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Biofuels Grants


Administered by: Commodity Credit Corporation
Annual funding: $100 million appropriated for FY2005; up to $150 million authorized annually for FY2004 through FY2006
Established: FY2001 through CCC’s general authority to conduct commodity programs; extended by §9010 of the Farm Security and Rural Investment Act of 2002 (P.L. 101-171) CRS-2
Scheduled termination: End of FY2006
Description: The Bioenergy Program reimburses ethanol and biodiesel producers for expanding their production capacity. Payments help defray the purchase cost of the additional commodities needed for that expansion, and are based on the level of increase, as well as the number of applicants. Eligible commodities include grain and oilseed crops (e.g. barley, corn, soybeans), cellulosic crops (e.g. switch grass, rice hulls), animal fats, agricultural byproducts, and oils.
Qualified applicant: Any ethanol or biodiesel producer who expands production capacity.
For more information: Visit the USDA Farm Service Agency at http://www.fsa.usda.gov/daco/bio_daco.htm



Administered by: Rural Business Cooperative Service
Annual funding: $20.5 million appropriated for FY2006 (up from $15.5 million in FY2005); part of a $40 million total annual authorization for several value-added programs
Established: FY2001, expanded in FY2003 to include renewable energy projects by §6401 of the Farm Security and Rural Investment Act of 2002 (P.L. 101-171)
Scheduled termination: End of FY2006
Description: VAPG provides grants to independent producers for the development of value added agricultural activities, including biofuel production. The grants can be used for feasibility studies, the development of a business plan, or to acquire working capital to operate a value-added business.  Grants are to enable applicants to pursue markets they are not currently serving.  The venture must be focused on this new or developing market.  Value-Added Products must expand the customer base for the product or commodity.  Candidate products must then meet one of the following criteria:

  • Changing of the physical state or form of the product. Examples include: processing wheat into flour, corn into ethanol, slaughtering livestock or poultry, or slicing tomatoes. 
  • Producing a product produced in a manner that enhances its value, as demonstrated through a business plan. An example is organically produced products. 
  • Physical segregation of an agricultural commodity or product in a manner resulting in the enhancement of the value of that commodity or product. Examples: include an identity preservation system for a variety or quality of grain desired by an identified end-user or the traceability of hormone-free livestock to the retailer.
  • Any agricultural commodity or product that is used to produce renewable energy on a farm or ranch. Examples: collecting and converting methane from animal waste to generate energy

Grant funds may be used to plan a defined program of economic activities to determine the viability of a potential value-added venture including feasibility studies, marketing plans, business plans and legal evaluations.  A maximum of $100,000 is available for a planning grant.  Grant funds can also be used a working capital funds to operate the venture and pay the normal expenses associated with the operation of the venture.  A maximum of $300,000 is available for a working capital grant.  Grants are limited to $500,000 per recipient.
Qualified applicant: Independent producer, producer group, cooperative, or a majority controlled producer-based business venture.
For more information: Visit the USDA Rural Development at http://www.rurdev.usda.gov/rbs/coops/vadg.htm



Administered by: Rural Business Cooperative Service
Annual funding: $23 million for all projects, including biofuels projects
Established: FY2003 by §9006 of the Farm Security and Rural Investment Act of 2002 (P.L. 101-171)
Scheduled termination: End of FY2006, with $3 million left available for FY2007
Description: This program provides grants, loans, and loan guarantees for the development of renewable energy projects and energy efficiency improvements. The construction of a biofuel plant could be an eligible project. Grants are limited to 25% of the costs of the project; loans are limited to 50% of the cost of the project.
Qualified applicant: Farmers, ranchers, and rural small businesses
For more information: Visit the USDA Rural Development at http://www.rurdev.usda.gov



Administered by: Department of Energy in consultation with the Department of Agriculture, Department of Defense, and Environmental Protection Agency
Annual funding: $250 million authorized by Energy Policy Act of 2005
Established: Calendar Year 2005 by §942 of the Energy Policy Act of 2005
Scheduled termination: The first year when annual biofuel production is 1 billion gallons or when the Energy Policy Act of 2005 has been in effect for 10 years (whichever comes first)
Description: This program serves as an incentive to accelerate annual cellulosic biofuels production to 1 million gallons by 2015 and to ensure that small feedstock producers and rural businesses are participants in the cellulosic biofuel industry.  The program awards a production incentive on a per gallon basis of cellulosic biofuels.  At this time, the DOE is in the process of determining how to best implement §942 of the Energy Policy Act and is asking for input through a Request for Information. 
Qualified applicant: Producers of fuels from cellulosic biofuels, agricultural producers, or cooperatives of agricultural producers.
For more information:
Visit the DOE at http://www.energy.gov/


Back to Comprehensive Guide to Federal Biofuels Incentives