Ethanol ProductionIt took the regular session, plus a one-day special session, but the Minnesota legislature has completed its work for 2015. The legislature convened in early January with a $1.9 billion projected budget surplus and had the task of setting a two-year state budget.

Through our work with the Bioeconomy Coalition of Minnesota, GPI set our sights on ensuring that a new financing program for the commercial construction of advanced biofuel, renewable chemical, and biomass thermal projects was included in the two-year state budget.

The Bioeconomy Production Incentive Program was established and received a two-year appropriation of $2 million – $500,000 in FY 2016 and $1.5 million in FY 2017.   The production incentive program language advocated for by the Coalition is now law in Minnesota! This is a significant achievement for the Bioeconomy Coalition and the biobased product and fuel industry. The program language and initial appropriation form a strong foundation from which to build a vibrant, diverse, and sustainable bioeconomy in Minnesota.

The Great Plains Institute issued a news release on June 16 lauding the passage of the Bioeconomy Production Incentive Program. GPI also prepared a summary of the new program.

The release included quotes from the chief House and Senate bill authors, Rep. Rod Hamilton (R-Mountain Lake) and Sen. Tom Saxhaug (D-Grand Rapids).

According to Rep. Hamilton, “Minnesota has always been at the forefront of capturing new value added opportunities for our agricultural producers. We led the nation in the development of first generation biofuels and we will continue our leadership role by enabling commercial development of new value added ventures in the next generation of biofuel production.”

Sen. Saxhaug commented, “These new incentives for renewable chemical and advanced biofuel projects present a tremendous opportunity to establish a new market for wood utilization.  This will have a positive impact on Northern MN communities through new economic development and support of the existing wood supply chain.”

Accompanying the release was a statement from the Bioeconomy Coalition, including remarks from Coalition members.  The diverse collection of organizational voices expressing their support for the program is a testament to the collective work done to establish this new program.

The Bioconomy Coalition has been working for the past three years to educate Minnesota policy makers about the tremendous economic and environmental opportunity presented by biobased industry development.  We can build on our strong foundation of biofuel and forest product industries to utilize agriculture and forestry feedstocks and new technology.

The production incentive policy replicates the successful producer payment model used to help build our first generation biofuels industry in Minnesota. Over the course of ten years, the State of Minnesota spent over $450 million dollars to help construct the state’s 21 currently operating corn ethanol plants. Those facilities contribute over $5 billion annually to the economy. From an economic development perspective, the producer payment financing model was a huge success.

Using real-world data from companies looking to build or expand projects in Minnesota, a University of Minnesota Extension economic impact study found that building 14 new advanced biofuel and renewable chemical production facilities could contribute over $840 million annually to the Minnesota economy and provide over 3,000 jobs. There is also a one-time construction impact over $1 billion and 9000 jobs.

Coupled with enormous economic development potential for biobased industry development are increased benefits to the environment. Advanced biofuels are required by the Environmental Protection Agency to reduce greenhouse gas emissions at least 50 percent when compared to gasoline. The production of renewable chemicals displace petroleum-derived compounds in cosmetics, cleaning supplies, plastics, detergents, and several other consumer and industrial products. Renewable chemicals can also serve as a safer alternative to toxic chemicals, which have demonstrated adverse human health impacts, such as phthalates.

Feedstocks, such as agricultural biomass or wood, utilized to produce advanced biofuels and renewable chemicals, can deliver additional benefits such as improved forest health or water quality improvements. The Bioeconomy Production Incentive program requires that cellulosic ethanol produced using agricultural biomass must source at least 50 percent of the total feedstock from perennial grasses by the fifth year of production.

If you have been a close follower of this issue during the 2015 legislative session, you might recall that the Bioeconomy Coalition reached an agreement with the MN Environmental Partnership at the end of March to support a policy package that included the following elements:

  1. 1. Add a requirement for cellulosic biofuels utilizing agriculture biomass to meet a 50 percent perennial and cover crop feedstock requirement in the fifth year of operation;
  2. 2. Modify responsible sourcing plan language in the bill to ensure sustainable harvesting of crop residue; and
  3. 3. Include a perennial crop establishment program (referred to as Working Lands Watershed Restoration Program) in the Senate bill, work to find a vehicle in   the House and support its inclusion in a final policy package.

The final package included the first and second elements, but the third was not included in the final Agriculture and Environment bill that was signed into law by Governor Dayton on June 13. Since the production incentive program language still contains a perennial feedstock requirement for cellulosic biofuels using agricultural biomass, future work will need to be done to determine the most effective pathways for securing a feedstock supply to meet the aggressive feedstock requirements for cellulosic biofuels.

The Bioeconomy Coalition and GPI staff who have led this initiative over the last several years are thankful to our legislative supporters and administration officials for establishing this program in law and for appropriating money to get it started. As with most legislative initiatives, there is always more work to be done; however, we are excited that a strong foundation is in place.

You will be hearing more from us soon about the Bioeconomy Coalition and our efforts to recruit new projects, educate existing industries about diversification opportunities, increase funding for the incentive program, secure feedstock pathways or additional policy for a perennial supply for cellulosic projects, and many other important strategies to capture the full potential of this new program.

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