March 2012 Biomass Power & Thermal

INSIDE: THE BENEFITS OF SOLID BIOFUEL STANDARDIZATION

March 2012

Feedstock FlowAn Oregon Tax Credit Boosts Biomass SupplyPage 18

Plus:Anaerobic Digestion Holds Vast Potential in the U.S. Midwest

Page 24

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conference is useful to identify new technologies and players in the market. The sessions are informative and help to get an insight to the future development of fuels and energy through biomass.

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Join the discussion | #IBCE12www.biomassconference.com

You’ll Join 1,500 Professionals Focused on Biomass – Be a part of the largest gathering of biomass professionals in North America. The best biomass industry products and services will be there.

Producers Will Be Attending – 33% of 2011 attendees identify themselves as an existing or future biomass producer of power or fuel. You’ll get the perspective of biomass producers and network with them throughout the event.

Focused Sessions – With five tracks focused on pellets & densified biomass, industrial & commercial thermal energy, biomass power, biogas & landfill gas and advanced biofuels & biobased chemicals, you’ll be able to go in-depth, on the topics that best interest you.

Business Connections – Based on our surveys, attendees connect with the right people and make business deals happen. 94% of all exhibitors and attendees made valuable contacts at last year’s event.

Multiple Networking Sessions – As an attendee, you’ll meet people and share your experience, product and/or service multiple times throughout the show.

Conference Social Media Site – You’ll be able to gain access to attendees and communicate with them directly on Biomass Connect, a social media site exclusive only to conference attendees.

Food and Drinks are Included – As an attendee of the conference, you’ll enjoy breakfast, lunch and dinner in the expo hall prepared by the renowned chefs at the Colorado Convention Center.

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Agenda Now Online

MARCH 2012 | BIOMASS POWER & THERMAL 3

INSIDE¦

MARCH 2012 | VOLUME 6 | ISSUE 3

FEATURES

DEPARTMENTS03 ADVERTISER INDEX

04 EDITOR’S NOTEAn Abundance of Opportunities By Lisa Gibson

06 INDUSTRY EVENTS

08 POWER PLATFORMSmall Government, Big Changes to Biomass Regulations By Bob Cleaves

09 THERMAL DYNAMICSFueling America: The Need for Standardization of Solid BiofuelsBy Joshua Holmes

10 ENERGY REVIEWEconomic Analysis of a Mobile Indirect Biomass Liquefaction SystemBy John P. Hurley

11 LEGAL PERSPECTIVEArranging Debt Financing for Biomass ProjectsBy David Benson

12 BUSINESS BRIEFS

14 EVENT COVERAGE

17 FIRED UP

30 MARKETPLACE

18

24

ECONOMY Biomass Sustains BusinessOregon’s biomass producer and collector tax credit stimulates jobs, the supply chain, and the state’s economy. By Luke Geiver

STUDY The Breadbasket’s Biomass BeltMultiple studies tout the capacity and economic value of anaerobic digestion in the U.S. Midwest.By Anna Austin

ADVERTISER INDEX¦

2012 Algae Biomass Summit 312012 Fuel Ethanol Workshop & Expo 302012 International Biomass Conference & Expo 2Amandus Kahl GmbH & Co. KG 26BioEnergy Systems, LLC 28BRUKS Rockwood 22Centre for Research and Innovation in the Bio-Economy 23Continental Biomass Industries, Inc. 12CPM Roskamp Champion 5Dieffenbacher 13Fagen Inc. 32Indeck Power Equipment Co. 21Jeffrey Rader Corporation 6KEITH Manufacturing Company 15Mid-South Engineering Company 29Pellet Mill Magazine's Pellet Producer Map 7PRODESA 27Studium Conferences 16West Salem Machinery 17Wolf Material Handling Systems 20

Biomass Power & Thermal: March 2012, Vol. 6, Issue 3. Biomass Power & Thermal is published monthly. Principal Offi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Application to Mail at Periodicals Postage Rates is Pending at Grand Forks, ND and additional mailing offi ces. POSTMASTER: Send address changes to Biomass Power & Thermal/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

4 BIOMASS POWER & THERMAL | MARCH 2012

An Abundance of Opportunities The word sustainability has broad defi nitions, but many of us in the bioenergy industry associate it

with ensuring the health and vitality of the feedstock source after a biomass harvest, whether it’s cropland, forestland, forestry residue, or another resource.

It certainly isn’t a new concern and is a vital aspect of every biomass project’s feasibility study. But sustainability doesn’t only revolve around feedstock. A successful, well-planned and well-executed biomass project can bring economic sustainability, also. A biomass producer and collector tax credit in Oregon has done just that, and therefore, has been extended through 2018. The credit has created jobs along the woody biomass supply chain, enhanced forest health, and brought revenue to the state. A research team discov-ered the positive impacts while analyzing the economy with and without the tax credit. The results are clear. Read more about it in a feature article by Associate Editor Luke Geiver, beginning on page 18.

Elsewhere, however, the biomass industry is facing the loss of many incentives supporting develop-ment. In February, leaders from the Biomass Power Association, National Hydropower Association and Geothermal Energy Association wrote a letter to Congress urgently calling for an extension of the renew-able energy production tax credit, set to expire in 2013. Don’t wait until the end of this year to extend it, they say, as it would mean the loss of an entire construction season for all their industries. I like to see renewables groups pushing together for support and I see it happening more, as concern about incentives mounts among all of us. The federal government could take a lesson from Oregon.

As the state has shown, the biomass industry has an abundance of advantages to offer citizens, com-munities, states and even entire regions. The U.S. Midwest, for example, could benefi t from existing re-sources in agriculture and purpose-grown biomass. In another feature in this issue, beginning on page 24, Associate Editor Anna Austin explores and expands upon existing research into the region’s cropland biomass resources and their ability to jumpstart a robust bioenergy industry that stimulates the economy.

The biomass industry is continually discovering more potential to fl ourish and make a difference in the U.S. domestic energy sector. This issue of Biomass Power & Thermal highlights just a few intriguing op-portunities in a growing list that includes feedstock options, as well as expansions of successful fi nancial incentives.

In this month’s Power Platform col-umn, Bob Cleaves, president and CEO of the Biomass Power Association, delves into the consequences of a federal policy that would classify certain types of woody biomass as waste instead of fuel. The im-plications are far-reaching and would affect not just the biomass industry, but also the environment.

David Benson, partner at law fi rm Stoel Rives LLP, writes in the Legal Perspec-tive column about the complexity of ob-taining debt fi nancing for biomass projects. He addresses the different sources, details their characteristics, and shares advice for developers on how to simplify the process and increase the probability of success.

