Stop me if you’ve heard this one.

Congress passes a bill to address an urgent public need. A greedy industry finds a loophole and steps in to siphon off a half-billion dollars without accomplishing anything new. Free money, no public purpose served, taxpayers ripped off.

This is what’s happening right now with the Biomass Crop Assistance Program (BCAP). The program was designed to promote biomass crops, including perennial and mixed prairie grasses with deep root systems. These plants can be turned into fuels and electricity. They’re much kinder to the environment than crops like corn, which have until now dominated the biomass industry, and could potentially help address climate change. By substituting renewable biomass for fossil fuels like oil and coal, we can go a long way to reduce net greenhouse gas emissions.

The BCAP, launched in the 2008 Farm Bill, was intended to help farmers begin to grow new crops for renewable energy. Instead, the wood and paper industry has swooped in and secured most of the program’s funding—up to $514 million could be paid out in a few months—to do what they’ve done for decades: burn wood waste to generate energy for company needs. Most of these companies, which include Weyerhaeuser, Georgia-Pacific, and International Paper, aren’t buying or producing any new biomass, nor are they producing any new renewable energy. Instead, they are getting our tax dollars to merely continue their standard operations. While using wood wastes for energy is a good thing, it’s not why this government program was created.

Meanwhile, money to support new biomass crops, such as switchgrass or mixed prairies, hasn’t even gotten off the ground.

As technologies for biomass conversion come on line, there’s a chicken-and-egg problem that the new BCAP program is designed to address: how to get the new crops established before the new energy facilities are ready to buy the biomass.

So what went wrong?

The U.S. Department of Agriculture skipped the crop establishment program and instead launched a minor provision intended to help develop new collection, harvest, storage, and transport methods by matching the price paid for delivered biomass, up to $45 a ton. The USDA didn’t draft rules or put them out for comment, but instead issued a simple notice of funding availability with few restrictions.

The applications poured in, and are still pouring in, with over 300 facilities approved, the vast majority from the paper industry and a wood industry beleaguered by the construction downturn. With no limits or environmental oversight in place, the wood products industry appears ready to profit from as much biomass as they care to strip from national and privately owned forests.

Then there’s the spending problem. How does a program estimated by Congress to cost $70 million over five years suddenly have $514 million to spend in 2010 alone? Our arcane budgeting systems for agriculture are to blame, as “such sums as are necessary” magically appear off-budget for all commodity programs and the Biomass Crop Assistance Program. The USDA requested and the Obama administration approved this outrageous and unjustified expenditure.

There’s one sure remedy to this potentially good program gone astray. The USDA needs to immediately rein in these payments, launch a smarter crop establishment program, and issue rules to ensure a sensible program that meets its intended purpose.

Companies and farmers should only get matching payments for new biomass sources that will be used to create new renewable energy. Applicants must prove that they meet stringent environmental requirements to ensure that over-harvesting and sloppy practices aren’t subsidized.

Getting renewable energy right is too important to let money be wasted. The government should be strategic with biomass crops instead of just throwing money at the problem with big handouts to corporations that don’t need them.

Loni Kemp is a policy consultant to the Institute for Agriculture and Trade Policy.

Get more news like this, directly in your inbox.

Subscribe to our newsletter.