Building a Stronger Minnesota
Bioeconomy:
2014 Legislative Priorities
Austin, MN
December 17, 2013
Mission of the Bioeconomy Coalition
of Minnesota
Articulate and implement a Minnesota
state policy and regulatory agenda t...
Coalition Organizers
Coalition Partners
Large forestry biomass resource
and large (but declining) forest
products industry

Large agricultural biomass
resource, a...
Renewable Chemical Value

Slide courtesy of
BioAmber
Iowa
Mississippi

9
Louisiana

10
Jurisdictions Providing Financing
Assistance for Bioindustrial projects
• Iowa, Mississippi, Louisiana, North Dakota
(and ...
What “could
be” if MN’s
Policy
Environment
Favored New
Bioeconomy
Projects?
Case Study: Cellulosic Ethanol
• Southern MN facility, co-located with ethanol
plant.
• Feedstock: Corn stover, switchgras...
Case Study: BioCNG
• Anaerobic Digestion facility utilizing turkey
litter, beet pulp, agricultural residues, and
other org...
2013 Legislative Achievements
• Biobased Chemical Funding:
– Language added to NextGen Energy Board Statute
allowing inves...
2014 Legislative Goals
• Create programs to attract commercial-scale
production of biobased chemicals and
advanced biofuel...
Success of MN’s 1st Generation Plants

Ethanol industry supports 12,600 jobs and generates over $5
billion annually in eco...
Policy 1: Producer Incentive
• Summary: Provide production-based
incentives for production of biobased
chemicals, advanced...
Policy 1: Producer Incentive
• Why do this?

– Make Minnesota a world-class destination for building
commercial-scale adva...
Policy 1: Producer Incentive
• Eligibility and Incentive levels
– Biobased Chemicals

• $0.03/Ib
• Up to $60,000,000 over ...
Policy 1: Producer Incentive
• Qualified Facilities
– Must source raw materials (sugar, biomass) from
Minnesota
– Raw mate...
Additional context slides
Displacing the WHOLE Barrel of Oil

Other Products

US Department of Energy 2005

Slide courtesy of
23
BioIndustrial Partn...
www.mnbioeconomy.org
Minnesota’s Biobased Chemicals Cluster
XL Terra

Segetis

Reluceo

Lonza
Cortec

EarthClean

Gevo

Entropy
Solutions

Carg...
Renewable Materials Value Chain

Next Generation
Biorefinery

Farmers/Foresters

Formulator/
Refinery

End Product
Manufac...
Company Highlight:
• Headquarters: Golden Valley, MN
• Base bio-derived compound: Levulinic ketals
• Used to replace petro...
Greenhouse Gas Reductions from Biofuels
According to existing federal policy (EPA’s RFS2)

Compared to gasoline:

Corn Eth...
Company Highlight:
• Headquarters: Elk River, MN
• Produce syngas from biomass
• Use syngas coupled with commercial
thermo...
2014 Policy Priorities
Policy 2: Public/Private Equity
Investments
• Summary: Create a new state-funded public/private
investment pool to make eq...
Policy 2: Public/Private Equity
Investments
• Why do this?

– Already permitted under state statute governing the Environm...
Policy 2: Public/Private Equity
Investments
• Policy detail:

– State should aim to make 5-10 total investments of $2-10 m...
Policy 2: Public/Private Equity
Investments
• Only invest in companies that are:

– Headquartered in Minnesota and have th...
Policy 3: Bonding for Community-Scale
Biomass Thermal Projects
• Summary: Provide bonding funding for capital
investments ...
Policy 3: Bonding for Community-Scale
Biomass Thermal Projects
• Biomass heating and district energy are proven
technologi...
Policy 3: Bonding for Community-Scale
Biomass Thermal Projects
• A few examples of projects that would
immediately benefit...
Other policies
• Support Department of Biosystems
Engineering Bonding Request
• State procurement of biobased products
• P...
Renewable Materials Value Chain

Next Generation
Biorefinery

Farmers/Foresters

Formulator/
Refinery

End Product
Manufac...
Existing Biorefineries Across Minnesota

40
Minnesota –
World Leading
Cluster of
Biochemical
Company
Headquarters

41
Energy Use In Production

Energy use (MJ/kg)

