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INSIDE: U.S. WOOD PRODUCTS MEETING EUROPEAN DEMAND BIOMASS MAGAZINE

May 2010

Biomass Conference Review International Biomass Conference & Expo draws 1,700 to Minneapolis

JUNE 2010 www.BiomassMagazine.com


INSIDE: AGAVE SHOWS POTENTIAL AS A BIOFUEL FEEDSTOCK May 2010

The Power of

Biomass

Do States With Renewable Energy Standards Have a Better Chance of Attracting Biomass Power Projects?

www.BiomassMagazine.com

5 |2010 BIOMASS MAGAZINE 1


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INSIDE

MAY 2010

VOLUME 4

ISSUE 05

FEATURES ..................... 38 EVENT Biomass Bonanza The International Biomass Conference & Expo drew attendees and nearly 300 exhibitors to the Minneapolis Convention Center May 4-6. The general consensus was that biomass is an important component of American’s energy and environmental security. By Anna Austin and Lisa Gibson

48 INTERNATIONAL Possible Policy Change The U.K.’s race to renewable energy has hit a bump in the road as some project developers are asking for more government support for biomass so they can better secure funding. By Lisa Gibson

58 DEBATE Facing the Vocal Opposition Biomass projects aren’t always welcomed with open arms and developers are learning that it’s best to meet with stakeholders and get out in front of misinformation. By Lisa Gibson

64 ALGAE Mitigation Mechanism Algae have great potential as a carbon mitigation option for power plants, but some argue that the benefits don't come into play unless the algae are used to produce biofuels. By Lisa Gibson

70 AGAVE Avant-Garde Agave AGAVE | PAGE 70

A plant commonly used to make tequila may be the next big biofuels feedstock. Agave proponents say the plant has traits that make it a better cellulosic ethanol feedstock than poplars and switchgrass. By Anna Austin

DEPARTMENTS ..................... 06 Editor’s Note Powering Up With Biomass By Rona Johnson

CONTRIBUTIONS .....................

07 Advertiser Index

78 SUPPLY Projecting Cropped Biomass Supplies: The Landowner Factor

10 Industry Events

A team of researchers used landowners as their key source in assessing whether an area has a reliable and reasonably priced biomass source. By Dan Conable and Tim Volk

11 BPA Update Biomass Power is a Natural Fit By Bob Cleaves

13 EERC Update Cellulosic Biorefineries: An Ethanol Revolution Paul Pansegrau

15 BTEC Update Time for Federal Tax Policy to Recognize Biomass Thermal By Charlie Niebling

17 Legal Perspectives Is Raising Money too Easy? By Todd Taylor

20 Business Briefs

82 POLICY Biomass is Having a (Political) Moment The federal government’s cash grant program under the American Recovery and Reinvestment Act of 2009 and the USDA’s Biomass Crop Assistance Program deserve a closer look by biomass project developers. By Rob Goldberg

86 INTELLECTUAL PROPERTY IP Pitfalls in Talking With Others This second installment of a two-part series discusses the laws that affect third-party disclosures and provides tips to use when making such disclosures. By Richard B. Hoffman

90 FINANCE Understanding the Economic Drivers of Originating Biomass for Power Projects Developers intending to use biomass or to cofire with biomass need to understand factors such as long-term acquisition costs, bulk density, moisture content, storage, handling, logistics and energy quality when choosing their feedstocks. By Scott McDermott

22 Biobytes 24 Industry News 100 Marketplace

94 RESOURCE Guidebook Supports Small-Scale Biomass Project Development in NY The New York State Energy Research and Development Authority has sponsored the production of a book to guide developers of small biomass-powered energy plants. By Mark Boustouler and Alison Reynolds

5 |2010 BIOMASS MAGAZINE 5


editor’s

NOTE Powering Up With Biomass

T

his month’s issue is about biomass power. My belief that there has been a positive shift in the way people view biomass power plants, mainly because of the industry’s potential for job creation, is being borne out by the bills being passed in state legislatures. In Florida, the Senate Energy Committee passed Senate Bill 1186, which would ease the development of renewable energy. Although Florida doesn’t have a renewable portfolio standard (RPS), this is a step in the right direction in terms of stimulating project development. Wisconsin recently passed legislation (Assembly Bill 749) that provides a tax credit equal to 10 percent of the cost of equipment purchased to harvest or process woody biomass into fuel. In New York, the New York State Energy Research and Development Authority and state Public Service Commission awarded $204 million for renewable energy projects, including NRG Energy Inc.’s plan to cofire with biomass at its Dunkirk Generating Station. I should also mention that New York increased its RPS last year from 25 percent to 30 percent of electricity generated from renewable sources by 2015. In Washington, Gov. Christine Gregoire signed a bill that allows the Washington Department of Resources to provide five-year contracts for long-term biomass supply (see “Washington passes forest biomass contract law” on page 42). This is just a smattering of what’s happening in state legislatures and I’m sure I've overlooked several legislative initiatives. This by no means gives biomass power projects the green light in some areas, however, as there are still pockets of resistance, which you can read about in associate editor Lisa Gibson’s feature “Facing the Vocal Opposition” on page 58. Even in the midst of intense opposition, however, there is hope. In fact, I read an opinion piece in the Wasaudailyherald.com in Wausau, Wis, in support of the proposed Rothschild, Wis., biomass plant, which has been hotly contested. I was especially pleased to see this written in response to residents’ pollution concerns: “The first is a fear of pollution. This has the simplest answer: It is a misplaced fear. This plant would burn only woody biomass—not other, dirtier forms of biomass—and would do so according to contemporary emissions standards.” This article was written by the newspaper’s editorial board after its meeting with executives from developer We Energies and the Domtar paper mill, where the project is being proposed. This is proof that reaching out and making the case for clean-burning, job-creating biomass energy to intelligent, open-minded, well-intentioned people works. As Brian Manthey, We spokesman, said in Gibson’s article when talking about providing information and answering questions posed by the public: “The burden of proof is on us.” If the public can’t go to the project developers for information they will get it elsewhere.

Rona Johnson Editor rjohnson@bbiinternational.com

6 BIOMASS MAGAZINE 5|2010


advertiser INDEX

EDITORIAL EDITOR Rona Johnson rjohnson@bbiinternational.com ASSOCIATE EDITORS Anna Austin aaustin@bbiinternational.com Lisa Gibson lgibson@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

Frazier, Barnes & Associates, LLC

92

2010 International BIOMASS Conference & Expo

102 & 103

Guascor Inc.

75

2010 International Fuel Ethanol Workshop & Expo

104 & 40

Hoffmann, Inc.

62

2010 Advanced Biofuels Workshop

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNERS Elizabeth Burslie bburslie@bbiinternational.com Sam Melquist smelquist@bbiinternational.com

PUBLISHING & SALES

98

2010 Northeast Biomass Conference & Expo

99

Husch Blackwell Sanders, LLP

45

2010 Southeast Biomass Conference & Expo

48

Hurst Boiler & Welding Co.

93

Acrowood Corp

74

IBED 2010

72

Advanced Trailer Industries

26

ICM, Inc.

31

Agra Industries

51

Indeck Power Equipment Co.

28

Amandus Kahl GmbH & Co.

37

Keith Manufacturing Company

33

ASI Industrial CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com

8

MAC Equipment

2

ATEC Steel

29

Mettler Toledo

85

Bandit Industries, Inc.

67

Mid-South Engineering Company

69

Bedeschi America, Inc.

39

Morbark, Inc.

96

BIBB Engineers Architects & Constructors

76

Natgun Corporation

56

BRUKS Rockwood

3

Precision Machine & Mfg. Inc.

41

84

Process Equipment/Barron Industries

36

Buhler Inc.

88

R.C. Costello & Assoc. Inc.

60

Christianson & Associates, PLLP

30

EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com

Rotochopper, Inc.

77

Continental Biomass Industries

32

SD&G Community Futures Development Corporation

57

SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com

Church & Dwight Co, Inc.

4

SGS North America, Inc.

34

CPM Roskamp Champion

42

Siemens Industry, Inc.

14

Davenport Dryer, LLC

66

Stoel Rives LLP

16

Detroit Stoker Company

80

The National Boiler Training and Renewable Fuels Institute

49

Energy & Environmental Research Center

19

The Parton Group, Inc.

97

Eide Bailly, LLP

27

The Shaw Group Inc.

18

EISENMANN Corporation

61

The Teaford Co. Inc.

38

Eldridge Products, Inc.

43

Verdant Environmental Services

54

Electromatic Equipment Company, Inc.

44

West Salem Machinery

12

Encore Business Solutions

68

WestMor Industries, LLC

73

Envergent Technologies

81

Wilkens Industries, Inc

35

Wolf Material Handling Systems

63

Buhler Aeroglide VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com

ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Gary Shields gshields@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

Subscriptions Subscriptions to Biomass Magazine are $24.95 per year in the U.S; $39.95 in Canada and Mexico; and $49.95 outside North America. Subscriptions can be completed online at www.BiomassMagazine. com or subscribe over the phone at (701) 746-8385.

Ethanol Producer Magazine

9

Everlasting Valve Company

89

Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com.

Advertising Biomass Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biomass Magazine advertising opportunities, please contact us at (701) 746-8385 or service@ bbiinternational.com.

Letters to the Editor We welcome letters to the editor. Send to Biomass Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rjohnson@ bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Cert no. SCS-COC-00648

5 |2010 BIOMASS MAGAZINE 7


industry events 2010 International Biomass Conference & Expo

Biomass Boiler Workshop

May 4-6, 2010

June 10-11, 2010

Minneapolis Convention Center Minneapolis, Minnesota This Biomass Magazine-sponsored conference will unite current and future producers of biomass-derived power, fuels and chemicals with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policymakers. Future and existing biofuels and biomass power producers will be able to network with waste generators and other industry suppliers and technology providers as well as utility executives, researchers, policymakers, investors, project developers and farmers. (701) 746-8385 www.biomassconference.com

Holiday Inn Downtown Superdome New Orleans, Louisiana This workshop consists of presentations about new technological developments and results to improve the operating performance, waste fuel burning capacity, efficiency and fuel economy of biomass-fired boilers (mostly stoker-fired). In addition, the program will include discussions on troubleshooting and problem solving challenges that attendees bring to the workshop. Participants will benefit by learning about the current retrofit technology for biomass boilers, seeing how other mill operations solve their biomass boiler area problems and receiving information and solutions to their mill specific problems. (425) 952-2843 www.jansenboiler.com

2010 International Fuel Ethanol Workshop & Expo

Biomass ’10: Renewable Power, Fuels, and Chemicals Workshop

June 14-17, 2010 America’s Center St. Louis, Missouri The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. It is the largest, longest-running ethanol conference in the world. The event delivers timely presentations with a strong focus on commercial-scale ethanol production, new technology, and near-term research and development. (701) 746-8385 www.fuelethanolworkshop.com

July 20-21, 2010 Alerus Center Grand Forks, North Dakota In its eighth year, this workshop offers a cutting-edge two-day technical program and exhibit with national experts who focus on biomass production (plant matter such as straw, corn, and wood residue) and biomass conversion to power, transportation fuels and chemicals. The workshop will be geared toward industry, research entities, government, community and economic development corporations, financial institutions and landowners. Topics will include trends and opportunities in utilizing biomass, renewable policies and incentives, renewable fuels, financing biomass-related projects, biorefinery chemicals and products, biomass for heat and electricity, biomass feedstocks, and algae. (701) 777-5000 www.undeerc.org/biomass10

2nd International Conference on Oil Palm Biomass

Northeast Biomass Conference & Expo

August 2-3, 2010

August 4-6, 2010

Matrade Exhibition and Conference Center Kuala Lumpur, Malaysia Oil palm biomass has emerged as a viable asset for the palm oil industry. Research and development have made it possible to convert oil palm biomass into economic products including medium-density fibreboard, timber board, fertilizer and paper, and new technologies have been developed to generate biofuel and electricity from oil palm biomass. Oil palm biomass is already being used in some commercial ventures. +60 3 7804 3423 www.icopb.com

Westin Copley Place Boston, Massachusetts With an exclusive focus on biomass utilization in the Northeast U.S., this Biomass Magazine-sponsored event will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. (701) 746-8385 http://ne.biomassconference.com

2010 Farm to Fuel Summit

Gasification Technologies 2010 Conference

August 11-13, 2010

October 31-November 3, 2010

Rosen Shingle Creek Orlando, Florida This fifth annual summit will be an opportunity for industry leaders and stakeholders to learn, network and strategize to advance the development of renewable energy in Florida. Florida’s Farm to Fuel Initiative was developed to promote the production and distribution of renewable energy from Florida-grown crops, agricultural wastes and other biomass. More than 500 attendees from academia, industry and government participated in last year’s summit. (850) 488-0646 www.floridafarmtofuel.com/summit_2010.htm

Marriott Wardman Park Hotel Washington, D.C. The GTC is the largest gasification event in the world, attracting speakers and participants from the Americas, Europe, China and India. The GTC provides a single venue for participants to learn what is new in the gasification industry and why it is important. Speakers will address all aspects of the industry, from cutting-edge improvements in technology, through projects in development worldwide to updates on operations of plants based on coal, petroleum residues, biomass and secondary materials. (703) 276-0110 www.gasification.org

10 BIOMASS MAGAZINE 5|2010


B PA

UPDATE

Biomass Power is a Natural Fit Many policymakers in Congress share the common goal of moving the U.S. closer to energy independence and reducing its reliance on fossil fuels. To accomplish this goal, America must embrace energy policies that aggressively promote a diversity of sources and expand America’s renewable portfolio. As Congress debates energy and climate legislation this summer, lawmakers should recognize that biomass power is a natural fit to increase America’s energy security, reduce greenhouse gas emissions, and create thousands of clean energy jobs in the process. The Southeast U.S. may provide the greatest domestic growth potential for the increased use of biomass power. There is an abundance of woody forest waste in the Southeast, the trees grow quickly, and the entire region remains largely untapped. In other words, if there were a Saudi Arabia of biomass, the Southeastern U.S. would be it. In other parts of the country, biomass power facilities continue to pop up—creating stable, well-paying jobs in the small, rural communities that need them the most. These facilities supply a steady and reliable flow of electricity to the local utilities, providing clean electricity 24/7. The fact that biomass provides a constant flow of electricity will help states more easily meet aggressive standards for renewable electricity. Additionally, an abundant supply of biomass power will help stabilize local utility prices when there are fluctuations in the market. The Biomass Power Association has long supported implementing a federal renewable electricity standard (RES) of 25 percent by the year 2025. This national standard would provide the incentives necessary to jumpstart America’s renewable energy sector and integrate renewable alternatives directly into the electricity grid. BPA remains optimistic that Congress

will pursue an aggressive standard in order to promote renewable energy sources and develop the infrastructure necessary to become energy independent. Biomass is an essential component to any national renewable electricity standard because it will allow Southeastern states without steady Bob Cleaves supplies of wind or solar energy to president and meet their renewable goals with bio- CEO, BPA mass. What’s more, a recent Navigant Jobs Study projected that an RES of 25 percent by 2025 would produce more than 70,000 new jobs in the biomass power industry alone. Developing America’s biomass power industry will reduce greenhouse gas emissions and improve the health of American forests. Biomass power is a natural fit to meet America’s energy and climate goals. Promoting the expansion of biomass power will increase our energy security, reduce our reliance on fossil fuels, and create thousands of new jobs. The U.S. DOE projects that, with the right policies, biomass power could produce as much as 15 percent of our nation’s electricity. Producing more of our electricity from biomass makes sense from both an economic and environmental perspective. As an added bonus, biomass power will also never run out—it’s renewable. If Congress is serious about addressing our energy needs and improving the environment, supporting biomass power should be the first step. BIO Bob Cleaves is president and CEO of the Biomass Power Association. To learn more about biomass power, please visit www.USABiomass.org.

5|2010 BIOMASS MAGAZINE 11


EERC

UPDATE Cellulosic Biorefineries: An Ethanol Revolution The Energy Independence & Security Act of 2007 contained a number of mandates with respect to renewable fuels. One of these mandates called for the production of 16 billion gallons of cellulosic or biomass-based fuel by the year 2022. This simply means producing ethanol from nonstarch sources such as corn stover and cobs, wheat straw, switchgrass, wood, sugarcane bagasse, agricultural residues, municipal solid waste, garden and lawn clippings, and rice hulls. In 2009, a total of 10.75 billion gallons of corn (starch) ethanol were produced from 170 production facilities operating in 21 states. According to EISA, corn-based ethanol is to be capped at 15 billion gallons. In order to produce the additional 16 billion gallons of cellulosic ethanol, new facilities will have to be built that are scaled to produce sufficiently large quantities in order to sustain profitable enterprises. Going hand-in-hand with the production of ethanol will be the need for more flexible-fuel vehicles (FFVs) that can burn ethanol up to a level of 85 percent. The Energy & Environmental Research Center has worked with all facets of the ethanol industry: from siting corn ethanol plants, to developing new fermentation schemes, to inventing new thermochemical processes that require absolutely no fermentation. So hereâ&#x20AC;&#x2122;s an answer to a question we get asked at least weeklyâ&#x20AC;&#x201D;what is the status of this ethanol revolution? Indeed, it will take a revolution. With respect to FFVs the automakers seem willing to produce more E85 FFVs, but in most states gas stations that carry E85 lag way behind and there is still a severe lack of public acceptance and incentive to get consumers interested in FFVs. Of the 7 million or so E85 vehicles on the road, GM has made half of them and has plans for 50 percent of its production to be FFVs by 2012. With respect to the fuel production side, the U.S. DOE is trying to stimulate technology development for cellulosic ethanol plants. Within the past two years, DOE has provided awards to 20 organizations working to develop such tech-

nologies. Currently, 19 of the original 20 organizations are actively working toward their goals; one organization has dropped out; and three are producing cellulosic ethanolâ&#x20AC;&#x201D;albeit at small scales. The array of technologies being developed is diverse, Paul Pansegrau in part due to the wide va- research scientist, EERC riety of cellulosic biomass feedstocks being utilized. Most ethanol plants today are located in the Corn Belt of the U.S., but most of the 19 organizations with DOE awards for cellulosic ethanol are developing their technology outside of the Corn Belt. This represents the diversification of feedstocks being developed. States that currently do not possess starch-ethanol production facilities and are hosting a DOE-funded project include Maine, Vermont, Florida, Montana and Louisiana. The technologies used to convert cellulose to fermentable sugars include biological methods that utilize concentrated acid hydrolysis and enzymatic hydrolysis, coupled with fermentation. Other technologies will utilize thermochemical means such as gasification to convert the biomass to gas and then reform that gas using chemical catalysis or biological fermentation to produce ethanol. When compared head-to-head, these various technologies offer an almost endless combination of possibilities for conversion of cellulose to ethanol. In conclusion, the status of the cellulosic ethanol revolution is that automakers are poised to do their part, consumers are lagging a bit in motivation, and technology options have yet to be proven commercially. Whether this is sufficient to meet the EISA goals remains to be seen. BIO Paul Pansegrau is a research scientist at the EERC. Reach him at ppansegrau@undeerc.org or (701) 7775169.

5|2010 BIOMASS MAGAZINE 13


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Answers for industry.


BTEC

UPDATE date exists for thermal. Therefore, tax incentives are the logical mechanism to promote biomass thermal. Ironically, the federal government has already established tax incentives for other thermal renewable technologies such as solar thermal and geothermal. BTEC seeks parity treatment for Charlie Niebling biomass thermal. In the 2008 Troubled chairman, BTEC Assets Relief Program, a modest credit for residential thermal systems was established under the efficiency title, 26 USC § 25C. This credit was enhanced in the American Recovery and Reinvestment Act in February. This incentive should be strengthened and reauthorized beyond 2010. For commercial and industrial installations, the most logical place to establish parity is in 26 USC § 48, the 30 percent business energy investment tax credit. Legislation has been introduced to achieve these goals. Sens. Jeff Bingaman, D-N.M., and Olympia Snowe, R-Maine, have introduced S. 1643, the Cleaner, Secure, and Affordable Thermal Energy Act, to strengthen the residential credit. Sens. Jeanne Shaheen, D-N.H., Lisa Murkowski, R-Alaska, and others have introduced S. 3188, the American Renewable Biomass Heating Act to extend section 48 tax treatment to commercial/ industrial biomass thermal. In the House, companion bills have been introduced by Rep. Paul Hodes, D-N.H., also called the American Renewable Biomass Heating Acts (HR 2080 and another as yet un-numbered). BTEC is working hard to gain co-sponsor support for these bills and position them for consideration should a larger Energy Bill move in this session of Congress. Ultimately we view these as short-term goals. Longer term, we need one mechanism that provides support for biomass in all its uses. The answer may lie in a production credit under 26 USC § 45, which provides a tax credit based upon an equivalent million Btu or megawatt hour output basis from each of the three energy pathways for biomass. BTEC sees an important opportunity to work with groups such as the Biomass Power Association and the Renewable Fuels Association to advance this idea. It is time that this simple technology was accorded the same incentives that have benefited virtually every other renewable energy technology. BIO

BTEC

America’s energy consumption can be divided into roughly equal thirds: transportation, electricity and heat (or thermal). Policies to promote renewable energy have focused largely on transportation fuels such as ethanol and biodiesel, and electricity from hydro, wind, solar, geothermal and biomass. Conspicuously absent from America’s support for renewable energy is biomass used to make heat. Congress overlooked biomass thermal because lawmakers were unaware of its enormous potential to cost-effectively address U.S. energy and climate challenges. In short, nobody asked. The Biomass Thermal Energy Council was formed to make the case for these and other policies that will enable biomass thermal to gain a solid place in the market. With the possibility of a comprehensive Energy Bill in 2010, we have the opportunity to correct this oversight. Biomass can be used to make heat in many forms including pellets or briquettes, wood chips, agricultural residues, willow, poplar, switchgrass and miscanthus. Highly efficient combustion technology is rapidly entering the market. Bulk fuel distribution systems are in place to expand the adoption of central heating systems in home and business heating, industrial process heat, district heating of whole communities, and combined heat and power. Biomass thermal fulfills all the same public policy objectives that are by necessity the basis and justification for energy tax incentives. These include: Reduced consumption of foreign fossil energy Increased efficiency of utilization for equivalent energy output, as compared to biomass electric generation and cellulosic biofuels Reduced greenhouse gas emissions due to the carbon lean status of biomass Reduced emissions of certain air pollutants such as sulfur dioxides and mercury, as compared to fossil fuels Strengthened local economic development and job creation Because of the small market penetration of new biomass combustion, these systems are expensive compared with fossilfueled systems. Fuel transport logistics have yet to reach critical mass with few customers spread over large geographic areas, thus increasing the distribution cost. Incentives are necessary to make biomass thermal more competitive. In time, with increasing market penetration, these incentives can be scaled down or eliminated. The renewable fuels standard (enacted in 2007) and the renewable electricity standard (pending) provide mandates for renewable transportation fuels and electricity. No such man-

Biomass Thermal Energy Council

Time for Federal Tax Policy to Recognize Biomass Thermal

Charlie Niebling is the general manager of New England Wood Pellet in Jaffrey, N.H., and chair of the Biomass Thermal Energy Council’s board of directors. 5|2010 BIOMASS MAGAZINE 15


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LEGAL

perspectives

Is Raising Money too Easy? Todd Taylor shareholder, Fredrikson & Byron

A

ccording to some, raising money from angel investors and venture capitalists is too easy and may have helped cause the financial collapse and they aim to fix this with a new law. Sen. Christopher Dodd’s, D-Conn., proposed Restoring American Financial Stability Act of 2010 would, if enacted, dramatically increase the complexity of raising private financing. Most capital in the U.S. is raised under Rule 506 of Regulation D that allows companies to file a simple form with the Securities and Exchange Commission and each state where sales are made, with no review on the merits of the offering. Before 1996, companies had to navigate the complicated and often contradictory securities laws of the SEC and each state. After 1996, state securities laws (except anti-fraud rules) were preempted by the federal Rule 506 and states had no power to put additional conditions on Rule 506 offerings. This has dramatically sped capital formation and reduced costs. But if Dodd has his way, a small provision in the 1,336-page act would change this all by: requiring the SEC to designate certain Rule 506 offerings as not qualifying for preemption considering the size of the offering, the number of states in which the security is being offered, and the nature of the offerees; requiring that the SEC review any filing made with regard to a Rule 506 offering

within 120 days, and that any filing which is not reviewed within the 120-day period would no longer have the protection of preemption unless a state securities commissioner determines that there’s been a good faith and reasonable attempt by the issuer to comply with all applicable terms, conditions and requirements of the filing, and any failure to comply with such terms, conditions and requirements “are insignificant to the offering as a whole;” permitting states to impose notice filing requirements “substantially similar to filing requirements required by rule or regulation under section 4(4) that were in effect on Sept. 1, 1996.” The first provision likely means that smaller offerings would lose the preemption and would have to once again deal with state regulation. The second provision is even worse. For 120 days after the filing with the SEC, a company would not know if its offering would be preempted from state securities laws. If the SEC does not review within 120 days, the offering is not preempted. Companies would likely have to escrow investor funds for four months while waiting for the SEC to review. Given all the other problems the SEC is dealing with, it is doubtful the SEC would be able to review every Rule 506 offering within this time frame. Plus, it is unclear how many state securities commissioners it takes to determine if the of-

fering is OK, how long they have to make that determination and what happens if they do not make that determination. If a company doesn’t escrow the funds for 120 days, the entire offering could retroactively be deemed to have been an unregistered sale of securities and the issuer could face serious civil liability. The bill also mandates that the SEC raise “accredited investor” thresholds, more than doubling the amount of income or net worth an investor needs to invest. According to Business Week magazine, this would reduce the pool of accredited investors by 77 percent. These provisions will harm innovation, company growth and job formation by small businesses at a time when that is exactly what this country and the biomass industry needs. I hope that by the time you read this, these provisions of the act have been removed, but if not, please contact your congressional representatives to get them removed. Regardless, if you are involved with a company seeking private financing, you need to be aware of these kinds of issues. Sometimes what happens in Washington D.C., really does impact the real world. BIO Todd Taylor is a shareholder in Fredrikson & Byron’s corporate, renewable energy, securities and emerging business groups. Reach him at ttaylor@fredlaw.com or (612) 492-7355.

