Expanding Renewable Energy: Think Outside the Barrel

1
Expanding Renewable EnergyThink Outside the
Barrel!
By Robert G. Craig, Director Agriculture
Development Division (AgD) Michigan Department of
Agriculture Lansing Chamber of Commerce MSU Henry
Center East Lansing, MI September 30, 2008
2
Why Are We Discussing Renewable Energy? Record
High Oil Prices!U.S. Crude Oil Composite
Acquisition Cost by Refiners
Gulf War
Source Energy Information Administration
3
(No Transcript)
4
U.S. Energy Supply and Role of Renewable Energy
(2006 Preliminary Statistics)
5
(No Transcript)
6
Transportation Energy Use in Michigan 1960 to
2002
Motor Gasoline
Jet Fuel
Distillate Fuel
Source State Energy Data Report, Energy
Information Administration, Graph prepared by
Energy Data and Security, Michigan Public Service
Commission
7
(No Transcript)
8
The US and Everybody Else

9
Michigans Renewable Energy Economic Development
Goals

• In-state production of ethanol and biodiesel
  fuels, wind, methane and other renewable energy
  forms producing jobs, new markets and capital
  investment
• Implementation of RFC Recommendations
• Utilization of Alternative Fuel Vehicles by State
  of Michigan, other fleets and general public
• 1,000 biofuel pumps by end of 2008

10
State of Michigan Goal

• Michigan has goal of producing 1.5 billion
  gallons of biofuels by 2025
• Offsetting 25 of current consumption
• Consuming an estimated 150 million bushels of
  corn and 8.2 million tons of forest products

11
Anticipated Impacts on Rural Economies

• Michigans agri-food sector is the states 2nd
  largest industry
• Generated 63.7 billion to state economy in 2006
• Employs more than 1 million people
• Michigans forestry sector is states 4th largest
  manufacturing industry
• Generates 11 billion
• Proposals will help Michigan
• Address key barriers to economic viability of
  biofuel production
• Leverage significant new funds and resources
• Foster economic growth and jobs in rural areas

12
2008 Bio-Economy Development Progress in Michigan

• 5 corn-to-ethanol plants open (Caro, Albion,
  Woodbury, Riga and Marysville) and 1 other under
  construction, at least 6 more proposed.  Total
  ethanol fuel production capacity by end of 2007
  267 MMG. 1 BILLION invested in Michigan
  biofuels plants.
• 4 Bio-diesel plants open (Gladstone, Bangor,
  Milan and Adrian), 1 other under construction and
  4 more proposed. High soybean oil feedstock cost
  opens opportunities for alternative feed stocks,
  such as animal fats and yellow grease, yet causes
  existing plants to struggle. Total biodiesel
  production capacity by end of 2007 20 MMG
• Mascoma, Inc. announces they will build one of
  the nations first commercial, cellulosic ethanol
  plant in Eastern Upper Peninsula of Michigan,
  more than 200 MIL investment. Others are being
  studied.
• More than 3,000 service stations offer 10
  ethanol blended gasoline
• 84 E-85 pumps open or will be soon
• 227 Biodiesel pumps (B5-100) open or will be soon
• 240,000 E-85 Flexible Fuel Vehicles (2005
  Estimate)
• Renewafuel LLC opens biomass (agricultural and
  forestry residues, recycled cereal boxes, etc. )
  dense fuel cube plants in Battle Creek and
  Marquette, Michigan for use by electric utility
  plants and others as partial replacement for
  coal.

13
(No Transcript)
14
Using Wood for Cellulosic Biofuels Biobased
Products

• Need a Strong Business Case for Wood Products,
  Paper, Biofuels and other Value-added Biobased
  Products. State and Federal Incentives May Be
  Helpful.
• Need a Sustainable Wood Basket Regional Supply
  for Demonstration/Commercial Plant
• Case Study of Georgia-Pacific (GP) Pulp Mill in
  Bellingham, WA produced ethanol (190 proof)
  fermented from wood sugars diverted from waste
  stream. Made 7 mmg/yr in pilot plant from WW II
  to 2002, received federal grant.

