According to the U.S. Census of Agriculture, U.S. farmers spent nearly $30 billion on direct energy expenditures (gasoline, fuels, and oils plus utility expenses) in 2022, a 24 percent increase over similar expense categories in 2017 (the previous Census year). This figure does not account for indirect energy expenditures, such as the natural gas used to produce nitrogen fertilizer used in crop farming, and energy expended to produce other inputs, such as farm machinery or farm chemicals. These expenditures made up just under seven percent of total farm production expenses in those years. This share is probably an overestimate, since some portion of farm utility expenses would be for water and sewer services and not energy-related.
A 2020 report issued by the Farm and Energy Initiative (University of Vermont) found that average fuel spending on U.S. crop farms were about $8,500 in 2017, as compared to about $3,900 per average livestock farm, primarily due to more intense use of farm machinery in cultivating and harvesting fields.
U.S. farmers have been taking steps for several decades to reduce their on-farm energy consumption, although improving their net financial position was often more of a motivating factor for such efforts on their part than were the resulting environmental benefits. For example, adopting more efficient irrigation practices, such as drip irrigation or a low-pressure sprinkler system with use of advanced sensor technologies, not only saves the farmers by reducing the amount of water applied to their fields but also reduces the electricity costs associated with pumping and/or moving the water onto the fields. Farmers also moved away from using gasoline-powered engines in their farm equipment towards more efficient diesel-powered machines.
A series of reports published by USDA’s Economic Research Service on agricultural and resource indicators found that total energy utilized on U.S. farms, both direct and indirect, fell by about 27 percent between 1978 and 2011. These estimates exclude data on electricity use, which was not available after 1991. Direct and indirect energy use on farms generated about 12 percent of total greenhouse gas (GHG) emissions from U.S. agriculture in 2021, according to EPA’s GHG inventory.
A USDA program established in the Food, Conservation and Energy Act of 2008 (the 2008 farm bill), Rural Energy for America or REAP (Section 9007), is aimed at helping U.S. farmers and ranchers reduce their energy and GHG footprints by providing financial assistance to either install renewable energy systems on the farm to replace or supplement energy acquired from conventional sources, or improve the energy efficiency of their current operation. This program resulted from effectively combining two programs created in the 2002 farm bill, the Energy Audit and Renewable Energy Development Program and Renewable Energy Systems and Energy Efficiency Improvements.
Between 2009 and 2022, USDA received more than $750 million in mandatory funds through the 2008, 2014, and 2018 farm bills to fund projects under REAP, although in a few years the mandatory funding levels were reduced due either to subsequent actions by Congressional appropriators or as a result of automatic budget sequestration steps taken. In addition, in some years, Congress has opted to provide modest discretionary funds (typically less than $500,000) through the annual appropriations process to supplement the mandatory funds. In nearly all cases those funds were targeted at projects seeking federal loan guarantees.. That tranche was elevated in fiscal year 2022 to $13 million.
In the Inflation Reduction Act of 2022 (IRA), enacted just over two years ago, Congress provided $2 billion in additional funds for this program, to be available until 2031. USDA has chosen to allocate this funding for REAP projects in quarterly competitions. The first round of competitions combined remaining mandatory funds from the 218 farm bill with $1 billion of the IRA funding, with all proposals to be submitted by September 30, 2024. Of that amount, $303 million will be targeted to “underutilized renewable energy technologies.” The remaining $1 billion from the IRA provision will be allocated through similar competitions over the next several years, to be completed by September 30, 2031.
According to data collected under the Census of Agriculture, the number of U.S. farmers that reported generating energy or electricity on their operations rose from 23,451 in 2007 up to 153,101 in 2022, an increase of more than 550 percent over a 15-year period. Such activities not only reduce energy costs on the farm, but in many circumstances actually yield additional income to the farming operation, as any excess energy not utilized on the farm can be sold back to the local utility for use by other households or businesses in the area. The most common energy system reported was use of solar panels (at nearly 117,000), followed by renewable-energy using systems (such as geothermal) at more than 28,000, and wind rights leased to third parties at more than 20,000. REAP funding doubtless accounted for a substantial share of these new on-farm activities.
