USDA to Invest $450M in Domestic Biofuel Sector

WASHINGTON — The Department of Agriculture is investing up to $450 million from the Inflation Reduction Act to increase the availability of domestic biofuels and provide consumers with additional cleaner fuel options at the pump.

The infusion of significant money into the sector is coming from the administration’s Higher Blends Infrastructure Incentive Program, which seeks to lower out-of-pocket costs for transportation fueling and distribution facilities by defraying the cost of installing or upgrading biofuel pumps, dispensers and storage tanks.

Last December, the USDA made $50 million available through the Inflation Reduction Act to fund 59 projects that will expand the use and availability of higher-blend biofuels.

The recipients of that initial tranche of money were also announced on Monday.

Among them were Kimmes Enterprises, in Carroll, Iowa, which will use a $510,500 grant to replace four E15 dispensers and four ethanol storage tanks at three fueling stations located in Carroll, Rockwell City and Baxter. 

This project is expected to increase annual sales of ethanol by approximately 635,000 gallons.

In Barnesville, Minnesota, Farmers Cooperative Oil Company will use a $623,500 grant to replace nine E85 dispensers, two B20 dispensers, two ethanol storage tanks and two biodiesel storage tanks at a fueling station. 

The project is expected to increase annual sales of biofuels by nearly 122,000 gallons.

And in Carmel, New York, Carmel Terminals Inc. will use a $1 million grant to install four 50,000-gallon B10 bioheat storage tanks, a 25,000-gallon B10 on-road biodiesel storage tank and a B100 biodiesel storage tank at a fuel distribution facility. 

The funds also will be used to install piping, circulation lines, a heating system for biodiesel flow control, electronics and other equipment. This project is expected to increase annual sales of biodiesel by more than 16 million gallons.

“By expanding the availability of homegrown biofuels, we are strengthening our energy independence, creating new market opportunities and revenue streams for American producers, and bringing good-paying jobs and other economic benefits to rural and farm communities,” said Agriculture Secretary Tom Vilsack in a written statement.

A full list of Monday’s grant award recipients can be found here.

Grant awards under the Higher Blends Infrastructure Incentive Program cover up to 75% or $5 million of total project costs to help facilities convert to higher-blend fuels. The fuels must be greater than 10% for ethanol and greater than 5% for biodiesel.

The $450 million in new funds will be available quarterly starting July 1. Each quarter, $90 million will be available to support a variety of fueling operations.

About $67.5 million will be made available to transportation fueling facilities, including fueling stations; convenience stores; larger retail stores that also sell fuel; and transportation, freight, rail and marine fleet facilities.

Another $18 million will be available to fuel distribution facilities, including terminal operations, depots and midstream operations.

Up to $4.5 million will be made available to home-heating oil distribution facilities.

There will be five application windows for the Higher Blends Infrastructure Incentive Program between July 1, 2023, and Sept. 30, 2024. A sixth application window will be opened if funding has not been exhausted.

Dan can be reached at [email protected] and @DanMcCue