15
Forestry

• Definition Wood and Wood Product Manufacturing
• Market Size 200 Billion World Wide, Quadrupled
  over the past 3 decades. US is the worlds
  largest producer and consumer of forest products
• MI Top Companies SE Forest Product Group, Besse
  Forest Products Group, Plum Creek, Universal
  Forest Products
• Competitors Wisconsin, Minnesota, North
  Carolina, South Carolina, Pacific Northwest, New
  entry Indiana
• MI Advantages Superior Quality Hardwood (Maple),
  available capacity
• Partner Interest Extremly High (North LP UP)

16
(No Transcript)
17
Simpkins, Dulcey. 2006. Clean Energy from Wood
Residues in Michigan. Michigan Biomass Energy
Program.
Simpkins, Dulcey. 2006. Clean Energy from Wood
Residues in Michigan. Michigan Biomass Energy
Program.
Source Simpkins, Dulcey. 2006. Clean Energy
from Wood Residues in Michigan. Michigan
Biomass Energy Program. Michigan Dept. of Labor
and Economic Growth
18
July 2007 Cellulosic Ethanol Plant Announcement

• Gov. Granholm and MASCOMA Corp. announce that the
  1st in the Nation Commercial Cellulosic Ethanol
  Plant will be built in Northern Michigan
• 100 Million Investment with Wood Chips as
  Primary Feedstock, also use non-food agricultural
  residues (corn cobs, stalks, grasses, etc.)

19
Mascoma Highlights Cellulosic Ethanol

• gt 250 million investment in plant construction
• Biochemical conversion of cellulosic biomass
  (Consolidated BioProcessing - Engineered organism
  breaks down cellulosic materials and makes
  ethanol)
• gt40 million gallons/year
• Reviewing phased integration with NY pilot plant
• Hardwood fiber (migrating to additional species
  and energy crops)
• Estimated 1 million green tons of wood fiber
• Location 400 acres in Kinross Township, Upper
  Peninsula, MI
• 60 jobs at plant site, 400 offsite in forest
  management harvesting transportation

20
Key Issues

• Michigan is the 8th most energy intensive state
• We expend almost 20 billion per year to import
  energy -5 of our Gross State Product
• Michigans economy is dependent on imported
  fossil fuels
• 100 of coal and uranium used for power
  generation
• 96 of transportation fuels
• 75 of natural gas
• The Federal Government is moving towards a
  cap/trade or Carbon Tax (Lieberman/Warner, etc.)
• Fresh Water supply worldwide crisis
• Need to build robust biomass supply
  infrastructure for very large quantities of
  agricultural and woody biomass delivery
• Diversification of economy MI is 17 times more
  dependent on Big 3 Jobs than any other State in
  the US.
• MI has lost approximately 400,000 manufacturing
  jobs in the last 6 years
• Cleantech industry growing at 20 plus per year
  with unmet demand

21
(No Transcript)
22
New Public/Private Partnerships Formed

• April 18, 2006 Press Announcement of 20 new
  E-85 Pumps in Michigan in 2006-07

23
Ag Solutions, Inc. Gladstone, MI Bio-Diesel
Plant
24
(No Transcript)
25
(No Transcript)
26
Wastewater Anaerobic Digesters for Farms and Food
Processors
27
(No Transcript)
28
Fueling the Future
21st Century Jobs Fund
Tax-free Renaissance Zones for agri-processing,
forestry and renewable energy
Alternative fuel legislation

• Consumer tax breaks for ethanol and biodiesel
  blends
• Biofuel infrastructure grants for retailers
• Creation of Renewable Fuels Commission

29
Charge of the Commission

• Promote use of alternative fuels and vehicles
• Promote alternative fuel research
• Promote communication and coordination among
  government, private industry and Higher Education
  relative to alternative fuels
• Change state regulations that hinder development
  of alternative fuels

