Beyond Theory—Creating a New Biomass Energy Market in the Midwest

Beyond Theory—Creating a New Biomass Energy Market in the Midwest Gary Radloff Midwest Energy Policy Director

Mission The WBI helps the talent within Wisconsin and the Midwest create, evaluate, commercialize, and promote bioenergy solutions.

Wisconsin Bioenergy Initiative Provide: • Research • Education • Outreach Areas: • Biopower • Biofuels • Biomaterials Develop collaborative projects, targeting: • Biomass supply • Sustainable biomass utilization • Collaborate with: • Academia • Industry • Governmental Agencies • NGOs

Bioenergy Biofuel ethanol, cellulosic ethanol, biodiesel • Feedstocks • Animal waste • Wood • Miscanthus • Corn • Sugar • Switchgrass Biopower digesters, cofiring, CHP Bioproducts plastics, chemicals

Key Themes • What is the biomass energy market opportunity? • Why Cooperatives can play a critical role in market development. • Learning about the challenges and making them opportunities. • Other issues as we move ahead.

Regional Answer • One Answer • Return to our roots – resources come from what we can sustainable produce • Bio-based economy • Benefits • National and homeland security, • Rural economic advantages • Environmental benefits at the global, regional, and local levels

Midwest Biomass

Bioenergy Technologies • Wood or pelletized biomass – combustion, gasification, & pyrolysis • Starch- and sugar-derived ethanol • Seed oil, waste oil, food and rendering waste - biodiesel • Anaerobic digesters and biogas from renewable waste • Advanced biofuels - Cellulose-derived fuels, sugar catalysis, algal fuels

Estimated Biomass Needs Utilities 1.2 mil tons/yr State (6 heating plants) 350,000 tons/yr ______________________Subtotal 1.5 mil tons/yr Estimate of available wood biomass 1.0 mil tons/yr* Need to grow or source 500,000 mil tons/yr * DNR Projection

Benefits of BiomassCooperatives • Long-term business relations with members for agronomy services and commodity aggregation. • Skills with arranging timing and scheduling of delivery of commodities • Skills with transportation and other delivery costs • Assistance with securing contracts and pricing • Assistance with government programs such as the Biomass Crop Assistance Program (BCAP)

Site and source concepts maps for viewing and download Biofuel Facility Siting Website

Role of Biomass Aggregator • Consistent quality of fuels at competitive prices • Understanding of competing fuels including coal, natural gas, propane and wind. • Understanding of contracts • Transportation and storage issues

Biomass Competition • Bioenergy industry forming – competing for low cost, high quality biomass • Traditional industry • Agriculture (food, feed & bedding) • Forest Products (building products, pulp & paper) • Fuelwood & pellets • Expanding & new industries • Biopower • Biorefineries • Cellulose-derived fuels – advanced biofuels

Prototypical crops Corn emblematic of row crops lots of information on yield under different conditions Switchgrass represents a range of proposed bioenergy crops emerging research Willow hybrids woody biomass harvested with agronomic equipment limited information on conditions, productivity Marginal Land for Bioenergy Crops

Imprecise definition of marginal land: acceptable levels of environmental degradation technology adaptation: planting and harvesting equipment and crop varieties adapted to dry, wet, or steep terrain adequate return on investment in capital equipment and inputs Marginal Land for Bioenergy Crops

Craig’s List of biomass Listings of biomass generation what kind of material is being generated how much? where is it? who has it? costs? Biomass Market

Craig’s List of biomass biomass generating enterprises wood by-products - mills, pulping, etc. food processing waste - vegetables, dairy, etc. breweries CAFOs biomass creating activities - voluntary registry municipal operations - leaves, compost, lake weeds, etc. forestry - thinning, harvest slash, etc. road maintenance Biomass Market

Standards for Bioenergy Crop Production on Marginal Land • Principles: Sustainability, Resiliency and Suitability • Best practices on the land • Tiered standards • Multiple dimensions: soil and crop management, ecosystem services, feasibility and sustainability

Carbon SequestrationSource:Parton et al. 1994. National Estimate of Carbon Sequestration using the CENTURY Model

BCAP was designed to support agricultural producers in producing biomass crops and collecting biomass for sale to commercial-scale facilities that commit in writing to use the biomass to produce fuels or power. The program is also intended to improve water quality through reduced water use and surface water protection. Environmental quality can increase with less fertilizer compared to traditional row crops and encouraging the use of perennial crops, which are better for soil, air, water and wildlife. The program has two distinct pieces: 1) biomass crop establishment; and 2) assistance for the harvest, storage, processing and transportation of biomass materials for energy. Biomass Crop Assistance Program (BCAP)

To participate in the biomass crop establishment portion of the program, a group of farmers or a "biomass conversion facility" (any facility that will use the biomass to make biobased products or energy, heat, power, or advanced biofuels) must submit an application to USDA that defines the borders of the proposed production area and identifies the variety of biomass crop to be used at the facility. The application also must include a commitment from at least one biomass conversion facility in the area to use the biomass in their facility. All biomass production must occur on either agricultural land or industrial private forest land. USDA will determine whether projects meet the minimum threshold for selection, based on criteria in the statute and others to be determined by USDA (presumably through rulemaking.) BCAP Eligibility

The BCAP statutory criteria include: The amount of crops to be produced and the likelihood that they will actually be used to produce energy The amount of biomass likely to be available from sources other than the crops grown with support from the BCAP The local economic impact of the project The opportunity for local investors to participate in the ownership of the facility The participation of beginning or socially disadvantaged farmers The environmental impacts of the proposal The variety of agronomic practices and species – including mixes of different crops – proposed within a BCAP area The range of crops across projects areas BCAP Criteria

Ag producers in project areas will receive a payment for up to 75% of establishment costs. Establishment costs refer to the costs to convert lands from an existing use to the new energy crop. Incentives also include an annual payment intended to compensate the producer for the opportunity cost associated with growing an energy crop on the land. Land that was formerly in a row crop will likely receive more than land that was fallow or pasture. The annual payments can continue for up to 5 years if the producer is growing a perennial grass and up to 15 years if the crop is trees. Ag producers are required to implement a conservation plan on the enrolled land and to agree to provide information to USDA for research purposes. BCAP Incentives to Producers

Any person collecting and selling biomass crops or agricultural or forest waste for energy is entitled to receive this payment. The payment is structured as a match; whatever the biomass collector (whether the farmer or some other person) is paid by the biomass user facility, USDA will match dollar for dollar, up to $45 per dry ton. Materials not eligible for this payment include animal waste and byproducts, food and yard waste and algae. BCAP Incentives to Collectors

Biomass Grades and Standards • What will be important? • BTU Content • Organic Range • Moisture Content • Size and shape • Woody Source? Ag Source? Muni Waste?

Things to Think About • How do we risk share? • How do we become business partners? • How do we include eco-system benefits into biomass cropping? • How do we all succeed? • Sustainability

Contact InformationGary Radloffgradloff@wbi.wisc.edu608-890-3449 www.wbi.wisc.edu

Beyond Theory—Creating a New Biomass Energy Market in the Midwest