EESI: Advancing Innovative Solutions!

1. Advanced Biofuel Opportunities for Every State: Guidebook of State PoliciesCarol WernerEnvironmental & Energy Study Institutewww.eesi.orgPresented at: Wisconsin Legislative Council,Special Committee on Domestic BiofuelsOctober 14, 2008Madison, Wisconsin

2. EESI: Advancing Innovative Solutions! Dedicated to promoting sustainable societies through innovative policies on energy, climate, transportation, agriculture, buildings, and smart growth A non-profit organization founded in 1984, by a bipartisan Congressional Caucus Provides timely information regarding science, policy, and technologies Conducts ~20 Congressional briefings a year Builds coalitions and networks Publishes 3 electronic newsletters BCO – Bioenergy, Climate Protection & Oil Reduction Climate Change News Clean Motion EESI Associates Program allows companies and individuals to participate Environmental and Energy Study Institute

3. Broad Biomass Policy Objectives Climate Change Environmental Stewardship National Energy and Security Public Health International Competitiveness Economic Development through Local Ownership Diversify and Sustainably Grow the Domestic Agriculture Portfolio while Decreasing Dependence on Export Markets Environmental and Energy Study Institute

4. Overview • National Renewable Fuel Standard • Low carbon biofuel production provides opportunities for all states • New EESI guidebook: Advancing Commercial Scale Production of Low Carbon Biofuels • Methodology • Policy objectives • Policy options Environmental and Energy Study Institute

5. Renewable Fuel Standard (RFS) New target of 36 billion gallons by 2022 (9 billion in 2008) • 15 billion gallons of conventional biofuel (ethanol from corn starch) – Lifecycle GHG emissions from new fuel production must be 20% less than 2005 baseline • 21 billion gallons from advanced biofuels: 50% less GHG than baseline • Biomass-based diesel • 50% less GHG than baseline • Cellulosic biofuel • 60% less GHG than baseline Environmental and Energy Study Institute

6. Advanced Biofuel Environmental and Energy Study Institute

7. Opportunities for All States • National RFS provides a guaranteed market for feedstocks and low carbon biofuels • Local source of renewable energy • Diverse and plentiful across the country • Appropriate scaled technologies keep this renewable energy source local • Farmers and foresters across the country benefit • Research capacity of states will lead in R&D • Manufacturing capacity could be put back to work Environmental and Energy Study Institute

8. Cellulosic Biofuel Projects as of July 2008 Environmental and Energy Study Institute

9. Advancing Commercial Scale Production of Low Carbon Biofuels • Sneak peek at new EESI state level low carbon biofuel policy guidebook • Goals of guidebook: • Determine what incentives best support the commercialization of low-carbon advanced biofuel technologies • Identify ways federal and state incentives can work together • Determine how states can position themselves to help meet federal biofuel mandate Environmental and Energy Study Institute

10. Methodology • Establish diverse Advisory Committee • Analyze effectiveness of current biomass incentives • Builds off of 3 year USDA Biomass Incentives Project (EESI, North Carolina Solar Center and New Uses Council) • Identify policy objectives • Develop policy options • Incorporate input from Advisory Committee Environmental and Energy Study Institute

11. Advisory Committee • University of Florida • National Council of State Legislatures • Council of Western State Foresters • Climate Solutions • Environmental Defense Fund • Southern Growth Policies Board & SAFER Alliance • Southern Alliance for Clean Energy • Western Governors’ Association • New Fuels Alliance • National Wildlife Federation • Washington State University Extension Energy Program • National Governors Association • Renewable Fuels Association • U.S. Department of Energy Biomass Program Committee Representation • Government • Industry • Non-profit • Environmental • Economic Development • Academics • Regionally Diverse Environmental and Energy Study Institute

12. Policy Objectives • Resource assessments • Sources of biomass • Available, quantity and cost • Adequate infrastructure • Removal, transportation, storage and cost • Human resources • Research, manufacturing and training capacity • Innovative and coordinated research • Research, development and deployment of technologies along the whole supply chain Environmental and Energy Study Institute

13. Policy Objectives cont. • Infrastructure • Not focused on fuel infrastructure • Feedstock infrastructure (harvesting, storage, and transportation) • Reduce the risk of investing • Finances and economics • Appropriate business models including multi-year contracts, capital investment, long-term incentives, risk management programs and other finance mechanisms Environmental and Energy Study Institute

14. Policy Objectives cont. • Regulatory conditions • Focused on funding and permitting difficulties • Flexibility in government agencies • Unique challenges and opportunities • Stakeholder perceptions & political priorities • Multiple benefits of biomass technologies • Local participation/ buy-in • Finding a champion: community or political Environmental and Energy Study Institute

15. 10 Policy Options • Public Education and Outreach Programs • Easement Programs • Sustainable Agriculture Programs • Sustainable Forestry Programs • Municipal Waste Utilization Initiatives • Low Carbon Fuel Standard • Innovative and Coordinated Research Initiatives • Interagency Collaboratives • Tax Incentives • Grant and Loan Guarantee Programs Environmental and Energy Study Institute