5|2010 BIOMASS MAGAZINE 17


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business

BRIEFS Envirotek partners with GFE Global Envirotek recently announced that the company’s Extreme Biodiesel division entered into a strategic alliance agreement with GFE Global, an alternative fuel supply equipment and feedstock company. Extreme Biodiesel, an Envirotek majority-owned company, produces biodiesel and manufactures portable production units, called Extreme Extractors, at the company’s Corona, Calif., refinery. The company announced formation of a strategic alliance with GFE Global, which provides alternative fuel refiners with its extruder equipment for extraction of oil from various feedstocks. GFE, which owns a 1,000-hectare (2,471-acre) jatropha plantation in Costa Rica, is currently providing Envirotek’s Extreme Biodiesel division with samples of the Costa Rica grown and extruded jatropha oil for the production of biodiesel at its methyl ester refinery in Corona. BIO

Plum Creek joins BTEC as sustaining member Plum Creek, the largest and most geographically diverse private landowner in the U.S., joined the Biomass Thermal Energy Council as a sustaining member. Plum Creek manages approximately 7 million acres of timberlands in major timber producing regions of the U.S. and wood products manufacturing facilities in the Northwest. The company serves traditional forest product markets as well as emerging energy markets for biomass. A longstanding practitioner of sustainable forestry, in 1999 Plum Creek became the first company to have all of its lands certified to Sustainable Forestry Initiative standards. Mike Jostrom, director of renewable resources at Plum Creek, will be joining the BTEC board of directors. BIO

CleanTech Biofuels appoints new board member CleanTech Biofuels Inc., an early-stage provider of technology to convert municipal solid waste into sustainable biomass for renewable energy and biobased chemical production, has appointed Jose “Joe” Bared Sr. to its board of directors. This appointment fills a vacant seat on the board, bringing the total number of directors to five. Bared has more than 40 years of experience having served as the president, chairman, and/or director of a number of public and private companies including oil refineries and waste-to-energy facilities. He began his career as an engineer and founded The Bared Co. in 1968. BIO

20 BIOMASS MAGAZINE 5|2010

New Generation Biofuels appoints Saglio as CFO Renewable fuels provider New Generation Biofuels Holdings Inc. named Dane R. Saglio as chief financial officer, effective March 29. Prior to joining New Generation Biofuels, Saglio had worked as a consultant with emerging private companies in the areas of strategic planning, including exit strategies, transaction evaluation, capital structure, corporate governance, and financial and business operations evaluation, since December 2008. Prior to that, Saglio served as chief financial officer of EntreMed Inc., a publicly traded clinical-stage biopharmaceutical company focused on developing oncology therapies. BIO

RISI hires Rahikainen as director of bioenergy services RISI, the information provider for the global forest products industry, announced the hiring of Anne Rahikainen as director of bioenergy services. Rahikainen previously worked as a senior consultant with Poyry Group, where her responsibilities included new business development, project management and supporting clients in the bioenergy and forest products industry sectors with key strategic questions such as market and product strategy, growth and new investments. At Poyry, she was involved with assessing and supporting numerous bioenergy related investments in the production of electricity, cellulosic ethanol and pellets. Her role at RISI will be to grow the bioenergy services practice by developing new multiclient, subscription and consulting products and growing the customer base within North America and internationally. BIO

Enerkem appoints new CFO Enerkem Inc., a waste-to-biofuels and advanced chemicals technology company, recently announced that Patrice Ouimet has joined the company as vice president and chief financial officer. Ouimet brings a wealth of knowledge to Enerkem’s current seasoned team of executives, with substanOuimet tial experience in corporate strategy, corporate development and investment banking. Prior to joining Enerkem, he was vice president, corporate development and enterprise risk management for Gildan Activewear, an international apparel manufacturer and marketer. As a chartered accountant, Ouimet began his career with Ernst & Young. He later worked in the investment banking primarily in the industrial and paper and forest products sectors. BIO


business

BRIEFS Agri-Tech partners with Cate Street Capital Mascoma awarded top biofuels designation Mascoma Corp. announced its favorable position atop the biofuels landscape, according to a Lux Research Inc. report issued earlier this year. Mascoma received top honors from the Lux report, “Ranking Biofuel Startups on the Lux Innovation Grid,” which analyzes a number of key criteria to indicate which companies are more likely to succeed as the market matures. The Lux Innovation Grid’s predictions are based on selective criteria including revenue per employee, patents, performance metrics, production capacity and other data. BIO

Myriant a GoingGreen Top 50 winner Myriant Technologies LLC, a biotech developer and manufacturer of renewable biochemicals, has been chosen by AlwaysOn as one of the GoingGreen East Top 50 winners. Inclusion in the GoingGreen East 50 signifies leadership among its peers and gamechanging approaches and technologies that are likely to disrupt existing markets and entrenched players. Myriant was selected by the AlwaysOn editorial team and industry experts based on a set of five criteria: innovation, market potential, commercialization, stakeholder value and media buzz. Myriant engineers naturally occurring organisms to utilize sugars from biomass, and can incorporate carbon dioxide from the environment to produce multiple high-value chemicals that are today made from petroleum. BIO

Comer joins Faegre & Benson Bob Comer has joined the Faegre & Benson environmental and natural resources practice as a special counsel in the Denver office. Comer previously served as associate solicitor for mineral, energy, land and water resources with the U.S. Department of the Interior. Comer has been involved in bringing many Comer noteworthy projects to fruition. In addition, he has successfully overseen a variety of complex permitting projects and environmental compliance activities, helped bring new and traditional energy to the grid, and navigated challenging federal land and water issues. Comer also served as associate general counsel for a Fortune 500 mining and mineral processing company. Faegre & Benson counsels clients on a range of natural resources matters—including legal and business issues related to energy, oil and gas, mining, electricity, renewable energy and public lands. BIO SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Industry Briefs, Biomass Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail information to rjohnson@ bbiinternational.com. Please include your name and telephone number in all correspondence.

Joseph J. James, president of Columbia, S.C.-based, Agri-Tech Producers LLC, announced that his firm has entered into a strategic partnership with Cate Street Capital of Portsmouth, N.H. Cate Street Capital will facilitate the manufacturing and purchasing James of what may be the world’s first commercialgrade torrefaction machines, which will provide large amounts of torrefied fuel for electric utility test burns. It will also provide lease financing for select operators seeking to acquire and use ATP’s torrefaction machines. That first machine, called the Torre-Tech 5.0, will be completed by mid-summer and will produce 5 tons of torrefied wood per hour. BIO

Sapphire signs top CFO and president, international James Lambright, former head of the U.S. Export-Import Bank and chief investment officer of the U.S. Treasury Department’s Troubled Asset Relief Program, is joining Sapphire Energy as chief financial officer and president, international. Lambright will expand Sapphire’s Lambright presence in international markets where, as in America, complex energy needs dominate the agenda. Lambright’s experience in the financial markets is extensive. In 2006, the U.S. Senate confirmed his nomination as president and board chairman of the Export-Import Bank of the U.S., where he oversaw a $60 billion credit portfolio of project and export finance transactions in more than 150 countries. In 2008, the U.S. Treasury Department named him chief investment officer of the TARP. BIO

Joule among 50 most innovative companies in the world Joule announced its inclusion among Massachusetts Institute of Technology Technology Review’s 2010 TR50—an inaugural list of the 50 most innovative companies in the world. Operating since 2007, Joule was chosen alongside noted industry-changers such as Google, Apple and Twitter, reflecting its potential to reshape the oil industry with solar fuels and chemicals, including fungible diesel and ethanol that surpass today’s barriers to abundant, sustainable and cost-competitive supply. Joule’s proprietary production process directly converts sunlight and waste carbon dioxide into liquid fuels—removing costly feedstocks and inefficient processing steps from the equation. As a result, Joule effectively bypasses the cost and resource constraints that have hindered biofuels—pioneering a new, breakthrough category of drop-in replacement fuels at unprecedented quantities and costs. BIO

5|2010 BIOMASS MAGAZINE 21


BIObytes Biomass News Briefs

3D glasses made from Cereplast’s bioplastics

Q microbe process patented The U.S. Patent and Trademark Office issued a patent to Qteros Inc. and the University of Massachusetts, Amherst, describing the creation of products such as biofuels through the fermentation of biomass by the Q microbe, a naturally occurring anaerobic microorganism. UMass Amherst microbiology professor Susan Leschine and her research associate Thomas Warnick discovered the microorganism in the soil near a Massachusetts reservoir and were surprised to find that it condenses the enzymatic hydrolysis and fermenting processes into one step. Qteros is the exclusive licensee of the patent, titled “Systems and Methods for Producing Biofuels and Related Materials,” and has demonstrated that its process offers ethanol producers significant cost reductions.

R.W. Beck awarded DOE BPA R.W. Beck, a wholly owned subsidiary of Science Applications International Corp., was awarded a $21 million blanket purchase agreement (BPA) by the U.S. DOE and the Golden Field Office to support the Office of Energy Efficiency and Renewable Energy’s Biomass Program, according to SAIC. R.W. Beck will serve as the DOE’s independent engineer on 18 integrated ethanol biorefinery pilot and demonstration projects, providing services including assistance in program

management, technical and financial due diligence, construction and operations monitoring and Recovery Act compliance, according to SAIC. The BPA’s period of performance expires Sept. 30, 2015. The projects are part of the Biomass Program and DOE will award grants to partially fund their design, construction and operation, helping promote the development and commercialization of cellulosic and algae-derived biofuel, along with biochemical production, in the U.S., according to SAIC.

22 BIOMASS MAGAZINE 5|2010

Oculus3D, a company focused on film-based 3D projection technology, will be the first to offer eco-friendly 3D glasses, made from Cereplast Inc. bioplastic resins and ready for distribution to movie theaters this summer. The CO2 emissions for the more than 10 million fossil fuelbased, nonbiodegradable plastic glasses offered by movie theaters

today is equivalent to the harmful emissions generated by burning 50,000 gallons of gasoline or 917 barrels of oil, according to Cereplast. The Oculus3D eyewear will feature Cereplast’s Compostables resin made with Ingeo polylactic acid. The 3D glasses will biodegrade at a compost site in less than 180 days with no chemical residues or toxicity left in the soil.

Cyclone Power delivers biomass-powered engine Cyclone Power Technologies reported delivery of a biomass-to-power engine system to the U.S. Department of Defense’s Defense Advanced Research Projects Agency-funded company Robotic Technology Inc. for use in its Energetically Autonomous Tactical Robot, a biologically inspired, organismlike robotic vehicle that finds and processes biomass in a manner similar to eating. Cyclone’s six-cylinder Rankine cycle external heat engine is

capable of generating up to 18 horsepower of mechanical power. A more powerful version of the engine is expected to be used in future field prototypes of the EATR. According to RTI, the EATR has numerous potential commercial applications outside military purposes such as in border patrol, agriculture, forestry, natural disaster clean-up and recovery, and power generation in industrial or large-scale farming and logging settings.


Helius Energy gains consent for 100 MW biomass plant UMM to offer gasification curriculum The University of Minnesota, Morris, received an $85,000 grant from the Minnesota Renewable Energy Marketplace– Alliance for Talent Development initiative to deliver and expand biomass gasification curriculum. The university will offer an intensive three-week course on campus this month, it said. Participants will include four-year students from Morris, two-year students from Minnesota West Community and Technical College and Alexandria Technical

College, undergraduate students from other institutions, and working adults seeking training and employment in biomass gasification. The curriculum is offered through a partnership with several institutions and organizations. MNREM is one of 39 regional projects funded through the U.S. Department of Labor Workforce Innovation in Regional Economic Development Initiative.

Finite Carbon announces Tennessee project Wayne, Pa.-based Finite Carbon Corp. launched last summer to provide landowners with a single-source, end-to-end solution for creating and monetizing carbon offsets, is developing a forest carbon project for Lyme Brimstone Forest Co. in Tennessee. It will be Finite Carbon’s first project in the eastern part of the country to be listed under the new Climate Action Re-

serve protocol. The project involves more than 4,300 acres of Brimstone Forest lands in the Cumberland Mountains near Oak Ridge, according to Finite Carbon. The company expects the project to generate several hundred thousand carbon offsets over the next 100 years. Lyme Brimstone Forest is a subsidiary of the Lyme Forest Fund, the forest land investment arm of Lyme Timber Co.

U.K. biomass power plant developer Helius Energy PLC has been granted consent by the Department for Energy and Climate Change to construct a 100-megawatt biomass power plant at Avonmouth Dock on Great Britain’s Bristol Channel. Helius announced the signing of an option to lease agreement for the 18-acre site in October 2008.

When complete, the power plant will be fired primarily by woody biomass and will produce enough electricity to power about 200,000 homes. Electricity will be fed to the local grid, to which Helius reports it has already secured access rights. More details will be released as the project progresses, according to the company.

Texas ag department seeks bioenergy proposals As diversifying the state’s energy resources becomes increasingly important, Agriculture Commissioner Todd Staples announced the Texas Department of Agriculture, in cooperation with the Comptroller’s State Energy Conservation Office, is requesting proposals from entities to conduct a comprehensive bioenergy study. The report will identify the state’s bioenergy needs and investigate opportunities for Texas within the renewable energy industry.

The goal of the study is to provide TDA, the Texas Bioenergy Policy Council, the Texas Bioenergy Research Committee and the Texas Legislature with an in-depth review of the capabilities and challenges of the Texas bioenergy industry. For more information, go to http://esbd. cpa.state.tx.us/bid_show. cfm?bidid=88071%20or or visit www.TexasAgriculture.gov/ bioenergy.

5|2010 BIOMASS MAGAZINE 23


industry

PHOTO: STEMPOWER RESOURCES

NEWS

Stempower Resources’ Biobaler is pulled behind a tractor.

Biobaler connects land management, biomass supply Brush lands in the upper Midwest are a great biomass resource, but can be hard to harvest because the vegetation is thicker than most agricultural machinery allow, but not thick enough to warrant forestry equipment. Stempower Resources’ Biobaler is designed to aggregate vegetation 1 to 8 inches in diameter and can link land management with the biomass supply chain. The cutting and baling equipment simultaneously harvests and bales brush with minimal soil disturbance. It’s been on the market for about four months and Stempower, based in St. Joseph, Minn., has focused on linking its capabilities with the land management industry, according to Peter Gillitzer, Stempower president and co-founder. The coupling can offer lower management costs, and therefore a savings to wildlife management agencies that clear land to create habitats. The Biobaler can also bring in extra revenue if buyers for the bales can be secured, which Gillitzer said has been the biggest challenge. Minnesota Power recently tested about 12 truckloads of the bales in

24 BIOMASS MAGAZINE 5|2010

its ML Hibbard steam electric generating plant in Duluth. The company is evaluating the bales’ fuel quality, availability, Btu value and moisture content to determine whether they are viable as a long-term feedstock. “They’ve burned all the loads but are still working on the analytics,” Gillitzer said, adding that further discussions and negotiations are ongoing. Minnesota Power most likely would not operate its own Biobaler, but would purchase bales already harvested. “They’re really good at running plants and don’t have any interest in operating one of these,” he said. Stempower is also in discussions with other power generators for the purchase or testing of bales, but Gillitzer declined to release more information, as no contracts are in place. Brush is an attractive biomass resource because there is no competition for a supply from paper mills, it can be stored indefinitely without rotting, and dries naturally in the sun without expensive equipment, Gillitzer said. —Lisa Gibson


industry

NEWS ‘Seinfeld’ actor launches waste-to-energy company John O’Hurley, well-known for his portrayal of Jacopo Peterman on the sitcom “Seinfeld,” as the host of the TV game show “Family Feud” and as the season one winner of “Dancing with the Stars,” has taken on a new role in a less-glamorous industry that will convert hog manure into power. O’Hurley and his new company Energy-Inc. have signed a contract to install a waste-to-energy system at High Ridge Farm in North Carolina to convert waste from the farm’s 3,000 hogs into electricity. O’Hurley, who said his interest and convictions in renewable energy aren’t a surprise to those who know him, described the company’s initiatives as the result of a two-year ramp up. “The technology hasn’t had a presence in this country, but it’s been used with quite a bit of success for the past 10 years or so in Europe and Asia because fuel prices, historically, have made it a comfortable environment,” he said.

‘It’s our first attempt to move into an industry that has been zeroed in on as the No. 1 polluter because of methane and the residual effluent. It’s a significant environment problem, and also a public relations problem because of the stench; nobody wants to live near one, and we can change that template for them.’ Now that the technology has been improved since its migration to the U.S., it has evolved into an efficient mechanism to produce large amounts of energy from waste, O’Hurley said. Much higher fuel prices in the U.S. and a more technologically and government-friendly climate for clean technologies influenced the decision to introduce the Advanced Thermal Conversion Technology in this country, he added. Nevada-based Energy-Inc. has an exclusive license to distribute the ATCT system, which O’Hurley said involves two main platforms. “One, we take any waste that has a Btu value such as manure, municipal solid waste, agriculture waste, wood waste—anything not nuclear or metal— and produce electricity with near zero emissions through a pyrolytic gasification technology,” O’Hurley said. “We super heat the waste without the presence of oxygen to generate a synthesis gas; the gas turns a generator if necessary or can used as a replacement for natural gas. It’s an entirely closed system and produces steam, heat, hot water and residual biochar.”