LISA [email protected]

BOB CLEAVES DAVID BENSON

¦EDITOR’S NOTE

For more news, information and perspective, visit www.biomassmagazine.com

Contributors


EDITORIALEDITOR

Lisa Gibson [email protected]

ASSOCIATE EDITORSAnna Austin [email protected] Geiver [email protected]

COPY EDITOR Jan Tellmann [email protected]

ARTART DIRECTOR

Jaci Satterlund [email protected]

GRAPHIC DESIGNERElizabeth Burslie [email protected]

PUBLISHING & SALESCHAIRMAN

Mike Bryan [email protected]

CEOJoe Bryan [email protected]

VICE PRESIDENTTom Bryan [email protected]

VICE PRESIDENT, SALES & MARKETINGMatthew Spoor [email protected]

EXECUTIVE ACCOUNT MANAGERHoward Brockhouse [email protected]

SENIOR ACCOUNT MANAGER Jeremy Hanson [email protected]

ACCOUNT MANAGERSMarty Steen [email protected] Bob Brown [email protected]

Andrea Anderson [email protected] Austin [email protected]

CIRCULATION MANAGER Jessica Beaudry [email protected]

ADVERTISING COORDINATORMarla DeFoe [email protected]

SENIOR MARKETING MANAGERJohn Nelson [email protected]

Subscriptions Biomass Power & Thermal is free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside of the United States, Canada and Mexico. To subscribe, visit www.BiomassMagazine.com or you can send your mailing address and payment (checks made out to BBI International) to Biomass Power & Thermal Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. 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 [email protected]. Advertising Biomass Power & Thermal provides a specifi c topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To fi nd out more about Biomass Power & Thermal advertising opportunities, please contact us at (701) 746-8385 or [email protected]. Letters to the Editor We welcome letters to the editor. Send to Biomass Power & Thermal Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to [email protected]. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

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International Fuel Ethanol Workshop & ExpoJune 4-7, 2012Minneapolis Convention CenterMinneapolis, MinnesotaEvolution Through InnovationNow in its 28th year, the FEW provides the ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-busi-ness environment. As the largest, longest-running etha-nol conference in the world, the FEW is renowned for its superb programming—powered by Ethanol Producer Magazine. Early bird registration rates expire April 23.(866) 746-8385www.fuelethanolworkshop.com

¦INDUSTRY EVENTS

International Biorefi ning Conference & Trade ShowNovember 27-29, 2012Hilton Americas - HoustonHouston, TexasOrganized by BBI International and produced by Biore-fi ning Magazine, the International Biorefi ning Confer-ence & Trade Show brings together agricultural, forest-ry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefi ning industry. Contact a knowledgeable account representa-tive to reserve booth space now.(866) 746-8385www.biorefi ningconference.com

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In the age of abundant calls for smaller govern-ment and consolidated agencies, you’d think that government agencies would be heeding the calls to scale back and cut unnecessary regulations that would cost signifi cant time and funding for very little gain.

The U.S. EPA is proposing to do just the opposite. The agency has refused to classify the waste wood used to generate biomass energy as a fuel, its historical clas-sifi cation. Instead, EPA may treat the material as a waste in the same category of material that goes to a landfi ll.

This seemingly small change has surprisingly large implications for our industry. It would render unusable several types of traditionally accepted materials used for biomass power generation. Materials like urban waste wood, such as pallets after they are used for construc-tion, would be redirected from biomass facilities to landfi lls. This would cause the twin consequences of clogging up the precious little space in landfi lls, and the release of methane gas, a greenhouse gas that’s 25 times more harmful than carbon dioxide, into the atmosphere.

Using these materials in the generation of biomass energy, however, allows for the capture of harmful gases along with the support of hundreds of jobs and the production of thousands of megawatts of renew-able energy. This is why many states, including Maine, New York and California, recognize urban waste wood and other similar materials as fuel instead of waste,

allowing the biomass industry to use them to their full potential.

If the EPA were to codify this regulation, besides limiting the materials available to the biomass industry, the agency would be required to devote untold hun-dreds of hours of manpower to monitor and enforce these rules.

The EPA is, by any measurement, currently stretched thin. Administrator Lisa Jackson has repeat-edly acknowledged that the agency does not have the resources available to properly monitor the process of hydraulic fracturing if the EPA fi nds it contaminates drinking water. “There is no EPA setup that allows us to oversee each and every well that’s drilled,” she said during a February teleconference hosted by the Ameri-can Sustainable Business Council, before going on to say that the agency will continue to focus on the “big things.”

The re-regulation of certain types of wood waste as waste instead of fuel is a small thing that will reap very little in terms of improved air or water quality, at the big cost of removing a sizable portion of fuel used by the biomass industry.

Author: Bob CleavesPresident and CEO, Biomass Power Association

www.USABiomass.org

Small Government, Big Changes to Biomass Regulations

¦POWER PLATFORM

BY BOB CLEAVES


According to the U.S. DOE’s Billion-Ton Update, more than 500 million tons of solid biomass waste is produced in the U.S. annually, and that fi gure is estimat-ed to expand beyond 1 billion tons by 2022.

As the country's energy policy evolves and the biomass waste industry continues to grow, solid biofuels will become a staple of American energy. In order for that to occur, biomass energy projects need to continue to be successful, and that requires consideration of several factors.

A successful biomass project should have a well-de-fi ned fuel source, as well as properly sized and selected equipment. The primary focus at the front end of every solid biofuels project is identifying the potential feedstock source. Currently, potential biomass sources must always be verifi ed through chemical and physi-cal analysis to ensure the fuel is compatible with the thermal equipment for achieving complete combustion and emissions compliance. Solid biofuels can vary in calorifi c value, moisture content, and ash content based on class, region, and climate, even on a load-to-load basis. Because of these variations, equipment perfor-mance and project economics are at risk of degradation without a proper, uniform defi nition for solid biofuels.

Currently, domestic feedstock sources are defi ned by thermal conversion equipment suppliers or by solid biofuel producers, generally according to different terms. Equipment suppliers are typically focused on a performance-basis, while solid biofuel producers are focused on a value-basis. Unfortunately, this leads to inconsistencies in defi nitions of solid biofuel quality, quantity, and value, creating uncertainty for both users

and providers. This uncertainty creates a level of per-ceived risk from an economic perspective.

At the Pacifi c West Biomass Conference & Trade Show in January, much discussion was focused on the standardization of a solid biofuels defi nition, with the goal of achieving commoditization. A proper defi nition on a standardized basis is needed to ensure that the user is able to source compatible solid biofuels of a consis-tent quality, quantity, and value. The European Com-mission has developed and implemented standardized specifi cations and classes for solid biofuels according to CEN/TC 335. They eliminate the ambiguity be-tween users and providers for sourcing and selling solid biofuels. Establishing solid biofuels as commoditized products also allows for a consistent basis of trade throughout the U.S., independent of localized factors.

