Quick Questions: Tom Vilsack

Questions for Secretary Vilsack for State and Local Energy Report

Secretary Vilsack

Q: As Secretary of Agriculture, you have significantly increased the focus on the role of renewable energy and energy efficiency as an important rural economic development tool. Can you elaborate on the goals and drivers of that policy and what it means for rural America and the entire nation? And why should those living on “the coasts” care about a shrinking rural population?

We see a tremendous opportunity in continuing to expand biofuels and bioenergy in rural America. Congress has mandated that we use 36 billion gallons of biofuel. Those biofuels are going to be produced from a variety of sources from all parts of the country. When the 36 billion gallon threshold is reached, we’ll have a million new jobs in rural America; a million good paying jobs that help support a strong middle class. We’ll see $100 billion of additional investment in biorefineries; $100 billion of construction opportunities. And then those facilities obviously will have to be maintained and improved. These biorefineries will dot the rural landscape. So this is a very important component of our revitalized rural economy.

We want to build a strong future for America by making sure that folks understand and appreciate the importance of rural America. Why is it so important for the rest of the country to appreciate rural America? Rural America helps clean the water we drink and the air we breathe. They provide our nation with a safe, abundant, affordable supply of food. They protect our natural resources. Rural America is also helpingto expand renewable energy, creating jobs, growing our economy and reducing our dependency on foreign oil.

The President recently laid out his energy goals for the future. This includes an increased focus on clean energy innovation. Specifically, he has set out a goal of breaking ground on four biorefineries in the next two years. In addition, he has set out a goal of 80 percent of America’s electricity to come from renewable sources. Here at USDA we are very much focused on meeting these goals and winning the future. This begins in rural America.

Q: Improving the energy efficiency of housing has been at the forefront of the Obama Administration’s energy activities. Does the USDA have a role in advancing the efficiency of rural housing and helping consumers lower their home heating and cooling bills?

Absolutely. USDA’s Rural Housing Service has several programs that support housing assistance that can help rural Americans lower bills through energy efficiency updates as well as reduce demand through installing energy conservation measures.

Our Single Family Housing Guaranteed Program includes the Rural Energy Plus initiative to provide additional incentives to certain low and moderate income families, who might not otherwise qualify for homeownership, to purchase an energy-efficient home. In addition, the Home Repair Preservation Program provides assistance to low and very low income rural homeowners for critical home improvements, including weatherization, insulation, and new heating systems. We also have High Energy Cost Grants to improve energy generation, transmission and distribution facilities in communities with home energy costs exceeding 275% of the 16 percent national average.

In addition, USDA’s Rural Housing Service has been working on the “Recovery through Retrofit Initiative” Partnership with DOE to boost home energy efficiency in rural America. USDA is working to help rural homeowners lower energy costs by making cost-effective improvements to their homes. This new effort is designed to expand green jobs opportunities and boost energy savings by improving home energy efficiency.

Often the upfront costs of energy improvements stop homeowners from investing in cost-effective energy upgrades. To help them, USDA Rural Development is promoting REDEE, which combines the efforts and funding of the Rural Development’s Utilities, Housing and Business program areas.

The nearly 130 million homes in this country are responsible for more than 20 percent of our nation’s carbon dioxide emissions, but through energy efficiency home improvements, retrofitting techniques and technologies, we can reduce energy use by up to 40 percent and lower home greenhouse gas emissions by up to 160 million metric tons annually by 2020. Improvements could save up to $21 billion each year. The ultimate goals are to create good green jobs, reduce energy bills and boost the American economy.

Q: You have noted the importance of opening Internet access for rural areas of the nation. Many living near major cities would be surprised to learn that this is a problem. Can you give us a sense of the need and talk about how it might benefit those living in these small communities? Does greater Internet access really change how farmers — big and small — produce grains and meat? Utility and other energy costs are a big part of farming costs – how does increasing internet access help reduce these costs?

Broadband is an essential part of this country’s capacity to win the future. But today, only half of rural residents subscribe to broadband, compared to 65 percent nationwide. If we’re going to out-innovate and out-educate and out-build global competitors, if we’re going to empower folks in rural areas to participate in this national effort to be competitive, they have to have access to 21st century infrastructure, and there’s no more important aspect of that 21st century infrastructure than broadband.

Investments in rural broadband help create economic opportunity and jobs all over America. It’s helped existing businesses and their owners to expand their distribution channels and enable a generation of entrepreneurs to take root in rural communities. It’s helped America’s farmers and ranchers monitor product prices, obtain weather forecasts, buy and sell commodity futures, and find new markets for their produce, their livestock, and their commodities.