16. Low Carbon Fuel Standard • Requires average level of performance (i.e. carbon intensity) making policies technology and feedstock neutral • Can encourage investment along the whole supply and production chain • Guarantee market for low carbon fuels • Best implemented on regional or national scale Environmental and Energy Study Institute

17. Low Carbon Fuel Standard e.g. California • Motivation: Reduction of greenhouse gas emissions • Reduce the carbon intensity of the state’s transportation fuels by 10 percent by 2020 • Policy allows refiners, blenders, producers, and importers to trade and bank credits for carbon reductions • Should be complemented with incentives that encourage low carbon production • Feedstock incentives: sustainable agriculture and forestry programs • Advanced conversion technologies: tax credits, grants, or loan programs • Note: CA public meeting to discuss the LCFS draft policy framework, October 16, 2008 – webcast available, http://www.arb.ca.gov/fuels/lcfs/lcfs_meetings.htm Environmental and Energy Study Institute

18. Innovative & Coordinated Research Initiatives Environmental and Energy Study Institute

19. Innovative & Coordinated Research Initiatives • Helps industry move past the “chicken and egg” dilemma • Involves many stakeholders (public-private partnerships) • May address the entire supply chain • Leadership from governmental champions is key Environmental and Energy Study Institute

20. Innovative & Coordinated Research Initiatives e.g. University of Tennessee Biofuels Initiative (UTBI) • Covers feedstock production from farmers to conversion technologies • Feedstocks • Switchgrass incentive program - farmers are paid $450 per acre to produce perennial feedstock in advance of a mature market • 20 switchgrass research and development projects in areas of breeding, planting, management, harvesting, storage, transportation, and pre-processing • Conversion Facility • DuPont Danisco Cellulosic Ethanol LLC: 250,000 gallon/year biorefinery -operational in late 2009 • $40.7 million from the state, leveraging $140 million of investment to develop commercial scale biorefineries (not just pilot facility) • Research • Oak Ridge National Laboratory (ORNL) received DOE funding for Bioenergy Science Centers Environmental and Energy Study Institute

21. Interagency Collaboratives • Helps conduct assessments of potential biomass feedstocks, human resources, and existing infrastructure • Creates a general roadmap for achieving commercial scale production • Helps attract new projects by coordinating funding and streamlining the permitting and approval process for facilities Environmental and Energy Study Institute

22. Interagency Collaboratives e.g. Washington State ‘Bioenergy Team’ • Biomass assessment: conducted by the Department of Ecology and Washington State University (WSU) • Focused on under-utilized material that could be converted to fuels, power, or products without disrupting other industries’ supply chains • ‘Bioenergy Team’ including: • Departments of Agriculture, Ecology, Transportation, Community Trade and Economic Development, the Conservation Commission, WSU, and the USDA Rural Development Energy office • Encourages sustainable biomass industry • Roadmap, website for centralized information for industry, consumers, feedstock producers, etc., and makes policy recommendations. Environmental and Energy Study Institute

23. Tax Incentives • Reduce risk of investing in new technologies and systems • Help account for the associated positive externalities and to help level the playing field with fossil fuels • Targeted at unique barriers in each state • Feedstock production • Targeted at unique opportunities in each state • Pulp-paper, dairy or other industries Environmental and Energy Study Institute

24. Tax Incentives e.g. Oregon Tax Incentives • Production & collection of biomass • Targeted at foresters, farmers and collectors of raw materials – reduces risk for producers • Compared to credits for the biofuel producer, where the incentive may ‘trickle down’ to the feedstock producers • Already having impact: now economically viable to use logging residues for power production • Helps create the infrastructure to collect, transport and store feedstocks that can be used in future biofuel production chain • Credit for ‘neat ethanol or pure bio-oils’ producer • Created to address the high cost of equipment (oil-seed crushers) to produce intermediary biofuel products • Business Energy Tax Credit (BETC) • Created to overcome high up-front costs of renewable energy projects • Unique options: ‘pass-through’ and ‘carry forward’ Environmental and Energy Study Institute

25. Grant or Loan Guarantee Programs • Stimulate capital investment • Helps leverage federal and private capital • Moves technologies through the “valley of death” from demonstration to commercial scale production • May be targeted at specific technological barriers • Helps achieve other political priorities and societal needs Environmental and Energy Study Institute

26. Grant or Loan Guarantee Programs e.g. Florida’s Farm-to-Fuel Grant Program • Matching grants to bioenergy projects • Research, development, or demonstration ($3 M) and commercialization projects ($22 M) • Preference to projects that are energy efficient, use Florida-Grown biomass, and innovative technologies New York State (2007) Pilot Cellulosic Ethanol Facility • Achieve commercial scale cellulosic production • Grant proposals were required to show that they could use the information gained from the operation of the pilot scale facility to develop a commercial scale facility Both states had political champions for their programs Environmental and Energy Study Institute