Universities and energy policy advocates are the most likely candidates to implement this level of stan-dardization in the U.S. The development of terms and defi nitions is the fi rst step, followed by advocacy and acceptance by the industry. When this occurs, consum-ers and producers will have a standardized basis to fulfi ll performance and value requirements while mitigating biomass energy project risks. This will accelerate the growth of the solid biofuel market and effectively utilize the 1 billion tons of solid biomass waste estimated to be produced annually over the next 10 years.

Author: Joshua HolmesVice President for System Development

Alternative Energy Solutions International, Inc. BTEC member

www.aesintl.net

Fueling America: The Need for Standardization of Solid Biofuels

THERMAL DYNAMICS¦

BY JOSHUA HOLMES


As I described in my February Biomass Power & Thermal column, the Energy & Environmental Research Center has built and tested a mobile system for converting wood waste into liquid products such as methanol. The system uses a unique gasifi er to convert the wood waste into synthesis gas, which is cleaned, compressed, and converted in a reactor to a variety of possible liquid products. We have initially fo-cused on the production of methanol because it can easily be reformed into hydrogen to power fuel cells to make elec-tricity at remote sites distanced from the biomass resource. The gasifi er was specifi cally designed by the EERC to han-dle wet wood waste with up to 40 percent moisture, thereby eliminating the need to separately dry the wood before gas-ifi cation, as most commercial gasifi cation units require.

We have found that the maximum wood feed rate of the system is largely determined by the size of the compres-sor that can fi t on the trailer. The production rate of metha-nol is greatly enhanced at higher pressures, so we compress the gas to 900 pounds per square inch (psi) before it enters the gas-to-liquids reactor. Given our current confi guration, we are limited to converting approximately 160 standard cu-bic feet per minute of gas into methanol liquids using a sys-tem mounted on a single trailer. This is the amount of gas produced from gasifying approximately 200 pounds of wet wood per hour. The information gained from recent tests was used to validate a computer model of the system based on gas production rates and composition. Using the model results, engineers have come up with several improvements to the system that should increase the hydrogen content of the syngas and permit production rates as high as 100 gal-lons per ton.

At that production rate, the 300,000 tons of unused forest residue produced each year in Minnesota could be converted to approximately 30 million gallons of methanol. A fuel cell uses approximately 1 gallon of methanol to cre-ate 5 kilowatt hours (kWh) of electricity, so 30 million gal-lons of methanol could be used to create 150,000 megawatt hours (MWh) of electricity by fuel cell in remote locations.

The system is primarily operated via computer control that can be largely automated. This method, rather than continuous monitoring, signifi cantly reduces labor require-ments of handling upset conditions such as plugged fi lters.

Therefore, the system is designed for sites where labor is available sporadically from other ongoing activities, signifi -cantly reducing labor costs.

One of the biggest operating costs comes with the electricity needed to run the compressor. One way to reduce this cost is to use excess syngas to fi re a modifi ed genera-tor to produce the electricity on-site, a technology that the EERC is currently developing in cooperation with a genera-tor manufacturer. If we assume that electricity is purchased at 7 cents per kWh, then production cost predictions are $1.58 per gallon using grid power, but as low as 95 cents per gallon if electricity is produced using excess syngas. Both of these costs are based on using wood waste that has no com-mercial value and is, therefore, free of charge.

In addition to the operating cost, the capital cost of the system must be paid off. We estimate that the cost of the trailer-mounted system with an additional syngas-fi red generator and other improvements to increase the produc-tion rate to 100 gallons per ton would be approximately $1 million. Assuming an 8 percent interest rate and payoff of the loan over 10 years, the combined capital and operating cost is approximately $3.05 per gallon using grid power, or $2.59 per gallon using onboard generation. These costs are considerably higher than the current delivered cost of meth-anol created from natural gas, especially because of the low cost of shale gas being produced. In some situations, how-ever, even these relatively high costs are acceptable. This is particularly true of operation in remote locations where the delivered cost of methanol may be very high, or in cases where additional incentives, such as carbon credits, are avail-able. More commonly, production of other liquids, such as Fischer–Tropsch fuels or other organic chemicals, might be more economical at this time than methanol, at least at the scale of a mobile system mounted on a single trailer.

Project funding is provided by Xcel Energy customers through a grant from the Renewable Development Fund and the U.S. DOE.

Author: John P. HurleySenior Research Advisor, EERC

(701) [email protected]

Economic Analysis of a Mobile Indirect Biomass Liquefaction System

¦ENERGY REVIEW

BY JOHN P. HURLEY


Biomass facilities are a great source of renewable energy, but diffi cult to develop and fi nance. Despite their typically smaller size (usually 50 MW or less) their complexity is signifi -cant. Developers must secure fi nanceable fuel supply agree-ments outlining appropriate term, quantity, quality and price with a creditworthy counterparty, obtain a fi nanceable power purchase agreement, and have a thick skin and capital to get through permitting and the inevitable public relations fi ght.

With a fi nanceable project, the developer can arrange permanent fi nancing, which can be leveraged or unleveraged. Recently, most transactions have been leveraged to achieve the desired returns, with the equity component comprising 30 to 50 percent of the total capital costs. The balance of the permanent fi nancing will be debt fi nanced.

Debt fi nancing for biomass projects will usually be struc-tured as non-recourse, relying on the project’s assets as collat-eral and looking to the cash fl ow for debt service. The lenders will generally not have any recourse to the sponsor or other equity investors. Leverage at the project level will increase eq-uity returns but also require higher tax equity returns and in-crease complexity. For these reasons, sponsors will sometimes seek to instead back lever projects.

Banks or institutional lenders are the primary sources of debt fi nancing. The lenders active in the space are expe-rienced and knowledgeable, which is critical to successfully completing the debt fi nancing. For banks, tenors have recent-ly lengthened to as long as 15 to 17 years for a fully amortizing loan. Institutional lenders will typically be longer term, 20 to 25 years, but with higher rates.

Perhaps the cheapest debt, but easily the most time con-suming, is commercial loans backed by the USDA and the U.S. DOE. The terms of the loan will be determined by the commercial bank but the loan guaranty increases the credit support and reduces the interest rate. Signifi cant downsides to these loan guaranty programs include the time, upfront cost and complexity of getting them completed.

Other federal fi nancing programs include tax-exempt bonds, such as Clean Renewable Energy Bonds, bonds backed by loan guaranties under USDA Section 9003, and New Market Tax Credits. The CREBS have not been widely used for various reasons. The Section 9003 program was not overly successful because lenders did not offer terms to suc-cessfully fi nance projects. As recently revised, Section 9003

loan guaranties can backstop bonds issued by the company in a private placement to qualifi ed buyers. The funds are then held by a commercial bank as a trustee.