O’Hurley described the footprint of a typical system as being able to fit in the back of an 18-wheel truck. A daily input of 500 tons of waste biomass should yield about 1.9 million Btu of syngas and 9,125 tons of biochar fertilizer annually. The system to be installed at High Ridge Farm is a 12-ton per day unit. “It’s our first attempt to move into an industry that has been zeroed in on as the No. 1 polluter because Actor O’Hurley is a partner in Energy-Inc. of methane and the residual effluent,” O’Hurley said. “It’s a significant environment problem, and also a public relations problem because of the stench; nobody wants to live near one, and we can change that template for them.” The system will enable farms such as High Ridge to utilize all of the effluent/manure, which moves through flow systems directly into the power plant. “This will provide all of High Ridge’s electricity, and also some excess to sell back to the grid,” O’Hurley said. Soon, Energy-Inc. will also be working to develop closed environments for the hog industry, using the byproduct of their units—controlled hot air—to provide a consistent 72-degree Fahrenheit environment for swine. “This will create a stress-free environment as hogs are very sensitive to their environmental conditions, and their size can be really affected by stress,” O’Hurley said. The systems are available for purchase and there is no capital outlay, according to O’Hurley. “We’ll bring it to them,” he said. “It’s done like a car lease—they purchase the power from us at a reduced rate, and anything leftover, they participate in that as well.” He added that the system at High Ridge Farm should be complete and operational within six months. —Anna Austin

5|2010 BIOMASS MAGAZINE 25


industry

NEWS WM’s waste-based energy strategy progresses In the midst of multiple new renewable energy investments and partnerships—most recently involving Canadian cellulosic ethanol producer Enerkem Inc., organic waste-to-biogas technology company Harvest Power Inc. and plasma gasification technology developer InEnTec LLC—“waste” is no longer an applicable term for the materials Waste Management has collected and handled for decades. Carl Rush, vice president of WM Organic Growth Group, who directs the strategy behind WM’s renewable energy investments, said the company’s versatile presence in the biomass/biogas energy industry, aside from its goals of sustainability, is the key to WM’s continued success. “With these investments—Enerkem, Terrabon, S4 Energy Solutions— each fills a potential niche within the recovery of material value,” he said. “We are looking for those we think are closest to commercialization and have the highest likelihood of success, and we have invested with those who have met those criteria.” On WM’s most recent announcement of forming joint venture company S4 Energy Solutions with InEnTec to develop, operate and market plasma gasification facilities using InEnTec’s Plasma Enhanced Melter technology, Rush said the first major milestone will be to complete a 25-ton-per-day demonstration unit to prove the technology at scale. “It’s been done at smaller scales, so we’re proving it up at our Columbia Ridge Landfill in Oregon,” he said. The unit is currently under construction, Rush added, and should be fully operational by the end of the year. As InEnTec’s technology produces syngas that can be used to make a variety of products including electricity, liquid fuels such as methanol/ ethanol, hydrogen and, potentially, diesel, Carl said the products WM are focusing on are categorized into a value hierarchy the company has de-

26 BIOMASS MAGAZINE 5|2010

veloped. “Electricity is the base case for outputs; the next level up is liquid fuels, which we are developing some of right now, and the next level up is the specialty chemicals and higher value products,” he said. “Syngas has a lot of flexibility, so it becomes a function of how efficient and how effective the conversion technology is that you put on the back end.” WM also recently invested in organic waste-to-biogas company Harvest Power. “We made an investment, but what really intrigued us about Harvest Power was that they are pursuing biogas as an output of their technology, but also recognize that there may need to be first steps taken in the composting arena in order to get into the game,” Rush said. Ideally, the relationship will extend beyond an investment, he added, and WM and Harvest Power are jointly looking at projects in the composting and anaerobic digestion sectors. The same goes for WM’s investment in Enerkem, which is currently operating a commercial-scale syngas-to-ethanol/methanol plant in Westbury, Quebec, and is constructing a 20 MMgy waste-to-biofuels plant in Pontotoc, Miss. “At this point it’s an investment, but it’s a different type of syngas technology than S4 Energy Solutions,” Rush said. “We’re keenly interested in what they are doing and are looking for opportunities to do things jointly with them while we watch their development, understand their technology and see what they can accomplish.” WM is well on its way to meeting its goal of generating the renewable energy equivalent of powering 2 million homes by 2020, added Wes Muir, WM director of corporate communications. When WM announced its goal in 2007, it generated enough renewable power for 1 million homes, he said. —Anna Austin


industry

NEWS Metabolix, ADM begin Mirel bioplastic production Massachusetts-based bioscience company Metabolix Inc. and agri-giant Archer Daniels Midland Co. have begun producing Mirel bioplastic at their $300 million commercial facility in Clinton, Iowa, and expect to make initial deliveries to customers by May. Through their joint venture, the companies are working up to the plant’s full production capacity of 110 million pounds per year, according to Metabolix. Mirel is a family of biodegradable, biobased natural plastics made from plant-derived sugar. Through a microbial fermentation process, the base polymer Polyhydroxyalkanoate (PHA) is produced within the microbial cells and harvested, according to Metabolix. The company has developed industrial strains of the cells, which can efficiently transform natural sugars into PHA. The recovered polymer is made into pellets to produce Mirel bioplastics products. Mirel resins will biodegrade in natural soil and water environments, along with home and industrial composting systems. Target markets for Mirel include agriculture and horticulture agencies such as Ball Horticultural Co.; compost bag producers such as Heritage Plastics; marine and aquatic companies such as Bioverse; consumer product manufacturers such as Newell Rubbermaid; business equipment producers such as Labcon; and packaging companies, according to Metabolix. “We believe that these six segments represent over 2 billion pounds of initial addressable demand. The market remains extremely robust for Mirel,” said Metabolix CEO Richard Eno. “We have

—Lisa Gibson

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industry

NEWS Summerhill unveils biomass powder technology

GDF Suez plans huge biomass plant in Poland

New York-based Summerhill Biomass Systems publicly unveiled its technology for converting plant waste into biomass powder in March. Summerhill has patents pending on its system, which produces a burnable fine powder fuel, similar in texture to baking powder. The fuel can be used to produce heat and burns as intensely as gas, according to the company. The powder would cost less than heating oil, including delivery, and is more efficient than ethanol and other types of biofuels produced around the world, according to James McKnight, president and cofounder of Summerhill. The system can consume timber, brush, corn stalks and other plant waste, emitting no smoke or odor. “With our system, everything can be used,” he said. “Nothing is wasted.” The system is controlled by a thermostat and can be used in grain-drying operations as well as commercial and small industrial applications. The company initially received a $75,000 grant from the New York State Energy Research and Development Authority for feasibility studies and is looking for additional investors. McKnight also presented his technology at the 2008 World Bank Alternative Fuels Symposium.

GDF Suez has signed a contract with engineering firm Foster Wheeler for the design and construction of a circulating fluidized-bed boiler for a proposed 190-megawatt 100 percent biomass-fueled power station near Polaniec, Poland. Foster Wheeler will design and supply the steam generator, auxiliary equipment and biomass yard, and will also construct and commission the boiler island. GDF Suez and Foster Wheeler believe the power station will host the world’s largest biomass boiler fueled by wood chips and biomass crops when complete. The facility will be located at the site of GDF Suez’s 1,800-MW coal/biomass cofired-power station, Polaniec Power Station. GDF Suez spokeswoman Sabine Wacquez said the facility will require 222,000 tons of agri-fuels and 890,000 tons of woody biomass each year. The total project investment is €240 million ($3.2 million), Wacquez said. The power station is expected to be operational by the end of December. GDF Suez has more than 50 sites in the U.S., Europe and Brazil that annually consume more than 2 million tons of biomass for power generation.

—Lisa Gibson

—Anna Austin


industry

NEWS Researchers discover furan-degrading bacterium Researchers at Delft University of Technology in Netherlands have discovered that the bacterium Cupriavidus basilensis breaks down furans and other harmful byproducts generated when sugars are released from wood. The discovery holds the potential to remove harmful compounds during the production of second-generation chemicals and fuels from waste wood, avoiding the current expensive and environmentally unfriendly methods. Cupriavidus basilensis completely metabolizes the furans, which can hinder fermentation, and leaves the valuable sugars untouched, according to the university. Assisted by supervisors Han de Winde, professor of industrial microbiology, and Harald Ruijssenaars, senior scientist at Bird Engineering, researchers Frank Koopman and Nick Wierckx unlocked the components of the entire degradation process in the bacterium, identifying the genes and enzymes involved. The initial discovery of the bacterium’s capabilities, however, was unexpected. “As often in this type of research, there’s quite some serendipity at stake here,” said de Winde, head of the university’s Department of Biotechnology. “We were indeed targeting microbial pathways for lignocelluloses (hydrolysates)

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degradation, however, finding this extraordinary bug yielding full blown and new hydroxymethylfurfural (HMF/furfural) utilization pathway was not our immediate expectation.” In addition, the team was successful in incorporating the degradation process into a bacterium with common industrial biotechnological uses, Pseudomonas putida. Their work was published March 2 in the journal Proceedings of the National Academy of Sciences. “Although still in early days, transferring the detoxification ability to bacteria (or other microorganisms) that at the same time can perform other industrially relevant processes would add value and efficiency to certain biotech processes,” de Winde said. “Judging from our current insight into the biochemical and molecular aspects of the HMF/furfural degradation route from Cupriavidus, this should work in other bacteria as well.” He added that the team is awaiting further proof. The research is part of the Dutch university research consortium Bio-based Sustainable Industrial Chemistry, geared toward developing new concepts for sustainable production of energy and chemicals. —Lisa Gibson

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industry

NEWS U of Toronto researches bark biorefinery process The process can use any bark, although composiThe University of Toronto will use a portion tional differences among different species may make of an $8.2 million award from the Ontario Research some candidates better for certain products, Yan Fund’s Research Excellence Program to develop a said. “We are certainly very interested in Canadian bark biorefinery that will produce green adhesives species including bark from mountain pine beetleand biobased foams from tree bark. infested trees.” Associate Professor of Forestry Ning Yan and The project received $1.75 million and could Professor Mohini Sain are leading a multidisciplinary have significant impacts on forestry, along with the team in developing the process. “We will be using Yan automotive and chemical industries, according to the extraction, separation and purification for turning barks into adhesives,” Yan said, adding that hydroxylation will university. “Bark contains other niche specialty chemicals that convert the bark biomass to biobased foam. “The biobased can have antimicrobial and neutraceutical/pharmaceutical apfoam with controlled foam structure can be used in building, plications,” Yan said. If the project proves successful, it would provide a methconstruction and automotive industries as more environmentally sound alternatives for traditional petroleum-derived foam od for converting a waste residue available in large quantities to commercially viable and value-added products with valueproducts,” she said. The team is in the early phases of project development, added market potential, Yan emphasized. It can be implementfocusing on fundamental research and bench-scale technology ed in existing forestry operations to complement the product development for intellectual property generation, which is cru- portfolio. “It also identifies another stream of waste nonfood cial for scale-up and demonstration efforts, according to Yan. biomass resources that can be utilized for bioproducts develThe team aims to have some products ready for pilot trials opment, offering more options and easing some of the conin four to five years with the help of its partners: FPInnova- straints due to demand on biomass feedstock,” she said. “Furtions, a forest bioeconomy development company; the Wood- ther developing nonfood feedstock to high-value chemicals bridge Group, a foam technology provider; Huntsman Corp., and functional materials is fundamental to this project.” a differentiated chemicals manufacturer and marketer; Arclin, —Lisa Gibson a provider of bonding and surfacing solutions; St. Marys Paper Corp., a paper mill; Tembec Inc., a paper company; and AbitibiBowater, which produces newsprint, commercial printing papers, market pulp and wood products.

30 BIOMASS MAGAZINE 5|2010


industry

NEWS Massachusetts coalition publicizes initiative’s negative impacts

Proponents of renewable energy in Massachusetts have formed a coalition to educate the public about the detriments of a proposed ballot initiative that would unreasonably limit carbon emissions. The initiative is slated to appear on the Nov. 2 ballot and will mandate that biomass power plants, along with other renewable facilities, emit no more than 250 pounds of carbon dioxide per megawatt hour in order to qualify for the state renewable portfolio standard (RPS) of 20 percent by 2025. Without that qualification, plants will not generate renewable energy credits, a key portion of their revenue. The mandate is completely unreasonable, according to Matthew Wolfe, chairman of the Committee For A Clean Economy, which formed the coalition, and principal of Madera Energy Inc, a renewable energy project developer. “It totally ignores the life-cycle analysis of biomass, considered to be carbon-neutral,” he said. In addition, the definition of biomass in the initiative is broad and would include wood, waste, anaerobic digestion and more. “A lot of different things would be captured in this ballot measure,” he said. The initiative would stymie renewable energy development in Massachusetts, making it difficult to meet its RPS. “We want to try to develop as much renewable energy as possible and this would hurt that,” Wolfe said. It would also significantly impact job creation in the state and hinder innovation. “We want to try to innovate our way out of our dependence on fossil fuels,” he said. The technologies available are efficient and the problem is not with the biomass industry, but the “not in my back yard” (NIMBY) mindset, Wolfe said, adding that not everyone would agree. “A lot of this opposition is based on NIMBYism,” he said.

The coalition’s campaign, led by Rasky Baerlein Strategic Communications, will focus partially on debunking NIMBY-related concerns, but also will educate the public on the overall benefits of biomass power, along with the other effected renewable energy sectors, such as biofuel and anaerobic digestion. Wolfe said the organization has seen positive feedback so far from focus groups. “This is an opportunity to bring together people with common interests around a common issue, which up to this point, hasn’t been very well organized,” he said. Madera is developing a 47-megawatt combined-heat-and-power plant, the Pioneer Renewable Energy Project, in western Massachusetts. The plant will run on clean wood biomass and will have the capacity to provide steam and heat to nearby homes and businesses. Massachusetts has ample woody biomass resources, prompting several other power plant proposals in the state but citizen opposition is broad and seems to be gaining ground. At the beginning of December, the Massachusetts Department of Energy Resources suspended all consideration of new biomass projects for participation in the state RPS as it awaits the results of a third-party study to determine the sustainability and carbon neutrality of biomass power generation. The study, led by the Manomet Center for Conservation Sciences, is largely fueled by the vocal citizen opposition. It should be completed by June, with any new rulings released at the end of the year. Even with such staunch resistance, Wolfe is optimistic that his coalition will succeed in convincing voters that the initiative will adversely affect the state. “This isn’t a great thing that’s happening in Massachusetts, but we’re confident that we can win this,” he said. —Lisa Gibson


industry

NEWS Colorado raises state RPS With the signing of a bill anticipated to create thousands of new jobs, Colorado—the first U.S. state to enforce a renewable portfolio standard (RPS)—has once again moved to the front of the pack of states that have followed its lead over the years, and is now second in aggressiveness only to Maine’s RPS of 40 percent by 2017. On March 22, Colorado Gov. Bill Ritter signed into law HB 10-1001, calling for Colorado to draw 30 percent of its energy from renewable sources by 2020. The bill trumps the state’s previous goal of 20 percent by 2020, an amendment that passed in 2004. The bill requires a portion of the RPS to be met through a subset of renewable generation, or distributed generation (DG), which does not require additional transmission facilities to connect to the grid. By 2015 and through 2019, 20 percent of retail electricity sales in Colorado must be renewable with DG equaling at least 1¾ percent of retail electricity sales; 30 percent of its retail electricity sales by 2020 and thereafter with DG equaling at least 3 percent of its retail electricity sales. All providers of retail electric service in Colorado, other than municipally owned utilities that serve 40,000 customers or

Colorado Gov. Ritter signs HB 10-1001 to increase the state’s RPS.

fewer, are considered required utilities. In the U.S., 29 states now have renewable electricity standards; those that do not are primarily in the south. —Anna Austin

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NEWS U of Toledo establishes sustainable materials institute The newly approved Institute for Sustainable Engineering Materials at the University of Toledo, Ohio, will bring together research teams to solve materials development-related problems, such as minimizing and recycling waste, within a variety of industries. The institute was formed in response to a growing corporate interest in environmentally friendly products and the development of sustainable ways to manufacture goods. It will function as a separate office within the school’s College of Engineering and will bolster the school’s standing as a center for green technology and innovation. “We want to be a problem solver for industries,” said Nagi Naganathan, dean of the College of Engineering. “We want them to know we are the product solution site. We have a proven track record to respond to industry problems and we will be agile in terms of our response.” He added that it will be an application-driven program wherein the client will come to the researchers with a problem. “We will reconstitute ourselves in terms of expertise to respond to that particular problem,” he explained. University researchers contributing to the institute have done work for 40 outside companies including Shell, DuPont, BP and Dow Chemical Co. “We already have some proven outcomes we

can share with industries in terms of why this institute will be beneficial to them,” Naganathan said. Work at the organization will extend to sectors including engineering materials, biochemical and thermochemical processing of renewable feedstocks into biofuels and value-added chemicals, and green chemistry and engineering, according to Maria Coleman, professor of chemical engineering and co-director of the institute. The center is studying the conversion of numerous biomass sources, including secondary and tertiary wastes, energy crops and algae, into products and fuel through fermentation or gasification, according to Glenn Lipscomb, professor of chemical engineering and chairman of the College of Engineering. The research groups will also address options for recycling of plastic material, which has been a focus of the University’s Polymer Institute, according to Saleh Jabarin, professor of chemical engineering, co-director of the Institute for Sustainable Engineering Materials and director of the Polymer Institute. “This [Institute for Sustainable Engineering Materials] will create integration among all the things we undertake here at this college,” Naganathan said. —Lisa Gibson

5|2010 BIOMASS MAGAZINE 33


industry

NEWS University of Florida study downplays RPS potential A recently released University of Florida study indicates that increased woody biomass use for power generation through implementation of a 7 percent renewable portfolio standard (RPS) in Florida would bring about a modest increase in the state’s gross domestic product, employment and state government revenues, but suggests that a more ambitious RPS would require significant forest management practices and could have negative implications on the forest products manufacturing sector. The study’s impetus was to evaluate economic effects that varying statewide RPS levels would have on Florida as well possible effects on woody biomass demand, supply and timber prices. Florida is not one of 29 U.S. states that have implemented a mandatory RPS, but a 20 percent RPS by 2020 has been contemplated since 2008 after being endorsed by the Florida Public Service Commission and Gov. Charlie Crist. John Bonitz, of the Southern Alliance for Clean Energy, said he doesn’t think the study proves or disproves the feasibility of a 20 percent RPS in Florida, despite recent doubt-casting media reports suggesting that the state’s forests cannot support one. He believes the study does not use the best available renewable energy data, and that it assumes woody biomass to play an extreme role in an RPS. “The other renewable energy source potentialities in the study—wind, solar and hydro—those numbers were almost half of what we found in our ‘Southern Solutions Report for a National Renewable Energy standard,’” he said. As a result of these drastically lower estimates, Bonitz said, when analyzing the RPS, biomass renewables had to make up that difference and therefore resulted in extreme assumptions. In the report, which found that a 20 percent RPS in Florida

is feasible, regional power production from biomass even at the highest level outlined in the report’s estimates, would require annual harvests of no more than 0.2 percent of forest resources. Bonitz said he agreed with the study’s emphasis on a need to improve management of forestlands to grow more wood, which is the case in all woody biomass-to-energy practices. According to the Florida Forestry Association, the state hosts nearly 16 million acres of timber resources that infuse more than $16.6 billion into the state’s economy. The UF study also conflicts with a study commissioned in 2008 by the FPSC and the Florida Governor’s Energy Office, which determined that Florida could economically produce nearly 25 percent renewable energy by the year 2020. Outside of Florida, there are a few other states in the Southeast contemplating an RPS; North Carolina is the only state in the region that has implemented one. Bonitz and the SACE are working to help southern states evaluate RPS possibilities. Regarding opposition to the role of biomass in RPSs, he said most of it is embellished by the media. “It’s a small amount of protesters who have a misunderstanding of the technology, and we work throughout the region to answer questions, address concerns and help people learn more about biomass electricity and biofuels,” he said. “There are a lot of complexities; it’s not a simple technology to address and understand, but it’s really easy to succumb to fear mongering. Biomass is clearly something we want to do sustainably; there’s tremendous potential in Florida and it’s still underestimated and underappreciated.” —Anna Austin

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NEWS Researchers study miscanthus, switchgrass pests Miscanthus and switchgrass, two of the leading cellulosic ethanol feedstock contenders, just like any other crops, are threatened by pests that need to be studied and carefully mitigated. Researchers at the University of Illinois Energy Biosciences Institute have recently identified potential pathogenic nematodes—microscopic, wormlike organisms—of both crops and at what levels they are present in different areas. In a 2008-’09 nematode survey, the group analyzed samples from 37 miscanthus and 48 switchgrass plots in Illinois, Georgia, Iowa, Kentucky, South Dakota and Tennessee. They found that all sample sites had at least two nematode species that have been reported to reduce biomass in most monocotyledon hosts. The presence of nematodes is not unheard of, however, as the organisms provide a variety of functions to soil systems including nutrient mineralization through feeding interactions. Lead UI researcher Tesfamariam Mekete told Biomass Magazine that results obtained thus far did not come as a surprise. “The result of our first survey fits in our preliminary hypothesis and expectations,” he said. “Most of the nematodes we identified are common parasites of monocotyledon plants such as corn.” The levels of the nematodes found in the switchgrass and miscanthus samples were comparable to densities found in other crops, Mekete said, but the damaging population thresholds for the biofuel crops are still unknown. Damage symptoms observed by the researchers included visible stunting of lateral roots and destruction of the fibrous root system, which could contribute to a decline in biomass yield. Currently, there are several control methods for a given nematode in different crops, Mekete said, but there is no information available

Biomass crops such as switchgrass, just like food crops, are threatened by potentially yield-robbing pests.

on bioenergy crops such as switchgrass and miscanthus. “Though we are screening some biocontrol agents and other available methods,” he said. The next step for the research team will be work on host suitability and damage threshold densities in a greenhouse setting. Mekete said the group plans to set up field experiments at Urbana and Havanna, Ill., in the summer. Eventually, they hope to develop species-specific DNA tests to help identify nematodes in order to develop control tactics. —Anna Austin

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NEWS BCAP proposed rule draws thousands of comments The USDA’s Biomass Crop Assistance Program proposed rule has drawn more than 20,000 submissions during the 60-day comment period, according to USDA Deputy Secretary Kathleen Merrigan. USDA released the proposed rule Feb. 3, allowing comment submissions until April 9. The final count could be significantly higher, she added, as that number was a preliminary estimate given several days before the comment period deadline. In similar past scenarios, the few days prior to the cut-off date saw an influx of comments as many people wait until the last minute. Merrigan could not yet describe the range of input received, but she said the USDA will be working as quickly as it can to assemble a team to organize and analyze the comments. “We put out a variety of options for people to give us feedback,” she said. “It will be very interesting to see if there is some consensus in key areas of the rule, but only time will tell. There’s a lot of work to do to get to the final rule.”

Merrigan made the remarks about BCAP during an energy forum officially recognizing a memorandum of understanding recently signed by U.S. Agriculture Secretary Tom Vilsack and U.S. Navy Secretary Ray Mabus, to encourage the development of advanced biofuels and other renewable energy systems. The Department of the Navy has set new energy targets for the Navy and Marine Corps and biofuels are a major component of these; the departments will now work together on projects that support President Obama’s initiative to make the U.S. a global leader in developing a renewable energy economy, reducing energy consumption derived from fossil fuels and increasing energy production from renewable energy sources. At press time, Merrigan and Assistant Secretary of the Navy for Energy, Installations & Environment Jackalyne Pfannenstiel could not yet comment on any specific USDA/DON projects.

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NEWS OPG contracting biomass for conversion Ontario Power Generation is moving forward with plans to repower its 211-megawatt (MW) coal-fired Atikokan Generating Station with biomass and has issued a call for potential woodbased biomass fuel suppliers. Located in northwestern Ontario, Atikokan will be the first power station that OPG will convert to biomass. The company owns three other coal-fired power plants in Canada, and has previously announced plans to evaluate repowering all of them with biomass by the end of 2014. Spokesman Ted Gruetzner said OPG is looking to contract 90,000 metric tons of fuel for Atikokan in the form of wood pellets. Fuel suppliers to the power station will be required to prove that the supplied biomass is being sourced from sustainable forest management practices. If all of the wood fuel required to power the Atikokan facility came from harvested wood, OPG said, it would be less than 1 percent of the current allowable harvest within the prov-

ince. According to the Ministry of Agriculture Food and Rural Affairs, Ontario contains 2 percent of the world’s forests and 17 percent of Canada’s forests. There is not yet a definitive timeline or cost set for the project, Gruetzner said. “We’re still doing engineering and studying what will be needed in terms of storage and fuel handling,” he added. “The big issue is determining how our burners will work with it (wood pellets) and configuring the fuel handling processes.” In the fall of 2009, as part as the province’s Green Energy Act, which calls for Ontario to phase out all coal-fired plants, the Ontario Power Authority launched a renewable energy feedin tariff that guarantees specific rates for energy generated from renewable sources. The rate for biomass is 13.8 cents per kilowatt for plants under 10 MW and 13 cents for larger facilities. —Anna Austin

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NEWS Shell, Virent announce biogasoline demonstration plant The world’s first biogasoline demonstration plant is up and running in Madison, Wis., with the capacity to produce 10,000 gallons per year from plant sugars. The facility, dubbed Eagle, is the latest milestone in a joint research and development effort between Virent Energy Systems Inc. and Royal Dutch Shell plc that aims to commercialize biogasoline production from Virent’s Bioforming platform technology. “The demonstration plant was delivered on time, on budget and without injury, producing on-spec biogasoline and frankly, it’s performing better than planned,” Lee Edwards, Virent CEO, said during a conference call March 23. “This is an important milestone for Virent as we progress plans toward commercialization.” The process is similar to a standard oil refinery converting crude oil to transportation fuels, but Eagle uses sugars from various biomass sources to produce the same hydrocarbon mixtures used in standard transportation fuels, according to Randy Cortright, Virent founder and chief technical officer. Those sugars can be sourced from corn stover, sugarcane pulp, wheat and corn, but Eagle’s feedstock has come from beet sugar, according to Virent. The companies declined to release a cost estimate of the plant. “This demonstration for Virent has shown the growth of our company,” Cortright said. “We will be able to collect information and collect the expertise to build a commercial-size plant that will be able to generate transportation fuels.” This year, Virent and Shell will focus on engineering, design and implementation plans, using Eagle’s success. Volumes produced at the plant, which is 100 percent bigger than Virent’s lab-scale operations, will be used for engine testing and fleet testing, as well as in engineering and commercial analyses.

