Inflation Reduction Act includes ag funding

Democrat reconciliation package provides nearly $40 billion from climate-smart ag and rural power and clean energy.

Senate Majority Leader Chuck Schumer, D-N.Y., and Sen Joe Manchin, D-W.V., announced a long-sought agreement on a tax, climate and healthcare package – the Inflation Reduction Act of 2022 - which includes $40 billion for climate-smart agriculture and biofuels.

Manchin says the bill is “laser focused on solving our nation’s major economic, energy and climate problems.” 

If passed, the Inflation Reduction Act of 2022 would, among other things, provide approximately $369.75 billion for energy security and climate change programs over the next ten years. As it relates to agriculture, it provides $20 billion to address the “climate crisis.” It also provides $5 billion to protect communities from wildfires and supports the workforce through climate-smart forestry.

Secretary of Agriculture Tom Vilsack notes if passed the bill will have a meaningful impact on the rural and agricultural communities USDA serves. “Agriculture has long been at the forefront of our fight against climate change. From climate-smart agriculture, to supporting healthy forests and conservation, to tax credits, to biofuels, infrastructure and beyond, this agreement provides USDA with significant additional resources to continue to lead the charge,” he says.

With existing conservation programs oversubscribed by as much as 3 to 1, the provisions provide additional conservation program funds to help farmers and ranchers implement and expand conservation practices that reduce potent greenhouse gases like methane and increase storage of carbon in their soil and trees. It also incentivizes sustainable practices — like optimizing fertilizer use and expanding cover crops — that are a win-win for conservation and for producers’ bottom line, according to a fact sheet from Senate Agriculture Committee Chairwoman Debbie Stabenow’s, D-Mich., office.

The act includes $3.25 billion for the Conservation Stewardship Program and $8.45 billion allocated for the Environmental Quality Incentives Program. Each of these funding increases for working lands conservation programs includes specific language prioritizing practices that reduce greenhouse gas (GHG) emissions and increase climate resilience for farmers. Other investments, such as $1 billion for NRCS Conservation Technical Assistance, $300 million for a carbon sequestration and GHG emissions quantification program at NRCS, and billions for the Rural Energy for America Program, provide additional funds to address the changing climate.

National Council of Farmer Cooperatives President and CEO Chuck Conner applauded the increased funding to support climate-smart ag through voluntary working lands conservation programs and technical assistance.

“This investment in the future is needed to help America’s farmers, ranchers and growers explore and adopt innovative approaches to production to help address the challenge of climate change. It will also help provide the resources needed to ensure a strong conservation title in the 2023 farm bill,” Conner says.

The National Sustainable Agriculture Coalition also welcomed this generational investment in farmers and rural communities. “If passed, this legislation could pave the way for a climate-focused 2023 Farm Bill. The package includes much-needed investments to help farmers and ranchers adopt conservation practices to build climate resilience, reduce emissions, and play a central role in our national response to the climate crisis,” says Mike Lavender, NSAC interim policy director. 

The Land Trust Alliance, a national land conservation organization, also welcomed the increase in federal funding for farm bill conservation programs. “We thank the Senate for its commitment to investing in America’s future by safeguarding essential agricultural lands that secure America’s food and fiber and are critical to tackling climate change and its impacts,” says Lori Faeth, senior director of government relations of the Land Trust Alliance.

Biofuels funding boost

Overall the bill provides $14 billion to lower costs for families and support good-paying clean energy jobs in rural communities. Specifically it supports rural electric cooperatives in the transition to cleaner energy, which will dramatically reduce greenhouse gas emissions. It also helps rural communities, farmers, and small business owners invest in renewable energy and be more energy efficient. 

Several provisions within the new Inflation Reduction Act will benefit the U.S. ethanol industry and the communities it serves, the Renewable Fuels Association noted in an initial review of the lengthy legislation. The Senate Ag Committee notes the bill “makes the single-largest-investment in infrastructure for home-grown biofuels to decrease our dependence on foreign oil and lower the cost at the pump.”    

“At long last, we are pleased to see the new Senate bill on climate change, which recognizes the important role renewable fuels like ethanol can play in a lower-carbon future for this nation,” says RFA President and CEO Geoff Cooper. “Specifically for ethanol producers, the legislation includes provisions that provide funding for clean fuel production, higher biofuel blend infrastructure, enhanced opportunities for ethanol to play a greater role in sustainable aviation fuel, and carbon capture, utilization and storage.” 

The Advanced Biofuels Association says it is pleased the act will provide extensions for renewable diesel and clean fuel production tax credits, as well as create a sustainable aviation fuel credit, which are essential to reducing greenhouse gas emissions from the nation’s highest emitting sector – transportation. “Our low-carbon liquid fuels, which by law must exceed 50% emissions reductions, but frequently exceed 80%, are vital to propel the US into a cleaner, energy-independent future,” says Michael McAdams, ABFA president.

Future outlook

Democratic leadership submitted the legislation to the Senate Parliamentarian on Wednesday evening. One of the duties of the Parliamentarian is to review budget reconciliation legislation and confirm that all provisions within are budgetary impacting. In previous attempts at this legislation, the Parliamentarian had rejected certain immigration-related provisions on these grounds. Barring unexpected obstacles, the Senate will consider the package next week, explained a briefer from Michael Best Strategies.

Lawmakers only have until September 30 to take advantage of the budget reconciliation legislative vehicle. To get approval in the Senate, it will need all 50 Democrats to support the bill and a tie-breaking vote from Vice President Kamala Harris.

“For too long, the reconciliation debate in Washington has been defined by how it can help advance Democrats political agenda called Build Back Better. Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together. I will do everything I can to usher in a new era of compromise and commonsense that will make America more energy secure, financially sound and a more united country for this generation and the next,” Manchin said in a statement following the agreement with Schumer.

“Before the Senate takes a final vote on the bill, the Senate will hold a ‘vote-a-rama,’ a marathon session lasting at least 24 hours where Republican senators (and even some Democrats) will try to change or slow down the bill with amendments. All 50 Democratic senators, plus Vice President Kamala Harris, will need to support the bill for it to pass the Senate. Then, if the proposal passes the Senate, it faces a similar gauntlet in the House. Therefore, it is possible the bill will change significantly in the coming weeks,” an update from Michael Best Strategies notes.