VICKSBURG, Miss. — Renewable energy was already a household practice for International Paper when the company signed up last year to be a bioconversion facility so its suppliers could reap benefits of a new federal program aimed at using nonfood crops as biofuel.

Katie Carter/Associated Press

Memphis-based International Paper says that about 70 percent of its mill system uses biomass fuel, including its mill in Vicksburg, Miss. A federal program IP is part of is being reworked to decide who gets the money for going green — large suppliers or landowners who grow trees.

“On average, 70 percent of our mill system is powered by biomass fuel,” said Amy Sawyer, senior communications manager for Memphis-based IP.

Bark chipped from its timber supply and black liquor extracted from raw pulpwood is commonplace at the mill near Redwood — and in the paper industry in general. If the power generated by the wood chips could be placed on the power grid, some say, the possibilities are tantalizing.

“There’s probably enough to run surplus supply to everyone in Redwood,” Warren County Extension Agent John Coccaro said.

Expansion of biofuel use forms the heart of a federal initiative being reworked to determine who gets to keep the green for going green — larger suppliers or the landowners who cultivate the trees.

Comments from the public are being sought through Friday concerning the future of the Biomass Crop Assistance Program formed out of the 2008 Farm Bill to help owners of agricultural and forest lands to collect, harvest, store and take materials from plants and trees, such as bark chips, to support biofuel expansion.

A directive issued by President Barack Obama in May 2009 to speed up investment and production of biofuels emphasized financial incentives to do so, with the USDA’s Farm Services Agency designated as the place to sign up.

In June, middleman suppliers began receiving payments to collect, harvest, store and bring materials to bioconversion facilities. Those subsidies matched dollar for dollar what suppliers were paid by 483 such facilities — timber mills, electric power producers and sugar plants, to name a few — for delivery, up to $45 per dry ton.

FSA halted the payments Feb. 8. The president’s budget request for fiscal year 2011 showed the program’s cost growing to $742 million, more than 10 times the Farm Bill’s estimate of $70 million over five years.

“It was very simple to administer, then it stopped,” Warren County FSA office director Rob Riggin said of the program’s opening months, a trial run of sorts for what might become a leaner program.

Several signed up, Riggin said, mostly logging companies and other entities who take forest material to processors.

Payments of as much as 75 percent of timber owners’ costs of establishing renewable crops and up to 15 years of support checks for continued production figure to continue regardless of FSA’s final decision on program specifics.

To become eligible, lands must be in a specific project area designated by USDA’s Commodity Credit Corporation. However, three options are on the table for the matching payments for what the proposal calls “eligible material owners.”

One keeps the matching formula the same but limits payments to biomass delivered for conversion to heat or power above a historical baseline set by the USDA.

A second offers a “tiered structure,” which would pay conversion facilities such as IP at the maximum rate of $45 per dry ton if they convert material to “advanced biofuels,” a broadly defined concept of fuel including forms derived from wood.

Those converting it to heat or power would be paid at some rate below that, depending on comments on options tailored to policy objectives such as reducing carbon emissions and expanding biomass feedstock.

A third would make the payments to spur renewable energy to a wider range of places, such as schools, military facilities and government buildings.

The incentive plan has its skeptics.

“Basically, we don’t think that government should pick winners and losers in the marketplace,” said Carlton Carroll, a spokesman for the American Forest & Paper Association.

The organization, he said, “opposes mandates and incentives that seek to direct the flow of biomass to specific uses because they inevitably distort markets.”

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