Congress has legislated a number of renewable energy programs that can be applied to algae such as the Bioenergy Program for Advanced Biofuels, the Rural Energy for America Program, the Biomass Research and Development Initiative and various grants and loans established in the 2008 Farm Bill in section 9003 of the USC (Food, Conservation, & Energy Act of 2008, 2008). These programs, however, focus on research and development of algae for fuels at smaller scales. While this initial investment in research & development (R&D) is essential to build knowledge, expertise, and technology around algae, the industry is now entering the formative stage of large-scale commercialization, which requires broader coordination among federal agencies and support infrastructure to gain proper alignment at the federal and state level required for a successful industry.
Biomass crop assistance program
The Biomass Crop Assistance Program (BCAP) was established in the 2008 farm bill (Food & Conservation Act of 2008, 2008) to financially assist farmers wishing to establish, produce, and deliver biomass feedstocks. BCAP’s purpose is to promote farming of bioenergy crops. The program provides either one-time establishment payments, annual payments, or matching payments to help with harvest, storage, and transportation of biomass. Proposals for BCAP funding are submitted to the FSA and can come from either producers or conversion facilities (Schnepf 2011). While many traditional biofuel crops are currently eligible for BCAP funding, such as switchgrass and most non-food biomass, the 2008 farm bill specifically excluded algae from participation in the matching payment side of BCAP but qualifies algae for establishment payments through BCAP (Food & Conservation Act of 2008, 2008).
Support programs
Congress has appropriated numerous federal agencies, such as the USDA and DOE, funds and authorization to implement programs that aid and support development of agriculture and aquaculture resources (Table 2). Since the passage of the original Agricultural Adjustment Act of 1933, each subsequent farm bill has evolved to address rising relevant issues in agriculture. This frequently involves drafting new programs or expanding existing programs to the new developing technologies. The 1977 farm bill (Food & Agriculture Act of 1977, 1977) expanded the definition of agriculture to include aquaculture, thus spurring the development of industry in the U.S. The 2002 farm bill was the first to include a title (9003) on energy (Farm Security & Rural Investment Act of 2002, 2002), enabling the initial research and development of biofuels and bioenergy and set the stage for bio-based energy standards in the 2005 and 2007 energy bills.
Table 2 Overview of federal support programs
The current farm bill, primarily through the arm of the USDA and associated agencies, funds a large number of assistance programs for agriculture and aquaculture (Agricultural Act of 2014, 2014). All of the major farm price and income support programs comprising the farm safety net are available only to the “program crops” of corn, cotton, wheat, tobacco, peanuts, rice, and some new oil crops such as sunflower and oilseed. The main farm safety net programs restricted to program crops include the Marketing Assistance Loan, Price Loss Coverage, and Agriculture Risk Coverage. Additional programs, such as the Feedstock Flexibility Program for sugar, also instill price control while simultaneously attempting to bridge the gap with biofuel producers looking to meet RFS standards. These programs ensure that market prices for program crops never fall below a certain limit and provide direct income support or revenue assistance. Farmers of specialty crops, such as fruits and vegetables, aquaculture crops, horticulture crops, and livestock are eligible for a range of support programs outside of the safety net. These programs provide extension services, loans, crop insurance, and incentives for improving environmental quality of farms (Mercier 2011).
Extension services
Some of the most important benefits allotted to agriculture and aquaculture in the U.S. are research, teaching, and extension services. Extension services are some of the oldest programs in U.S. agriculture, dating back to the Smith-Lever Act of 1914 that established a link between universities and the USDA (Smith-Lever Act 1914). The purpose of the programs has always been to (1) develop applications for agricultural research and (2) provide instruction on agricultural technologies to farmers. Today, the Cooperative Extension Service program of the USDA provides funding through the National Institute of Food and Agriculture to support programs that connect scientific agricultural research with local farmers. Extension services are administered through regional offices that bring expertise from land-grant universities to local levels to instruct farmers in emerging technologies that can increase productivity.
Extension services are essential for disseminating information about innovative research and technologies throughout the agricultural industry. They also play an extremely important role in providing more immediate assistance to issues faced by local farmers and in developing plans that address regional problems. The application of USDA’s extension services to aquaculture in the 1981 farm bill was instrumental in expanding the industry and coordinating research and commercialization efforts (Agriculture and Food Act of 1981).
Federal crop insurance programs
The additional support programs available for all farmers are important for the continuing success of non-program crops. These programs provide assistance for the development, commercialization, and continuation of farms and provide incentives for environmentally sound farming practices. The largest of these programs, in which all farmers (including those of aquaculture and livestock) can participate, is the crop insurance program. The original crop insurance program began in 1938 and only covered major crops (Agricultural Adjustment Act of 1938, 1938), but the passing of the Federal Crop Insurance Act of 1980 expanded the program to be universal (Federal Crop Insurance Act of 1980, 1980). Crop insurance is run by the USDA Risk Management Agency (RMA) and paid for by the separate Federal Crop Insurance Corporation (FCIC).