38 BIOMASS MAGAZINE 5|2010

“We are looking with Virent into how we can scale up this technology,” said Luis Scoffone, vice president of alternative energies for Shell. The most important factor is that Eagle, sited at Virent’s Madison facilities, demonstrates the processes’ scalability, he added, noting that feedstock and location are important elements in the commercialization equation. Edwards said a timeline for a commercial facility has not been established, but it will need to be clearly defined within the next five years. “We have many milestones still to deliver going forward,” he said. “It’s important during 2010 that we learn as much as we can while we complete the fleet testing schedule for this year.” —Lisa Gibson


industry

NEWS Study evaluates landscape effects on biomass crop yields Understanding biomass productivity on specific landscape positions is essential to realizing the highest financial returns on the integration of herbaceous and woody biomass crops at the field scale while providing a reliable and consistent feedstock source that meets quality specifications for the bioenergy market, according to a recent University of Minnesota study. Led by Gregg Johnson, associate professor, the research team investigated the differences in woody and herbaceous crop productivity and biomass yield of crops planted on seven varying landscape positions at the University of Minnesotaâ&#x20AC;&#x2122;s Agricultural Ecology Research Farm, part of the Southern Research and Outreach Center in Waseca, Minn. Terrain features were analyzed using Geographic Information Systems technology. Crops evaluated in the study were alfalfa, corn stover, corn, grain, willow (two clones), cottonwood, poplar and switchgrass. Landscape positions included summit (excellent water drainage but visible erosion), depositional (receives water from two hill slopes and is characterized by poor drainage and accumulated topsoil), flat (poorly drained but has retained topsoil), and four hill slopes with east, south, southwest and north aspects. The researchers recognized that harvest intervals between woody and herbaceous crops are different and adjusted sampling methods accordingly. Willow data represented growth in the second year postcoppice, whereas poplar and cottonwood data represented third-year growth; alfalfa, switchgrass, and corn data represented combined yields from 2006 and 2007. The study also takes into account the fact that soil physical and chemical properties change depending on landscape position. Bedeschi has been designing, manufacturing and marketing industrial equipment for the biomass, cement, brick, mining, mineral, power, wood, pulp, and paper industries for over 100 years. Our line of products encompasses equipment for UDZPDWHULDOVKDQGOLQJGHVLJQHGWRĂ&#x20AC;WWKHVSHFLĂ&#x20AC;F needs of our clients such as: Â&#x2021;$SURQ)HHGHUV Â&#x2021;&UXVKHUV Â&#x2021;6WDFNHUV OLQHDUDQGFLUFXODU  Â&#x2021;5HFODLPHUV OLQHDUFLUFXODUDQGEOHQGLQJ  Â&#x2021;6KLS/RDGHUVDQG8QORDGHUV With our in-house engineering department, we design and engineer all of our equipment, using the latest software systems. We fabricate, assemble and test all of our machines in our 500,000 ft² PDQXIDFWXULQJIDFLOLW\2XUĂ&#x20AC;HOGWHFKQLFLDQVIROORZ the erection/assembly phase of the machines on site, along with providing start-up and commissioning assistance â&#x20AC;&#x201D; allowing us to supply machines and plants to engineering companies and clients around the world. BEDESCHI AMERICA, INC. :+LOOVERUR%OYG6XLWH 'HHUĂ&#x20AC;HOG%HDFK)/Â&#x2021; 3K info@bedeschiamerica.com www.bedeschiamerica.com 9LVLWRXU%RRWKDWWKH,QWHUQDWLRQDO %,20$66&RQIHUHQFH ([SR

Key findings of the study included: Total switchgrass and biomass yields were lower at the depositional, south hill slope, southwest hill slope and north hill slope compared with other landscape positions. Cottonwood biomass yields were consistent across all positions, showing no differences in yield among sites. Poplar biomass yield was lower at the depositional position compared with all other positions. Cottonwood and poplar did not display significant correlations between biomass yields and soil/terrain attributes. High productivity of both willow clones at the depositional and flat positions relative to other landscape positions indicate that willow is a good cropping option in landscape positions with saturated, anaerobic soils. Total alfalfa yield was lower at the depositional and west hill slope landscape positions compared with all other positions. Alfalfa biomass at the west hill slope position, however, was higher than the depositional position but lower than the other positions. Total corn stover yield was significantly lower at the depositional and flat landscape positions compared with all other positions; yields were higher where there was less soil moisture compared with landscape positions with saturated soils. The researchers believe the study provides a first step in developing cropping systems that provide a knowledge-based approach to crop selection and placement on the landscape with the goal of functional optimization. â&#x20AC;&#x201D;Anna Austin


industry

NEWS Using funds it was awarded from the U.S. DOE, Massachusettsbased Myriant Technologies LLC has begun design and engineering phases in the development of its biobased succinic acid facility at the Port of Lake Providence, La. It will be the biggest of its kind in the world. Myriant, a biotechnology developer and renewable biochemical manufacturer, was awarded up to $50 million for the project and hopes to begin construction on the facility by September of this year, according to Myriant. The company’s process for producing its biobased succinic acid uses both carbon dioxide and local sorghum to displace petroleum-based feedstocks. Succinic acid is used in a variety of applications including plastics, fibers, polyesters and pigments. Of 19 integrated biorefinery projects that won funding or loan guarantees from the DOE in 2008, Myriant’s is the only one focusing exclusively on biobased chemicals rather than biofuels. The project, which will also benefit from an additional $10 million from the Lake Providence Port Commission and the Louisiana Department of Transportation, will help revitalize the U.S. manufacturing base, bringing much-needed job growth to northeast Louisiana, according to the company. Myriant and the port had previously invested more than $13 million to make the site shovel-ready and Myriant has plans to further expand at the location.

PHOTO: MYRIANT TECHNOLOGIES LLC

Myriant draws from DOE-awarded funds

An aerial view shows Myriant’s biobased succinic acid facility site at the Port of Lake Providence, La.

“This project unleashes a new era of investment and job creation here in the United States by bringing together our core strengths in biotechnology, agriculture and manufacturing,” said Stephen J. Gatto, chairman and CEO of Myriant. “The advent of industrial biotechnology represents an extraordinary opportunity for the United States, and we believe, a defining moment in our history.”

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40 BIOMASS MAGAZINE 5|2010

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industry

NEWS KEDA assembles biomass working group In a proactive effort fueled by increasing nationwide interest in biomass energy, the Koochiching Economic Development Authority board in Koochiching County, Minn., is assembling a biomass working group to gain a thorough understanding of the industry’s important elements. The team of six to nine people will include foresters, loggers, the land management sector and representatives from the county’s largest employer and user of timber: the Boise Cascade Inc. paper mill. “We want to get a good cross-section of people who understand what’s out there and how it’s used,” said KEDA director Paul Nevanen. “We’d like to assemble a team that can put a business plan together for projects around here.” The group will be the contact for any parties interested in developing projects in Koochiching County. The county has no biomass projects so far, but Nevanen said it’s just a matter of time. “People are looking in that direction and doing some planning around it,” he said. “We’d like to have a clear understanding of how we can capitalize on that.” The team will study supply chain logistics, as well as resources for project investors and one of the main goals is to establish a planning document. “I don’t know yet what that will look like or what it will morph into,” Nevanen said.

The first meeting was in April, and will be followed by regular quarterly meetings. While members will not rule out any viable source, woody biomass will be the main focus. “That is the resource we are blessed with,” Nevanen said, adding that the group will be sensitive to Boise and its pricing. “It’s important to compile this team, so when opportunities arise, we’ve done our homework,” he said. —Lisa Gibson

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NEWS Washington passes forest biomass contract law Washington Gov. Christine Gregoire recently signed into law a bill that will help build a strong forest biomass industry within the state while mitigating overcrowded or fire-prone forests on state trust lands. According to the Washington State Department of Natural Resources, there are approximately 3 million acres of state trust Gregoire land in Washington. The Forest Biomass Supply Agreements Bill will allow the DNR to enter into longterm agreements to supply forest biomass from trust lands for energy projects/purposes. The bill goes hand-in-hand with HB 2165, which was passed in 2009 to authorize the DNR to implement forest biomass-to-energy pilot projects in eastern and western Washington. Under the bill, rather than having to auction each timber sales’ woody biomass waste on a sale-by-sale basis, the DNR will be authorized to provide five-year contracts with up to three renewals or leases for long-term biomass supply. The call for proposals went out last summer and in January, the DNR selected its first four partners for biomass pilot projects from more than 30 interested parties. They are: Parametrix, which plans to develop a transportable fast-pyrolysis system; Borgford Bioenergy LLC, which will build Kulzer BioEnergy Park in Stevens County to generate 9.5 megawatts (MW) of electricity, bio-oil, syngas and biochar; Atlas Pellets, which will produce pellets from forest biomass; and Nippon Paper, which will replace an existing biomass boiler at its paper mill in Port Angeles, Wash., to produce 6 MW of excess power for sale to a

power utility to help meet renewable energy requirements. “We selected a group of projects that included a diverse mix of geography and technologies to help us to understand how to best create a forest biomass industry on state lands,” said Aaron Toso of the Washington DNR Office of Commissioner of Public Lands. “The amount of material and duration of the contracts are a couple of the items we will be piloting.” He said right now there are no plans to announce any other pilot projects this year. The DNR will report to the state legislature in December on the progress and results of the pilot projects. It is currently pursuing funding to initiate a statewide woody biomass investmentgrade supply and accessibility study, which Toso said will help the DNR determine what is an ecologically sustainable amount of material that can be removed for green energy purposes. The DNR hopes to have a final report by 2011. —Anna Austin

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industry

NEWS A 207.5-acre jatropha project in India aims to develop optimal growing and harvesting techniques for the crop, along with favorable characteristics such as frost tolerance and growth with less input. General Motors Co. and the U.S. DOE have teamed up for the fiveyear project, enlisting help from the Central Salt & Marine Chemicals Research Institute, an India-based research lab of the Indian Government’s Council for Scientific and Industrial Research, Ministry of Science & Technology. The CSMCRI will manage the three plots, two in Bhavngar and one near GM’s India car manufacturing plant in Kalol. GM declined to disclose a project cost, but said it is funded jointly by GM and the DOE. Jatropha oil is ideal for biodiesel production, as it has high oil content, can be grown on marginal lands and is cheaper than soybeans, which are commonly used to make biodiesel. “We are actually diesel short,” said Candace Wheeler, GM technical fellow and biofuel lead at the company’s Global Energy Systems Center. “We really need a good replacement for diesel as well as ethanol, which is a good replacement for gasoline.” The project will focus on jatropha species development as well as agronomics. “It grows, but no one’s tried to cultivate it and plant it,” Wheeler said. Research will determine if it’s better to begin in a nursery before planting the shrubs in plots, how far apart shrubs should be planted, and much more, she said. “We certainly want to understand better how to grow the crops.” The project has been in the works for a while, Wheeler said, and GM has already determined that biodiesel from jatropha oil works well in its vehicles. “We kind of did the second part before the first part,” she said. “We’ve been able to harvest and take jatropha oil and test it in our vehicles and it works.”

PHOTO: GM

DOE, GM grow jatropha in India

Jatropha oil’s high oil content make it ideal for biodiesel production.

India was chosen as the project location because it has a suitable climate, and because the country imports much of its petroleum, like the U.S., Wheeler said, so it also is working toward a more energy-independent future. In addition, GM has previously worked with the CSMCRI on jatropha optimization. “We’ve found them to be leaders in this area,” she said. Jatropha requires warm climates and cannot be supported in most areas of the U.S., but the project seeks to develop a variety that can. Even if that can’t be done, the research will help establish a global market for the fuel, Wheeler said. “I really see a lot of potential in jatropha as an energy crop,” she said. “I think you’ll see jatropha grown more and more.” —Lisa Gibson

5|2010 BIOMASS MAGAZINE 43


industry

NEWS RSB tests standards on jatropha cultivation San Diego, California-based SG Biofuels is teaming up with the Roundtable on Sustainable Biofuels for a pilot project to test and enhance sustainability standards for jatropha cultivation. The duo will evaluate the practicality and usability of RSB sustainability standards applied to SG Biofuels’ existing 1,400-acre plot in Guatemala, dubbed the community-farming initiative, according to the company. SG Biofuels specializes in the development of jatropha as a low-cost, sustainable source of oil and has the largest library of jatropha genetic material in the world. Since the cultivation of jatropha as a biofuel feedstock is relatively new, the pilot project is designed to evaluate RSB’s existing sustainability standards as they apply to the community-farming initiative, modifying and strengthening those standards as needed, according to Brian Brokowski, vice president of marketing and communications for SG Biofuels. “The goal is two-fold,” he said. “RSB will have the opportunity to review how the standards function when applied to a jatropha community-farming model, and SG Biofuels will have a head start in understanding and practicing sustainable methods as we build additional projects moving forward.”

Through the community-farming initiative, more than 380 farmers in 25 communities received free seedlings and monthly technology training from SG Biofuels. Plantations were started in 2009 without displacing food crops and on land considered marginal, with initial harvests expected by this summer. In addition, the company eliminated the harvest sale risk to the farmers by providing guaranteed purchase contracts of 100 percent of the production. Version one of RSB’s international standards was released in November and includes: “RSB Principles & Criteria for Sustainable Biofuel Production” and an associated guidance document, detailed compliance indicators and a glossary of terms. Those principles and criteria address issues such as legality, greenhouse gas emissions, conservation, water, air, land rights and more. This year, the RSB standard will be pilot tested in numerous biofuel supply chains throughout the world to identify areas requiring further refinement, according to the RSB. To learn more about the project, go to http://cgse.epfl.ch/ page65660.html. —Lisa Gibson

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NEWS EU to meet renewable energy target The EU is on track to meet its renewable energy target of 20 percent by 2020, according to the EU Commission. In fact, it may even surpass that goal by 0.3 percent. The EU Renewable Energy Directive, first endorsed by EU leaders in March 2007, mandated that 20 percent of EU state energy consumption must come from renewable sources by 2020, including biomass, hydro, wind and solar power. In a summary released by the commission, it was found that 10 out of the 27 EU member states are likely to exceed national targets for renewable energy, led by Spain and Germany. Five statesâ&#x20AC;&#x201D;Italy, Denmark, Luxemburg, Malta and Belgiumâ&#x20AC;&#x201D;are not currently expected to meet their targets with domestic sources only; Italy forecasts the largest deficit. The states which cannot reach their targets with domestic resources alone must either acquire transfers from other states with surpluses or countries outside of the EU. The summary noted that in supplying the EU with renewable energy forecast documents, several states emphasized that in developing their renewable energy sources to meet targets or to take part in the use of cooperation mechanisms under the directive, new infrastructure was required. This included interconnectors and the general need to reinforce the capacity of the grid in many EU countries. For the EU overall, the

share of electricity from renewable energy sources is expected to reach 33 to 35 percent, accentuating the need to improve the electricity gridâ&#x20AC;&#x2122;s ability to manage and balance electricity flow and to improve interconnections of the grid to improve stability. The commission anticipates that the National Renewable Energy Action Plans, due in June 2010, will contain significantly more information on this matter. â&#x20AC;&#x201D;Anna Austin

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Southern

DISCOMFORT

To date, 29 U.S. states and the nationâ&#x20AC;&#x2122;s capitol have adapted renewable energy standards, and the possibility of a national mandate is looming. The Southeast, however, seems to be lagging behind the rest of the country in implementing renewable energy policies. By Anna Austin

46 BIOMASS MAGAZINE 5|2010


POWER

5|2010 BIOMASS MAGAZINE 47


POWER

F

or the past several years, many states in the Southeast have repeatedly failed to pass any type of renewable electricity mandate. Meanwhile, states in other regions continue to refine and polish their renewable energy standards (RES) while becoming home to and enjoying the benefits of new clean energy projects. Just scratching the surface, since 2007 Delaware has doubled its RES, Minnesota and Maryland have upped their originals, and Colorado—the first state to adopt an RES in 2004—recently raised its initial RES of 20 percent by 2020 to 30 percent by 2020, becoming the most ambitious state in the country next to Maine. To date, North Carolina is the only state in the Southeast to have passed a mandatory RES—13 percent by 2021 with a tight cap on biomass—and like North Dakota, South Dakota and Utah, Virginia has implemented a voluntary RES, which most green energy advocates consider a meager solution. In a few states, especially those that lack an RES such as Massachusetts and New Mexico, some biomass power projects are having difficulty with opposition groups that are convinced that biomass is worse than coal and are working on statewide bans (see “Facing the Vocal Opposition” on page 58). In the aftermath of failed projects or RES legislation, coaldevouring utilities are commonly blamed, when in fact, flounder-

48 BIOMASS MAGAZINE 5|2010

ing RES legislation seems to stem from one common denominator—a misunderstanding of biomass, whether it be technology, environmental effects or resource use/abundance. John Bonitz, farm outreach and policy advocate for the Southern Alliance for Clean Energy, says biomass opponents are generally a minority of people who misunderstand the technology, and their seemingly dominant presence is largely colored by the media.

Resource Reassurance As far as labeling the South as lacking in necessary resources goes, Bonitz says, that isn’t so. “We’re quite adamant that the Southeast has no shortage of renewable energy resources, and utilities that continue to try to assert that the sun doesn’t shine, the wind doesn’t blow and we can’t grow anything in the Southeast are not helping—in fact they are hindering—economic development and the recovery of our economy in the Southeast,” he says. In 2009, SACE performed an in-depth study, “Southern Solutions Report for a National Renewable Energy Standard,” which evaluated the potential for renewable energy generation, as well as the effects a national RES would have on the Southeast. The analysis showed that states in the region have enough bioenergy, solar, wind (onshore and offshore), hydro-electric and geothermal resources to meet an RES of 25 percent by 2025, and


POWER that the Southeast has sufficient renewable energy resources to meet high interim targets, such as 20 percent by 2020. The Union of Concerned Scientists shared and supported SACE’s findings, and last year the groups jointly circulated a letter urging legislators to stop dismissing the South’s renewable resources and to start supporting policies such as an RES. More than 3,200 community leaders, business people and concerned citizens signed the letter. As for the role of woody biomass in an ideal RES scenario, regional power production from biomass even at the highest levels outlined in the study’s estimates would require annual harvests of no more than 0.2 percent of forest resources. A common argument against an RES or biomass power projects, in general, is that there aren’t enough sustainable wood resources to maintain biomass energy operations. At the same time, however, some companies—not just in the South but also in other regions— are exporting wood resources overseas for energy production, because of attractive prices and a bustling market fueled by Europe’s mandatory energy goals. For example, Georgia Biomass in Waycross, Ga., recently reported that it will have the capacity to produce 750,000 tons of wood pellets per year from local timber sources, but will ship the pellets from the port in Savannah, Ga., to Europe for use in biomass power plants owned by German utility RWE Innogy. Green Circle Bioenergy Inc., a 560,000-ton

per year wood pellet plant in Cottondale, Fla., exports its product to Europe as well. “The basic problem with opposition to a state RPS (renewable portfolio standard) is that it is economically self-defeating,” Bonitz says. “Due to market trends, much of the biomass will be consumed one way or another—in fact, much of it is already being exported to Europe as a result of their greenhouse gas reduction and renewable energy goals. With a strong RPS, these pellets could help Florida reduce imports of fossil energy.” Susan Glickman, consultant for the Natural Resources Defense Council, the Clean Energy Group and SACE, says states that don’t have an RES aren’t being courted by biomass power project developers and are missing out on significant revenue opportunities. “With biomass plants, jobs stay very close, within a 45- to 65-mile radius, so the money/energy dollars stay close,” she says. “In Florida right now, 80 cents out of every energy dollar goes out of state. There’s a big advantage with biomass—it keeps the energy dollars and jobs closer to home. We’ve done some comparisons of jobs broken down per megawatt hour. Biomass is about nine or 10 jobs per megawatt hour, nuclear power creates a third of the jobs per megawatt hour.” According to a recently released study commissioned by RES-Alliance for Jobs, a national RES of 25 percent by 2025 would create about 274,000 more renewable energy jobs and a

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POWER

States with RES States with RES Goals

As this map indicates, most states in the Southeast have shied away from adopting a renewable energy standard.

cumulative 2.36 million job years of work compared with no national policy. It also indicated that Southeastern states such as Louisiana, Alabama, Kentucky, Tennessee, Georgia and Florida can benefit from substantial biomass and municipal solid waste-to-energy projects. Until a national RES is passed, however, a state can opt in or out as it chooses and may miss out on countless economic opportunities. Curt Gleeson, Community Power Initiative project director for Public Policy Virginia, adds that many developers won’t choose to build in a state without an RES because of the lack of certainty. “Not without a long-term commitment by

50 BIOMASS MAGAZINE 5|2010

the state—without saying ‘this [renewable energy] is something we’re going to be doing’—their investment dollars probably won’t come here,” he says.

No Certainty, No Consideration Gleeson says his suspicions have been confirmed through various conversations with venture capital firms and project developers that have told him they wouldn’t even consider projects in states such as Virginia that don’t have renewable energy mandates. In Virginia, RES legislation has been introduced numerous times over the past several years, but hasn’t gotten anywhere.

“Dominion Power and Appalachian Power have a fair amount of influence in Richmond and that’s a big hurdle,” Gleeson says. “I also think more broadly, it’s the same old thing, there’s lots of sun out west, lots of hydro other places, lots of corn in the Midwest, but none of that here. There’s just a general lack of understanding of what kind of renewable energy you could have in Virginia or the Southeast.” That’s on top of the fact that there is coal in parts of Virginia, Gleeson adds. “It’s pretty inconsequential in terms of power generation; there are lots of metals in it and it’s only in a couple of counties,”


POWER he says. “Yet, it’s part of the hindrance and I think there is a sense of identification with it that is hard to get people to sway from.” In February, the Dendron, Va., town council approved rezoning for a 1,500-megawatt coal-fired power plant that when built would be the largest in Virginia, and already forces have mobilized to try to stop it. “We met with Dominion, not to tell them not to build the plant, but to tell them if they have a demand for power, to look at biomass,” Gleeson says. “We had a fruitful discussion. Their concerns were whether the feedstock is reliable and if the technology is there. The answer is yes, but these are fair questions. We also met with those against the coal plant and they’ve gotten to the point where they believe biomass should be the replacement. This is a broad coalition of environmental folks who, maybe a year or two ago, wouldn’t have supported biomass.” Generally being a conservative state, environmental arguments in Virginia typically don’t go very far, according to Gleeson. “Beyond utility objections, there are lots of other small hurdles and that’s what we’re working on—reaching out to constituencies that normally wouldn’t embrace an environmental cause, but would embrace an economic development cause, especially in southern Virginia where tobacco is gone, soybeans are down, corn is a mess and young farmers are leaving. We’re going into these regions and meeting with farmers who generally seem to be very interested in growing and selling fuel crops. This [RES] is how we can make this happen.” Despite the fingerprints of southern utilities on failed RES bills, their efforts may eventually be trumped by a national RES, with which all states would be forced to comply. Though some utilities declare customers would see considerable rate increases in complying with such a bill, according to a Union of Concerned Scientists analysis, a 25 percent RES would eventually save consumers $64.3 billion

by 2025 and $95.5 billion by 2030 in their electricity and natural gas bills.

