Climate, Healthcare Package Becomes Law

19 Aug 2022

OMAHA (DTN) -- President Joe Biden on Tuesday signed into law the Inflation Reduction Act, a bill focusing on climate change and health care that includes significant spending for USDA conservation and rural renewable energy programs.

The $739 billion overall spending act includes $369 billion for various programs tied to renewable energy and reducing greenhouse gases throughout the economy. The climate provisions in the law will help lower U.S. greenhouse gas emissions 40% below 2005 levels by 2030.

Biden, in signing the law, called the bill, "The most aggressive action ever, ever, ever, ever in confronting climate crisis and strengthen our energy security."

Biden said the law would lead to 9 million new jobs in "clean energy manufacturing," including solar and wind farms, hydrogen projects and electric batteries and vehicles.

The president also pointed to the 15% minimum corporate income tax, saying "wealthy and big corporations will finally begin to pay part of their fair share."

The legislation faced unanimous opposition from congressional Republicans. Among the complaints, GOP lawmakers said the spending on USDA programs will make it harder to negotiate a farm bill next year.

The $19.5 billion for USDA conservation programs will incentivize more farmers to adopt cropping and livestock practices that reduce greenhouse emissions, reduce nitrogen loss or sequester carbon in the soil.

"Through this legislation, Congress and the administration recognize that farmers' voluntary climate-smart agricultural practices are an important part of addressing climate change," said Brooke Appleton, vice president of public policy for the National Corn Growers Association (NCGA). "We are also particularly pleased to see Congress and the administration acknowledge that low-carbon biofuels like ethanol are needed to help decarbonize transportation and improve energy security."

Some of the harshest criticism of the law, though, came from the Center for Food Safety, which lashed out at climate-smart agricultural investment as only a small portion of funding, though the funds give Agriculture Secretary Tom Vilsack "a blank check." The law boosts spending on biofuels, which the CFS noted are mainly produced from genetically engineered corn. "So, in reality, this provision is just more subsidies for GMO technology."

With all of that, CFS said it "is profoundly disappointed in the IRA's failure to seriously address urgently needed reform of the U.S. industrial agriculture system. No solution to the climate crisis will be sufficient without such reform."

CLIMATE-SMART AG

Among the top spending items for USDA:

-- Environmental Quality Incentives Program (EQIP), $8.45 billion.

-- Regional Conservation Partnership Program (RCPP), $4.95 billion.

-- Conservation Stewardship Program (CSP), $3.25 billion.

-- Agricultural Conservation Easement Program (ACEP), $1.4 billion.

Another $1 billion will go to the Natural Resources Conservation Service (NRCS) for technical assistance to producers. USDA will also receive $300 million to quantify carbon sequestration and emissions on farms.

Another $5 billion will be used for forest management, including about $2.15 billion for funding to reduce dead wood and other vegetation that would be fuel for forest fires. Another $2.75 billion will go toward urban areas and other non-federal forests to develop incentives such as carbon sequestration in those areas.

The Chesapeake Bay Foundation called on USDA to use its climate-smart funds to help further restore the bay and meet nutrient pollution reductions in those states.

"Most of the pollution cuts still needed to restore the Bay must come from agriculture, particularly in Pennsylvania," said Allison Prost with the Chesapeake Bay Foundation. "Farmers are willing to invest their time, land, and limited funds to clean and protect local rivers and streams that feed into the Bay. But they cannot do it alone. This $20 billion funding infusion means USDA can afford to step up its commitment to helping Bay state farmers do their part to save this irreplaceable natural and economic resource. CBF urges USDA to seize this opportunity."

RENEWABLE ENERGY

Renewable energy programs through USDA overall will receive $13.3 billion. Rural electric cooperatives will receive $9.7 billion for loans to build out renewable energy infrastructure with specific language on "zero-emission systems" and carbon capture programs.

The Renewable Energy for America Program will receive $1.7 billion to boost small-scale renewable energy projects in rural areas.

Biofuels will see another $500 million to develop blender pumps and other infrastructure to increase the blends of biofuels above 10% blend levels for ethanol and 20% for biodiesel blends.

The law also extends the $1-per-gallon biodiesel and renewable diesel tax credit through 2024. The $1.01-per-gallon second-generation biofuel tax credit also is extended through 2024.

A major boost for airlines transitioning aviation fuels will come from a $1.25-a-gallon sustainable aviation fuel (SAF) tax credit for 2023 and 2024. The SAF tax credit also gets bumped up for fuels that reduce emissions by more than 50%.

"This bill puts ethanol on a sustainable path for growth and investment," said Geoff Cooper, president of the Renewable Fuels Association. "Several provisions within this bill are very important to the U.S. biofuels industry and will result in American families having greater access to low-carbon, more affordable, domestically made renewable fuels."

Another $1 billion goes for loans for electric generation from renewable energy resources for rural and nonrural power companies. This includes solar, wind, hydropower, biomass, or geothermal. The federal government would cover up to 50% of the loans for such projects.

The production tax credit also is extended with adjustments in the tax credit for the technology used and when construction of the project began. The tax credit includes bonuses for projects that use certain levels of domestic materials as well.

The legislation also includes several residential and energy-efficiency tax credits for buying products such as heat pumps or installing solar panels on homes.

Tax credits for carbon sequestration are also boosted and extended for projects that begin construction before 2033. The tax credits, known as 45Q, will likely lead to greater expansion of carbon pipeline projects in rural areas as well.

AT-RISK FARMERS LOAN AID

The law provides USDA with $3.1 billion in funding for USDA to provide relief for at-risk agricultural operations. All distressed borrowers of direct or guaranteed loans administered by USDA are potentially eligible for assistance under this provision, which is designed to keep these farmers in production.

The law provides $2.2 billion for a program to provide financial assistance to farmers, ranchers or forest landowners who have experienced discrimination in USDA lending programs. Under the new language, financial assistance would go to farmers, ranchers or forest landowners who are "determined to have experienced discrimination prior to Jan. 1, 2021," in USDA farm lending programs. The financial assistance may not be more than $500,000 "as determined to be appropriate based on any consequences experienced from the discrimination."

As written, the law does not prioritize the 17,000 farmers and ranchers who received letters promising debt relief.

The law also includes $250 million that would go toward research, education and extension, as well as scholarships for 1890 Institutions -- land-grant, historically Black colleges and universities (HBCUs).

Another $250 million in the law would go to help underserved producers through loans and grants such as those who farm on heirs' property.