This item has been officially peer reviewed.

Existing Incentive Programs

Authored By: C. Mayfield, J. Gan

Incentive programs for biomass and bioenergy are available from a variety of different sources. These programs offer assistance in several forms including tax credit or exemption, grant, loan, cost share, or other types of incentive. Most of the existing programs assist energy producers and consumers with few providing incentives to forest landowners. The U. S. Department of Energy and the U. S. Department of Agriculture administer several federal incentive programs for biomass and bioenergy development.

Incentives related to energy production are generally sponsored by the Department of Energy. These include incentive payments and tax credits for the production of energy using renewable sources. The Energy Policy Act of 2005 contains several sections devoted to renewable energy and biomass energy. For instance, the Act modifies and extends the Renewable Electricity Production Credit through December 31, 2007. The credit provided to qualified producers under this program is good for 10 years and will increase to $10/MWh for bioenergy, which is twice as high as the credit given to wind and geothermal producers. Also, in Section 210 of the Act a grant program for forest fuel utilization of up to $20/green ton was established, though this program is not currently funded.

The U. S. Department of Agriculture also provides incentives for biomass, bioenergy, and bio-based product development in a number of ways. Incentives for forest biomass can be attained through programs administered by the USDA Forest Service and Rural Development Agency. The Farm Security and Rural Investment Act of 2002 and the Healthy Forests Restoration Act are examples of legislation that provide incentives for biomass development. Small business development and rural development grants can also be used to bolster economic conditions in rural ares through the development of a bio-based products industry.

In addition to federal programs, most states throughout the South also offer financial incentives or tax credits to businesses interested in the development of renewable energy sources. These programs can be administered through the state departments of agriculture, rural development agencies, or other various state agencies. Links to each state are available which allow one to search for specific state programs. Summaries of all state programs can be found at the Database of State Incentives for Renewable Energy.

Furthermore, there are several federal and state wildfire mitigation programs that offer incentives for fuel treatments on private forestlands. Among the federal programs are the Environmental Quality Incentives Program (EQIP) and the Forest Land Enhancement Program (FLEP). EQIP assists private landowners, helping them to address natural resource problems which threaten environmental quality by providing cost share. Funding for FLEP has been stopped, but any FLEP funds remaining in the states may be spent in accordance with federal and state program rules. Examples of the state programs include the Wildfire Mitigation Program in Mississippi and North Carolina and the Urban Wildland Interface Community Wildfire Preparedness Program in Texas.

Bioenergy development is affected by policies related to agriculture, forestry, energy, environmental protection, rural economic development, etc. Many of the existing incentive programs and related policies are operated by different agencies with their own specific emphases. Better integration and coordination of these programs is needed and will generate synergetic impacts on promoting bioenergy development.

Encyclopedia ID: p1164