Energy Savings 52%
100
90
80
70
60
50
40
30
20
10
0

88.8

88.7

42.69

*
Bi...
Ontario, Canada 30K MT Production of Bio-Succinic
Acid Will SAVE 212,000 tonnes of CO2e per year

Slide courtesy of
BioAmb...
Sarnia Production of 30,000 MT Bio-Succinic Acid
will SAVE 1.6 Trillion Btu of energy per year

Slide courtesy of
BioAmber
Bio-SA: Lower Cost Than Petroleum SA
Lower Cash Cost TODAY

Historical Data past
29 years when oil >
$30/barrel

Petroleum...
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Bioeconomy Coalition Austin December 2013

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  • 95 percent of products coming from petroleum can be made from biobased alternatives (LUX RESEARCH)
  • Even so, there is a substantial reduction in energy savings. Again here we see that one can provide twice as much product for the same amount of energy.
  • 30K MT capacity = GHG Savings 211,700 Tonne CO2e per/year
    The CO2 emissions of Petro Succinic is 213,000 tonnes Co2/year
    The co2 emission of Bio Succinic is 1,300 tonnes Co2e/year
    That is a savings of 211,700 tonnes of Co2e per year
    Electricity Reductions (kilowatt-hours)
    The Greenhouse Gas Equivalencies Calculator uses the Emissions & Generation Resource Integrated Database (eGRID) U.S. annual non-baseload CO2 output emission rate to convert reductions of kilowatt-hours into avoided units of carbon dioxide emissions.
    All C02 equivalency metrics calculated from the Environmental Protection Agency equivalency calculator http://www.epa.gov/cleanenergy/energy-resources/calculator.html)
  • 1.6 Trillion Btu per year according to our LCA
    This is the savings, NOT the USE for BIO-SA production. That means this is the difference between the energy our process uses and the energy of Petro derived SA.
  • Bioeconomy Coalition Austin December 2013

