The Obama Administration’s politically-driven energy spending (think Solyndra) has illustrated for Americans that government should not be in the business of selecting and subsidizing energy sources. But the farm bill currently under consideration contains more of this wasteful spending. The bill has advanced from a Senate committee.
According to the Congressional Budget Office, the “Energy Title” (the section of the bill that addresses energy) will result in additional spending of $780 million over the next ten years, with $550 million of that in the first five years. This additional spending is over the “baseline” spending. Total spending on energy in the farm bill would be $1.5 billion over ten years.
One of the programs in the farm bill is Biomass Crop Assistance Program (BCAP), which, according to the USDA, “provides financial assistance to owners and operators of agricultural and non-industrial private forest land who wish to establish, produce, and deliver biomass feedstocks.” In other words, it pays farmers to grow and deliver crops. This program was cited by the USDA Inspector General for problems including improper payments and administration problems.
Another energy-related program in the farm bill is Biorefinery Assistance Program (BAP). This program has had its share of failures along the lines of Solyndra. Range Fuels, for example, was formed to produce cellulosic ethanol. It received a $76 million grant from the Department of Energy (during the Bush Administration), and later a $80 million loan under BAP during the Obama Administration. The plant produced one batch of methanol — not the type of alcohol that cars use as fuel — and then shut down. For more, see the Wall Street Journal The Range Fuels Fiasco: A case study in the folly of politically directed investment.
There’s also the Rural Energy for America Program, which provides loan guarantees and grants for rural America to install renewable energy systems such as wind and solar power, as well as more exotic technologies like geothermal.
There’s other energy-related spending in the bill, but you get the idea. Some of this spending is government choosing winners and losers in the energy marketplace, rather than letting markets work out which technologies are worthwhile investment subjects. Some of it is simply welfare spending on special interest groups. This energy-related spending is happening where you might not think to look for it: the farm bill. (The total cost of the farm bill over ten years is estimated by the CBO to be $969 billion.)
There’s other spending on biofuels that’s not in the farm bill. Last year a cellulosic ethanol plant in western Kansas received a $132 million loan guarantee. All this spending is in spite of the fact that there has been no commercial-scale cellulosic ethanol production.
Spending on these rural energy programs provides an opportunity for politicians to engage in what U.S. Representative Mike Pompeo has termed “photo-op economics.” Those who have fought for these spending programs get to participate in groundbreaking ceremonies and other highly visible new events. The lobbyists who fight for them earn large fees. But this type of spending represents cronyism at its fullest, where the public at large is taxed to provide benefits for the few. We need to end this type of spending, whether it be hidden in the farm bill or elsewhere.