Commission on Rural Resources Meeting

Albany, September 6, 2011

A Neglected Opportunity - Current NYS Energy DemandNYS depends upon out of state sources for about 92% of its energy needs, equivalent to more than $1,000 per resident annually.

NYS imports more than 2.3 billion gallons of fuel oil each year, at a cost of more than $8 billion dollars.

More than 75% of this money leaves the state. (EIA)

Plus, there is no minable coal and no minable nuclear ore in NYS - all coal and nuclear fuels used in NY are imported from other states, and most of the natural gas, (currently more than 90%), is imported either from other states or adjacent countries. (NYS Energy Plan)

A Neglected Opportunity - Domestic Alternatives for Electricity Production

Natural gas - abundant, but this production comes at potential environmental cost.

Coal - none in NY, no proven carbon capture technology.

Hydropower - resources are almost completely built out.

Wind - great, renewable resource to generate electricity, but not well-suited to supply base load power.

Solar photovoltaics - due to the high cost of manufacture and installation, unlikely to be major contributor in near-term.

Nuclear – emits fewer greenhouse gases, but storage of waste and catastrophic safety issues are problematic.

Biogas – limited in quantity.

A Neglected Opportunity – NYS Biomass Resources

- Millions of tons of plant-based urban waste, most of which is trucked to out-of-state landfills and produces no additional value.

- An overabundance of low-quality and unhealthy trees, weak existing markets.

- More than a million acres of idle farmland that is a burden on its owners and vulnerable to urban sprawl.

Photo courtesy of the USDA Natural Resources Conservation Service

The Most Practical & Economical Form of Renewable Energy in NYS

Growing, harvesting, transporting and using this biomass creates more long-term jobs per unit of energy than any other renewable energy alternative.

New York farms, forests and urban environments are rich in sustainable sources of materials that can be converted into heat, electricity, biofuel and bioproducts.

Photo courtesy of the U.S. Department of Energy

The Most Practical & Economical Form of Renewable Energy in NYS

State policies largely overlook biomass - NY’s second-largest source of renewable energy (after hydro-electric power),

There are NY-based companies that are poised to develop these opportunities given the right policy and market signals.

Flow Diagram of Sustainable Biomass for New England & New York

Potential Environmental Benefits

Replacing oil (a high carbon fuel) with biomass (a low carbon fuel) reduces greenhouse gas emissions that contribute to climate change

The use of biomass greatly reduces acid rain causing sulfur emissions as compared to the heating oil it can replace

The enhanced value of biomass will contribute to healthy rural communities through improved economics and viability of forest and farm ownership

Biomass is part of a natural carbon cycle, when harvested sustainably, can continue indefinitely

Heat Consumers Can Afford

Biomass is a more affordable energy for most consumers.

Fuel Market Price January, 2011 Input cost $/million BTU

Electricity (home consumer) $.20/kwh (Jan-Sept 2010 avg.)

$54.94

Propane, retail delivered $2.94/gal $32.10

#2 Heating oil, retail delivered

$ 3.44/gal $24.90

Natural gas, delivered (residential)

$1.12/therm $11.20

Wood pellets, bagged, delivered

$229/ton $14.70

Wood pellets, bulk delivered $200/ton $12.80

Cord wood (delivered) $150-$200/full cord (seasoned)

$8 – 10

Wood chips (commercial customer)

$27-$50/green ton1 $4.80 – 6.20

1 varies by grade, moisture level, etc.

Addressing Air Quality Concerns

ACT BIOENERGY: Manufacturer of high-efficiency biomass gasification boilers in Schenectady, NY.

Most modern high-efficiency biomass boilers and stoves are designed to burn cleanly, with some reaching the emissions profile of modern fuel oil systems.

Biomass system design standards are rapidly advancing, with units manufactured by several New York manufacturers achieving exceptionally low emissions.

Local Pellet Manufacturers

Schuyler, NYCapacity 85,000 tons

Deposit, NY Capacity 85,000 tons

NY’s rapidly expanding pellet fuel industry is in a position to supply hundreds of thousands of homes and businesses with clean-burning, sustainable biomass fuel suitable for the best combustion appliances.

Meeting NY's Electricity Demand

Overall, RPS is falling short of its 2015 goal (actual renewable MwH being added to the grid).

RPS has achieved a low cost for each “renewable energy credit” generated to date, but impact on the state’s total energy supply, and on green job creation, has been modest at best.

Early investors in wood biopower have been unsuccessful in persuading the PSC to adjust support levels in light of current low natural gas prices.

