Much of the new spending on renewable energy would be drawn from a reserve fund that requires lawmakers to find the money from other existing sources or "offsets." Peterson said he believed a pending repeal of tax breaks for oil companies would provide the savings needed to pay for biofuels.

"We're looking around the neighborhood of US$5 billion in that area," said Peterson, Minnesota Democrat. The chairman of the subcommittee that oversees biofuels, Democrat Tim Holden of Pennsylvania, said he aimed for "a robust multibillion-dollar" program to develop new feedstocks for ethanol and build the refineries to use them.

Cellulose, found in crop residue, woody plants and trees, is tabbed as the next major feedstock. But it cannot compete in price with corn-based ethanol yet. Ethanol output is 6 billion gallons annually now and is on track to double in two years.

Peterson raised the idea of putting the Agriculture Department in charge of a loan guarantee program that would support the first wave of cellulosic ethanol plants.

Renewable fuels are an economic engine in rural America, boosting grain prices and creating jobs. They are broadly popular. The Bush administration has proposed US$2.2 billion for biofuels research and loan guarantees over 10 years.

Environmentalists and Sen. Tom Harkin, the lead sponsor of the Conservation Security Program (CSP), objected to the House proposal, which would bar enrollment in CSP until 2012. Created in 2002, CSP is hailed as a way to encourage soil, water and wildlife stewardship on "working land" at a lower per-acre cost than idling cropland, the traditional federal approach.

"They're trying to pick a fight rather than win a fight," said Ferd Hoefner of the Sustainable Agriculture Coalition, by pitting land conservation programs against each other.

But Peterson said CSP rules were too complicated and too much CSP money rewarded landowners for past work rather than for undertaking new stewardship efforts.

"In this committee, these other programs are a higher priority ... than CSP is," said Peterson. The major stewardship programs are the Conservation Reserve, which pays farmers to idle fragile land, and the Environmental Quality Incentives Program, which shares the cost of controlling runoff.

Holden's subcommittee will inaugurate work on the farm bill on May 22, working on energy, stewardship, rural credit and agricultural research. The livestock subcommittee will hold its first bill-drafting session on May 24. Other sections of the bill, including crop subsidies, will be unveiled in June.

Fourteen senior members of the Agriculture Committee joined Peterson to outline the first steps in writing the bill. The Republican leader on the committee, Bob Goodlatte of Virginia, said finances for the bill were not clear.

"We don't know if some of this ... will have to be re-done,"said Goodlatte.