University of Tennessee Study Defines New Market for Midwestern and Southeastern Farmers

Contact: 

Paul Bledsoe
(202) 637-0400
pbledsoe@bipartisanpolicy.org

Friday, October 23, 2009

Washington, D.C. – A new economic study conducted by the University of Tennessee‟s Bio-Based Energy Analysis Group has determined that there are significant market opportunities for agriculture if Congress enacts a national renewable energy standard (RES) policy.

Background. Renewable Electricity Standards provide an efficient mechanism to increase the share of electricity generated by renewable resources nationwide. Technologies that typically qualify for renewable energy standards include solar, wind, landfill/digester gas, geothermal, biomass (agricultural, wood, co-firing, methane recovery/animal waste), and biogas.

An RES policy requires utilities to provide a minimum percentage of energy from renewable sources. To date, RES policies to promote renewable energy have now been adopted by 27 states and the District of Columbia, generating growing momentum for a national-level program.

Findings. RES policies are expected to create a large new market for biomass from the agricultural and forestry sectors, and as a result, to have a positive effect on farm income, according to the study. Under a 25% RES policy in 2025, the study projected that increases in gross receipts range from $9,419 per farm in Florida, $11,283 per farm in Colorado, $16,028 per farm in North Carolina, and $43,229 per farm in Kansas. “We expect to see a significant increase in farm revenue if an RES policy is implemented,” said study co-author Dr. Daniel De La Torre Ugarte, Professor at the University of Tennessee‟s Institute of Agriculture. “Similarly, we found that the relationship between farm revenue and the stringency of an RES policy was positive, with more revenue generated under scenarios with stronger RES targets.”

Preliminary results from the study also show that the increased demand for biomass feedstock is substantial under all RES policy cases considered. However, the size of the new market will vary by state and by level of the RES target, with higher targets typically resulting in a larger market for biomass.

The focus of the study centered on the impact of RES policy in farm revenue in Colorado, Kansas, Florida and North Carolina. It also examined potential new markets for biomass resources in these states. In addition, the University of Tennessee researchers evaluated the potential direct employment opportunities that may result from building out new electric generating facilities in these states, as well as the potential for job growth on the farm supported by increased biomass production. The relationship between job creation and RES policy was positive, with more jobs created in scenarios with stronger RES targets, and similarly more jobs created under Federal proposals than under state proposals alone. “A Federal RES policy has the potential to create thousands of new jobs,” said study co-author Dr. Burton English, Professor at the University of

Tennessee‟s Bio-Based Energy Analysis Group. “And these jobs are diverse, driven not only by the build out of new energy infrastructure, but also are jobs associated with growing the biomass that will fuel power plants.”

The study examined current proposals for Federal renewable energy standards based on legislation introduced in the 111th Congress, as well as state-level renewable energy standards currently in place in Colorado and North Carolina.

Report Release. The full report will be released on October 23, 2009 in Washington, D.C. with a briefing in the United States Senate (room SVC201/200) from 10:00 a.m. to noon. The Hill briefing will be sponsored by the National Farmers Union (NFU) and the National Milk Producers Federation (NMPF). Representatives from both NFU and NMPF will be present at the briefing along with representatives from other agriculture organizations to discuss RES policies and their implications for agriculture.

Upon release of the report, both the report and a podcast of the briefing will be accessible on line at http://www.21stcenturyag.org.

The study was funded by the Bipartisan Policy Center. The BPC also sponsors the 21st Century Agriculture Policy Project, which works to identify new economic opportunities for agriculture.

About The 21st Century Agriculture Policy Project

The 21st Century Agriculture Policy Project works to identify new economic opportunities for agriculture that are sustainable domestically and globally. In particular the project is focused upon opportunities to improve the „safety net‟ of government programs that support American agriculture and explore opportunities to create new revenue streams through an increased role for agriculture in energy production, conservation and greenhouse gas mitigation.

For more information, please visit http://www.21stcenturyag.org.

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