THE WHITE HOUSE

Office of the Press Secretary

           PRESIDENT CLINTON'S FY 2001 BUDGET ACCELERATES THE
             DEVELOPMENT AND USE OF BIO-BASED TECHNOLOGIES

                            January 13, 2000

President Clinton's FY 2001 Budget includes a new initiative to accelerate the development and use of bio-based technologies, which convert crops, trees, and other "biomass" into a vast array of fuels and products. This initiative supports the President's August 1999 Executive Order 13134 and Memorandum on Promoting Biobased Products and Bioenergy, aimed at tripling U.S. use of biobased products and bioenergy by 2010. The initiative provides an increase of more than $240 million over the amounts available for FY 2000, with $49 million directed towards the Department of Energy (DOE) and $194 million for stepped-up efforts at the Department of Agriculture (USDA). This initiative will increase the viability of alternative energy sources, help meet environmental challenges like global warming, support farm incomes, and diversify and strengthen the rural economy.

The DOE goal for this initiative is making biomass a viable competitor to fossil fuels as an energy source and chemical feedstock. Its efforts will be concentrated on developing "biorefineries" -- integrated systems for processing feedstocks simultaneously into a variety of products such as fuels, chemicals, and electricity. This will require increased collaboration among DOE, USDA, NSF, and other agencies, and will support research partnerships linking industry, university, and government research facilities selected on a competitive basis. The work will build on fermentation, gasification, and other biomass-related activities currently funded by the Energy Department.

Key areas of increased DOE activity will include:

• Development of inexpensive cellulase systems to break down cellulose into low-cost sugars for the production of bio-based chemicals and bioenergy. This will allow woody and grassy crops and agricultural waste such as corn stalks to take the place of high-value grain and food crops as biofuel feedstocks.
• Renewable Bioproducts, using multi-disciplinary and university/industry partnerships to develop and accelerate adoption of possible "leap-frog" technologies for converting crops, trees and residues into chemical feedstocks and consumer products.
• Biopower, promoting both the integration of biomass gasification systems with modern gas-turbine/steam-turbine generation systems, and the co-firing of biomass with coal at levels ranging from 5-15% biomass by heat value.

USDA's goals for the initiative are increasing the economic viability for farmers and foresters to grow biomass products, developing new uses for biobased materials, and providing incentives to use bioenergy. Key areas of increased USDA activity will include:

• The Commodity Credit Corporation providing up to $100 million in FY 2000 and up to $150 million in FY 2001 and 2002 in incentive payments to ethanol and other bioenergy producers to expand production of biobased fuels. Payments would be made on a portion of the increase in agricultural commodities purchased for expanded bioenergy production, with smaller and cooperatively-owned facilities receiving higher payment rates.
• Expanded Forest Service research on faster-growing trees and the use of small-diameter trees for commercial, biobased products.
• The Natural Resources Conservation Service funding methane gas recovery pilots to reduce greenhouse gas emissions from livestock operations, providing a clean energy source to the producer, and providing assistance to farmers that want to produce or market biobased products.
• Expanded Agricultural Research Service research (in association with DOE) to develop biobased materials from commodities and bioproducts, and convert biomass to energy.
• The Cooperative State Research Education and Extension Service providing additional competitive resources for research partnerships involving universities. This will complement the new Initiative for Future Agriculture and Food Systems announced by the Secretary of Agriculture on January 10th.
• Rural Development grants to rural electric cooperatives to develop pilot projects to demonstrate the commercial viability of small-scale biomass fuel generation, grants for technical assistance to cooperatives for processing and marketing biobased products, and loans for facilities and operating capital for organizations engaged in biobased production activities.

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