Amid growing demand for biofuels, lawmakers are grappling with how to insure the millions of acres that will produce grass, trees and other feedstocks for alternative energy.

Some lawmakers say new types of federal crop insurance for biofuel crops will be necessary to attract more farmers to the burgeoning industry. Others, including House Agriculture Chairman Collin C. Peterson, D-Minn., say a new array of crop insurance policies is too much, too fast.

“We’re getting way ahead of ourselves,” Peterson said, referring to a bill (S 1242) introduced by Sen. Jon Tester, D-Mont., that would provide expedited insurance for biofuels crops.

Creating new insurance plans is just one of many challenges the emergence of biofuels has presented to lawmakers. New fuels have created a gantlet of transportation, infrastructure, environmental and investment issues that could come up in debate over reauthorization of the 2002 farm law (PL 107-171).

Corn or soybeans grown for biofuels are covered by the same insurance policies that farmers buy to protect the commodities they grow for food. But the long-term viability of biofuels depends on cost-effective production of “cellulosic” ethanol from plants such as switchgrass, which are not currently eligible for crop insurance protection.

In addition to crop subsidies, which don’t cover the less traditional biofuel crops, farmers rely on government-subsidized insurance to protect their bottom line if crops are ruined by drought, flood or fire. In theory, creating a new crop insurance program is simple: Congress mandates the Agriculture Department’s Risk Management Agency (RMA) to come up with a policy.

In practice, however, developing a new crop insurance program can be complicated. Academics, insurance experts and agriculture officials first must write a policy and set a premium based on the crop’s historical success. Then, the policy is tested in different regions of the country for as long as four years. If the indemnities paid out exceed the premiums collected, the program is changed or scrapped.

Tester’s bill would expedite the creation of a pilot crop insurance program for biofuel crops, including camelina, a type of wheat that is grown in Montana to make biofuel, not food. He hopes the measure will end up in this year’s rewrite of the farm law.

“Right now the only thing holding farmers back is the insurance,” Tester said. “This will open the door for a lot of folks who want to grow camelina, and it will make agriculture a much bigger player in the future of biofuels.”

Crop insurance is a key incentive to bring more farmers to the biofuels market and to keep up with the growing demand for alternative energy, advocates say.

“Our farmers are willing to produce any commodity to expand the renewables industry, but we cannot sit back and expect agricultural producers to venture down this road alone,” said Tom Buis, president of the National Farmers Union, a group supporting Tester’s bill.

Peterson, meanwhile, wants to develop a pilot program under the new farm bill to grow 5 million acres of feedstock for ethanol. The idea, he says, is to see which crops grow best in different regions.

But tight overall funding for the farm bill means lawmakers must find budget offsets to pay for new initiatives, including crop insurance.

With little data to demonstrate how biofuel crops would resist natural disasters, a new category of crop insurance could cost billions of dollars. David Graves, managing secretary for the American Association of Crop Insurers, said it’s riskier to insure crops without historical data — and that means higher premiums.

“The trick is always in the premium,” Graves said, explaining it must be affordable enough for the government to subsidize and for the farmer to buy. “The policy has got to be something we can go out there and sell.”

So, with a limited budget on his mind, Peterson said farmers who participate in his pilot program would get payments similar to those doled out by current conservation plans — such as the Conservation Security Program, which pays farmers a set amount per acre for employing environmentally friendly farming practices. Ultimately, conservationists hope land used to grow feedstocks will be counted under current Agriculture Department preservation programs.

Lawmakers advocating new crop insurance plans may come up against members who have become skeptical of the entire industry. Rep. Henry A. Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, held a hearing this month on abuse in the crop insurance industry.

“The federal crop insurance program has become a textbook example of waste, fraud and abuse in federal spending,” Waxman said.