The New Market Tax Credits program allocates tax credits to community development organizations (CDO) to create jobs and economic development in low-income areas. An investor will fund a developer’s project through the CDO in return for federal tax credits at 39 percent. A CDO typi-cally allocates about $10 million to a single project. If a proj-ect needs $50 million of NMTCs, the sponsor will need fi ve CDOs to participate. NMTC transactions are very complex and a developer needs to work with experienced advisors.

Equipment vendors and EPC (engineering, procurement and construction) contractors may also be a good source of permanent fi nancing, as well as equipment or construction fi nancing. Foreign vendors generally will have limited or no ability to use federal tax credits, so may not be a source of tax equity. Vendors who invest in the project may also have con-cerns about accounting treatment for various items, including consolidation of the project liabilities and the character and timing of revenue recognition.

Finally, debt fi nancing through private placements of debt or bond offerings are gaining attention with very low rates and terms of 25 to 30 years. Securitization is diffi cult to combine with tax equity in a single project, so is more effi -cient for fi nancing a portfolio of projects to achieve the scale needed by institutional investors.

With so much complexity, it can be nearly impossible to determine the right approach (or approaches) and to se-cure that particular type of fi nancing. A sponsor would be well-served to focus on a few key items. First, make sure your project is solid and fi nanceable. Second, understand your fi -nancial model and what cost of capital is needed to make the project successful. Finally, make sure your advisors and coun-terparties have experience with the development of biomass projects and the fi nancial structures being proposed. Devel-opment and fi nancing of a biomass project is complex. Don’t reinvent the wheel unless it is your only option, or there is a very real and signifi cant benefi t.

Author: David BensonPartner, Stoel Rives LLP

(206) [email protected]

Arranging Debt Financing for Biomass Projects

LEGAL PERSPECTIVE¦

BY DAVID BENSON

Negroponte joins Greenwood Energy as senior advisor

John Negroponte, former U.S. Deputy Secretary of State and Ambassador to the United Nations, has joined Green-wood Energy as senior advisor and board member. Negroponte will provide strategic advice and senior counsel to Greenwood’s management as it continues to build its platform of investment in both the renew-able fuel and clean energy sectors.

Founded to repurpose industrial waste into fuel pellets, Greenwood Energy is now a growing provider in North America that incorporates a clean power division deploying the latest research in fuel cell technology and energy effi ciency.

Negroponte also serves as an advisor to the board for the Libra Group, Green-wood’s parent company, which has ad-ditional renewable energy interests in Eu-roEnergy, the European operator of wind farms, solar parks and biomass plants.

DP CleanTech expands into the UK biomass market

DP CleanTech has set up an offi ce in Wolverhampton, U.K., the company’s fourth strategic investment in the past year. The announcement follows the recent opening of new offi ces and manufactur-ing facilities in Thailand and Poland. DP CleanTech executives expect the U.K. mar-ket to be promising because of its energy initiatives, including the Renewable Heat Incentive.

The world's largest straw-fi red plant, a 38 MW facility in Ely, Cambridgeshire, uses DP CleanTech’s highly acclaimed straw-fi ring technology.

Founded in 2004, DP CleanTech designs, engineers, manufactures and commissions biomass and waste-to-energy power plants, providing complete solu-tions for turning waste materials into clean energy.

Partners introduce gasification burner system

Green Clean Heat of Newton, N.H., and Nord Energy Systems, Rowayton, Conn., have formed a joint venture aimed at providing economical, high-effi ciency heating systems. The Nord Energy Gasifi -cation Burner is a heating unit designed to replace oil burners in furnaces and boilers used in residential and small commercial applications. Green Clean Heat will pro-vide ready-to-install systems for schools, municipal buildings, hospitals, condomini-ums, and other commercial and industrial facilities.

The Gasifi cation Burner uses com-puter controls to ensure the high-effi ciency gasifi cation and combustion of biomass resources such as pellets and wood chips.

Nord Energy Systems is a research and development organization specializing in high-effi ciency biomass-based heating and power generating systems.

PEOPLE, PRODUCTS & PARTNERSHIPSBusiness Briefs

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The Biofuel Experts


Ineos Bio chooses AMEC as license support engineering firm

Ineos Bio has selected AMEC, an in-ternational engineering company, to be its global license support engineering fi rm, as the company rolls out its licensing program for the Ineos Bio advanced bioenergy tech-nology. AMEC will work with Ineos Bio to develop engineering design packages for future Ineos Bio technology licensees. AMEC was selected following an exten-sive evaluation process of qualifi ed global engineering fi rms.

The value of the contract has not been announced.

AMEC’s experience in similar markets, along with its dedication to sustainable business practices makes it an ideal license support contractor for Ineos Bio. The two companies are currently working together on the fi rst commercial-scale facility to deploy the waste-to-bioenergy technology. Slated to come online this year, the Indian

River BioEnergy Center in Vero Beach, Fla., will produce 8 million gallons of advanced cellulosic ethanol and 6 MW of power, while providing a solution for deal-ing with waste that would normally end up in a landfi ll.

Koller joins Vecoplan as sales, project management engineer

Lars Koller joined Vecoplan LLC, a size-reduction technology supplier, as a sales and project management engi-neer. Koller earned an advanced mechanical engineering degree from the Univer-sity of Hannover, Germany, in 2001. He brings 10 years of engineering experience from Focke & Co., having fi rst worked in research and

development at Focke’s Verden, Germany, headquarters and then as manager of the design department at Focke’s Whitsett, N.C., facility.

Koller’s responsibilities will include coordinating the design and development of turnkey shredding systems for the recycling sector. He will also oversee the manufacturing and implementation of his projects once the engineering phase has been completed, ensuring continuous qual-ity control throughout the process.

SHARE YOUR INDUSTRY NEWS: To be included in the Busi-ness Briefs, send information (including photos and logos, if available) to Industry Briefs, Biomass Power & Thermal, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail information to [email protected]. Please include your name and telephone number in all cor-respondence.

BUSINESS BRIEFS¦

Lars Koller


EventCoverage

The third annual Pacifi c West Biomass Conference & Trade Show, held in San Francisco, Calif., Jan. 16-18, welcomed more than 400 at-tendees, exhibitors, and presenters to examine and discuss the region’s most pressing, innovative and challenging bioenergy industry issues and ideas.

Keynote speaker Mike Hart, CEO of Sierra Energy, emphasized the versatility of synthesis gas, and how the value of biomass—particu-larly municipal solid waste (MSW)—will drastically increase over the next couple decades.

Hart believes trash will become a valuable commodity as waste con-version technologies become widely implemented. “As time goes on, we’re going to be buying it and mak-ing competitive bids,” he said, adding that feedstock fl exibility will become a dominant factor in the biomass energy industry.

