A new economic study conducted by the University of Tennessee’s Bio-Based Energy Analysis Group has determined there are significant market opportunities for agriculture if Congress enacts a national renewable energy standard (RES) policy.
Presented Oct. 23 during a briefing at the United States Senate, the report suggests that RES policies would create a large new market for biomass from the agricultural and forestry sectors, and therefore have a positive effect on farm income. Speaking for the group of researchers was Daniel de la Torre Ugarte, a professor with the UT Agricultural Policy Analysis Center (APAC), which is housed in the Department of Agricultural Economics at the UT Institute of Agriculture.
Kim Jensen, a study co-author and professor of agricultural economics at UT, summarizes the study in this way, “The results indicate how farmers may benefit from an expanded renewable energy industry through a variety of means from bioenergy feedstocks such as dedicated energy crops, animal manure, and forest wastes and residues to wind lease payments to farmers and rural land owners.”
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.
A national RES policy could require utilities to provide a minimum percentage of energy from renewable sources. To date, RES policies to promote renewable energy have been adopted by 27 states and the District of Columbia, generating growing momentum for a national-level program.
Under a 25 percent 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 Ugarte. “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,” he said.
The study also shows 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 and add to the rural economies of the nation,” said Burton English, also a study co-author and professor of Agricultural Economics with UT’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 and collecting and bundling forest residues 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.
The UT research team conducting the study included Jensen, English and Ugarte along with Research Associate Jamey Menard. BEAG studies government and economic forces that impact energy, agriculture and the environment.
The Senate briefing was sponsored by the National Farmers Union (NFU) and the National Milk Producers Federation (NMPF). 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. Both the report and a podcast of the briefing are accessible on line at http://www.21stcenturyag.org/.