27. Public Education and Outreach • Helps build support for technologies that are unfamiliar • Galvanize support by bringing stakeholders into the decision-making process • emphasize multiple benefits of technologies, oil reduction, job creation, climate change mitigation etc. • Should be encouraged on a state or local level to deal with concerns about specific projects Environmental and Energy Study Institute

28. Public Education and Outreach e.g. Los Angeles Solid Waste Integrated Resources Plan (SWIRP) • Based on successful Bureau of Sanitation’s wastewater integrated resources planning (IRP) • Includes many state and local agencies • Engaged local stakeholder groups through a grass roots public outreach campaign • Effort began with one-on-one interviews with business, religious, and academic leaders and then moved to house meetings, regional workshops, and citywide conferences • Objective to develop a 20 year road map for local solid waste management • Possible biorefinery model to be used for conversion of solid waste Environmental and Energy Study Institute

29. Easement Programs • What is an easement? • A voluntary, legally binding agreement in which a private landowner allows another entity to define the use of his land for a set period of time or in perpetuity, usually in return for a payment or tax break • Protects open spaces for multipleuses • Provides a low carbon biofuelfeedstock • Simple model that is well established Environmental and Energy Study Institute

30. Easement Program e.g. Reinvest in Minnesota – Clean Energy Program • Specific to bioenergy crop production that complements water quality, soil health, reduction of chemical inputs, soil carbon storage, biodiversity, and wildlife habitat • Administered by the Board of Water and Resources • Targets areas of the state for growing native perennial bioenergy crops for periods of at least 20 years: clustered areas • Payment rates increase as more native perennial or woody species are planted to address specific local environmental benefits • Note: State legislature has not funded program; matching with public education campaign could assist funding prospects Environmental and Energy Study Institute

31. Sustainable Agriculture Programs • Helps agricultural feedstock producers lower their life-cycle carbon emissions through education, technology transfer, and/or financial incentives to use low carbon practices • Achieves complementary objectives: • Clean water, soil health, biodiversity, reduce nutrient run off etc. • Prepares farmers/foresters for climate legislation Environmental and Energy Study Institute

32. Sustainable Agriculture Programs E.g. Maryland • Agricultural Water Quality Cost-Share Program payslandowners to plant winter cover crops (bioenergycrops) to reduce soil erosion and nutrient runoff • Manure Transport/Matching Program was developedto reduce nutrient runoff • Provides $20/ton to cover costs of transporting,loading, and handling excess manure from poultry,dairy, beef, and other animal operations Montana Organic Fertilizers • Allows taxpayers to deduct expenditures for the purchase of organic fertilizer Iowa Field Days • Practical Farmers of Iowa Field Days show farmers ‘innovative farming practices, share on-farm research results, and build urban-rural understanding Environmental and Energy Study Institute

33. Sustainable Forestry Programs • Provides assistance in forest management through guidelines and plans which focus on: • biological diversity, productive capacity, forest health, soil and water resources, carbon cycles, socio-economic impacts • Provides low-value material markets • Focuses financial assistance on harvesting equipment Environmental and Energy Study Institute

34. Sustainable Forestry Programs e.g. Minnesota • Forest Resources Council Created guidelines for sustainably managed woody biomass • Created a tax incentive for harvesting equipment which lower the collection cost of woody biomass New York’s Forest Utilization and Marketing Program • Information sharing program • Releases stumpage price reports, timber harvest reports, and directories of companies which utilize forest products • Helps facilitate a market for forest products Environmental and Energy Study Institute

35. Waste Reduction Should Be First Priority…. Municipal Waste Utilization Initiatives Environmental and Energy Study Institute

36. Municipal Waste Utilization Initiatives Waste Reduction Should Be First Priority… • Potential low carbon biofuel feedstock that is especially important in urban areas that have abundant and renewable sources of biomass • Could reduce the amount of waste going to landfills • Could reduce costs associated with shipping waste to more distant landfills Environmental and Energy Study Institute

37. Municipal Waste Utilization Initiatives e.g. Maryland, New Jersey, Hawaii include some kinds of waste materials in energy incentive definitions Florida Waste Diversion Goal • Half of their waste reduction objective may be met by converting yard waste or other clean post-consumer wood or paper waste into biofuels • Must continue active composting program Environmental and Energy Study Institute

38. Biomass can be a part of the Clean Energy and Climate Solution There is No Silver Bullet New Policies New Technologies New Feedstocks (includingwastes) Conservation & Efficiency Efforts Decreased Petroleum for Transportation Needs Flex-Fuel Vehicles/Plug-In Hybrids Biobased products and renewable energy can reduce fossil energy use/ greenhouse emissions Environmental and Energy Study Institute

39. For More Information Contact Carol Werner, Executive Director (202) 662-1881cwerner@eesi.org Jesse Caputo, Policy Associate (202) 662-1882 jcaputo@eesi.org EESI: Advancing Innovative Solutions! www.eesi.org Environmental and Energy Study Institute