Hart sees a game changer on the horizon for feedstock procurement: suppliers paying biomass plants to take feedstock, rather than plants paying for their feedstock. As trash becomes a commodity, companies that designed technologies based on a feedstock that was typically free will realize the econom-ics of their system no longer work. “This is because people with waste products will realize they have another product to sell,” Hart said. “My expectation is that we will see this with garbage.”

He added that landfi lls will become a thing of the past because of carbon taxes, decreased tip fees, and local governments looking for ways to turn waste into a profi t, or reduce the substantial cost of paying somebody to take it.

Following Hart, the event’s opening general session featured current trends in fi nancing mechanisms. The panel, titled “Financ-ing Strategies for Biomass-Derived, Energy, Fuels and Chemicals in a Tight Capital Market,” offered three very different investment perspectives.

Bill Lemon, senior vice president of investment banking at Source Capital Group Inc., opened the discussion by noting that biomass developers are in the big leagues now, and attracting invest-ment will be a challenge. “There is a lot of money at stake, lots of technical complications, political complications, and lots of head-aches,” he said. “But, the basics of good projects haven’t changed.”

Different types of investors are attracted to different aspects of a project, Lemon said, and developers need to understand the type of investor they are hoping to attract.

John May, managing director at Stern Brothers and Co., said biomass projects have traditionally trailed behind other types of renewable energy when it comes to access to capital. He also noted that the bond market is wide open. “It’s a trillion dollar mar-ket, it’s very liquid…and it’s a market that will look at projects that are trying to get technology commercialized…or trying to scale,” he said.

New biomass conversion and energy projects will seem risky in an investor’s eyes, May continued. “The issue is how can we at-tack the perception of that risk, and how do we mitigate that risk,” he said. “I think [the reason] we haven’t gotten that many biomass projects fi nanced with non-recourse debt and with traditional insti-tutional equity is we haven’t solved that problem yet.”

Paul Tantillo, managing member of Enervation Advisors LLC, an alternative energy advisor and investor, fi nished up the general session describing several ways a company can better attract interest from his fi rm and other potential investors. Most important, he said developers should be bold, but also honest and direct. “Don’t sugarcoat the situation,” he said. “If the pitch seems too good to be true, it probably is.” —Anna Austin and Erin Voegele

Golden Gate to Biomass More than 400 professionals gather to talk biomass in The City by the Bay

SETTING THE STAGE: Speakers on the fi rst general session panel at the Pacifi c West Biomass Conference & Trade Show included (from left) moderator Bruce Manchester, McGladrey Capital Markets LLC; John May, Stern Brothers & Co.; Bill Lemon, Source Capital Group, Inc.; and Paul Tantillo, Enervation Advisors LLC.

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The Pacifi c West Biomass Conference & Trade Show kicked off with a day-long tour that featured one of the country’s most innovative wastewater treatment plants, as well as an on-farm dairy digester power system.

The city of Santa Rosa’s 21-million-gallon-per-day Laguna Wastewater Treatment Plant houses four 1-million-gallon anaerobic digesters that turn sludge separated from the water into Class B biosolids, which are sent across the street to a facility that transforms them into Class A biosolids.

Biogas emitted from the digesters is blended to a 50/50 mix with utility gas and is then combusted by three 0.8 MW engines to create a total of one-third of the plant’s electrical needs. A combined-heat- and-power (CHP) project to replace the existing facility is expected to be fi nished in December, according to Cayden Hare, city intern and aquatic biomass program lead researcher.

When that’s complete, four 1 MW engine generators will burn the biogas, and serve as standby power for the plant’s needs during utility outages.

Uniquely, some of the plant’s wastewaster is diverted to six channelized wetlands, where aquatic biomass cleans the water, absorbs pollutants and is allowed to grow. The biomass is eventually transferred into two 1,500-gallon vertical anaerobic digesters, Hare explained, along with waste glycerol and winery leaves. The resulting biogas is used to power small cars used on site, according to Hare, and the remaining half of the materials are composted.

At the Giacomini Dairy at Point Reyes, Calif., tour attendees viewed an ambient temperature, covered lagoon anaerobic digester fueled with manure from about 350 cows.

With fi nancial aid from the USDA and other government grant programs, the digester has been operating 24/7 for the past two years, according to digester technician Douglas Williams. Biogas emitted from the digester is captured through a gas collection system and then piped to a gas handling system.

Electricity produced from the biogas via an 80 kilowatt genera-tor powers the farm’s operations, and excess electricity is purchased by electric utility PG&E, according to Williams. “There’s also a CHP aspect, as heat coming off the engine is used in the dairy and cream-ery,” he said. —Anna Austin

Digesting California’s InnovationsConference tour visits wastewater treatment plant, dairy digester

EVENTCOVERAGE¦

'TANK' IT ALL IN: Anaerobic digesters at the Laguna Wastewater Treatment Plant process aquatic biomass, waste glycerol and winery leaves.

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The Carbon Conversation Conference general session hashes out bioenergy carbon cycles

During the second-day plenary session of the Pacifi c West Biomass Conference & Trade Show in San Francisco, the hot topic was wood-to-energy carbon cycles and their relation to for-est management.

Session speakers presented and dissected new research and the most recent studies relating to biomass carbon accounting, including a widely publicized report authored by Oregon State University College of Forestry researchers. Titled “Regional Carbon Dioxide Implications of Forest Bioenergy Production,” the study concluded that production of bioenergy from U.S. West Coast forests would increase carbon dioxide emissions from 2 to 14 percent over the next 20 years.

Although not one of the study’s authors, presenter Norm Johnson of the same OSU department discussed the fi ndings, pointing out that the key phrase repeated in media headlines was “biofuel production will increase carbon emissions.” “Now that’s counter to what has been said and understood by many people, including myself,” he said.

Emphasizing that the report was performed by top-of-the-line scientists, Johnson referred to it as “wild science,” but pointed out that if researchers didn’t do studies such as this one, people might still believe the sun revolved around the earth. “It opens up new avenues of thought, analysis and controversy, and it’s not go-ing away soon; it’s not easily dismissed, it’s a serious work.”

However, the report has a very specifi c point of view and looks out only 20 years—a very short time—and the outcome would be different if it accounted for a more expanded time period, according to Johnson. “They don’t look at the longer

picture, and it’s hard to argue that harvesting trees reduces carbon emissions in the short term, unless it results in greatly reduced mortality in the forests due to various threats, or through selection of building materials,” he said. “We have shorter-term goals that are important, and we’re headed into a pretty intense period of discussion of what all this means.”

Joining Johnson on the panel were Jeremy Fried, research forester at the U.S. Forest Service Pacifi c Northwest Research Station, and Bill Stewart, cooperative extension specialist at the University of California–Berkeley. —Anna Austin

EXPLAINING EMISSIONS: Norm Johnson speaks to conference attendees about wood-to-energy carbon cycles.