NY Utility-Scale Biomass Power Facilities and Current Status

6 out of 8 RPS-contracted power plants are not operating.

Biomass power generation is now below when the RPS began 6.5 years ago.

Other Regimes vs. NYUtility-Scale Biomass Power Incentives*

Areas creating significant rural job creation in biomass power have significantly higher levels of government-enabled support, such as more effective and biomass-friendly RPS programs, carbon cap and trade, and Feed-in-Tariffs

*References for all data available upon request.

Job Creation PotentialWith NY RPS Biomass Power

Operating RPS-contractedBiomass Capacity (2 plants) 38 MW ~180 ~$22MM

Non-operatingRPS-contracted BiomassCapacity (7 plants) 120 MW ~540 ~$70MM

Additional Plants if 50%of remaining NY RPS goalshortfall was met by ~830 MW ~3,700 ~$490MMbiomass power

Plant Annual Expenditures ($MM) into Local Economy

~4,240 jobs and ~$560MM/yr in local economic activity unexploited due to insufficient support of

RPS biomass power in NY

Biomass Megawatts (MW)

Total BiomassPower-related Jobs

(Plant and Fuel Sourcing)

The Next Step for Transportation

USDOE and NYSERDA are emphasizing more fuel efficient, hybrid-electric and electric vehicles of all types. However, liquid fuels will be needed for the foreseeable future. NY biomass energy is a renewable resource that can provide both liquid fuel and electricity for transportation needs.

After making a quick start to support advanced biofuels with two pilot project grants, New York’s attention to this challenging area of energy R&D has declined – even though the state has so much idle agricultural land and abundant underutilized forest resources that the “food vs. fuel” and “energy vs. forest product” issues simply do not arise.

Alliance 2011 Policy Goals

1. State policy must affirmatively endorse the use of biomass energy to meet the state’s energy needs (State Energy Plan currently under revision).

2. The State should direct a task force to review procurement policies that discourage the use of biomass heating in public buildings. Outdated policy guidance makes biomass energy a “hard sell” to public institutions – even when less expensive than other choices, within a very short time period (5 to 10 years) and creates more jobs in the local community.

3. The State needs to immediately review the policies underlying its Renewable Portfolio Standard to determine how biopower can help bridge the gap between current performance and the State's renewable power goals.

Alliance 2011 Policy Goals Continued

4. Biomass heating and CHP should be listed as an eligible technology within the state’s Property Assessed Clean Energy (PACE) program.

5. The state should reverse a recent agency decision that defines what constitutes “eligible” forest biomass under the Regional Greenhouse Gas Initiative.

6. New York should explore ways to direct more LIHEAP dollars to support the purchase of locally-produced biomass heating fuels.

Alliance 2011 Policy Goals Continued7. A swap out program to underwrite the replacement of old, inefficient wood stoves would help some of the state’s most vulnerable families, with an added benefit of improved air quality in areas where wood heating already predominates.

8. A renewable heat standard similar to the state’s RPS for electricity could do as much or more to decrease the state’s dependence on fossil fuel than the RPS.

9. Tax policies that unduly burden owners of woodlots and idle agricultural land encourage development. The State should evaluate whether property tax abatement programs tied to the production of energy feedstock might not more than offset their cost in terms of net government revenues.

New York Biomass Energy Alliance2011 Membership

Thank-you for the opportunity to discuss these important issues.Advanced Climate Technologies, LLC

Advanced Radiant DesignAgri-Tech Producers, LLCAlliance for Green HeatBoralex New York LP*BioMaxx*C2 Biotechnologies, LLCCato Analytics, LLCCeltic Energy Farms, L.L.C.Colgate UniversityCommunity Biomass EnergyCovanta Energy CorporationCurran Renewable Energy LLCDouble A WillowEconoburn BoilersEmpire State Forest Products AssociationErnst Conservation Seeds, Inc.Farm Credit EastFermata Consulting

*indicates Sustaining Members

Genesee Regional BiofuelsHoneywellLyonsdale Biomass, LLCMascoma CorporationMesa Reduction and Engineering, Inc.New England Wood Pellet, LLC*New York Farm BureauNew York Farm Viability InstitutePaul J. Mitchell Logging, Inc.Rick Handley & AssociatesRigoni Farms, LLCRochester BioFuels & BioTech ConsultantsSM GallivanSt. Lawrence County Grass Energy Working GroupSUNY – ESF, Faculty of Forest and NR ManagementTaylor Biomass Energy, LLCU.S. Renewables Group (Niagara Generation, LLC)Zero Point Clean Tech