In addition, broadband access opens new opportunities not only for homes and businesses, but for community institutions such as health facilities, libraries, public buildings and community centers. The Obama Administration and USDA are focused bringing broadband to rural America so that Americans can compete in a global economy.

Q: The system of public and private agronomic research in the United States has produced some amazing results over the years in terms of food productivity. Given the impact that recent spikes in food prices are having globally, do you see nearer-term productivity gains that might mitigate this situation? If so, what will the impact be on our nation’s use of energy, water, and land?

There is no doubt that feeding the world will be a great challenge. Estimates suggest that we will have to increase global food production by 70 percent by 2050 to meet the need of a growing population. With regards to food prices, in the short term, the US is urging nations to embrace transparency and the free movement of food supplies. Rather than impose export bans, or begin massive purchases or hoarding – nations should embrace trade, which allows the flow of food from places with surplus to populations in need. They should share information on stocks and production and put in place targeted safety nets for populations at risk of hunger.

In the longer term both public and private research will be critical. To lead the effort to increase agricultural productivity, both in America and in the parts of the world most plagued by food insecurity, USDA is investing in research to improve agricultural productivity by focusing on making plants more resilient to environmental stresses like drought, salinity and pests. We are studying pre- and post-harvest technologies to reduce crop losses. And we are supporting President Obama’s Feed the Future Initiative, led by the US Agency for International Development, which is helping countries develop local solutions to develop their agriculture sectors and fight hunger.

At the end of the day I believe in betting on America’s farmers and the worlds farmers. Over generations, they have embraced change, new ideas and technology to become more productive and more sustainable and I believe the remain ready to meet the challenges in front of them.

Q: We read that you see biofuels development as one of the ways your agency is helping to address both economic and energy issues. However, there’s been a good deal of controversy in the media about ethanol in particular, ranging from questions about the amount of corn used and its impact on feed and food supplies to the net energy value of the fuel produced? Given USDA’s significant research and analytical capacity, could you address some of those issues for us, tell us what progress farmers are making in corn production, and give some sense of what the Department is doing to make biofuels more environmentally sustainable?

Meeting the 2022 Federal Renewable Fuels standard goal set by Congress will require increased production of biofuels. This will be an increasing source of income for rural America and it represents an opportunity to increase the number of green jobs available not only to farm families, but also to residents of rural communities. In addition to the economic benefits the renewable fuels industry represents, it is also vital to our national security. We import 60 percent of our oil. Sixty percent of the resources we spend on energy are traveling somewhere overseas probably to countries we don’t agree with or don’t like us. It makes far more sense to me to continue to provide opportunities for investment here in the United States.

Corn ethanol has made impressive gains to reduce its carbon footprint. In just the past few years, producing the fuel has grown 30% more energy efficient – and improved corn yields require less land and fewer inputs. According to a report by USDA’s Office of Energy Policy and New Uses, for every BTU of energy required to make ethanol, 2.3 BTUs of energy are produced.

With respect to food prices, corn-based ethanol does not deserve the scapegoat reputation that folks often attempt to assign it. During the run-up in food and commodity prices in 2007 and 2008, biofuel production played only a minor role – accounting for about 4 per cent of the total 45 per cent increase in US food price inflation. And we must remember that only 16 cents of the food dollar actually go to the farmer. So, it is actually the packaging, manufacturing, transportation, and—most of all– energy costs that are contributing the most to rising food prices.

I firmly believe that our farmers are productive, smart, innovative, and creative enough to meet both our food and fuel needs. USDA values the important and vital work that the biofuels community has done to lay the foundation of a biofuels economy for America. We know that the future of this industry depends on the development of alternative sources of biofuel.

USDA has established five regional research centers working on the science necessary to ensure profitable biofuels can be produced from a diverse range of sources across the nation, not just in the Midwest where the industry is already thriving. In addition, through the Bioenergy Program for Advanced Producers (9005), we have made payments worth nearly $30 million to more than 120 recipients producing biofuels from non-corn sources in 34 states.

Ultimately, we must move away from the foreign oil that means regular run-ups in gas prices. And home-grown biofuels provides an energy-secure opportunity to do just that. At USDA, I have set out a comprehensive strategy for how we will work with our sister Federal Departments, states and private businesses to build a national biofuels industry.

Q: Wind energy is one of the great successes of the renewable power sector. Given the location of most wind farms this must be a great example of the new “clean economy” at work. Does the Department of Agriculture have a role in encouraging continued wind development and what are some priorities you see?

