Governor Bredesen Makes Available $3.5 Million for Three Alternative Fuels Grant and Loan Programs
Programs Encourage Production and Use of Farm-Based Alternative Fuels in Tennessee

Nashville – Governor Phil Bredesen made $3.5 million in grants and loans available today to increase the accessibility, development and production of biofuels in Tennessee. Bredesen announced the opening of the application processes on Wednesday in remarks previewing a comprehensive alternative fuels strategy to be proposed in his 2007-2008 budget.

“I believe we’re at a critical point in which Tennessee can be a national leader in the development of the alternative fuels market,” said Bredesen. “It’s a smart energy strategy, a smart economic strategy and a smart environmental strategy. Most importantly, it helps create new markets and new opportunities for Tennessee farmers.”

Four departments are involved in coordinating the alternative fuel grant and loan process and managing the allocation of funds: Agriculture, Economic and Community Development, Environment and Conservation and Transportation. The three programs include:

Feedstock Processing Demonstration Loans
The Departments of Agriculture and Economic and Community Development (ECD) will disperse loans of up to $500,000 through the Feedstock Processing Demonstration Loan program. The departments have allocated $1 million for the loan program, which is designed to increase Tennessee farm income and production of alternative fuel feedstock.

“Tennessee’s economic growth and our standard of living are tied to energy production,” said ECD Commissioner Matthew Kisber. “The alternative fuel industry in Tennessee promises to be the next arena for long-term economic stability, job growth and research development, especially in rural areas. Having the basic infrastructure in place is central to our goal.”

Prospective applicants must submit a business plan with their application by March 15, 2007. Representatives of ECD’s Program Management Division and the Department of Agriculture will review each application for presentation to the Governor’s Alternative Fuels Working Group. The application will then be presented to ECD’s Loan and Grant Committee for determining the loan’s terms and conditions.

“This loan program represents a key element in developing our biofuels industry and providing more opportunities for Tennessee farmers,” said Agriculture Commissioner Ken Givens. “By attracting investment in soybean crushing facilities, we can help create local markets for an important agricultural product, make Tennessee farmers more competitive and bring more jobs to rural areas.”

After the first round of loans has been awarded, additional loan program cycles will be announced until the funds available are exhausted. For more information on the Feedstock Processing Demonstration Loan and application materials, please visit www.state.tn.us/ecd/feedstockgrant.htm.

Alternative Fuel Innovations Grants
The Tennessee Department of Environment and Conservation has a total of $1 million for its Alternative Fuel Innovations Grants. Innovation grants are designed to help local governments and state-funded universities increase the use of alternative fuels in their fleets and measure positive impacts to state air quality, particularly in areas not currently attaining federal air quality standards.

“These grants give local governments and universities the opportunity to craft projects that directly suit their needs,” said Environment and Conservation Deputy Commissioner Paul Sloan. “Priority will be given to counties not currently meeting federal air quality standards, and we hope local governments in these counties will take advantage of this additional tool to help bring these areas into attainment.”

Maximum grant awards are $40,000 for fuel purchasing, maintenance or fuel promotional projects and $100,000 for capital projects. Applications will be accepted through May 31, 2007. Once the first round of grants are awarded, additional grant cycles will be announced for up to three years or until the funds are exhausted. For more information on Alternative Fuel Innovations Grants and application materials, please visit www.state.tn.us/environment/altfuels/funding.

Green Island Corridor Grant Project
Through its biofuel corridor grant project, the Tennessee Department of Transportation (TDOT) will use $1.5 million to establish a statewide network of publicly accessible biofuel E85 and B20 refueling stations, or “Green Islands,” in Tennessee.

E85 is a blend of 85 percent ethanol and 15 percent gasoline that can be used in flexible fuel vehicles designed to run on either conventional gasoline or ethanol blends up to E85. For diesel vehicles, B20 is a blend of 20 percent biodiesel and 80 percent petroleum diesel. Biodiesel is a regulated diesel fuel made from natural, renewable sources such as plant oils or animal fats.

The program will assist retail stations with the capital costs of converting or installing the necessary infrastructure to offer B20 and E85 biofuels to the public. Retail stations will be required to provide at least 20 percent of these capital costs. The department’s goal is to have more than 50 biofuel pumps stationed along the state’s interstates and major highway corridors and in major population centers and communities in 2007.

"This grant program will make cleaner burning biofuels more commercially available in Tennessee by establishing a series of retail biofuel stations across the state," said TDOT Commissioner Gerald Nicely. "By the end of 2007, we hope to have biofuel stations up and running along all of Tennessee's interstates."

Tennessee is an active participant in the Southeast Alternative Fuels Task Force and working with other states, including Alabama, Georgia, Indiana, Kentucky, North Carolina and South Carolina, to increase the availability and use of alternative fuels along interstates to create "clean corridors" throughout the Southeast.

Grant applications will be accepted through April 12, 2007. For more information on TDOT’s Biofuel Green Island Corridor Grant Project, please visit www.tdot.state.tn.us/biofuel/default.htm.

The three grant and loan programs are funded through part of the $4 million investment proposed by Governor Bredesen and approved by the General Assembly last year to promote the production and use of alternative fuels in Tennessee. These programs represent just one part of the Governor’s Alternative Fuels Working Group’s efforts in developing the state’s alternative fuels strategy. Other priorities include increasing biofuels availability at retail stations, producing more ethanol and biodiesel and communicating the importance of biofuels to the public.

More information on Tennessee’s work to promote the production and use of alternative fuels can be found on the Web at: www.tdec.net/altfuels.