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On October 21, 2010 Secretary of Agriculture Tom Vilsack made an exciting announcement that USDA will support the installation of up to 10,000 blender pumps in the next five years throughout the U.S. The funds for the program according to the Secretary already exist within USDA.
Based on this announcement the ethanol producers, corn growers and petroleum marketers began talking on how to take advantage of this great opportunity. The Illinois Corn Marketing Board already has a cooperative program in place with the Illinois Department of Commerce and Economic Opportunity (DCEO) and the American Lung Association of Illinois to install E-85 stations and blender pumps. Funding provided by both DCEO and ICMB allow a station to receive up to $20,000 if they install a blender pump system. Blender pumps cost between $25,000 and $30,000. The E-85 program allows grants up to $30,000 for the installation of E-85 underground storage tanks and dispensers.
Funds are tight so the additional funds from USDA would fit right into the existing program. In fact several petroleum marketers have in the last two weeks expressed interest in this new program.
Alas, announcements are easy to make but the real work begins after the press releases. In follow-up discussions with USDA and others it became quite clear that the surplus funds have not been identified. The plan is for the funding to go through Rural Development (which is a very good idea) but the current programs would have to be changed to allow funds to be used specifically for blender pumps. One obvious program is the Rural Energy for America Program (REAP) which has been identified as a possible vehicle. Unfortunately the guidelines will have to be changed and the solicitations will not be issued until next spring. It is also possible the program will have to be changed legislatively for blender pumps to be allowed.
USDOE with their billions are also in the discussions. They of course are not as excited about funding blender pumps and E-85 infrastructure as USDA. USDOE has significantly reduced their support for ethanol research and E-85 in the last two years. Unspent stimulus funds that go to the states for energy programs were originally identified as an option for funding blender pumps. In Illinois, like many other states, these funds have been obligated already.
We will continue working with USDA, Rural Development as well as USDOE to identify funding opportunities for blender pumps. It just will not happen next week.
The good news is, the Rural Development Director of Illinois and her staff are very supportive of trying to identify the funding in USDA and they are working with ICMB, the American Lung Association and DCEO to develop a program for the petroleum marketers and ethanol industry in Illinois.
In the world of corn-based ethanol, we’re always looking for a silver lining.