Pending National RES In June 2009, the U.S. House of Representatives passed the American Clean Energy Security Act, also known as Waxman-Markey, which would set a national RES of 20 percent by 2020 and allow up to 8 percent of the standard to be met through energy efficiency improvements. Also in June, the Senate Energy and Natural Resources Committee passed the American Clean Energy Leadership Act, which has a target of 15 percent by 2021 and allows up to 4 percent of the standard to be met through energy efficiency improvements. Most RES supporters, which include groups from all alternative energy industries and environmental organizations, are hopeful that mandatory national RES legislation will be passed in 2010. “Mandatory is kind of a toxic word to people, but by definition a better standard would be mandatory,” Gleeson says. However, until a national RES is passed, understanding biomass and its potential is key to acceptance by residents in states unfamiliar with or favorable toward the technology. “There are a lot of complexities; it’s not a simple technology to grasp and understand,” Bonitz points out. Glickman adds that it in the Southeast, it’s largely a political issue. “In the South, you have the status quo or old way of doing things, which was built around a centralized business model for the delivery of energy,” she says. “There’s no way to get around the need to transition, but the sooner we move forward, the cheaper it’s going to be for people to shift gears in a big way. The country is in a transition phase, and unfortunately the Southeast is the slowest to move.” BIO Anna Austin is a Biomass Magazine associate editor. Reach her at aaustin@ bbiinternational.com or (701) 738-4968.

5|2010 BIOMASS MAGAZINE 51


INTERNATIONAL

Large silos at Drax Power Ltd.’s cofiring facility will store biomass before it is used. PHOTO: DRAX POWER LTD.

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INTERNATIONAL

POSSIBLE POLICY CHANGE

The U.K.â&#x20AC;&#x2122;s Department of Energy and Climate Change is considering adjustments to its biomass policies in response to numerous concerns from developers including inability to secure funding and inadequate subsidies for cofiring facilities. By Lisa Gibson

5|2010 BIOMASS MAGAZINE 53


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U

.K. electricity-generation giant Drax Power Ltd. plans to build three 290-megawatt dedicated biomass power plants in the U.K. that will run on a mix of forest and agricultural residues and energy crops, but has hit a hitch in its plans. The company anticipates a struggle to secure funding for the projects, because the U.K.’s Renewables Obligation does not allow grandfathering of support for biomass power, ultimately meaning developers don’t have definitive revenue estimates for investors. “The one thing investors need is some certainty on the return they’re going to get on their investments,” says Melanie Wedgbury, head of external affairs for Drax. The problem has prompted numerous developers, banks, equity providers and the Renewable Energy Association to request a re-evaluation of the RO grandfathering provisions by the Department of Energy and Climate Change. The inadequacies of the current arrangement have stalled more than £13 billion ($20 billion) worth of thermal renewable energy projects, according to the REA.

The Problem The RO is banded by technology type. The bands dictate how many Renewables Obligation Certificates will be awarded to

renewable energy generators per megawatt hour (MWh) and are reviewed every four years. The next scheduled review begins in October of this year, with any changes implemented in April 2013. Dedicated biomass currently receives either 1.5 or 2 ROCs per MWh, depending on technology type. “Our situation is we’ll be going to investors this year to raise finance,” Wedgbury says. “They will quite rightly say, ‘What are the revenue streams? How do I make a return on my investment?’ We can say at the moment, under current regulations, each of the plants will earn 1½ certificates for every megawatt hour of electricity it produces. However, we don’t know what will happen in the banding review, so we cannot say with any certainty how many certificates will be earned each megawatt hour from April 2013. For dedicated biomass, there’s no guarantee of the level of support in place.” “Grandfathering is important for any big capital investment that’s relying on an element of subsidy in its long-term income stream,” says Gaynor Hartnell, REA CEO. “If the rules change, investors need to know they won’t have the rug ripped from under them. It’s about protecting investments, giving funders the necessary confidence to lend.” Up until recently, U.K. biomass developers were under the impression that their project investments were protected against

future rule changes, but civil servants had a different interpretation, he says. “Once we discovered that the understanding was different out there in the biomass community from what the civil servants believed to be the case, that’s when we said, ‘Well, it’s got to be sorted out.’” Grandfathering is incorporated into support for generators in all other technologies, setting the level of ROCs at the point of accreditation for 20 years, according to the DECC. Such imbalances have convinced developers that the policy holds back biomass development and favors other renewable sources. “The right noises are being made and there appears to be a willingness to put this right,” Wedgbury says. “We’re optimistic that this issue will be resolved.”

Time for Change At the end of March, the DECC released its budget 2010 and included proposals dealing with grandfathering of dedicated biomass, anaerobic digestion (AD) and energy from waste (EfW) with combined-heatand-power (CHP) facilities. The proposals were followed by a consultation document detailing them and offering more options for consideration. Besides preferred grandfathering options, the proposals include excluding bioliquids from grandfathered sup-

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INTERNATIONAL support at the band received on accreditation; grandfather at current levels with the potential to upband, but never band down existing generators even if the DECC decreases RO support during regular reviews; grandfather the portion of ROC support of nonfuel costs, leaving support for variable fuel costs subject to change during regular

PHOTO: DRAX POWER LTD.

port; and consulting in the summer on the introduction of sustainability criteria for biomass, considering whether biomass generation must meet the criteria as a condition of qualifying for financial support, according to the DECC. The subsequent consultation outlines four grandfathering options: grandfather

Woody biomass piles up near Drax’s cofiring facility ahead of its operation commencement, scheduled for the middle of this year.

banding reviews; or make no change to the current policy. The closing date for responses from the industry is May 28, according to the document, and summarized responses will be available on the DECC Web site: www.decc.gsi.gov.uk. The responses will be taken into account during the next banding review. The entire consultation can also be viewed on the Web site, under the “Consultations” tab. It’s clear a one-size-fits-all solution is not appropriate for biomass electricity, according to the consultation, so the DECC proposes a split solution: grandfather support at current levels for AD and EfW generators; and grandfather a minimum level of support on accreditation for dedicated biomass, set as the proportion of the costs attributable to nonfuel costs. The latter would not apply to bioliquids. “We believe this proposal gives the best balance between ensuring developers and investors have the certainty they need to invest, whilst retaining enough flexibility to cope with potential variations in future biomass and electricity prices, so maintaining value for money to the consumer,” according to the document. Grandfathering for biomass support was not incorporated when the RO was banded in 2008 because, unlike other renewable technologies, a large portion of the generators’ costs are ongoing fuel costs, which can vary over time, according to the consultation. “Like other technologies, dedicated biomass developers should, however, be able to fix the nonfuel costs for the upfront build of the project,” the DECC consultation reads. “We are therefore proposing a policy to grandfather the proportion associated with nonfuel cost for dedicated biomass, but not to grandfather the element of support which helps pay for the ongoing fuel costs.” “It’ll sort out problems for some kinds of projects, but not for others,” Hartnell says of the proposal. “It depends what kind of project you’re developing.” Public finance initiative projects and those using their own feedstocks can secure a robust long-term contract for fuel, so a fixed number of ROCs per MWh for 20 years is ideal, but it will be much more difficult for merchant plants that can’t lock down that cost 5|2010 BIOMASS MAGAZINE 55


PHOTO: DRAX POWER LTD.

INTERNATIONAL

Smokestacks tower over a pile of woody biomass on the site of Drax’s cofiring facility.

over time. “Separating the current level of support for biomass projects into a capital element and fuel element is a problem,” she says. “Lenders, being conservative, are going to place limited value on the fuel element.” It could lead to numerous projects being left without funding, as investors will only lend on the basis that the grandfathered part is secure, she adds. In addition, Hartnell says, “Under the Renewables Obligation, bioliquids are simply a form of biomass. Singling them out in this way has no justification and will further complicate things.” At press time, Wedgbury said Drax was still looking over the proposals and had not released an opinion. Drax hopes to begin construction in early 2011 on one of its three dedicated biomass plants: one at the Port of Immingham; one planned for North Yorkshire, England, on the site of its existing coal-fired, 4,000 MW Drax Power Station; and another location not yet disclosed, according to Wedgbury. If changes are not made, the investment community will have the final say as to whether the plants can be constructed. “If we are stopped from developing in this country, then we will look overseas to make that development,” she 56 BIOMASS MAGAZINE 5|2010


INTERNATIONAL says. The company has already contracted 2 million tons of biomass for its projects, including a cofiring facility also hindered by current biomass policies.

Cofiring Constraints Drax has invested in a cofiring plant for the Drax Power Station that will be fully commissioned by the middle of this year, Wedgbury says. But because of biomass costs and constraints on nonenergy crop feedstocks, the company has discovered it’s cheaper to continue burning only coal. Ag and forestry residue is typically three times more expensive than coal and cofired nonenergy crop biomass only receives one-half of a ROC per MWh. Even when considering that subsidy and carbonemission permit costs for burning coal, coal still comes out ahead. “Given the choice, you’re going to burn coal,” Wedgbury says. “The level of subsidy isn’t high enough.” In addition, electricity suppliers have the advantage of complete control over the market for ROCs. They are obligated to source a certain amount of electricity purchased from renewable sources and need to redeem the certificates earned by generators such as Drax to prove it. “We are absolutely dependent on being able to trade these certificates in a market to extract value,” Wedgbury says. But the obligation is in name only and suppliers can opt to pay into a buyout fund instead of redeem ROCs. “The effect of that is they have a certain amount of control over the [ROC] price,” she says, adding that suppliers can offer to buy ROCs, but at a discount. On top of that, a 10 percent cap is placed on the amount of ROCs suppliers can redeem for electricity produced from nonenergy crop biomass. “Because there’s this cap, we don’t know whether there’ll be a market for our certificates,” she says. The cap increased to 12.5 percent in April, but still is not sufficient. The DECC is promoting cofiring of energy crops through the lack of a cap, along with a banding subsidy of 1 ROC instead of one-half. Drax does have contracts in place with farmers for crops, but the volume is limited. “There’s a very posi-

tive message there to encourage us to cofire energy crops,” Wedgbury says. “The problem is there isn’t anywhere near the volume of energy crops in the U.K. that we require. The truth is there just isn’t an established market in energy crops. We’ve worked incredibly hard over the past five years trying to develop one, but there is a limit. If we’re serious about biomass, we need to look at other sources.” Drax has communicated its cofiring concerns to the DECC and hopes changes can be made there, too. The company has called on the government to remove the nonenergy crop cap, and to increase the subsidy for nonenergy crop cofired biomass. The DECC has offered to review the level of support in October’s banding review, Wedgbury says. Although discussions are in early stages and no proposals have been released, development of the cofiring facility will not be stalled because Drax has already

made investments in the project, Wedgbury says. “We will have the capability; there’s no question. But government policy may keep us from operating to full capacity.” The grandfathering provisions affect all sorts of thermal renewable energy projects and failure to pass effective changes could put the U.K. behind in its renewable goals for 2020: 15 percent of all energy and 30 percent of electricity. If Drax is forced to develop its huge projects elsewhere because of inadequate or no policy change, overall biomass development in the U.K. would be hampered, but Drax is not the only company with plans at risk. “It affect all kinds of biomass projects,” Hartnell says. “They’re a big player, but there are plenty of other projects that depend on this issue being resolved.” BIO Lisa Gibson is a Biomass Magazine associate editor. Reach her at lgibson@ bbiinternational.com or (701) 738-4952.

5|2010 BIOMASS MAGAZINE 57


DEBATE

Facing the Vocal Opposition

As the biomass power industry grows, so do the organizations that seek to stop it. Opponents have been influential in postponing and even terminating plans for proposed plants, forcing developers to be more savvy in their pubic outreach. By Lisa Gibson

58 BIOMASS MAGAZINE 5|2010


DEBATE

5|2010 BIOMASS MAGAZINE 59


DEBATE

O

pposition groups have been vocal and relentless recently in their campaigns to stymie progress in the biomass power industry. From local citizen groups to statewide organizations endorsed by environmentalists, biomass adversaries are making their case to state and local agencies and in some instances have been successful in quashing plant proposals. Faced with possible lawsuits and intense disagreements that would have meant more money and delays, Georgia-based Biomass Gas & Electric pulled its plans in 2009 to build a 43-megawatt (MW) biomass power plant in Tallahassee, Fla. The plant had been approved by the city commission and had a power purchase agreement with a local utility. “We saw that there was this relentless opposition that I thought was going to result in, after the [public] hearing process or even before it was done, more lawsuits,” says then BG&E CEO Glenn Farris, who is now the director of business development for Biomass Energy Holdings, a joint partnership of BG&E and Bianchi Energy Holdings. “I just didn’t see any end in sight.” Citizens had requested a public hearing for the Tallahassee plant before the state Department of Environmental Protection could issue a permit, but BG&E changed its plans before the process was carried out. “I have absolutely no doubt we would have won that fight,” Farris says, adding that BG&E met all the EPA guidelines. The opposition group alleged that the DEP didn’t do its work in evaluating the effects of the plant on local air and water quality; that the regulations weren’t strict enough; and that BG&E pro-

‘By far, 90 percent of the people we met with, who were willing to have an honest dialogue, walked away saying, “You’re not what I thought you were and I can support the project.”’ —Glen Farris, director of business development, Biomass Energy Holdings

60 BIOMASS MAGAZINE 5|2010

vided incomplete or false data regarding the plant’s operations. Concerns included ash, noise, forest depletion and pollution. “Nothing was based in fact because certainly the toxicologists’ facts were on our side,” Farris says. Ambient air modeling showed the plant was an insignificant source of pollution compared with other industries in the area. Forest depletion is a difficult concern to back up, he adds, as the forest products industry is dominant in Florida and Georgia. BG&E tried to correct the widely distributed misinformation in numerous public forums, speaking openly and honestly about all allegations against the plant, company and biomass power industry, according to Farris. “By far, 90 percent of the people we met with, who were willing to have an honest dialogue, walked away saying, ‘You’re not what I thought you were and I can support the project,’” he says. Still, Farris decided to move his plant to Port St. Joe, Fla., to avoid further setbacks. Following the change in plans, Farris was inundated with feedback from disappointed Tallahassee citizens and officials. “Certainly over 80 percent of the comments expressed great dismay that we were leaving,” he says. “So even in Tallahassee, while it was a lot more people [in opposition], it was never the majority of the people who live there, but they were certainly vocal and they were wellorganized.”

A Better Place Letters of dismay were not the only response Farris received, though. “Literally the day they heard we pulled out of Tallahassee, I started getting e-mails and requests for meetings from many communities asking us to look at their sites,” he says. The mayor of Port St. Joe had contacted BG&E when it first announced its Tallahassee plans in 2008, asking why the company hadn’t chosen his city. “He thought it would be a much better place and in fact, he was right,” Farris laughs. Biomass Energy Holdings, which has taken on BG&E’s projects, is currently going through the public hearing process in Port St. Joe for its 47 MW Northwest Florida Renewable Energy Center that will gasify


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A rendering of Biomass Energy Holdings Northwest Florida Renewable Energy Center proposed in Port St. Joe, Fla.

wood waste. The request for a hearing delayed the project a few months, but the 16- to 18-month construction period should begin by the fourth quarter of this year, according to Farris. “We have every intention of following through with this process in Port St. Joe,” he says. Those opposed to the new location are largely the same who trampled the Tallahassee plans. “But we got in front of it a little better in Port St. Joe,” he says. “I’m not sure how strong their opposition really is, but it’s certainly nothing like what we faced in Tallahassee.” Port St. Joe is familiar with the forest products industry, as it hosted a paper mill up until 1999, so the community was receptive and even supportive of such a project, Farris says. Biomass Energy Holdings has also done a few things differently this time around that he thinks will help. The company went to the community after the site was under control to preemptively debunk the opposition’s claims, and set up a tour of the 10 MW biomass gasification plant at the University of South Carolina for city and county officials, along with community leaders. “They could see firsthand that it was not the dioxin-spewing,

cancer killer that the opposition claims it is,” he says.

Public Outreach News media in and around Rothschild, Wis., have drawn attention recently to a growing group of citizens against a proposed 50 MW We Energies biomass power plant that would run on wood waste. The $255 million co-generation plant is proposed on a Domtar Paper Mill site, allowing it access to the same fuel suppliers. The facility would supply steam to the Domtar mill, effectively eliminating four of its boilers and reducing pollution on the site by 30 percent, according to Brian Manthey, We spokesman. We submitted its application to the Wisconsin Public Service Commission in March and is now filing permits with the Department of Natural Resources. If all goes well, construction will begin next year with an operation date in 2013, Manthey says. Opponents held a meeting March 26 that attracted about 150 people from the village of 5,000, a disappointing head count according to opposition leaders, who are concerned about sustainability, emissions, traffic

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DEBATE and noise. But We has been holding its own community meetings and Manthey says the outlook is positive, with no expected delay in construction or operation. “From the beginning, we have set out a plan to reach out to the community and be responsive to the community,” he explains. “At this point, early on in the process, it’s been for the most part a positive reaction. Those who have been skeptical or have questions, we’ve reached out to meet with them.” Manthey says open communication and accessibility are No. 1 priorities. “Any change in the neighborhood, naturally you want to know how it will affect you,” he says. Besides meetings, We’s campaign has included newsletters, direct mail and door-todoor visits to educate citizens of the plant’s benefits, including lower emissions; improved standing for the Domtar mill in the paper industry through increased energy efficiency and lower costs; and shared revenue for the

62 BIOMASS MAGAZINE 5|2010

‘We think when people evaluate the information and understand the benefits of these projects, ultimately they get approved.’ —Bob Cleaves, president, Biomass Power Association

village from the state for hosting an electricitygenerating facility. But providing information and answering questions is just the tip of the iceberg. “Our job isn’t done,” Manthey says. “The burden of proof is on us.” Opposition has not affected timelines of any other renewable project We has undertaken, but it has cropped up. “We’ve never had a project with 100 percent acceptance and we never will,” Manthey says. “We’ve been down this road with a number of projects in the past few years.” Because the plant is under 100 MW,

We needs a Certificate of Authority from the PSC, which does not require a public hearing, but the company has asked the PSC to hold one anyway. “We look at the public outreach as being critical, as critical as any piece of that biomass plant,” Manthey says.

Statewide Stalemate Broad and defiant opposition to biomass power in Massachusetts has become the most illustrative example in the country of the effects an organized contention can have on a project. Numerous local groups have assembled to protest proposals in their neighborhoods and a circulating statewide initiative would mandate biomass power plants emit no more than 250 pounds of carbon dioxide per megawatt hour in order to qualify for the state renewable portfolio standard (RPS). Without that qualification, plants will not generate renewable energy credits, a key portion of their revenue. The initiative, slated to appear on the Nov. 2 ballot, would hamper renewable energy development in the state, making it extremely difficult to meet its RPS of 20 percent by 2025. The Committee for a Clean Economy has established a coalition that will inform the public of that and other negative impacts the initiative would impose. “It completely ignores the life-cycle analysis of biomass, considered to be carbon neutral,” says Matthew Wolfe, chairman of the Committee for a Clean Economy and principal of Madera Energy, a renewable energy project developer. The coalition will address “not in my backyard” (NIMBY)-related issues, as well as general misinformation about biomass power and its renewable capacity. Wolfe is optimistic that his group will succeed in convincing voters that the initiative is unreasonable and unnecessary. In addition, the Massachusetts Department of Energy Resources suspended consideration of all new biomass projects for participation in the state RPS as it awaits the results of a third-party study to determine sustainability and carbon neutrality of biomass power. The study, led by the Manomet Center for Conservation Sciences, was heavily influenced by fierce opposition and should be completed by June, with any new rulings released by the end of the year. Citizens in New Mexico have followed


DEBATE suit and are trying to convince the state that burning woody biomass from forests is unwise for both the forests and residents, alleging harmful pollution. The group has asked the state legislature not to include forest woody biomass in the RPS, making it ineligible for tax credits.

Simple Answers “Whenever a concern is raised by someone in the public, that’s a legitimate concern,” says Bob Cleaves, president of the Biomass Power Association. “Making sure these projects meet federal, state and local standards is obviously the No. 1 concern of any developer. We do think, though, that in the case of biomass, the answers are quite simple.” There is a lack of understanding and plenty of misinformation circulating because biomass development, having seen its boom in the ’80s and ’90s, has been slow until recently, Cleaves says. Biomass is important for states to meet aggressive RPSs and that point is sometimes lost and needs to be emphasized, he adds. Cleaves doesn’t think the recent staunch opposition will slow down overall development of the biomass industry, saying it’s part of the renewable energy landscape. “We think when people evaluate the information and understand the benefits of these projects, ultimately they get approved,” he says. “Just like we’re confident in what’s going on in Massachusetts with the sustainability study, we welcome these opportunities to explain the benefits of the industry and share information. Ultimately, the merits of what we’re doing win out, hands down.”

London-based Consense is handling its first biomass consulting campaign, defending the 40 MW waste-wood fueled Thetford Renewable Energy Plant proposed in Thetford, Norfolk, England, by MEIF Renewable Energy Holdings Ltd. The main concerns are visual and traffic-related, but most citizens are intrigued by the plans, rather than concerned, according to Jessica Topham, Consense operations director. Demand for consultation in the U.K. is growing, she says, as the recently established Infrastructure Planning Commission, which evaluates large applications including power plants, will not even consider a planning application without evidence of thorough public consultation. Consense offers an online channel for communicating plans, storing public feedback, and generating responses to questions. “It’s really effective for involving people who wouldn’t normally get involved—and that

includes supporters of renewable energy who typically don’t always voice their opinions,” Topham says. Maiorino advises project developers to meet with adversaries, as well as supporters, saying opposition comes out in a blizzard but proponents are harder to hear. “Get them all in one room,” he says. “See why they’re supportive and how they’re willing to assist.” The biggest mistake developers tend to make is not getting their message out early, according to Maiorino. “If you start at the beginning and get your information out there, you don’t spend so much time correcting the opposition,” he says. “Uncertainty and inaccessibility can trip up projects more than the actual project can,” Manthey says. BIO Lisa Gibson is a Biomass Magazine associate editor. Reach her at lgibson@ bbiinternational.com or (701) 738-4952.

A Little Help As anti-biomass groups grow larger and louder, public relations companies are shifting their focus to include the biomass industry in their operations. Public Strategy Group Inc. runs grassroots campaigns to address NIMBY-isms for its clients and President Al Maiorino says he has contacted several biomass developers in light of recent events. “Opposition to biomass is relatively new and is coming to the media in the forefront now,” he says. “I think it’s a good source of energy and like wind, it’s got some misrepresentations because opposition is getting bigger out there.” 5|2010 BIOMASS MAGAZINE 63


ALGAE

Bioalgene Inc. is developing an algal carbon-capture project at this Boardman, Ore., coal-fired power plant. PHOTO: BIOALGENE INC.