Over 100 crops are currently eligible for the Federal Crop Insurance (FCI) program, in which farmers pay a subsidized premium for insurance delivered by private companies. While program crops are eligible for revenue-based loss insurance, specialty crops typically only participate in physical crop-loss insurance. If a crop is ineligible for the program, then it can still be insured through the Non-insured Crop Disasters Assistance program, established in the 1996 farm bill and run by the Farm Service Agency (FSA), which functions similarly to FCI (Federal Agriculture Improvement & Reform Act of 1996, 1996). Sea grass, a similar crop to algae that requires a blend of agriculture and aquaculture, is eligible for Non-Insured Crop Disasters Assistance (FSA 2011). Additional insurance support is available for all farmers to cover losses from natural disasters under the Supplemental Revenue Assurance Program. This program provides additional assistance beyond crop insurance to farmers who experience a decrease in revenue due to natural disasters and is only available for crops that are enrolled in one of the crop insurance programs.
The expansion of crop insurance programs to specialty crops, aquaculture, and livestock was important for the development and protection of these industries. Farms of these commodities are all affected by the same environmental factors as those of program crops, such as lower-than-expected production due to droughts, natural disasters, soil quality, water availability, etc. The farming of algae is equally susceptible to different but similar factors that affect biomass and crop yields.
Farm loan programs
Farm loans are essential in successful agriculture as up-front capital is needed to make purchases of inputs such as fertilizer, equipment, land, etc. Most farm loans are authorized by the Consolidated Farm and Rural Development Act (1961) and can be in the form of direct loans, guaranteed loans or emergency loans. Direct loans cover input purchases and farmland purchases, require farmers to complete financial training courses and are given preferentially to beginning farmers. Guaranteed loans are available in coordination with banks and emergency loans can help cover natural disasters.
Environment and conservation programs
Agriculture, aquaculture, and livestock farms have traditionally been eligible for a number of federal programs that incentive environmentally friendly practices and resource conservation. Most notable, the Environmental Quality Incentives Program (EQIP), introduced in the 1996 farm bill, provides technical and financial assistance to farmers to increase the environmental quality of their farmland. EQIP funds are distributed by states in competitive programs that focus either on innovation of novel conservation practices or water enhancement, including enhancing water quality and conservation. EQIP also works in partnership with farms to aid in farm design that promotes environmental quality and resource conservation.
The Conservation Stewardship Program (CSP) awards funds to farmers that have adopted uncompensated practices across their entire operation for overall conservation. To be eligible for CSP funds, farmers must be sustaining conservation of a certain resource and must demonstrate improvement and maintenance of conservation practices. Farmers can receive both EQIP support and CSP rewards. The final environmental program, the Agricultural Management Assistance (AMA) Program was established in the Agricultural Risk Protection Act of 2000 to address the fact that crop insurance is heavily concentrated among program crops in only a few states. The AMA provides assistance for conservation practices in a select 16 states.
The algae industry, which has most recently been associated with renewable energy production with the added constraints of reducing greenhouse gas emissions and being cost-competitive with fossil fuels, has already made substantial technological advances in freshwater conservation and nutrient recycling for commercial-scale production. In order to be categorized as advanced biofuel, the overall process of algal fuel production must represent a 50 % decrease in GHG emission compared to fossil fuels (Energy Independence & Security Act of 2007, 2007). A study conducted by the University of Virginia found that commercial scale production of algae-to-energy can result in a 68 % reduction in overall greenhouse gas emissions when compared to traditional fossil petroleum (Liu et al. 2013). Additionally, to increase economic feasibility, algae can be grown on non-potable saline or wastewater and nutrients can be recycled, drastically mitigating freshwater use and fertilizer inputs. The company BioProcess Algae, for example, has successfully utilized waste outputs of water, heat, and CO2 from corn ethanol fermentation to cultivate algal biomass for various end products. Coupling algae cultivation with waste outputs from other industrial processes provides cost-effective and sustainable solutions to cultivation barriers.
Marketing services
Agricultural products are frequently subjected to market analyses by the USDA such as economic and census reports. As the commercialization of algae progresses, market analyses will be advantageous to assess the strengths and weaknesses of the industry, the interplay between the agricultural and energy aspects of algae, and the outlook of the industry. The USDA also provides marketing assistance to farmers through financial assistance, research and promotion (AMS 2013). To successfully break into the agricultural market, algae would benefit from the marketing services available from the USDA.
State programs
Defining the commercial cultivation of algae as agriculture provides opportunities at the state level as well. Many states offer additional loan and financing programs, especially for first-time farmers, such as “Aggie Bonds” that encourage private lenders to loan to beginning farmers (CDFA 2005). Beyond financial assistance, states can control laws associated with agricultural property and zoning. For example, the Ohio state legislatures recently defined algaculture as agriculture to allow use value assessments of algae cultivation land for tax purposes, thus lowering property taxes for land used for commercial algaculture (OH-H.R. 2012). The law additionally limits the authority of zoning laws to restrict algae cultivation on lands. Although decisions on specific investments in algae development are made at the regional and local levels, a federal initiative is still imperative to establish and influence direction and focus for the industry, as well as to develop guidance for new algae programs.