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Ask Markus Huwener, former investment banker from Germany and now CEO of First Climate, which biomass feedstock is best for power or thermal energy generation, and he might fi rst tell you about First Biomass.

First Climate is a carbon funds manage-ment company that has invested roughly $309 million in emissions reductions technology. Formed through an Australian joint venture between First Climate and Spar Capital, First Biomass functions as an equity investment fund

for pelletizing operations across the world. It doesn’t matter what the biomass

resource is. Huwener and his team at First Bio-mass plan to utilize pellets made from woody residues, straw, bagasse, rice husks and more. The team views Europe as a great offtake user for its pellet supply, but the company also sees China and Japan as intriguing users. The company’s strategic investment plan is simple: acquire, hold, manage and trade interests in a portfolio of biomass pellet production invest-

Global Supply Chain Glory First Biomass aims to be a global pellet supplier

FiredUp

STOCKPILE UTILIZATION: First Biomass will help supply global bioenergy demand, using sugarcane bagasse stockpiles.

ments, all while keeping that portfolio diversi-fi ed by source biomass, end contractor and geographic location of plants. The company has already made investments in nearly 25 dif-ferent pellet projects.

“Over the past several years, we have seen a lot of biomass projects that failed due to one or another factor,” Huwener says. “The main challenge for First Biomass would be to originate good, solid projects.” That means projects located in favorable areas that provide a suffi cient source of feedstock and can be managed by a proven professional team. Although Huwener’s perspective on creating a successful biomass feedstock supply chain seems to meet the status quo of project devel-opment in the biomass sector, his company’s willingness to overcome the unfavorable capital market conditions might be the main lesson.

Unfortunately, the pellet plants that would have supplied the demand of Japan or Europe are off the table. Instead, First Biomass has embarked on a $100 million pre-initial public offering (IPO) funding round that will net long-term investors a cash fl ow return per year of 15 percent, in advance of another shot at a successful IPO slated for 2013. Given that, and the upward trajectory of pellet demand in Europe, the company’s un-willingness to test the IPO market to raise the equity needed to create a global supply chain might be a good thing after all. —Luke Geiver

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PROFITABLE ALTERNATIVE: Oregon's BPC tax credit encourages the use of biomass slash piles that would have otherwise been burned. PHOTO: EMILY JANE DAVIS, ECOSYSTEM WORKFORCE PROGRAM


ECONOMY¦

A producer and collector tax credit has improved economic sustainability in Oregon’s biomass industry BY LUKE GEIVER

Biomass Sustains Business


¦ECONOMY

When Cassandra Moseley, Max Nielsen-Pincus and the rest of the team at the University of

Oregon’s Ecosystem Workforce Program (EWP) fi rst started their research into the impact of the state’s biomass producer and collector (BPC) tax credit, they had no preconceived notions about whether the tax credit was good or bad.

They were interested in forest resto-ration and intrigued by the job creation possibility of a policy linked to biomass. And they planned on letting Oregon’s policymakers decide whether a tax credit that awards $10 for every green ton of biomass delivered to a bioenergy facility is worth the money. But that was before the team, which also included members of Oregon’s Department of Energy, fi n-ished its work.

Now, after biomass prices and re-gression analyses simulating a world without the BPC tax credit, the results are in. And they show that policymakers have an easy choice to make.

HITTING THE TARGET: The BPC tax credit created biomass handling jobs in an otherwise slow 2010 economy.

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The Main Effects When the team’s research into the BPC

began in 2010, the amount of information on wood fuels markets and the economics of biomass collection was limited. With the help of Forest2Market, the research team compiled biomass prices dating back 10 years. The team also reached out to several Oregon businesses to discuss the typical costs of transporting woody biomass. “We tried to tie any information that did exist to this particular tax credit program,” Pincus says.

Moseley says the researchers had three goals. First, determine if the tax credit was actually fi nancially affecting the wood fu-els market. Second, fi nd out if the amount of biomass fl owing into the market was fl uctuating in relation to the BPC. And the third goal was centered around employ-ment. “We wanted to know whether it was creating or sustaining any new or existing jobs,” Moseley says.

To satisfy those goals, the team created a statistical model based on fi gures from before the tax credit, and then projected

the fuels market pricing out through 2010 as if the credit had never been implement-ed. The team then compared the fuel pric-ing market conditions, with the tax credit versus without.

“What we’ve learned is that the tax credit has helped prices in the wood fuels market,” Pincus says. But that’s only one of the ways the BPC tax credit impacted the state. The research by EWP shows the tax program also supported between 32 and 73 jobs in 2010. The most powerful testa-ment to the effectiveness of a state’s com-mitment to the growth and health of the biomass industry, however, is a comparison between what the state got out of the BPC and what it had to put in.

At an average price of $30.11 per bone dry ton (BDT), the EWP calculated that 10,000 BDT equaled $301,000, and would be eligible for $178,571 in tax credits. That means 10,000 BDT of forest biomass de-livered to a bioenergy facility would sup-port roughly 5.1 jobs, $241,000 in wages and benefi ts, and $868,000 in direct, indi-rect and induced economic activity. The

Clean Forest Floor: The program incentivizes the removal of usable biomass from forest thinning.

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net tax expenditure cost of all that is about $143,000.

“This study shows that the tax credit seems to have generated more economic activity than it cost the state in tax,” Mo-seley says. “The credit moderated the price increases that would have happened other-wise in the wood fuels market caused by the economic downturn.”

As of March 2011, 52 biomass provid-ers and collectors requested nearly $6.6 mil-

lion in BPC tax credits for fi scal year 2010, according to the research. About $5.5 mil-lion of that came from more than 550,000 green tons of woody biomass. The average amount request by each participant totaled $126,931.

And it all came at a time of economic peril, during a downturn in the housing mar-ket that was creating typical sources used in bioenergy facilities, such as hog fuel and mill residues. But, decreased demand didn’t fol-

low the decrease in supply. “The demand (for biomass) was still growing because of our increasing demands for renewable en-ergy,” Pincus says.

That steady demand for biomass-based energy was still met, however, through the BPC tax credit. “The credit essentially al-lowed for material to come out of the woods that wouldn’t have otherwise come out,” Pincus says. “It allowed that demand for wood fuels and for biomass to continue to grow.” And without the BPC in place, the price of woody biomass would have climbed during the decrease in supply. According to the research, the price of forest biomass would have been roughly 20 percent higher, and availability would have been 20 to 30 percent lower.

The BPC not only helped sustain the health of the woody biomass supply market in Oregon, but it also helped sustain jobs involved with the handling, delivering and storing of biomass.