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ALGAE

MITIGATION MECHANISM Using algae for carbon mitigation at power plants is gaining momentum but there is disagreement over whether itâ&#x20AC;&#x2122;s the best or most efficient use of the resource. By Lisa Gibson

5|2010 BIOMASS MAGAZINE 65


ALGAE

M

ore and more power plants are exploring options for carbon mitigation as humankind steers toward a more environmentally friendly existence. While still in its infancy, algae’s mitigation potential has garnered attention from plant operators and government agencies alike. Even so, some say the practice is not a solution for carbon dioxide emissions and should be studied from the point of bioproducts manufacturing instead. An Arizona Public Services’ project at Cholla Power Plant in Holbrook, Ariz., is set to be the first integrated pilot-scale demonstration of capturing CO2 from a coal-fired power plant with algae in the U.S., according to Daniel Cicero, senior management and technology advisor for the U.S. DOE’s National Energy Technology Laboratory in West Virginia. The 25-acre raceway pond project, which should be completed and operating in the next three to four years, is an expansion of APS’s research and development endeavor at its natural gas-fired Redhawk Power Station near Phoenix, according to Cicero. “The algae technology is being considered to be an integral part of the electric power plant for its mitigation of CO2 emissions and for further reuse of the CO2 into a coproduct (substitute natural gas) with the electric power from the plant,” he says. Researchers expect that the Cholla algae farm will reuse CO2 at a rate of 70 metric tons per acre per year.

‘All these power plants will be penalized if they don’t have a solution for taking CO2 and using it. You can’t emit carbon dioxide anymore. If you can’t emit carbon dioxide, then you don’t have an industry. Everything emits carbon dioxide.’ —Sharon Miller, vice president, Bard Holding Inc.

66 BIOMASS MAGAZINE 5|2010

The project received $70.5 million from the American Recovery and Reinvestment Act, one of many algal carbon mitigation endeavors awarded federal funding. “We began a program several years ago about using algae to absorb CO2 from power stations and further use that CO2 as opposed to just emitting it,” says Cicero, who works in the DOE’s Office of Fossil Energy. The ARRA also awarded a total of $7.02 million for design and evaluation of algae growth projects at industrial emitters, including some power plants, in Hawaii, Virginia, Ohio, Texas and California. More funds will be awarded after another competitive process to determine which projects will see the remaining three phases of development—detailed design, construction and operation. Those projects are expected to come on line shortly after the Cholla application, although they will be smaller. Cicero sees promise for the practice from bench-scale results, but acknowledges work left to be done. “It’s going to take a lot of land mass to capture significant amounts of CO2,” he says, adding that some areas are more amenable to algae growth than others and applications must be tailored to specific locations. “We have been able to demonstrate that depending on the strain of algae you choose, it can be very effective in [certain areas], but you have to be careful which strains of algae are chosen and how you process those algae.” On average, about 60 percent of the carbon dioxide can be captured daily, according to the Office of Fossil Energy. The algae grown with carbon emissions can enhance domestic biofuel production and contribute to energy security, but carbon dioxide abatement is the most important benefit, according to Cicero. “Our primary focus is on CO2 capture and helping companies get renewable energy credit,” he says.

Abandon All Hope But some researchers believe that the focus should be changed, including


ALGAE John Benemann of Benemann Associates. The number of power plants with the right conditions for growing algae is small, according to Benemann, and it’s difficult to match up a sufficient growth operation with plant size. “Even under the best circumstances, the amount of CO2 mitigated is not overwhelming,” he says. At most a small fraction of a percent of total CO2 emissions from power

plants could be abated by microalgae, he explains, so those who believe algae will solve the problem should abandon all hope. Benemann has researched microalgae for more than 30 years and says there are a number of issues related to using it for carbon mitigation. The best way to look at such a project is in the benefit of biofuels production, not CO2 mitiga-

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ALGAE tion. “Rather than using algae to mitigate CO2 from power plants, use power plants to supply CO2 for algae biofuels production needs … Just like any other biofuel, it doesn’t matter where the CO2 comes from,” he says. “It doesn’t matter if you take it from a power plant or from the atmosphere.” In his paper, “Microalgae Biofuels: A Brief Introduction,” Benemann writes that contrary to common belief, CO2 use by algal cultures is not sequestration, nor even a greenhouse gas (GHG) abatement process by itself. “…that could only come from using the algal biofuels to replace fossil fuels, in the same way as all other biofuels are assumed to replace fossil fuels and thereby reduce greenhouse gas emissions and mitigate global warming.” In actuality, algae-based biofuels using fossil fuel flue

gas CO2 are less desirable for GHG abatement than higher plant biofuels, he writes. By depending on the consumption of fossil fuels they indirectly contribute to the atmospheric CO2 load and are by definition unsustainable. They enable fossil fuel use, he argues. Of all the factors that limit the potential of algal biofuels, including suitable climate, land, water, nutrients and CO2 on-site, CO2 is likely the most limiting, according to Benemann. Carbon dioxide supply from power plants is not costfree because of the necessary capital and operational costs of supplying the CO2 to the ponds. Capturing carbon dioxide from large fossil fuel power plants would require tens of thousands of hectares of algae ponds in close proximity to the plants, he continues. Further, large land

‘Neither we, nor anybody else has fully scaled these systems. We’re confident we’ll be able to do that. It’s by no means an established industrial process yet, but we’re all working hard at this because we see the potential.’ —Stan Barnes, CEO, Bioalgene Inc.

and water resources are uncommon at most large power plants, and only about half the captured CO2 is captured in the biofuel. “You can make a case for algae biofuels production, but you cannot make a case for algae saving coal-fired power plants from emitting CO2,” he says. More concentrated fossil fuel CO2 sources such as refineries and ammonia plants would be more suitable, along with smaller-scale nonfossil fuel sources such as wastewater treatment plants.

Location, Location, Location A Bard Holding Inc. pilot project in Pennsylvania will begin to produce 20 million gallons of algae oil for biofuels in April, using a nearby industrial and municipal wastewater treatment plant, along with emissions from three natural gas power plants, including Dominion, one of the largest in the northeast corridor. Bard has a purchase agreement on 38 of the 2,700 acres at the Keystone Industrial Port Complex in Fairless Hills. Once the pilot is operational, Bard plans to construct a full-scale 66 million-gallon-peryear photobioreactor algae production system. “The reason we chose this site is the wastewater treatment plant is less than 500 yards from our site and adjacent to the Dominion power plant,” said Surajit Khanna, Bard founder and chairman

68 BIOMASS MAGAZINE 5|2010


ALGAE the plants to reuse substantial of the board. “This is the best amounts of water, and provide scenario you could ever have.” greater efficiency for their proIn addition, a number of other cesses, according to Barnes. He steam-generating plants opersays the most important benate within a 10-mile radius. efit is the carbon credits. “We The relatively high content think that algae are the largest of carbon dioxide in flue gas scale, most efficient, least costly significantly increases growth Stan Barnes rates in the species of algae used CEO, Bioalgene Inc. means to do that.” Contrary to Benemann’s arin Bard’s photobioreactor technology. The algae will be harvested every gument, Barnes says his process is 30 per30 minutes and the key to such vigorous cent more efficient when CO2 is gathered harvesting is the amount and frequency from a concentrated source, than when of carbon dioxide pumped into the algae it’s taken from an atmospheric source, alsystem, Khanna says. The company says though both can be efficient. Both Barnes and Keven Vorce, vice its process can be used at virtually any president of finance for Bard, agree that power plant with the incorporation of growing algae with CO2 emissions and slug flow technology to create favorable industrial waste is sustainable. “It’s a perconditions for algae growth. Contrary to Benemann’s beliefs, the manent renewable source,” Vorce says. company says the main benefit of using industrial waste streams for algae growth is the atmospheric cleanup, but it also generates carbon credits and brings down operating and materials costs. “All these power plants will be penalized if they don’t have a solution for taking CO2 and using it,” says Sharon Miller, vice president of strategic planning for Bard. “You can’t emit carbon dioxide anymore. If you can’t emit carbon dioxide, then you don’t have an industry. Everything emits carbon dioxide.”

“Power plants and wastewater treatment plants will continue operating until the world comes to an end.” A Bioalgene project at a coal-fired power plant in Boardman, Ore., will complete phase two this summer and a couple more locations are developing phase one, according to the company. Full commercialization of the Bioalgene process is three to four years away, Barnes says. “Neither we, nor anybody else has fully scaled these systems,” he says. “We’re confident we’ll be able to do that. It’s by no means an established industrial process yet, but we’re all working hard at this because we see the potential.” BIO Lisa Gibson is a Biomass Magazine associate editor. Reach her at lgibson@ bbiinternational.com or (701) 738-4952.

‘Little Green Factories’ Seattle-based Bioalgene Inc. will use its open pond algal carbon-capture process to generate carbon credits for coalfired power plants and wastewater treatment facilities, as well as to produce algal biomass for products. “Both industries are awakening to the benefits of algae cultivation as a means to generate benefits from handling their waste products,” says CEO Stan Barnes. He refers to the applications as “little green factories.” Bioalgene’s three-phase process— evaluation, pilot and scale up—has the potential to dramatically reduce emissions at coal-fired power plants, allow

5|2010 BIOMASS MAGAZINE 69


AGAVE

70 BIOMASS MAGAZINE 5|2010


AGAVE

Avant-Garde Agave A group of researchers are touting agave, a plant traditionally used to produce tequila, as a revolutionary cellulosic ethanol feedstock. By Anna Austin

5|2010 BIOMASS MAGAZINE 71


AGAVE

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s the pursuit for the perfect cellulosic ethanol feedstock continues, new light is being shed on plants traditionally used for different purposes. A group of Mexican researchers believe they’ve discovered what they call the “missing energy crop,” and though it hasn’t exactly been missing—it grows abundantly in Mexico and in some southern U.S. and South American locations—these scientists claim agave possesses characteristics superior to other feedstocks currently being examined for biofuel purposes, such as cellulosic ethanol production. Researcher Arturo Velez Jimenez is a developer of the Agave Project, designed to explore and promote the potential of the plant, which began four years ago when he was the national administrative coordinator at the National Confederation of Forestry

Producers in Mexico. Now developing the project separately from the agency, Jimenez says the research currently extends into all 17 agave regions of Jalisco State (central-western Mexico) and will soon become a nationwide project. Local Congressman Jose Luis Ortega, Juan Frias of Bioenergy Solutions, Professor Juan Villalvazo at the University of Guadalajara, the Mexican Agavaceas Net and the State Council of Agave Tequilana Producers are also participating in the project, he adds. The core of the project is based on the research of Remigio Madrigal Lugo, a professor at the University of Chicago, who developedenhancedvarietiesof agavetequilana weber,agaveangustifoliaandagavefourcroides,according to Jimenez. Now convinced that agave is the missing energy crop, he tells Biomass Magazine that the high-quality feedstock is reliable,

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72 BIOMASS MAGAZINE 5|2010

PHOTO: AGAVE PROJECT

Jimenez is pictured near a stand of agave.


AGAVE abundant, easy to handle, and possesses an interesting history.

Crop History Agave is arguably one of the most significant plants in Mexican culture. It has a rosette of thick fleshy leaves, each of which usually end in a sharp point with a spiny margin, and is commonly mistaken for cacti. According to Jimenez, more than 100 uses for the crop have been documented. “It was used as a food 9,000 years ago and probably was the main source of carbohydrates in ancient Mexico, before corn,” he says. “When I was a kid, men walked the streets selling toasted agave, a candy with a very soft taste of alcohol. Nowadays, nobody makes this candy and agave isn’t used as a food. Sometimes during drought, the leaves are fed to cattle, and some people collect agave worms, which are toasted and used in mescal bottles.” There were three agave industries in the beginning of the 20th century—tequila, pulque (a milk-colored alcoholic beverage) and henequen (ropes and cords)—in precapitalist Mexico, Jimenez explains. “Huge fortunes were accumulated. But then the

revolution came and those industries were abandoned by the new powers-to-be, except for tequila, which some people kept producing in spite of it being forbidden. Then, tequila developed a culture of its own.” The tequila industry became popular and rather than becoming concentrated in a few hands, profits were widely distributed; a large part of the population had money to spend. “Clothing, music, dances, food and even the mariachi (traditional Mexican music) emerged from the tequila industry,” Jimenez says. “Mexico is known internationally, thanks to the tequila culture.” With the many uses for agave, one might question whether there’s enough of the crop for fuel purposes, but Jimenez says there’s enough agave in Mexico alone for massive production of ethanol and other biofuels. In fact, overproduction has become a problem and about 225 million mature agave plants won’t be used because the tequila industry cannot buy them. There is a reason for the surplus, Jimenez points out. About 10 years ago, a plague killed millions of plants. “There wasn’t enough agave tequiliana to produce tequila,” he says. “Prices went up 20 pesos per kilo

*

*Ha=Hectare (2.47 acres) SOURCE: AGAVE PROJECT

5|2010 BIOMASS MAGAZINE 73


PHOTO: AGAVE PROJECT

AGAVE

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of agave so many people planted it, and now there’s overproduction. This year, one kilo of agave head was worth one-hundredth of its cost 10 years ago, and producers are suffering. It’s a paradox—they have a gold mine in their fields, only they don’t know it.” Jimenez is trying to convince the Mexican government to start a biofuel industry based on agave. “The tequila industry is very powerful, though,” he says. “They don’t want anything to bother them. Tens of thousands of families could lose their crops.” In the meantime, the Agave Project will continue to build on research dating back several decades.

Research and Yields Lugo has been working to develop enhanced strains of different varieties of agave,includingagavetequilana,angustiflioand fourcrocides, which Jimenez says have even higher sugar content and the plants are several times larger than typical agave strains. “His agave tequilana variety, for instance, produces six to 10 times more tequila than common agave,” he says. Lugo’s initial agave research began in 1979, when the first agave plantation was established in Yucatan, Mexico, using an in vitro propagation protocol. In the following years, work continued with different strains of agave being developed with respective protocols for propagation in vitro. Since then, all propagation has had to be done from immature plants, since mature plants didn’t allow this type of propagation, Jimenez adds. “But immature plants don’t have well-defined characteristics. Thus the seedlings could be large and productive or small and unproductive, resulting in very diverse plantation. The possibility to propagate mature plants, with well-defined characteristics allows the industry to select only the best plants to propagate.” In agave characterization, among other qualities of production importance is the weight of the plant head, which determines sugar content—the heavier the head the higher the sugar content, according to the research. Lugo and Jimenez say some agave strains can possess three times more sugar than sugarcane in Brazil, four times more


AGAVE cellulose than the fastest-growing eucalyptus, and five times the amount of dry biomass than the genetically modified poplar tree; one hectare (2.47 acres) of agave usually produces more than 500 metric tons (551 tons) of biomass.

Fields of Dreams The question is, what will it take to jump-start the agave-to-ethanol industry in Mexico? According to a report generated from a research project undertaken at Chapingo Autonomous University, agave ethanol production in Mexico would require a subsidy of 29 cents per liter for agave refineries to support a sustainable renewable energy economy, which is described by researcher Antony Maldonado Sanchez as being a feasible policy since the U.S. government subsidizes ethanol obtained from corn at approximately 28 cents per liter. As for the reach of the Agave Project, Jimenez says the group plans to get the Chamber of Tequila Industry or several major tequila industries, as well as state and municipal government dependencies, the National University and other research centers and international biofuels wholesalers involved in the project. The group is working to secure additional funding, a task Jimenez is confident will be completed soon. “We plan to ask for help from the Global Sustainable Biomass Fund for a subsidy to promote the Agave Project,” he said. “There are several groups of interested international investors, as well as the CO2 Foundation of The Emirates Airline (Foundation), and a Canadian bank.” Several different industries are also interested in agave. “Its low cost, high yields, superb quality of sugars, all-year round harvesting and its high cellulose content—up to 68 percent—are very attractive,” Jimenez says. We will be sending agave biomass samples for testing to the best commercial technologies available in the production of all kinds of biofuels. We have a first-prizewinner energy crop and we want to mate with companies with first-prize-winner technologies.” He adds that they are already quietly working with some companies. For example,

Massachusetts-based Mascoma Corp. is interested in building a 50 MMgy to 100 MMgy facility for cellulosic ethanol production utilizing agave bagasse. Mascoma research scientist Heidi Hau says Mascoma is currently evaluating agave as a potential feedstock, and has conducted some preliminary tests in-house that warrant further testing. “We are very much in the evaluation stage and we have not yet committed to a project,” she says. Jimenez said the Mexican Ministries of Economy and Agriculture are interested in having Mascoma visit Mexico for that purpose and are providing their assistance. Beyond Mascoma, the Energy Biosciences Institute at the University of Illinois is evaluating agave, and Jimenez is also working with Washington-based Clearsky Energy Systems Inc., which is exploring the possibility of building municipal electricity-generating facilities that run on syngas produced from the gasification of agave biomass.

Future plans for the Agave Project include delving into the production of biochar, biocoal and possibly biocrude or biojet fuel from the crop, and growing agave for renewable energy purposes all across Mexico. “Just in Mexico, there are more than 80 million hectares of marginal and semiarid land where agave plantations could be established, and massive production of agave biochar and biocoal could have a real impact on climate change,” Jimenez says. “It could also become a very prosperous business in the U.S., China and many other countries. I think agave is here to stay. As more and more people discover it, it will become very popular and be a gift from Mexico to the world.” BIO Anna Austin is a Biomass Magazine associate editor. Reach her at aaustin@ bbiinternational.com or (701) 738-4968.

5|2010 BIOMASS MAGAZINE 75


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CONTRIBUTION

Projecting Cropped Biomass Supplies: The Landowner Factor New York biomass study focuses on landowner choices and preferences in determining how much biomass can be grown and at what cost.

A

reliable and affordable biomass supply is the starting point for any biofuel or bioenergy project. Although the level of detail in biomass supply shed assessments has increased in recent years, all the standard approaches ignore an essential element—the opinions and preferences of the peo-

ple who own and make decisions about the land.

Understanding a Local Biomass Supply Shed When Ray Cross, president of Morrisville State College, undertook a comprehensive review of energy use by his school’s central New York campus, a bio-

mass-fueled heat and power plant was an obvious option. “It fits our tradition as an agricultural college, and also our educational strategy of exposing students to the challenges of implementing new technologies in realworld settings,” Cross says. The campus is surrounded by a mixture of farm and forest land. It is also eight miles

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

78 BIOMASS MAGAZINE 5|2010

Dan Conable partner, Cato Analytics LLC

Tim Volk senior research associate, SUNY College of Environmental Sciences and Forestry


SUPPLY By Dan Conable and Tim Volk

PHOTO: MORRISVILLE STATE COLLEGE

supporting field testing of biomass crops in different climate zones, we’re beginning to get a handle on production costs,” says Tom Sleight, the institute’s executive director. “However, in a state where upwards of one-third of the active agricultural land and a larger share of the idle land is not owned by a farmer, model crop budgets only take you so far. When does it become interesting for a commercial farmer to aggregate enough land to set up an efficient production unit? Will nonfarmers be receptive to the longer lease terms that perennial energy crops require?” With funding from the Farm Viability Institute, Cato Analytics LLC undertook a biomass supply assessment covering all the agricultural land within 25 miles of Morrisville, utilizing a new methodology initially developed in another supply shed with support from the New York State Energy Research and Development Au-

Morrisville State College is considering biomass to heat and power its campus.

thority. This research strategy emphasizes an “overlay” that most GIS assessments fail to include: the landowner choices and preferences that will control how much biomass will be grown and what it will cost.

A Field-by-Field Approach

PHOTO: CATO ANALYTICS LLC

up the road from Colgate University, which has used wood chips as a primary heat source for more than 20 years. “With a neighboring college already getting most of its heat from wood and new forest-based energy projects springing up all over the region, it made sense for us to look into cropped biomass as our fuel source,” he says. “We seemed to have an adequate land base, but we didn’t have a good sense of how biomass would fit into the mix of existing uses for that land, let alone the underlying relationship between the price we could pay and what our area could supply.” The question of where biomass crops fit into a complex mixture of overlapping agricultural and “lifestyle” uses for rural land has also intrigued the Farm Viability Institute, a nonprofit organization that has funded applied agricultural research in New York State since 2004. “After several years of

Interviews were conducted to supply the element of landowner choices and preferences.

The team began by identifying properties with 10 acres or more of agricultural land from satellite land cover and tax roll land use data. “The published accuracy of the National Land Cover Data Base classification of agricultural land in the Northeast is about 80 percent,” says Stephen Stehman, the project’s statistician, “which was considered suitable for constructing a reasonably accurate list of candidate properties.” A stratified sample was drawn from nearly 7,000 properties that met the coarse land cover/land use criteria. Owners of properties in this sample were invited to participate

in the study, with the offer of an assessment of the biomass crop production potential of their individual properties in exchange for a face-to-face interview. Properties whose owners agreed to participate were located from tax roll data and mapped onto aerial photos. A GIS specialist outlined and numbered each field, measured its area, and identified its dominant soil type. “This was an essential starting point,” explains Chuck Kyle of Cato Analytics, who served as field director of the project, “because we know from previous studies that landowners may be willing to do something with one particular field that they wouldn’t consider on another. This is true both for farmers and nonfarmers, and these are things you can’t figure out from standard GIS data.” After the properties and fields had been mapped, a field technician visited the proper-

5|2010 BIOMASS MAGAZINE 79


SUPPLY By Dan Conable and Tim Volk

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‘This is the first time we have seen a local biomass supply analysis that produces a cost curve, rather than a total biomass supply number, disconnected from someone’s estimate of a standard cost of production.’ —Larry Martin, vice president, O’Brien & Gere

ties, noting the current use of every field, along with drainage and other conditions relevant to its biomass crop production potential. Crop yield models were used to estimate what each field might be able to produce in three perennial crop categories—shrub willow, warm season grasses and cool seasons grasses—taking into consideration soil type, climate zone, drainage, estimated fertilizer requirements and other agronomic factors. As this work was getting underway, team members built crop budget models, incorporating local farmer input to make sure they accurately represented costs in the region. Structured face-to-face interviews with each landowner began with an informal exploration of the property’s ownership history, current uses, and the owner’s plans and ideas for the future. The discussion then progressed to whether the owner would consider committing his or her property, field by field, to any of the biomass crop options.

The interviewer’s first goal was to learn whether each field was “in play” or “out of play” for each of three perennial energy crop systems. “Every landowner has a different story, and so does each field,” Kyle says. “How far is the field from the house? Is its current use vital to the owner’s agricultural business, or to a particular recreational use?” Using an Excel workbook with each field’s productive potential and the crop budgets already loaded, the interviewer could explore the roadside price at which the landowner would consider producing each of the three crops with his or her own resources. The workbook was constructed with macros that could simulate the cash flow and cumulative net returns for an energy crop on the acreage in play at varying hypothetical roadside price levels. Another tool captured the minimum rent at which the owner would commit the land to biomass production by a third party under a multiyear lease.

Linking Supply and Price After two months of field work, the team had determined whether more than 1,300 individual fields, located throughout the study region, might supply biomass, how much they could supply, and at what minimum price. An expansion of data from this randomly-selected set of study properties provided a projection of total regional supplies, by price, for each type of biomass.


