Growing the Rural Economy with Energy Efficiency

Blog Post | August 15, 2013 - 9:57 am
By Kate Farley, Research Assistant

With all the attention that certain provisions in the farm bill have been getting lately, it’s easy for those of us of the urban (and suburban) persuasion to forget that there’s more to the bill than just crop subsidies and food stamps. An important part of USDA’s mission is to improve the quality of life in rural areas, and one of the ways they can do this is through promoting energy efficiency.

If you haven’t been following the progress of the farm bill, here’s a quick recap of the events thus far: The farm bill expires every few years and must be re-authorized by Congress. In June, the Senate passed a version that contained sweeping budget cuts, but left most programs largely intact, and in July the House passed a version that completely eliminated the section that discusses food stamps. Now the House and Senate have to reconcile the two versions, and they have a long way to go.

Fortunately, energy in the farm bill is something that both Democrats and Republicans seem to be able to agree on. Compared to previous farm bills, both the House and Senate versions contain some pretty serious budget cuts (the House’s version is more severe than the Senate’s). But all the key energy efficiency programs are intact and have bipartisan support.

The problem is that a lot of people just don’t know about these energy programs or that they can be used for energy efficiency projects. According to the USDA Energy Investment Report, programs like the B&I Loan Program, the Rural Electric Development Loan & Grant Program (REDLG), and the Value-Added Producer Grant (VAPG) have only been used for a handful of energy efficiency projects apiece since 2003. Clearly energy efficiency is an eligible type of project for these funds, but the programs simply aren’t being used for energy efficiency.

Potentially, a lot of American homes and businesses could make use of these programs. About 20% of Americans live in areas that the USDA considers to be rural and they are therefore eligible for many of these programs. Non-farm rural businesses can benefit from these programs, too. In particular, the number of manufacturing jobs in rural areas is growing faster than in the United States as a whole. Industrial businesses could make use of some of these USDA energy efficiency programs to make investments that would improve competitiveness and create or maintain valuable manufacturing jobs.

This week, ACEEE is publishing Energy Efficiency Opportunities at USDA, a white paper which outlines the main programs at USDA that provide funding that can be used for energy efficiency. Some are more well-known as energy efficiency programs, like the Rural Energy for America Program (REAP) and the Environmental Quality Incentives Program (EQIP). Others haven’t been used for energy efficiency in years. These programs make up a toolkit that the energy efficiency community should keep in mind when working in rural areas.

Although energy programs generally have bipartisan support, there is a danger that we won’t get a farm bill at all this year. The current farm bill extension is set to expire in September. If that happens, the average American might see food prices skyrocket, families in need would have no assistance with groceries, and farmers might have trouble paying the bills. Less visibly—but not less importantly—land grant universities would see a large portion of research funds dry up. If the House and Senate can’t agree on the most controversial provisions, they might pass another temporary extension to act as a Band-Aid until they can consider a real farm bill again. Funding for important programs, including energy, might be slashed as a “temporary,” “emergency” measure. Rural America needs a new farm bill to provide stability for the next few years.