    1. 1. Building a Stronger Minnesota Bioeconomy: 2014 Legislative Priorities Austin, MN December 17, 2013
    2. 2. Mission of the Bioeconomy Coalition of Minnesota Articulate and implement a Minnesota state policy and regulatory agenda to expand biobased chemical, advanced biofuel, and biomass thermal energy industries, along the entire value chain from R&D through commercial production and use.
    3. 3. Coalition Organizers
    4. 4. Coalition Partners
    5. 5. Large forestry biomass resource and large (but declining) forest products industry Large agricultural biomass resource, and successful track record in creating an ethanol industry through effective state policy
    6. 6. Renewable Chemical Value Slide courtesy of BioAmber
    7. 7. Iowa
    8. 8. Mississippi 9
    9. 9. Louisiana 10
    10. 10. Jurisdictions Providing Financing Assistance for Bioindustrial projects • Iowa, Mississippi, Louisiana, North Dakota (and others) • Thailand • China • E.U. • Canada • Brazil • And others…
    11. 11. What “could be” if MN’s Policy Environment Favored New Bioeconomy Projects?
    12. 12. Case Study: Cellulosic Ethanol • Southern MN facility, co-located with ethanol plant. • Feedstock: Corn stover, switchgrass • $250 million construction investment • $20 million annual payments for feedstock • 100-200 construction jobs • 40 permanent jobs • 180 permanent indirect jobs
    13. 13. Case Study: BioCNG • Anaerobic Digestion facility utilizing turkey litter, beet pulp, agricultural residues, and other organic materials. • Producing Compressed Biogas for use as renewable fuel • Also producing nutrient products • Economics TBD
    14. 14. 2013 Legislative Achievements • Biobased Chemical Funding: – Language added to NextGen Energy Board Statute allowing investment in biobased chemicals – ~$2.5 million over 2 years – Planned RFP for Fall 2013 • Next Gen Biofuels: – Modifying MN “ethanol” mandate to be biofuel-neutral, allowing butanol and other biofuels to enter market. – Establishes 30% by 2025 biofuel goal – Taskforce to recommend incentives to commercialize advanced and cellulosic biofuels in MN
    15. 15. 2014 Legislative Goals • Create programs to attract commercial-scale production of biobased chemicals and advanced biofuels • Create a program to encourage investment in early stage bioindustrial companies • Bond for community-scale biomass thermal energy projects
    16. 16. Success of MN’s 1st Generation Plants Ethanol industry supports 12,600 jobs and generates over $5 billion annually in economic activity. (MDA) 17
    17. 17. Policy 1: Producer Incentive • Summary: Provide production-based incentives for production of biobased chemicals, advanced biofuels, and biomass thermal energy.
    18. 18. Policy 1: Producer Incentive • Why do this? – Make Minnesota a world-class destination for building commercial-scale advanced biofuel and biobased chemical plants – Production incentive can be included in financing, and will attract projects to Minnesota. – Legitimate government role in helping to build “first-of-a-kind” facilities, for which other forms of financing do not exist. – Protection for the state. No payment occurs until production occurs. No risk of boondoggle projects. – State government doesn’t pick technology winners. They simply award the projects that cross the finish line. – Minnesota has history with this approach, through the state’s ethanol producer payment.
    19. 19. Policy 1: Producer Incentive • Eligibility and Incentive levels – Biobased Chemicals • $0.03/Ib • Up to $60,000,000 over 10 years – Advanced cellulosic biofuels • $0.20/gal • Up to $60,000,000 over 10 years – Certain Biomass Thermal projects • $10/mmbtu • Up to $2,000,000 over 10 years • Additional sustainability bonus for use of certified feedstocks, or for following state-approved best management practices
    20. 20. Policy 1: Producer Incentive • Qualified Facilities – Must source raw materials (sugar, biomass) from Minnesota – Raw material must be from agricultural or forestry sources, or from organic content of municipal solid waste. – Facility must be located in Minnesota – Facility must begin operation after January 1, 2015 (including existing facilities with significant retrofits to allow new production after January 1, 2015)
    21. 21. Additional context slides
    22. 22. Displacing the WHOLE Barrel of Oil Other Products US Department of Energy 2005 Slide courtesy of 23 BioIndustrial Partnership
    23. 23. www.mnbioeconomy.org
    24. 24. Minnesota’s Biobased Chemicals Cluster XL Terra Segetis Reluceo Lonza Cortec EarthClean Gevo Entropy Solutions Cargill Industrial Oils BioAmber Natur-tec West Central Ammonia Development Butamax Butrolix Natureworks Agristrand Biocomposites Cargill BioH Starch Tech CHS Slide courtesy of 25 BioIndustrial Partnership
    25. 25. Renewable Materials Value Chain Next Generation Biorefinery Farmers/Foresters Formulator/ Refinery End Product Manufacturing Retail, End Uses 26
    26. 26. Company Highlight: • Headquarters: Golden Valley, MN • Base bio-derived compound: Levulinic ketals • Used to replace petroleum in the manufacture of: – Plasticizers (PVC), polyols for polyurethane materials or use in polyester thermosets or thermoplastics and cleaning solvents
    27. 27. Greenhouse Gas Reductions from Biofuels According to existing federal policy (EPA’s RFS2) Compared to gasoline: Corn Ethanol 20% GHG Reduction Advanced Biofuel 50% GHG Reduction e.g. bio-butanol Cellulosic Biofuel 60% GHG Reduction e.g. ethanol from corn stover or wood Source: EPA RFS2 Threshold Levels; graph and slide by GPI