SOURCE: CATO ANALYTICS LLC

SUPPLY By Dan Conable and Tim Volk

Cost curve for switchgrass, Morrisville supply shed

“This is the first time we have seen a local biomass supply analysis that produces a cost curve, rather than a total biomass supply number, disconnected from someone’s estimate of a standard cost of production,” says Larry Martin, vice president of O’Brien & Gere, the engineering firm that is performing the energy analysis for Morrisville College. “This is enormously useful when you’re doing a feasibility study and evaluating multiple solutions and technologies. What we need to know is what a future plant will have to pay for a type of fuel, connected to the availability of that source.” While these cost curves were the study’s “bottom line,” byproducts included a finegrained analysis of current land use, the quality of land in the total agricultural land base, rents, ownership patterns, and the dimensions and dispersion of fields that might be available to produce biomass. Although this study covered only

perennial grasses and shortrotation woody biomass, the methodology is adaptable to other energy crop options, as well as crop residues. “I don’t know how a project developer could design a biomass crop procurement strategy in upstate New York without the kind of information about the potential production area that this study has given us,” Cross says. The same may be true for cropbased biomass projects in many other parts of the United States, where land ownership patterns and the motivations of individual landowners are as diverse as the landscape itself. BIO

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Dan Conable is a partner in Cato Analytics LLC. Reach him at contact@catoanalytics. com. Timothy Volk is co-director for the sustainable energy program in the Center for Sustainable and Renewable Energy at the State University of New York College of Environmental Sciences and Forestry. Reach him at tavolk@esf.edu.

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5|2010 BIOMASS MAGAZINE 81


POLICY By Rob Goldberg

CONTRIBUTION

Biomass is Having a (Political) Moment Biomass project developers can benefit by taking a closer look at the opportunities offered by the federal government in the cash grant program under the American Recovery and Reinvestment Act of 2009 and USDA’s Biomass Crop Assistance Program.

T

his year is shaping up to be interesting for developing and financing power projects that use biomass as feedstock. On the one hand, raising private capital for biomass projects continues to be challenging, creating further pressure on biomass developers to structure “clean” projects with strong fuel supply and other contracts that

favorably allocate risk to experienced and creditworthy project counterparties. On the other hand, a number of government incentives hold great promise for financing all kinds of bioenergy projects. Current developments relating to two of these government programs, the cash grant program under the American Recovery and Reinvestment Act of 2009 or the stimulus bill, and the

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

82 BIOMASS MAGAZINE 5|2010

Biomass Crop Assistance Program, are worth a further look.

velopers is turning to whether a plant can commence construction by the end of Cash Grant the 2010 deadline. Expiration The stimulus bill Much has been permits qualifying written regarding Rob Goldberg biomass power projthe U.S. Treasury’s partner, Mayer ects to forego proBrown cash grant program duction tax credits and instead to elect for eligible generating facilities, but as 2010 pro- an investment tax credit for gresses, the focus for many de- 30 percent of eligible project


POLICY By Rob Goldberg

USDA has terminated funding for the BCAP Matching Payment Program until the final rule is released.

costs, or a cash grant from U.S. Treasury. For biomass projects in particular (compared with technologies such as wind), this is a big deal. Open-loop biomass projects (as defined in the Internal Revenue Code), which currently comprise most of the operating biomass projects in the U.S., qualify for only half the value of the production tax credit for wind, but the stimulus bill made open-loop biomass eligible for the investment tax credit and the equivalent cash grant that is available to other technologies. However, the cash grant is a temporary stimulus measure. The current cash grant deadline requires that a biomass project must be placed in

service by the end of 2010 or “commence construction” by the end of 2010 and be completed by the end of 2013. In July, the U.S. Treasury released cash grant program guidance, including rules on what “commence construction” means. The guidance was helpful, but a number of questions were not addressed or were left unclear. Treasury issued revised guidance on the rules on starting construction in March 2010. A cash grant applicant has commenced construction by the end of 2010 if “physical work of a significant nature” has begun. This is not preliminary activities such as planning, designing or clearing, but rather on-site foundation work or other physical con-

struction activity, or off-site manufacturing of components for the facility. The guidance permits both self-construction and third-party construction by a written, binding contract to be taken into account. The guidance also includes a safe harbor if at least 5 percent of actual project cost is paid or incurred. For property constructed by the applicant, the cost of property is treated as paid or incurred when paid or incurred by the applicant. For property manufactured or constructed by a third party under a binding, written contract, the cost of the property is paid or incurred when the property is provided to the applicant or when the thirdparty manufacturer or vendor

pays or incurs the costs. Developers targeting the 5 percent safe-harbor should leave a margin for error (incur not less than 7 to 8 percent of eligible project cost in case, for example, Treasury rejects the classification of certain costs as eligible, or actual cost turns out to be less than estimated cost). Developers hoping to qualify for the grant, but currently anticipating the start of plant construction in the latter part of 2010 or early 2011, should carefully review their construction plans with advisers to ensure the project complies with the revised guidance and meets the deadline. Projects that simply can’t meet the deadline obviously are not eligible for the grant.

5|2010 BIOMASS MAGAZINE 83


POLICY By Rob Goldberg

BCAP may not make a noneconomic project viable, but it certainly has potential to create additional options to structure fuel supply, thus addressing a critical risk for biomass project developers trying to solidify financing arrangements.

These project developers at least have certainty that federal tax credits will be available to qualifying projects placed in service during the next few years. In addition to permitting eligible generating facilities to take the investment tax credit or cash grant rather than production tax credits, the stimulus bill extended the deadline for tax credits. Biomass projects must now be placed in service by the end of 2013 to qualify for production tax credits or the investment tax credit.

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There is also support for extending the cash grant as a “refundable investment tax credit.” However, it is not certain at the date of this writing whether the program will be extended or, if extended, exactly what new rules may be attached. Given this uncertainty and the benefit of the cash grant as compared to tax credits (most developers must find scarce tax equity to monetize them), projects that have a realistic chance to meet the current cash grant deadline (and are otherwise eligible) should push to meet the safe harbor for commencing construction.

BCAP Boost Another recent development that may boost biomass power project financing is BCAP, authorized by Section 9001 of the 2008 Farm Bill. Under the BCAP Matching Payment Program, agricultural and forest landowners and operators can receive matching payments for eligible biomass material (including most nonfood biomass) sold to any qualifying project that converts renewable biomass into heat, power, biobased products, advanced biodiesel or certain advanced biofuels. Under the BCAP Establishment and Annual Payment Program, producers of eligible renewable biomass crops within specified project areas can receive up to 75 percent of the cost of establishing eligible woody and nonwoody perennial crops, and annual payments for up to 15 years for production of such crops. In 2009, funding and interim rules were established for the Matching Payment Program, but not the Establishment and Annual Payment Program, by a notice of funding availability (NOFA). In early February 2010, another major step towards implementation was taken as the Commodity Credit Corp. issued a proposed rule on BCAP in its entirety. However, at that time the USDA terminated funding for the Matching Payment Program under the NOFA and indicated that new applications will not be accepted until the final


POLICY By Rob Goldberg

rule is issued. The proposed rule is subject to a 60-day period for public comments that ended in early April. It is not yet clear under the proposed rule who the Matching Payment Program winners and losers will be. The proposed rule seeks comment on three different payment options. The first option follows the NOFA and provides matching payments at $1 for each $1 per dry ton paid by a qualified biomass conversion facility (BCF) to agricultural and forest landowners and operators for eligible material sold to such BCF. Such matching payments are limited to a maximum of $45 per dry ton, and a period of two years from the date of the first payment. The matching payments are payable for wood wastes or residues that are converted by the BCF to heat or power only above a historical baseline of any heat or power the BCF produces for self-use. This option generally treats different biomass uses the same, with perhaps some incremental advantage to uses other than heat or power that are not subject to the selfuse carve out. The second option is a tiered approach. The maximum $45 per ton rate is available only on materials delivered to BCFs that convert eligible material to advanced biofuels. Biomass providers to BCFs that convert eligible material to energy or biobased products other than advanced biofuels remain eligible for the $1 for each $1 per dry ton, but subject to a cap of $16 per dry ton. This option encourages the use of biomass for advanced biofuels production over other uses. The third approach encourages additional biomass consumption above a historical baseline. The matching payment of $1 for each $1 per dry ton paid by the BCF would be reduced for facilities that do not increase renewable biomass consumption over the historical baseline. Compared with the first two options, this seems to favor new facilities over existing projects. For both the Matching Payment Program and the Establishment and Annual

Payment Program, there are numerous eligibility and qualification requirements in the proposed rule that cannot be addressed in detail here. BCAP may not make a noneconomic project viable, but it certainly has potential to create additional options to structure fuel supply, thus addressing a critical risk for biomass project developers trying to solidify financing arrangements.

Rob Goldberg is a partner at Mayer Brown and is co-head of the firm’s Renewable Energy Group, where he advises on domestic and international project finance transactions and development matters. His practice focuses on the energy and infrastructure sectors, including conventional and renewable power, oil and gas, and toll roads. Reach him at rgoldberg@ mayerbrown.com or (713) 238-2650.

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5|2010 BIOMASS MAGAZINE 85


INTELLECTUAL PROPERTY By Richard B. Hoffman

CONTRIBUTION

IP Pitfalls in Talking With Others This is the second part of a two-part series. The first part detailed several scenarios in which intellectual property rights problems can arise. The second part is about the basic laws that affect third-party disclosures and tips regarding such disclosures.

T

he overarching IP basics and general guidelines1 operative relative to disclosures to (and by) third parties in the context of inventions are as follows: It goes without saying that rights in trade secrets and other confidential information (CI) can be lost by outright nonconfidential disclosures to third parties. Normally, if some information a third party learns of is not otherwise subject to some confidentiality restriction, or to some patent right, or where ap-

propriate, the subject matter is not protected by copyright, or it is not otherwise known to be under any trade secret protection (and the information is legitimately acquired), that information is then free to be used by the third party without restriction. It is often said that ideas and information themselves do not care who knows or uses them. Under U.S. Patent law2 any co-inventor, not otherwise subject to an assignment of rights or a suitable joint commercialization agreement being in place, is free to commercial-

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

86 BIOMASS MAGAZINE 5|2010

of the inventor, of ize the joint invention a definite and perwithout obtaining the manent idea of the consent of and accomplete and opcounting to any other erative invention, as joint inventor. it is thereafter to be Basically, a joint applied in practice.”3 invention occurs when two or more persons Richard Hoffman This means that the collaborate to produce partner, Marshall, invention must be so the invention through Gerstein & Borun complete and definite that only orditheir aggregate efforts LLP nary skill would be and at least one claim in a patent application is reflec- necessary to reduce the inventive of each inventor’s inventive tion to practice, which includes contribution. (Collaboration making a working prototype here is in the sense of joint ef- or example of the invention, forts or working under com- without extensive research or experimentation.4 Thus, one mon direction.) The true inventor con- who recognizes a problem is tributed to the conception of (normally) not considered an the invention. Conception here inventor. Rather, the party who is “the formation in the mind conceives the solution to the


INTELLECTUAL PROPERTY By Richard B. Hoffman

problem is the true inventor. Generally, the party that conceives the ultimate overall solution, and controls the invention’s development process to successful testing (or preparation and filing of a patent application), is normally considered the inventor, as against any other who merely provides a general suggestion, or recites to the inventor the current status of the art, or provides an obvious element or well-known principle. An inventor “may use the services, ideas, and aid of others in the process of perfecting his invention without losing his right to a patent.”5 However, such contribution or assistance from others does not give rise to joint inventorship unless it contributes to conception of the invention. For example, merely suggesting a technology or an existing, available device that may be useful in solving a problem does not contribute to conception unless the suggestion includes the specific improvement or insight that makes the overall invention new and distinct from what came before, allowing one of ordinary skill in that discipline to create the invention without employing any creativity or ingenuity of their own.6 In conceiving the invention, the inventor may consider and adopt (or reject) outside ideas and materials from many sources, such as suggestions from a colleague, employee or hired consultant, as long as the inventor maintains intellectual domination and control of the work of making the invention, including control over testing and development. Even if such suggestions or materials prove to be the key to the technical

problem, that does not constitute inventorship and does not diminish the role of the person controlling the inventive process.7 Many third-party contributions (especially when the outsider is not working in a collaborative relationship with the true innovator, i.e., primary inventor, or when the third party has no control over the direction and scope of the inventive efforts) may simply be noninventive. For example, the third party may supply a general suggestion, i.e., a general (or even specific) response to a general hypothetical question put to them, that doesn’t contribute to the inventive process. One does not qualify as a joint inventor merely by assisting the actual inventor after conception of the invention has occurred.8 For example, contributing, rather than to the conception, but only to reducing the invention to practice (e.g., making a workable example of the invention) does not make one an inventor.

Tips for Third-Party Disclosure The goal with third-party disclosures, whether in the biomass or biofuel area or otherwise, is to assure that any outside suggestions received, under all the circumstances, do not rise to the level of an inventive contribution necessary to establish co-inventorship with the inventor’s ongoing efforts unless one is able to negotiate an assignment of resulting IP rights. Thus, there are general tips for making necessary limited disclosures of CI to persons and entities outside one’s company. Use confidential disclo-

sure and invention rights agreements: Before making any disclosures to third parties from whom you seek assistance to solve a technical problem, appropriate agreements should be negotiated and signed. Examples of such agreements include confidential disclosure agreements (CDAs), joint research and development agreements, sponsored research agreements, joint commercialization agreements, feasibility agreements, engineering/repair/testing services agreements, material transfer agreements, consulting agreements, joint venture agreements, contract research agreements and manufacturing agreements. These agreements often prohibit the recipient from using company CI for any reason other than the purpose defined in the appropriate agreement, and often state that there is no express or implied license granted to the recipient to use or otherwise act on the CI or other intellectual or intangible property right being disclosed. File provisional patent applications/undertake searches: To the extent you have a completed invention, consider quickly preparing and filing a provisional patent application on what the in-house innovator currently knows, before ever making any disclosures to a third party. Perhaps also do quick technical information/prior art searches to seek as much information as possible about potential solutions to the technical problem at hand. Then consider including such search-derived solution information in the provisional application, before talking to any third parties. In doing so, the innovator’s company will

be better positioned relative to third parties. That is, the innovator’s company has hopefully learned sufficient solution information in advance, and has a placeholder patent application on file regarding it, with priority as of an early date (vis-á-vis any similar patent application that might later be secretly filed by the third party, or useful against any later possible joint invention claim by such a third party). If the invention is not fully completed, then at a minimum have an internal memorandum documenting what is currently conceived and known by the innovator, and then witnessed as read and understood by two company employees who have signed and dated it, before making any third-party disclosures. Dominate and control the invention/development/ disclosure process: In situations where the innovator is developing an invention and needs to ask a third party for assistance or technical information, consider these controls to help best preserve IP rights: Conceive of, control and direct the overall inventive process. Oversee all research and development; decide how to proceed, what to test, what materials to select and use, what material percentages and ranges to use, etc. Control/direct the investigation into the state of the prior art and in seeking possible solutions to a given problem. Keep control over the entire disclosure situation. This can be achieved by revealing as little information and details as needed to inform a third party so they can consider and respond, maybe only a few generalities will suffice. (By limiting

5|2010 BIOMASS MAGAZINE 87


INTELLECTUAL PROPERTY By Richard B. Hoffman

what information is provided to the third party, you can prevent them from having a complete conception of the invention.) Take care to not have situations where the innovator tells the third party too much about the reason behind why they are asking the technical questions in the first place. That might take the situation outside the context of an abstract question seeking a general answer, and more into the realm of joint inventorship. Thus, caution innovators to be careful in divulging too much information about what they are working

on, or why they need the given answer, as that can sometimes lead to the third party later claiming co-inventorship rights. The goal is to maintain control over the confidential facts divulged and the reason for the inquiry, so as to best ensure that there is primarily a one-way flow of information, flowing only from the third party back to the innovator.

when inventions are made. Encourage all inventors to comply with such policies via financial incentives. This can be done first through proper regular use of handwritten or electronic lab notebooks (inventor’s notebooks). Second, also use appropriate record of invention forms. Both of these documents should be properly dated, signed, and countersigned by two witnesses for verification. These written invention records may Establish Good Internal Policies become vital evidence of how and when a Maintain good internal policies at the given concept originated. That is, such ininnovator’s company for recording how and ventor documentation can help prove who conceived and did what, and when, regarding the invention, to help (hopefully) show that the innovator’s invention was first conceived and reduced to practice at a point Quality pellets, guaranteed. For perfect pellets the entire production system well before any invention by a third party. must work together flawlessly. Buhler enables total process control by Assess if there truly is a need to disproviding a complete process design package and key equipment for close secrets in the first place. Recall that drying, grinding, pelleting, cooling, bagging and loading. This, combined the best way to keep a secret is not to tell with Buhler’s integrated automation system, unrivaled after sales support anyone. Carefully choose the receiving party and training provides a seamless solution, guaranteed. for your crown jewel CI to make sure they are trustworthy. Only disclose to those employees of the third party who have a need Visit us at the International Biomass Conference & Expo - Booth #408 to know and who have agreed to be bound by the CDA. Mark all CI that will be disBuhler Inc., 13105 12th Ave N., Plymouth, MN 55441, T 763-847-9900 closed in writing as confidential, and identibuhler.minneapolis@buhlergroup.com, www.buhlergroup.com fy confidential oral or visual information at the time of disclosure, and review the CDA to see if there is an obligation to confirm such disclosure in writing within a certain time period. Each company should have a thorough IP policy and a training program to educate its innovators that no company CI is to be disclosed outside the company unless there is a nondisclosure agreement in place. Many employees are not able to bind the company, or are not familiar with the potential legal issues of any form agreement. Therefore, ensure all employees are familiar with authorization and internal review requirements. Companies should also include a publication review process so that employees cannot write or present talks about internal inventions and ongoing research and development without first being vetted by management or IP counsel. Warn and periodically remind company employees to not disclose CI outside the company. The solution behind the solution. For example, caution employees to be care-

88 BIOMASS MAGAZINE 5|2010


INTELLECTUAL PROPERTY By Richard B. Hoffman

ful not to reveal company CI and trade secrets during trade shows, seminars, cocktail receptions and conferences. Request that employees and technical staff remember to check themselves whenever discussing current company efforts, so as not to unwittingly reveal company CI. Set up policies to prevent unwanted early disclosure of unpublished (secret) company patent applications.

4. See, Singh, 317 F.3d at 1340; see also, Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456, 1460 (Fed. Cir. 1998), cert. denied, 525 U.S. 923 (1998); see also, Burroughs, 40 F.3d at 1228.

F.2d 878, 883 (Fed. Cir. 1992). 7. Morse v. Porter, 155 USPQ 280, 284 (Bd. Pat. Int. 1965). 8. See, Ethicon, 135 F.3d at 1460.

5. Hess v. Advanced Cardiovascular Systems, Inc., 106 F.3d 976, 981 (Fed. Cir. 1997) (quoting Shatterproof Glass Corp. v. Libbey Owens Ford Co., 758 F.2d 613, 624 (Fed. Cir. 1985)).

Richard B. Hoffman is a partner at Marshall, Gerstein & Borun LLP and chair of the firm’s cleantech and renewables practice group. Reach him at Rhoffman @marshallip.com or (312) 474-6621.

6. Agawam Woolen Co. v. Jordan, 74 U.S. 583, 602-03 (1869); see also New England There are many reasons for biofuel and Braiding Co. v. A.W. Chesterton Co., 970

Conclusion

clean technology innovators to interface with third parties in solving a technical problem. There are obviously competing interests involved when disclosures are made for purposes of soliciting technical information and solutions to technical problems, especially where resulting IP rights are involved. One’s perspective depends on where one is situated in the innovation chain, whether you are the innovator company, the company whose personnel are being asked to help solve problems, or a potential vendor, consultant or other outside entity. Take care in advance of any disclosures to third parties to properly preserve CI by contract, and to establish who owns any resulting inventions and other IP rights. You may need to obtain field-of-use licenses regarding pre-existing IP rights owned by third parties. Third-party disclosures need to be made to separate what belongs to the innovator’s company and what may belong to any third party so that the innovator’s rights to the invention are preserved as much as possible without being tainted by a third party. BIO References: 1. Of course, these are given as general guidelines, as every disclosure situation is different. Further, inventorship (and coinventorship) questions are heavily fact intensive, and can turn on various factors. A qualified IP counsel’s assistance should be sought to address a given situation. 2. 35 U.S.C. §262.

8

ACCREDITED

3. See, Singh v. Brake, 317 F.3d 1334, at 1340 (Fed. Cir. 2002); see also, Burroughs Wellcome Co. v. BonLabs., Inc. 40 F.3d 1223, at 1227-1228 (Fed. Cir. 1994). 5|2010 BIOMASS MAGAZINE 89


FINANCE By Scott McDermott

CONTRIBUTION

Understanding the Economic Drivers of Originating Biomass for Power Projects Participation in the emerging biomass-to-energy industry requires knowledge of the origination, logistic, storage and handling challenges involved with the various biomass resources.

A

scendant Partners Inc. has been working with a number of power, combined-heat-and-power and densification projects to better understand and implement options for lowering energy cost, for energy diversification and for lower carbon energy. What makes this analysis different today from past economic and business energy assessments is that many of the fuel sources being considered today were rarely considered fuel sources even three years ago. It takes a forward-looking approach to understand the current and potential macroeconomic drivers of a structurally higher energy price environment and growing body of greenhouse gas legislation such as the patchwork of state renewable fuels standards and the prospect of legislation for greenhouse gas emissions. This article focuses on the economic drivers for the utilization of biomass as a feedstock for coal-fired boilers, biomass boilers and biomass gasification. There are many intelligent researchers focused on the technology of converting biomass to energy in all of its forms. What seems to be less understood are the economics and business challenges of

Primary and Forest Residue

Crop Residue

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

90 BIOMASS MAGAZINE 5|2010


FINANCE By Scott McDermott

Biomass Transportation Cost/Dry Ton/Day

A power producer considering low-carbon emission biomass energy resources should understand the fuelâ&#x20AC;&#x2122;s economic competitiveness and the business challenges of sourcing, storage, handling, transportation, infrastructure and energy quality and content in addition to conversion and purchase price. a fuel source. Most agricultural residues are returned to the soil because of their nutritive benefit in the crop-production cycle. Forest and wood residues are often either left in the forests, or the wood scraps are used as a base for compost, mulch or animal bedding or are recycled or go to the landfill. It is yet to be seen if energy cropsâ&#x20AC;&#x2122; agronomic and indirect land use characterization will drive energy crops to be grown in more traditional growing areas or in new growing areas.