I believe that wind energy is a vital part of developing a diverse domestic clean energy economy. In fact, during my time as governor of Iowa, I worked to create a regulatory and financial environment in Iowa for wind energy to develop to the point that it now makes up 5.5 percent of the state’s generation, the largest percentage of any state. At USDA we believe that wind energy can help us win the future by capturing and converting wind to electricity we will create jobs, reduce our reliance on imported energy, and build a reliable source of renewable energy for generations of rural Americans.

Through USDA’s Rural Energy for America Program, we’ve supported the development of wind by investing in over 270 wind energy projects over the last two years. This funding will not only help our farmers and small businesses reduce energy costs, but also help them be more efficient and competitive.

Q: The Energy Title of the Farm Bill has proven to be a catalyst for renewable energy development for farms and small businesses, with the Renewable Energy for America Program (REAP) as an example. What do you see as some of the key successes of the program under your tenure, and are there improvements or enhancements the Administration is considering for this title in the next Farm Bill?

The 2008 Farm Bill provided over $1 billion of mandatory funding over a 5-year period to support a comprehensive approach to energy efficiency and renewable energy development in rural America, and we are making the most of it. These loans and grants will generate and save energy for farmers and business for many years to come as they replace outdated equipment such as grain dryers so they can become more competitive and profitable.

Since the signing of the 2008 Farm Bill, the renewable energy programs authorized under Title IX of the Farm Bill have invested over $460 million in biorefineries and renewable energy and energy efficiency systems through mandatory Farm Bill funding for grants, loan guarantees, and assistance payments. In FY 2010 the program provided 2,400 grants and loan guarantees totaling $159 million in support for energy audit projects, and energy efficiency and renewable energy projects that ranged from biofuels to wind, solar, geothermal, anaerobic digesters, hydroelectric, and biomass projects.

We are always looking for ways to make our programs work better for the American people. We have modified our Energy Programs in Title IX based on concerns raised by private-sector lenders and project developers when the proposed rule was issued in April 2010 are addressed in the interim final rule, which allows for greater participation by private-sector lenders and relaxes certain eligibility requirements. The interim final rule therefore should make Section 9003 loan guarantees more accessible to biorefinery developers.

In addition, we recently announced a modification to our REAP program, the Renewable Energy for America Program, that’s going to allow us at USDA to provide grants and loan guarantees for the first time to folks at convenience stores, gas stations, petroleum marketers who are wishing to install flexible fuel pumps. This announcement is going to help expand the national biofuels industry and help to create jobs across the country.

Q: You had some great accomplishments as Governor of Iowa that must have shaped how you have approached your tenure as Secretary of Agriculture? Are there any energy-related policy actions you took as Governor or advocated for nationally that stand out from your perspective? With the historic number of new governors elected last fall, is there any advice you would offer to help spur economic growth through clean energy?

I have found that much of what I learned as Governor of Iowa transferred well to my role here at USDA. During my time as Governor, we worked to build a sustainable energy infrastructure, permitting Iowa to fuel as well as feed the nation. In addition to state economic investment, we worked to construct Iowa’s first power facility in two decades and make Iowa a leader in alternative energy and renewable fuels. We are doing the same at USDA.

And as I mentioned, USDA is continuing to promote wind energy development across rural America to help farmers and rural small businesses install wind energy sources on their farms and in their communities.

As the President has said, we must invest in cutting edge technologies, such as wind energy, in order to win the future and out-innovate our competitors. I would encourage other governors to continue to invest in the future, through promoting education and research on clean energy, investing in energy efficiency and clean energy technologies, and building infrastructure like biorefineries and wind turbines that can help generate electricity for rural communities.

Q: While you were Governor, you strongly supported continued funding for the State Energy Program, the Low-Income Weatherization Assistance Program and the Low-Income Home Energy Assistance Program. We assume you continue that support. Do you have suggestions on how to tie these programs more closely with rural concerns and the work of the USDA?

Rural Development’s Rural Housing Program has several opportunities for low income assistance for rural Americans to make necessary improvements to their homes to reduce their energy bills and energy use. Single Family Housing Guaranteed Program includes the Rural Energy Plus initiative which provides additional incentives to certain low and moderate income families, who might not otherwise qualify for homeownership, to purchase an energy-efficient home. In addition, the Home Repair Preservation Program provides assistance to low and very low income rural homeowners for critical home improvements, including weatherization, insulation, and new heating systems.

This assistance helps to ensure that rural Americans can have access to safe, affordable, and energy efficient homes that will improve their quality of life. This is a fundamental goal of mine, and of USDA.