Washington (Platts)--26Apr2012/429 pm EDT/2029 GMT

The Senate Agriculture Committee on Thursday preserved funding for several biofuels programs that support the US Department of Agriculture's grants and loan guarantees to cellulosic refineries.

The committee met to consider a comprehensive farm bill, the initial version of which did away with funding for those biofuels programs. But an amendment introduced by Senators Kent Conrad, a North Dakota Democrat, and Richard Lugar, an Indiana Republican, restored $800 million for those programs, which were created by the 2008 farm bill.

The amendment also creates the Rural Energy Savings Program, which would allow rural utilities to offer loans to customers for energy efficiency upgrades.

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The amendment passed on a voice vote, as did the full farm bill, which now advances to the full Senate. Its prospects there appear dicey, due to election-year politics and significant opposition from several Southern lawmakers, who protested that the bill does not provide enough protection for peanut and rice farmers.

Biofuels advocates hailed the Conrad-Lugar amendment, saying it would help wean the US off imported oil and create jobs.

"The Conrad-Lugar amendment that restores mandatory funding to core energy title programs of the farm bill is a big win for the nation's farmers, foresters and rural businesses as well as the broader new energy economy, national security and the environment," said the Agriculture Energy Coalition, a group of companies engaged in biofuels and renewable electricity production. "There is no question these initiatives will continue to pay off, through new jobs and businesses, increased private capital investment and reduced energy costs."

Senator Amy Klobuchar, a Minnesota Democrat who supported the amendment, noted that biofuels represent about 10% of US fuel supply.

"That's why it's incredibly important to move towards the next generation of biofuels," she said.

But the amendment was opposed by Senator Pat Roberts, the top Republican on the Agriculture Committee, who said it was too expensive. The $800 million price tag for the amendment's programs is paid for through deficit-reducing measures in other parts of the bill. In all, the farm bill is expected to reduce the federal deficit by about $25 billion, less than committee leaders had been hoping for.

"I have very strong reservations about providing mandatory funding in this title," Roberts said. "We have made every effort to find a path to reduce federal spending, streamline programs and eliminate areas of duplication. This amendment misses that mark."

--Herman Wang, herman_wang@platts.com

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