    28. 28. Company Highlight: • Headquarters: Elk River, MN • Produce syngas from biomass • Use syngas coupled with commercial thermochemical processing technology to produce gasoline, diesel fuel and chemical products – integrated biorefinery
    29. 29. 2014 Policy Priorities
    30. 30. Policy 2: Public/Private Equity Investments • Summary: Create a new state-funded public/private investment pool to make equity investments in Minnesota-based biobased chemical and advanced biofuel companies to support growth and innovation, and help companies cross the “valley of death” to commercialization.
    31. 31. Policy 2: Public/Private Equity Investments • Why do this? – Already permitted under state statute governing the Environment and Natural Resources Trust fund – Secure MN’s leadership in a potentially $500 billion industry – Support innovative MN start-up companies, in a sector where MN is currently the world leader – Assure MN companies stay in the state, despite competition from other states; counteract venture fund pressure to move companies to CA and other states where funds are located. – Attract $4 in outside funding for every $1 invested by the state of MN – Significant outside match assures vetting of companies and technologies by outside investors, and protects state investments. – State also manages risk by making multiple investments.
    32. 32. Policy 2: Public/Private Equity Investments • Policy detail: – State should aim to make 5-10 total investments of $2-10 million each (total state investment of between $10-100 million). – The state should form a partnership with a qualified lead investor who will take responsibility for attracting other investors, and conducting due diligence and company valuations and negotiating investments. – State should require a 4:1 match for any state investment, represent no more than 20% of total investment in a given company (required by statute). – Favor companies that receive SBIR investment in scoring system, along with other criteria. – Possible source of funding: State Environment and Natural Resources Trust fund, or other state investments managed by the State Board of Investment.
    33. 33. Policy 2: Public/Private Equity Investments • Only invest in companies that are: – Headquartered in Minnesota and have the majority of their operations in Minnesota. – Primary operations devoted to developing biobased chemical or advanced biofuel technology. – Evidence of movement towards commercial-scale production. – Investment targeting companies in “pre-commercial” stage to assist moving towards commercial scale. – Invest in companies that have already attracted significant venture capital investment (more than $50 million) (include SBIR as a criteria)
    34. 34. Policy 3: Bonding for Community-Scale Biomass Thermal Projects • Summary: Provide bonding funding for capital investments in biomass heating plants and district energy facilities to support that state’s biomass thermal industry while reducing energy bills and environmental impact.
    35. 35. Policy 3: Bonding for Community-Scale Biomass Thermal Projects • Biomass heating and district energy are proven technologies that are being operated at scale in Minnesota and around the world. • There are numerous biomass heating projects proposed around the state. • Bonding funding helps communities to finance large, multi-building projects and projects at public facilities that are difficult to finance. • Several studies show strong economics for these facilities.
    36. 36. Policy 3: Bonding for Community-Scale Biomass Thermal Projects • A few examples of projects that would immediately benefit from a state bonding bill include: – City of Grand Marais District Heating Project – City of Ely District Heating Project – Itasca Community College – Itasca State Park – Soudan Underground Mine State Park
    37. 37. Other policies • Support Department of Biosystems Engineering Bonding Request • State procurement of biobased products • Product stewardship
    38. 38. Renewable Materials Value Chain Next Generation Biorefinery Farmers/Foresters Formulator/ Refinery End Product Manufacturing Retail, End Uses Slide courtesy of 39 BioIndustrial Partnership
    39. 39. Existing Biorefineries Across Minnesota 40
    40. 40. Minnesota – World Leading Cluster of Biochemical Company Headquarters 41
    41. 41. Energy Use In Production Energy use (MJ/kg) Energy Savings 52% 100 90 80 70 60 50 40 30 20 10 0 88.8 88.7 42.69 * BioAmber SA Petro AA (Thermal) Petro AA (Catalytic) *Field-to-Gate Energy and Greenhouse Gas Emissions Associated with Succinic Acid Produced At BioAmber’s Facility In Sarnia Ontario, August 2012 Slide courtesy of BioAmber
    42. 42. Ontario, Canada 30K MT Production of Bio-Succinic Acid Will SAVE 212,000 tonnes of CO2e per year Slide courtesy of BioAmber
    43. 43. Sarnia Production of 30,000 MT Bio-Succinic Acid will SAVE 1.6 Trillion Btu of energy per year Slide courtesy of BioAmber
    44. 44. Bio-SA: Lower Cost Than Petroleum SA Lower Cash Cost TODAY Historical Data past 29 years when oil > $30/barrel Petroleum Succinic CASH COST Competitive with Oil at $35 / Barrel Bio-Succinic Cost Advantage for BioAmber Cost Advantage for Petroleum @ $80 barrel oil @ $6.00 bushel corn Cost Advantage Will Drive Market Share Growth In This $3.8 Billion Market Opportunity Slide courtesy of BioAmber

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