§16251 Production Incentives for Cellulosic Biofuels

Summary

Creates a federal program that pays producers to make cellulosic biofuels. The goals are to speed up commercial use of these fuels, reach 1,000,000,000 gallons per year by 2015, make biofuels cost-competitive with gasoline and diesel after 2015, and make sure small feedstock growers and rural small businesses can take part. Cellulosic biofuels are fuels made from cellulosic feedstocks. An eligible entity is a U.S. producer whose plant meets permits and the Secretary’s financial rules. The Secretary, working with Agriculture, Defense, and EPA, must run the program. Payments start as set per-gallon amounts until a first reverse auction. The first reverse auction happens no later than 1 year after the first U.S. year with 100,000,000 gallons produced or no later than 3 years after August 8, 2005. After that, yearly reverse auctions run until U.S. annual production reaches 1,000,000,000 gallons or 10 years after August 8, 2005. Bidders give a per-gallon incentive and expected gallons. Winners get the bid price for each gallon for the first 6 years of operation and must start production within 3 years of the auction. Rules cap payments (Secretary sets rates first 4 years, then a declining cap), limit any one project to 25% of auction funds, limit $100,000,000 per year and $1,000,000,000 total. Projects that boost local economies, include farm producers as partners, or fairly pay feedstock suppliers get priority. Up to $250,000,000 is authorized for the program.