The Future Matt Krumenauer is a senior policy

analyst at the Oregon Department of En-ergy and an integral part of the BPC pro-gram. Krumenauer helped assemble the team tasked with analyzing the effectiveness of the tax program. He was responsible for implementing and evaluating the BPC cred-it, and says he’s happy it has been extended through 2018.

But a few changes have been made to the program. Most notably, the unit of mea-sure will switch from green tons to bone dry tons. In addition, stand alone electricity gen-eration sites will not be eligible for the tax credit because combined-heat-and-power facilities will better assist in reaching energy effi ciency standards set by the state’s DOE.

Krumenauer doesn’t envision any more changes to the BPC program in the fore-seeable future, and is already working to implement more biomass programs. In the past, his department created incentives for equipment, or for the construction of new facilities, and now is looking at the biomass


ECONOMY¦

the BPC and the wood fuels market is more than merely casual, they say. They both be-lieve the market would have been far less fi scally successful and sustainable over the past few years without such a pro-gram in place.

For Krumenauer, the choice to extend the program through 2018 was an easy one, given its economic sustainabil-ity factor. “I think that being a resource-dependant state, the value that the legislature saw was really being able to put log-gers and farmers and contrac-

tors back to work creating energy products when the markets for housing products, tim-ber and forest products markets declined.”

And, of course, the program will lower Oregon’s carbon impact through the next six years of its life. But in today’s economic climate that starts and ends with jobs, the research by the EWP team proves bioenergy affects more than just greenhouse gas emis-sions.

“(Legislators) extended it through two other legislative cycles and I believe they wanted to provide some assurance that the program would be available so that they could begin to make business decisions,” Krumenauer says.

Author: Luke GeiverAssociate Editor, Biomass Power & Thermal

[email protected](701) 738-4944

The forest industry isn’t just about lumber and paper. Wood can also be integrated seamlessly into products that are currently made using oil and other fossil fuels. From car parts to children’s toys, bio-composite materials are helping reshape the forest-based economy in Northern Ontario. By pairing forest materials with innovation, we create a brighter future for the North. CRIBE is proud to support bio-composite research and the commercialization of new uses for wood in Ontario.

Have an idea you’re looking to grow? Find out more at www.cribe.ca

thermal sector. “We are starting to focus more on our heating sector…trying to pro-vide our communities with access to bio-mass heating systems,” he says. That could include applications in hospitals, schools, commercial buildings and prisons.

But for now, Krumenauer and his EWP team have one more major task at hand: analyze the effect of the BPC tax credit in the absence of major federal in-centives such as the USDA’s Biomass Crop Assistance Program. Although the analy-sis is still in progress, Moseley, Pincus and Krumenauer agree that the information for 2010, and most likely for 2011, shows that the BPC undoubtedly stimulates at least one important part of the market: the middle of the supply chain. “It doesn’t stimulate fi nal demand, it doesn’t create more con-sumers, nor is it directly building any new production facilities,” Moseley says. “But it could potentially create some investment decisions.”

“One could imagine that with a time horizon of this particular tax credit be-ing here until 2018, that that might impact somebody’s investment decision about building new biomass capacity,” Pincus adds.

And, although neither Pincus nor Moseley believe the BPC program is a sil-ver bullet, they do adamantly argue for its strengths. The link the team found between

SEE FOR YOURSELF: The results and products of the BPC program are clear, and are showcased during Oregon biomass resource tours.

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GROUNDWORK: A local farmer and researchers from Better Environmental Solutions, University of Wisconsin Soil Center, and Veridian Homes, work on a 2010 hybrid willow biomass restoration project in Wisconsin.

PHOTO: BRETT HULSEY, BETTER ENVIRONMENTAL SOLUTIONS


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The U.S. Midwest has considerable biomass energy potential, specifi cally in anaerobic digestion applicationsBY ANNA AUSTIN

The Breadbasket’s Biomass Belt

Any visitor to the U.S. Midwest knows the region isn’t recognized for glori-ous mountains, warm weather or

sunshine. It does, however, boast fl at and vast plains, long stretches of grassland, and highly productive soil that allows it to pro-duce an abundance of cereal crops.

To some, that’s an ideal scenario for growing a biomass energy industry off the back end, and numerous industry experts are busy examining its viability and poten-tial impacts. As with any emerging indus-try, there are some hurdles and kinks to be worked out, but there is a resounding con-sensus across the scientifi c community that Midwestern crop residue and cattle manure will play a key role in the region’s energy fu-ture. In fact, one recently published, USDA-backed study has determined that biomass alone could be used to produce 15 percent of the Midwest’s electricity.

Assessing AvailabilityAuthored by Chicago Council Senior

Energy Fellow Steve Brick, “Harnessing the

¦STUDY

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KAHL Wood Pelleting PlantsKAHL Wood Pelleting Plants

Quality worldwide.Quality worldwide.

Crop residuesCorn stoverSoy strawWheat strawTotal

Animal manureCattleSwinePoultryTotal

Forestry residuePrimary mill residueUrban wood residueTOTAL

(106 dry tons)

106647

177

1442201156

219

(%)

81

9523

Source2000-’09 production averages, USDA NASS: Data and Statistics

2007 Census of Agriculture

Milbrandt, 2005Milbrandt, 2005Milbrandt, 2005

Total Resources

SOURCE: CHICAGO COUNCIL

Power of Biomass Residuals: Opportunities and Challenges for Midwestern Renewable Energy,” considers the residual biomass re-sources of Illinois, Indiana, Michigan, Min-nesota, Ohio and Wisconsin. According to Brick, the year-long project involved three main steps: preparing a regional residual biomass inventory, developing an assess-ment of conversion technology readiness and economics, and developing policy rec-ommendations.

Brick’s team arrived at its 15 percent of Midwest electricity conclusion by converting all of the “ecologically available” biomass to dry tons, and assuming it would be burned in a conventional boiler. “This was done as a way to bind the total contribution that waste biomass could make to the regional energy supply,” he says. “We made the same calcu-lation for ethanol—assuming all the bio-mass could be converted—and found that 17 percent of the region’s gasoline could be supplied from biomass residuals.”

Residuals included in the report are crop residues such as corn stover, soy straw and

wheat straw; manure from swine, cattle and poultry; and forestry, primary mill and ur-ban wood residues. While corn stover leads in crop residue annual tonnage at 106 mil-lion tons, Brick points out that the logistics of harvesting, transporting and storing corn stover are uncertain. “Questions of how much stover can reasonably be harvested, who harvests it, how it is harvested, trans-ported and stored must be addressed before a new industry can take shape,” he says. “We really need to consider biomass energy sys-tems in the broader landscape contexts in which they occur. The land-water-air-wild-life-human interactions are critical, but easy to ignore if we just consider biomass as an energy resource. A landscape perspective is harder to develop and talk about, but it is really the key to smart protection and utiliza-tion of our natural resources.”