30
Create a Green Retailers Program

• Reward retail and wholesale outlets reaching
  benchmarks in sale of biofuels through tax
  incentives
• Support infrastructure development needs for E85
  B20
• Accelerate Michigans plan to use a minimum of 10
  percent alternative fuels in its transportation
  sector by 2012 (p. 28, 22-25) and 25 percent by
  2025 (p. 33, 26)

31
MI Center of Excellence Concept

• Swedish Triple Helix Model
• Regional Solutions Food for fuel, wood fiber
  for fuel
• Anchor Company emphasis
• Fuels Chemicals Materials
• Categories
• Gasification (Chemrec/New Page)
• Bioconversion (Mascoma)
• Corn Ethanol to Chemicals
• Waste Material to Energy

32
Provide Incentives

• Craft incentive package of at least 200 million
  for developers of early-stage technology projects
  and processing centers
• Use 50 million from 21st Century Jobs Fund over
  two years, and 150 million from other sources
  over following three years (p. 27, 10a)
• Reserve at least six tax-free renewable energy
  renaissance zones for new facilities that utilize
  cellulosic materials for renewable fuel
  production. (p. 28, 4)

33
Explore/Develop New Funding Source

• Aggressively pursue federal grant opportunities
• Assess states ability to monetize non-earmarked
  revenue generated from state-owned oil, gas, and
  forest reserves
• (p. 28, 10b)

34
Michigans Oil Gas Reserves

• Michigan has more natural gas reserves than any
  other Great Lakes state and greatest capacity
  (600 Billion cubic feet) for underground natural
  gas storage in the nation!
• With todays advanced technology, its estimated
  that Michigan still has 1.23 Billion barrels of
  Crude Oil and 4.83 Bcf of natural gas reserves.

35
Next Steps

• Generate public education and awareness
• Renewable Fuels Commission to function as
  catalyst for action
• Pursue renewable fuels legislation

36
Royal Dutch Shell Group Visionthe beginning of
the end of oil.
100
Traditional - Biomass - Wind - Water-
Animals
Renewables - Electric - Low
temperature - Catalysts
Fossil Fuels - Mechanical- Combustion -
High temperature
75
of total
50
25
0
1800
1850
1900
1950
2000
2050
2100
2150
37

• 2007 Michigan Exports 1,237,000,000
• Numbers from USDA

38
Food Export-Midwest

• Private, non-profit international trade
  organization
• Members are state agricultural promotion agencies
• Work with producers in the Midwest
• Often work with small and medium-sized producers
• Focus on products that are value-added,
  consumer-oriented

39
2007 Top Michigan Food Agriculture Exports by
Country
40
Food Export HelplineSMCustomized export
assistance is just a phone call away!

• Top 25 export markets for your products
• Secondary market research and reports
• Finding and responding to trade leads
• Locating potential overseas distributors
• Explaining export documentation and
  correspondence
• Payments and collections
• Export shipping, packing and transportation

41
Assistance at Trade Shows Buyers Missions

• Food Show PLUS!SMCost is 200 and services
  usually include
• Pre-show research Translation of company
  profile and product data
• Interpreters at your booth
• One-on-one meetings with targeted, invited buyers
• Site visits, industry tours
• Buyers Mission
• One-on-one meetings with pre-qualified buyers
  from around the world
• Receive feedback on your product
• Establish new contacts with long-term sales
  potential

42
Branded Program

• Cost share assistance for branded products sold
  in foreign markets
• - 50 cost reimbursement of eligible expenses
• U.S. food agricultural products only
• - minimum 50 US agricultural origin
• Products not covered by another industry group
• Small companies only (lt500 employees)
• Application from a U.S. company

43
MDA International Marketing Resources

• Web site www.mdainternational.com
• Newsletter The New Market Developer
• Partnerships Food Export Association of the
  Midwest, MEDC, Commodity Groups
• Funding USDA Foreign Agriculture Service money
  through Food Export Association of the Midwest