the baseline.
  • A study completed in 2001 by the U.S. Department of Agriculture’s Office of Energy Policy and New Uses in conjunction with the Economic Research Service (ERS) found that an average annual increase of the equivalent of 200 million gallons of soy-based biodiesel demand would boost total crop cash receipts by $5.2 billion cumulatively by 2010, resulting in an average net farm income increase of $300 million per year.
Petroleum and local fuel distributors are increasingly making biodiesel available to their customers. A map with state-by-state distributors and a list of wholesale biodiesel suppliers is available at the National Biodiesel Board Web site, http://www.biodiesel.org .

I’m sure that I’ve pushed beyond the limits of my allotted time. In closing, one of the strongest prevailing winds of change in rural America has to do with the recognition that sustainable, energy independence must be a key strategic national priority. The renewable energy resources I’ve discussed here today will play a big role in America’s national and economic security for the future. Thank you.

Eric Chivian M.D., Director, Center for Health and the Global Environment

Recent Climate Variability and Future Climate Change: What They Mean for the Nation's Farmers
William Easterling Ph.D., Professor of Agronomy and Director of the Institutes of the Environment, Penn State University

Climate Change Effects on Crop Diseases and Pests
X.B. Yang Ph.D., Associate Professor of Plant Pathology, Iowa State University

Carbon Sequestration on Farms
Charles W. Rice Ph.D., Professor of Soil Microbiology, Kansas State University; Director, Consortium for Agricultural Soils Mitigation of Greenhouse Gases

Wind Energy and the Production of Biofuels
Dan McGuire, CEO, American Corn Growers Foundation

For more information on the briefing go to: http://www.med.harvard.edu/chge/policy/agbrief.html