Unlike corn stover-to-energy, the an-aerobic digestion (AD) industry isn’t new to the Midwest. It is already home to 52 of the nation’s 169 anaerobic digestion projects. Most of the digesters are concentrated in the

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Total Resources

SOURCE: CHICAGO COUNCIL


¦STUDY

Great Lakes region, but the 33 MW contribu-tion to the regional energy supply represents only 2 percent of installed capacity, according to Brick. He believes AD energy potential in the region is huge, even though it is challeng-ing fi nancially. “AD is a great technology for producing biogas for use in a turbine, as a boil-er fuel or a transport fuel, and a great way to reduce water quality issues associated with ma-nure and reduce greenhouse gases,” he says.

Digest ThisCurrently, only about 1 percent of the

Midwest’s cattle manure is managed through AD, and digesters are found on only about 10 percent of the region’s largest dairy farms. With the amount of manure available—14 million tons annually from cattle alone—why aren’t more farms taking advantage of the technology?

“I think there are several reasons why,” says Amanda Bilek, energy policy specialist for the Great Plains Institute. “Part has to do with public policy, and a lack of support in individual Midwestern states with the ex-ception of Wisconsin, which is a shining example for the other states. They’ve done better than any other Midwestern state by collaborating with state agencies, producer associations, and leveraging some federal re-sources.”

Wisconsin has the most AD installa-tions of any state in the country, according to Bilek.

Outside of the policy realm, another factor infl uencing the lack of AD projects is the low price of electricity in the Midwest. “A lot of AD project models have been focused on producing renewable electricity, but we have very low prices in the Midwest overall,”

Bilek says. And because digesters require a large capital investment, selling the resulting electricity in the Midwest often means a re-ally slow return on investment. “That deters some producers from installing them, be-cause they can be viewed as risky.”

Biogas doesn’t have to be converted into electricity, though. “It can also be a source of renewable natural gas, cleaned and compressed even further into vehicle fuel, or a source of heat in certain applications,” Bilek says. “If we only look at one specifi c type of utilization of the gas—electricity—we’ve really missed the potential opportuni-ties there.”

The low price of natural gas is another AD hindrance, according to Brett Hulsey, president of Better Environmental Solutions, a Wisconsin-based clean energy consulting, managing and development fi rm. “Actually the biggest challenge in the biomass indus-try as a whole is cheap natural gas—at $2.50 per 1,000 cubic feet, energy effi ciency barely pays,” he says. “I’ve been at this 30 years, and I’ve seen natural gas take a wild swing.”

Hulsey, also a Wisconsin state legislator and a Dane County board supervisor, served as an environmental policy advisor to Presi-dent Bill Clinton and worked as an environ-mental educator and advocate for the Sierra Club for 17 years. He says another hurdle to widespread AD implementation and bio-energy in the Midwest is getting farmers to understand the right amount of manure and corn stover to put back on the soil. “Any more than [the right amount] results in more phosphorus and nitrogen pollution,” he ex-plains. “This industry is also part of a water quality improvement solution, because when you have too much manure or corn stover on the soil it creates water pollution.”

For corn stover, the adequate amount is about two to three tons per acre, but ma-nure varies greatly. “A lot of soil in Wiscon-sin doesn’t need more phosphorous,” he says. “So if we can separate the biomass out of the manure—we’re actually doing that at a pilot project in Dane County, separating liquids from solids after the digester—the phosphorus stays with the solids.”

Despite the aforementioned challenges, AD development has continued in the Mid-


STUDY¦

associated with biomass energy is reduced fl ooding. “Many studies have shown that planting cropland to grasslands, combined with other conservation practices, can reduce 100-year fl oods by 15 to 39 percent,” Hulsey says. “Basically we’re restoring nature’s spong-es—especially with grassy biomass—that store fl ood waters. I worked on a project two years ago where we restored a wetland area to both willow and switchgrass, and the idea there was to build more of nature’s sponges to reduce water on the land and in people’s living rooms.”

While biomass is usually snubbed in the energy portions of typical presidential speeches touting home-grown fossil fuels and other sources of renewable energy, it plays a signifi cant role in the country’s cur-rent energy portfolio. “Biomass is the Rod-ney Dangerfi eld of energy—‘we don’t get

no respect,’” Hulsey jokes. “But really if you look at (U.S.) DOE numbers, it equals about half of renewable energy in the U.S., espe-cially here in the Midwest and in Wisconsin.”

Overall, the important thing to remem-ber about biomass fuel is that it’s all local. “You have to set your fuel systems up ac-cording to what you have,” Hulsey adds. “For example, Iowa has corn stover. The Saudi Arabia of America is right here in the Mid-west, and while we aren’t a Silicon Valley, we can be the ‘cellulose prairie,’ making our own energy and jobs.”

Author: Anna Austin Associate Editor, Biomass Power & Thermal

[email protected](701) 751-2756

west over the past decade. “It’s been slowly increasing, and there are some real pockets of signifi cant development, especially in Wisconsin,” Bilek says, adding that since the state is home to a manufacturer of an AD technology, producers likely feel more secure having someone in their backyard to help with trouble shooting.

In Minnesota, the number of digest-ers has tripled from two to six in the past 10 years, and other states in the region have had similar increases. “That’s not a huge amount of growth, but its growth,” Bilek says. “We just have to get the technology over the fi rst hump. Creating more incentives would help, at least to get over the initial economic bar-rier until more systems are installed and the costs come down.”

And once the AD and biomass energy industry in general gets rolling in the Mid-west, so will new employment.

Jobs and MoreA 2007 analysis performed by Hulsey

found that the industry could create 100,000 jobs in Wisconsin alone. “We import $12.5 billion worth of energy per year for coal, oil, and natural gas, and conservatively that’s a 100,000 job loss,” he explains. That’s follow-ing a rule of thumb for one job created for every $50,000 kept in state. “Iowa generates about 39 million tons of corn stover per year, and they are already generating more fuel than they use,” Hulsey says. “They im-port about 20 million tons of coal a year, but they could be almost energy self-suffi cient. That’s one of the next studies I may do, an energy import study, to really hone in on the jobs question.”

Speaking of replacing coal, in another of Hulsey’s 20 studies, “Cellulose Prairie: Biomass Fuel Potential in Wisconsin and the Midwest,” he found 12 Midwestern states generate up to 231 million tons of potential excess biomass each year that could replace 37 percent of the coal used in those states, 50 percent in Wisconsin alone. Hulsey says coal replacement conversions were a key concept in the study, as previous data hadn’t put information in such real terms.

Moving on to other Midwestern bene-fi ts, one environmental advantage not often


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March 2012 Biomass Power & Thermal