A bill has been introduced in the United States Senate which would offer incentives to farmers who plant switchgrass and other cellulosic ethanol feedstocks.

The proposed Biofuels Innovation Program Act (BIP), introduced on 23 May by Corn Belt Senators John Thune of South Dakota and Ben Nelson of Nebraska, aims to help the cellulosic ethanol industry overcome market barriers so that it can compete with and supplement corn-based ethanol.

In a press release issued by his office, Senator Thune argues that because corn is also used as a feed source, production of corn-based ethanol in the US will have to be limited to approximately 15 billion gallons of ethanol a year.

"Cellulosic ethanol, produced from homegrown sources like corn stover, wheat straw, switchgrass and wood chips, has incredible potential to supplement corn-based ethanol. But if cellulosic ethanol is to achieve its potential, it is critical that Congress help this industry overcome initial market barriers. My legislation would spur the construction of biorefineries across the country and provide incentives to farmers in surrounding areas to grow energy dedicated crops that can eventually supply these biorefineries in a cost-effective, environment-friendly way," said the Senator from South Dakota.

According to the bill's co-sponsor Senator Nelson, "Cellulosic ethanol has always faced a chicken-or-the-egg problem: it's difficult to start commercial production without a guaranteed supply of biomass, but it's hard to encourage farmers to grow the biomass unless they know they'll have a market. This legislation will help resolve that problem by encouraging the construction of biofuel facilities while simultaneously pushing the production of biomass."

To do this, the proposed legislation would conduct 10-12 feasibility studies to scope out areas with a potential for feedstock production, as possible locations of a future biorefineries.

Farmers in selected areas would be able to enroll eligible land in the project. During the first phase of the project, as the biorefinery is being built, participating farmers would receive a cost share - a reimbursement for a share of the costs to convert their farms - as well as a rental fee for the enrolled land.

During the second phase of the project, as the biorefinery comes online, farmers would get a matching $45 US for each ton of biomass delivered for up to two years.

The BIP proposal would also extend the Sun Grant Initiative through 2012. Under that initiative, universities, such as the University of South Dakota, receive grants for research into the production and delivery of cellulosic ethanol.