Biomass Transportation Cost/MMBtu/Day

Manage Acquisition Costs

biomass origination, logistics, storage and handling. The fact is, we are in the early stages of the evolution of the biomassto-energy supply chain. While woody biomass residues, crop biomass residues and energy

crops will be distributed across the country, their economics vary greatly. One of the most important points to keep in mind regarding the economic drivers of biomass resource acquisi-

tion is that all of the potential feedstocks being considered as a fuel source are either not being utilized today or are being utilized in other applications because of their relatively high cost and technical challenges as

If energy prices continue to rise and carbon emissions become more regulated, more groups will be attempting to utilize these biomass energy resources. It is inevitable that their value will rise under these scenarios. Therefore, a key economic driver to consider for any group looking to utilize biomass as a feedstock is

5|2010 BIOMASS MAGAZINE 91


FINANCE By Scott McDermott

a long-term strategy to manage biomass acquisition costs. Many groups looking at biomass as a feedstock observe the current market pricing structure and assume it will stay constant. They, therefore, lock counterparties into contracts that will not stand the test of time or believe they will have time to renegotiate contracts when prices start to rise. A more prudent approach would be to work directly with prospective feedstock suppliers in contract relationships

for some part of the biomass feedstock requirements. The long-term goal of these contracts should be energy competitiveness relative to an energy index such as natural gas that will allow the biomass supplier to participate in higher prices while prices are depressed. The other economic drivers for biomass sourcing include bulk density and moisture content, storage, handling, logistics and energy quality. It does not matter

if the discussion concerns energy crops, wood residue, agricultural residue or traditional agriculture and energy products, the fundamental economic drivers are the same. Bulk density defines how much mass can be loaded into a truck, train, barge or ship. The chart on page 91 shows a range of transportation costs per dry ton given different distances. A comparison can be made of the cost to move coal 120 miles to moving wood chips the same distanceâ&#x20AC;&#x201D; the cost for wood chips being almost three times that of coal with the cost to transport wood shavings being as much as five times that of coal on a dry and moistureadjusted basis. That is why densifying the biomass to manage acquisition costs when moving biomass long distances can be the lowest cost biomass feedstock option. No one wants the additional expense of densification included in the cost of the biomass fuel; but if the biomass is being moved a long distance, this option may have to be considered. The densification process produces a product that is materially denser and drives moisture levels down. Another consideration is that densified biomass products can often be moved and handled in an established handling and storage infrastructure. As stated previously, the biomass-to-energy supply chain is in its early stages; and some of the collection, storage and handling systems that will be used in the future have yet to be developed. Being able to leverage existing infrastructure and technology can lower the capital requirements of the new biomass-to-energy systems.

Understanding Energy Quality The concept of energy quality may seem strange, but when it comes to biomass energy feedstocks it is important. Unlike coal, biomass energy feedstocks are susceptible to the elements and degrade over time. This is a particularly important consideration when it comes to energy crops and agricultural residues because they degrade relatively quickly as they are

92 BIOMASS MAGAZINE 5|2010


FINANCE By Scott McDermott

It is important to consider the biomass economic drivers in context of a forward-looking view about how the biomass feedstock will compete in future energy price environments and quantifying the lower carbon fuel benefits under current and proposed greenhouse gas and carbon regulation regimes. This combination will be beneficial in calculating the timing and best energy mix for the facility over the long term.

energy solutions. A power producer considering low-carbon emission biomass energy resources should understand the fuelâ&#x20AC;&#x2122;s economic competitiveness and the business challenges of sourcing, storage, handling, transportation, infrastructure and energy quality and content in addition to conversion and purchase price. It is important to consider the biomass economic drivers in context of a forward-looking view about how the biomass feedstock will compete

in future energy price environments and quantifying the lower carbon fuel benefits under current and proposed greenhouse gas and carbon regulation regimes. This combination will be beneficial in calculating the timing and best energy mix for the facility over the long term. BIO Scott McDermott is a partner with Ascendant Partners Inc. Reach him at (303) 2214700, ext. 3.

exposed to weather. This has implications to the additional cost of storage and handling and the additional capital it takes to minimize degradation. The final economic driver to consider is the energy or Btu content per unit of biomass feedstock. Powder River Coal, for example, has an energy content of about 11,000 Btu per dry pound compared with wood or agricultural residues, which are mostly 7,500 to 8,500 Btu per dry pound. The chart on page 91 shows a range of transportation costs per million Btu (MMBtu) given different distances. If the analysis above is extended to include energy cost per MMBtu, the cost to move coal 120 miles compared with wood chips increases to 3.75 times that of coal and wood shavings to almost 5.75 times that of coal. If the biomass feedstock is stored in a location that is susceptible to the elements, it can lose as much as 25 percent of its energy content, increasing the transportation cost disadvantage to five and 7.5 times, respectively. In the end, utilizing the best technology to convert your biomass feedstock to energy is important; but there are other material economic factors that drive the competitiveness of different low-carbon

5|2010 BIOMASS MAGAZINE 93


RESOURCE By Mark Boustouler and Alison Reynolds

CONTRIBUTION

Guidebook Supports Small-Scale Biomass Project Development in NY The New York State Energy Research and Development Authority has sponsored the production of a guidebook to assist developers of biomass-power projects that produce less than 10 megawatts.

N

ew York has an abundant supply of biomass resources that, if used effectively, could help the state meet both its electricity supply needs and its environmental goals. Currently, 21 percent of New York’s electricity generation comes from renewable resources, with biomass comprising 1.4 percent. By 2013, according to the state’s renewable portfolio standard (RPS), 25 percent of electric generation should come from renewable resources. Encour-

aging small, biomass-based distributed generation would help the state meet this goal, while reducing greenhouse gas emissions and dependence on fossil fuels, increasing grid stability and stimulating local economies. However, developers of small biomass projects face many barriers, including informational barriers, permitting requirements, and financing challenges. The New York State Energy Research and Development Authority has sponsored the development of a guidbook to assist developers of

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

94 BIOMASS MAGAZINE 5|2010

small biomass-fueled electricity generation plants that produce less than 10 megawatts (MW). Under contract with NYSERDA, Pace Energy and Climate Center has written the “Guide for Siting Small-Scale Biomass Projects in New York State.” The guidebook focuses on three technologies: agricultural waste biogas (anaerobic digesters), biomass direct-fire or cofire facilities and biomass gasification. These technologies were selected based on their viability and potential for development in New York.

Choice of Biomass Technologies Of the three biomass technologies addressed by the guidebook, anaerobic digesters are the most well-established in New York, where they have historically been a feature of dairy farms. Animal waste (manure) is stored within a sealed environment and broken down through anaerobic decomposition, producing biogas. This gas, after treatment, can be used as a replacement for natural gas. The basics of this technology have been around for some


RESOURCE By Mark Boustouler and Alison Reynolds

time, however, state-of-the-art complete mix systems, widely used in Europe, are only now becoming generally accepted in the U.S. These systems offer higher efficiencies than the plug-flow systems traditionally used in New York. There is great potential for a build-out of digester technology in New York, which is home to the nation’s thirdlargest dairy cow population. Agricultural digesters have proven to be useful manure management tools, minimizing environmental impacts, reducing odors and reducing risks associated with manureborne bacteria and pathogens, while providing farms with an effective method of generating on-site heat and electricity. The U.S. EPA estimates that it is feasible to operate anaerobic digesters on 157 dairy operations in New York. This potential remains largely unrealized, however, with fewer than 20 digesters currently operating in the state. Part of the reason for this underdevelopment may be that traditionally, in the U.S., farmers carry the entire burden of financing the digester and maintaining its operation. But this “farm-financed” model is not the only option. The guidebook suggests a new model of third-party ownership, or farm/ developer partnership, similar to that which has helped support the rapid deployment of digester systems across Europe. Under this model, third parties (generally digester manufacturers and/or installers) share the costs of operations and maintenance with the system owner,

thereby placing a smaller burden on the farm. Typically, such a partnership will include an operating agreement covering system and process monitoring. Additional contracts may include laboratory support, system maintenance and technology upgrades. With such a partnership in place, financing may become easier to obtain, and system component warranties can sometimes be extended. Direct combustion and cofiring is perhaps the most technologically mature of the three technologies addressed by the guidebook. The biomass fuel, typically wood, is burned in a boiler, either alone or in combination with a fossil fuel, such as coal. A variety of combustion systems are currently available, but stoker and fluidized bed systems are the most commonly used. This technology is appealing because of New York’s plentiful supply of wood, municipal solid waste and industrial waste products; and due to the ease with which existing coal-burning systems can be converted to accept wood. In central New York, the State University of New York College of Environmental Sciences and Forestry is reviving New York’s historic willow cultivation industry for the purpose of producing biomass for electricity generation. In addition, a variety of alternative biomass fuels, such as pelletized grasses and waste materials, are undergoing commercialization and may soon be available in sufficient quantity. New York is currently home to two major cofiring facilities, the Niagara Mohawk

Power Corporation Project and the Greenridge Generating Station. There are also significant opportunities for industrialand institutional-scale projects using this technology. The third technology addressed in the guidebook, biomass gasification, is newly emerging within the small-scale energy production marketplace. To date, gasification has primarily been used by industrial and large commercial energy users; however, as technology costs decrease and the technology is proven, gasification is anticipated to become affordable for smaller-scale applications. Significant research and development has already scaled down the size requirements of gasification systems. Fixed-bed gasifiers in particular have been adapted for the small-scale market, providing a simplified design and lower capital costs, which makes them more attractive to potential distributed energy producers. Gasification, in its simplest form, produces energy through a two-stage process. First, the feedstock is burned in an atmosphere containing little oxygen; this prevents complete combustion and results in compounds consisting largely of carbon and hydrogen. The second combustion stage uses these compounds to form syngas, a clean-burning gas with high energy content. Gasification facilities are more costly than direct-combustion facilities; however, the marketability of gasification technology to small-scale distributed energy production

has increased due to higher efficiency rates, lower emissions and fewer slagging problems. Gasification produces fewer nitrogen oxide, carbon monoxide and particulate emissions than direct combustion, which has implications for the state’s air quality goals, and can be twice as fuel efficient. Another advantage of gasification is that a wider array of fuels can be used. Gasification feedstocks can consist of anything organic based, without much added emissions risk, making this technology highly adaptive. Despite these benefits, there is only one operational gasification technology project in New York. More demonstration projects are needed in the state in order to prove this technology’s viability, which will make it easier for gasification project developers to obtain financing. Regardless of the biomass technology selected, the guidebook assumes that small biomass facilities will employ combined-heat-and-power (CHP) systems, since this is the most economical way to produce electricity on a small scale. CHP systems capture the thermal energy created as a byproduct of the electricity generation process. Capturing the waste heat increases biomass fuel efficiency from approximately 20 percent to about 75 percent. Because it is more efficient to produce heat than electricity, CHP systems are generally sized to match the heat load of their host facilities or a nearby heat purchaser.

5|2010 BIOMASS MAGAZINE 95


RESOURCE By Mark Boustouler and Alison Reynolds

From the Ground Up The guidebook provides a detailed outline of project development, from the planning phase to energy production. It is important to remember, however, that individual projects must be uniquely tailored to meet site-specific needs and opportunities. Space requirements, financing opportunities and community impacts will all factor into project design and help determine which technology is best suited to a particular location.

Many project development decisions will revolve around the availability of appropriate and affordable feedstocks in the area. Biomass feedstocks in New York include wood, grasses, manure, urban and industrial waste streams, and crop residues. Wood sources include waste wood (for instance, from construction projects), forest products and dedicated woody crops. Grasses are currently not available for industrial-scale use in New York, but there are test plots of dedicated grassy energy

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96 BIOMASS MAGAZINE 5|2010

crops, such as switchgrass and other perennial grasses. Waste streams include municipal solid waste, mill waste and food processing waste. Although each technology has its advantages and disadvantages, all three offer the environmental benefits of biomass-based distributed energy production. Replacing fossil fuels with biomass significantly reduces net (life-cycle) CO2 emissions, because the only CO2 released is that which had previously been taken up during the growth of the biomass feedstocks. These emissions will then be recaptured by the next generation of biomass. Biomass-fueled power plants also produce little sulfur dioxide and toxic metals. As with other industrial-scale development projects, proposed biomass facilities in New York are subject to multiple environmental regulations and permitting requirements. Each project must undergo a State Environmental Quality Review and may also be subject to various environmental compliance measures administered by the New York State Department of Environmental Conservation, the New York City Department of Environmental Protection and federal agencies. Because New York is a home rule state, land-use regulation is largely controlled by local municipalities. Therefore, project development will be subject to local laws, which vary from municipality to municipality. Examples of environmental regulations that a biomass project may be subject to are storm water, solid waste, air and wastewater regulations. Because biomass technologies may be unfamiliar to regulators, boards and agencies, the process of navigating regulations and permitting may take longer and involve more detailed plans than might be required for a similar-sized fossil fuel project in the same location. The guidebook assists biomass developers in navigating this complex regulatory background by identifying potential environmental impacts of biomass projects and the key permits that must be obtained. Since SEQR can be a complicated process, the guidebook also provides a SEQR process summary. The guidebook also aids developers in assessing the financial viability of their projects. Obtaining financing is key to successful biomass project development. Developers must be able to determine whether the expected


RESOURCE By Mark Boustouler and Alison Reynolds

revenues and savings resulting from the project would cover its costs while providing an acceptable return on investment. To obtain financing, developers will likely have to demonstrate a secure and reliable fuel supply, energy off-take contracts, grid interconnection agreements, contracts for additional revenue streams, and investment commitments from the developer and/or a third party. Alternate revenue streams may come from financial incentives, including investment and production tax credits and renewable energy credits. Further, New York developers may be able to acquire emission reduction credits under the Regional Greenhouse Gas Initiative, the Northeast’s cap-and-trade program. Power purchase agreements (PPAs), or long-term contracts between electricity purchasers and electricity generators, can also provide an alternative revenue stream for developers. When looking at a developer’s PPA, a lender will evaluate the contract’s duration, the purchaser’s creditworthiness, and the penalties that would result from a contract breach. Avoided costs, such as from net metering and on-site heat use, will also contribute to the project’s financial profile. The guidebook organizes and discusses the stages of financing for biomass project developers. For example, during the early stages of development, developers must assemble their project team, determine costs, create a financial model, and initiate the permit/approval process. During the secondary stage of development, developers must identify potential financing partners, create a more detailed analysis of design and engineering feasibility, and progress on project agreements and contracts that were previously initiated. During the advanced stages of development and implementation, developers must finalize agreements, solicit equity and debt financing, and begin the due diligence process. Due diligence for biomass projects, especially those using relatively new technologies, can take much longer than one might expect. Developing small- to mid-sized biomass-fueled electricity generation projects can be complicated. In order to ensure the economic viability of their projects,

developers must be well acquainted with the technological, regulatory and financial complexities involved. “The Guide for Siting Small-Scale Biomass Projects in New York State” can assist developers by providing guidance in navigating these complexities. The guidebook can be found at: http://www.nyserda.org/publications/ Report09-07SitingSmallBiomassProjects. pdf. BIO

Mark Boustouler and Alison Reynolds are student interns at the Pace Energy and Climate Center in White Plains, N.Y. Their work on this article was supervised by Todd Olinsky-Paul, energy policy analyst at Pace Energy and Climate Center, and a member of the biomass guidebook project team. Information about the Pace Energy and Climate Center is available at www.law.pace. edu/energy.

5|2010 BIOMASS MAGAZINE 97


A 21 billion gallon market The 3rd annual Advanced Biofuels Workshop, a one-day event co-located with the 26th annual International Fuel Ethanol Workshop & Expo (FEW) in St. Louis, will feature more than 25 presentations from leading players in the race to scale up and commercially deploy next-generation renewable fuels such as biobutanol, green gasoline, renewable diesel and biobased jet fuel. Hundreds of FEW attendees will arrive early to attend this event—space is limited—so register today.

Panels include: • Value Propositions: A Look at the Upside of Four Unique Fuels • Game-Changing Pathways • Second Life: Converting Existing Industrial Facilities Into Advanced Biofuels Plants • Making Money in the Advanced Biofuels Game • Drop-In Biofuels: Sizing Up Advantages • Integrated Biorefining: Fuels and Chemicals

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BIOMASS MAGAZINE

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May 4-6, 2010 Minneapolis Convention Center Minneapolis, Minnesota

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102 BIOMASS MAGAZINE 5|2010

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2010 Sponsors, Supporting Organizations & Exhibitors

Exhibitors 2G CENERGY Power Systems 3M ABBOTT Energy Systems Acrowood Corp ADI Systems Inc. Advanced Enzyme Technologies Ltd. Advanced Recycling Equipment, Inc Advanced Trailer Industries AECOM Aecometric Corporation AGRA Industries, Inc. Air-Cure Inc. Albarrie Environmental Services Limited ALL Power Labs Amandus Kahl USA Corp AMEC Power and Process Americas American Wood Fibers Anderson Group Co. Andgar Corporation Andritz Apache Stainless Equipment Corp Applied Chemical Technology Applikon Biotechnology Aquatech International Corporation Ascendant Partners Inc. ASI Industrial ATEC Steel Fabrication and Construction Atlas Systems, LLC Atmosphere Recovery Inc. B.I.D. Canada Ltd. Babcock & Wilcox Company Baisch Engineering Inc. Bandit Industries, Inc. Barr Engineering Company Bedeschi America, Inc. Benetech USA BERC Biomass Energy Resource Center Beyer Renewable Fuels BinMaster Level Controls Bioenergy International BioFuels Automation Biofuels Journal Bio-Gigajoules S.L. Biomass Briquette Systems, LLC Biomass Magazine Biomass Products and Technology Biomass Thermal Energy Council BioMassXchange, LLC Bioprocess Control Blasch Precision Ceramics Bliss Industries, LLC Boerger LLC BRUKS Rockwood Brunette Industries LTD Buettner GmbH Buhler Inc. Cablevey Conveying Systems

Canadian Biomass Magazine Catalytic Products CECO Environmental Central Boiler CF Nielsen Chemtex International Inc. Christianson & Associates, PLLP Clyde Bergemann Power Group Cogent Industrial Technologies Ltd. CONSOL Energy Inc. R & D Continental Biomass Industries, Inc. Coperion Corporation Corval-Ryan J.V., LLC Cousineau Forest Products CPM Roskamp Champion Custom Instrumentation Services Corp - CiSCO CW Mill Equipment Co., Inc.- HogZilla Grinders Davenport Dryer De Jaye Technologies Detroit Stoker Company DODA USA Inc. Dome Technology Dorsey & Whitney LLP Double A Willow Duratech Industries International, Inc. Durr Systems, Inc. Easy Energy Systems, Inc. Eaton Corporation EDI Environmental Developers, Inc. Eide Bailly LLP ElectraTherm Electronic Wood Systems Elementar Americas Emerging Fuels Technology Emerson Process Management Encore Business Solutions Energy Unlimited Inc English Boiler Biomass Systems Erin Recycling Ernst Conservation Seeds Evergreen Engineering Ewing Bemiss & Co. Fagen Inc. FECON, Inc. FireÀy AB FLAMEX Incorporated Flottweg Separation Technology Fluid Engineering FPS Forest Products Society Fredrikson & Byron, P.A. Frontline BioEnergy, LLC Fuel Tech, Inc. Gagnon, Incorporated Gasi¿erStore.com GE Energy Jenbacher GEA Process Engineering Inc. GEA Westfalia Separator Geomembrane Technologies Inc.

Global Water and Energy Gradient Technology Graf Brothers Flooring & Lumber GreCon, Inc. Greenberry Industrial Guascor North America Gyro-Trac Hallco Industries, Inc. Hansentek Heat Transfer International (HTI) Heyl & Patterson Inc. Hi Tech Agro High Five LLC Hunt, Guillot & Associates, LLC Hurst Boiler & Welding Co. Inc. Hydro-Thermal Corporation ICM, Inc. IMERYS Industrial Accessories Company Industrial Construction Group Industrial Contract Services, Inc. Innovative Magnetic Technologies Inc. Interstates Companies InterSystems Intertek J&D Construction, Inc. Jackson Lumber Harvester Co. Jacobs Corporation Jansen Combustion & Boiler Technologies, Inc. Jasper Engineering Jeffrey Rader JH Kelly KEITH Manufacturing Company Komptech USA Inc. Konecranes America, Inc. Kraft Power Corporation Laidig Systems, Inc. Lanworth Inc. Larox Flowsys LECO Corporation LM Machinery and Equipment, LLC Maas Companies Malcolm Pirnie, Inc. Martin Engineering Matrix Service Company Maxi-Lift Inc. MCC, Inc. M-E-C Company Mendel Biotechnology, Inc. Messersmith Manufacturing, Inc. Metro Boiler Tube Company Metrohm USA Metso Power Mettler Toledo, Inc. Mid-South Engineering Company Minnesota Pipe Trades Association Miron Construction Mitchell County Georgia

Spokane Industries Inc. Moisttech Stanley Consultants, Inc. Momentum West Stempower Monitortech Corporation Stoel Rives LLP Morbark, Inc. Summit Fire Protection MVTL Laboratories Sun Machinery Company Nalco Mobotec SunBelt Biofuels LLC Natgun Corporation Sunomi, LLC Navas Instruments LLC Superior Industries, LLC NEAtech, LLC Swiss Combi New Generation Biofuels, Inc. Sylva Corporation / Wood Chip of NewEarth Renewable Energy Inc. Princeton Next Step Biofuels The County of Elgin Nexterra Energy Corp. The NanoSteel Company North American Clean Energy The National Boiler Training and North Central Sun Grant Center, Renewable Fuels Institute- Western SDSU Iowa Tech Community College NorthAmerican Services Group The Parton Group, Inc. Novaspect The Shaw Group, Inc. Novozymes The Teaford Company, Inc. Pace Analytical Services, Inc. Thomas & Muller Systems, Ltd. Pallmann America Inc. Torrefaction Systems, Inc. Peterson Paci¿c Corp. Trace Environmental Systems Petrochem Insulation, Inc. Trico TCWind PFI Pellet Fuels Institute Tri-Mer Corporation Pinnacle Engineering, Inc. TurboSonic Inc Plante & Moran, PLLC Twin Cities Clean Cities Coalition / Powerhouse Technology ALA of Upper Midwest PowerStock Twin Ports Testing Inc. Prairie Trailer U.S. Water Services Pratt & Whitney Power Systems US Department of Energy Biomass Precision Machine & Mfg. Inc. Program Process & Storage Solutions Process Equipment/Barron Industries Van der Graaf Vecoplan, LLC Pumpaction/Putzmeister Verdant Environmental R&R Contracting INC. Verdicorp, Inc. R.C. Costello & Assoc., Inc. Victaulic Company Rapat Corporation Viking Automatic Sprinkler Rasmussen Mechanical Services Visiam Rawlings Waste Wood Recovery VYNCKE Systems W. Soule & Company Redekop Manufacturing Ltd. Warrior MFG Reserved for Potential Sponsor Weaver Silos and Reclaimers, Inc. Resonant BioSciences, LLC Weis Environmental Richwood Industries Wenck Associates, Inc. RISI West Salem Machinery Robert White Industries, Inc. West Virginia Development Of¿ce Rotochopper, Inc. Western Ag Enterprises, Inc. Ruf US, Inc White Construction, Inc. Rural Energy Marketing, LLC Wilkens Industries, Inc. Schutte-Buffalo Hammer Mill Wisconsin Pipe Trades Schwing Bioset Inc. Wolf Material Handling Systems Screw Conveyor Corporation Wood Bioenergy Magazine Sega Inc. WorleyParsons SEH Inc. Zachry SGS North America Inc. Zampell Refractories, Inc. Siemens Industry, Inc. SmartWood - Rainforest Alliance Smith & Loveless, Inc. SolaGen Incorporated 5|2010 BIOMASS MAGAZINE 103 Solvay Chemicals Inc.


104 BIOMASS MAGAZINE 5|2010

Biomass Magazine - May 2010  

May 2010 Biomass Magazine

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