A summary of the Bioeconomy Coalition of Minnesota, presented by the Great Plains Institute

1. Bioeconomy Coalition of Minnesota:
2014 Legislative Priorities

2. Mission of the Bioeconomy Coalition
of Minnesota
Articulate and implement a Minnesota
state policy and regulatory agenda to
expand biobased chemical, advanced
biofuel, and biomass thermal energy
industries, along the entire value chain
from R&D through commercial
production and use.

3. Coalition Organizers

4. Coalition Partners

5. www.mnbioeconomy.org

6. Displacing the WHOLE Barrel of Oil
Other Products
US Department of Energy 2005
Slide courtesy of
6
BioIndustrial Partnership

7. Renewable Chemical Value
Slide courtesy of
BioAmber

8. Large forestry biomass resource
and large (but declining) forest
products industry
Large agricultural biomass
resource, and successful track
record in creating an ethanol
industry through effective state
policy

9. Minnesota’s Biobased Chemicals Cluster
XL Terra
Segetis
Reluceo
Lonza
Cortec
Butrolix
Entropy
Solutions
EarthClean
Cargill Industrial
Oils
West Central Ammonia
Development
BioAmber
Natur-tec
Natureworks
Agristrand
Biocomposites
Butamax
Gevo
Cargill BioH
Starch Tech
CHS
Slide courtesy of
9
BioIndustrial Partnership

10. Renewable Materials Value Chain
Next Generation
Biorefinery
Farmers/Foresters
Formulator/
Refinery
End Product
Manufacturing
Retail, End Uses
10

11. Company Highlight:
• Headquarters: Golden Valley, MN
• Base bio-derived compound: Levulinic ketals
• Used to replace petroleum in the manufacture
of:
– Plasticizers (PVC), polyols for polyurethane
materials or use in polyester thermosets or
thermoplastics and cleaning solvents

12. Greenhouse Gas Reductions from Biofuels
According to existing federal policy (EPA’s RFS2)
100%
20%
90%
Reduction
80%
50%
70%
Reduction
60%
Reduction
60%
50%
80%
40%
GHG
Intensity
30%
50%
GHG
Intensity
20%
10%
40%
GHG
Intensity
0%
Gasoline
Corn Ethanol Advanced
Biofuel
Cellulosic
Biofuel
Compared to gasoline:
Corn Ethanol
20% GHG Reduction
Advanced Biofuel
50% GHG Reduction
Cellulosic Biofuel
60% GHG Reduction
e.g. bio-butanol
e.g. ethanol from
corn stover or wood
Source: EPA RFS2 Threshold Levels; graph and slide by GPI

13. Iowa

14. Company Highlight:
• Headquarters: Elk River, MN
• Produce syngas from biomass
• Use syngas coupled with commercial
thermochemical processing technology to
produce gasoline, diesel fuel and chemical
products – integrated biorefinery

15. 2013 Legislative Achievements
• Biobased Chemical Funding:
– Language added to NextGen Energy Board Statute allowing
investment in biobased chemicals
– ~$2.5 million over 2 years
– Planned RFP for Fall 2013
• Next Gen Biofuels:
– Modifying MN “ethanol” mandate to be biofuelneutral, allowing butanol and other biofuels to enter
market.
– Establishes 30% by 2025 biofuel goal
– Taskforce to recommend incentives to commercialize
advanced and cellulosic biofuels in MN

16. 2014 Policy Priorities

17. Success of MN’s 1st Generation Plants
18

18. Policy 1: Producer Incentive
• Summary: Provide production-based
incentives for production of biobased
chemicals, advanced biofuels, and biomass
thermal energy.

19. Policy 1: Producer Incentive
• Why do this?
– Make Minnesota a world-class destination for building
commercial-scale advanced biofuel and biobased chemical
plants
– Production incentive can be included in financing, and will
attract projects to Minnesota.
– Legitimate government role in helping to build “first-of-a-kind”
facilities, for which other forms of financing do not exist.
– Protection for the state. No payment occurs until production
occurs. No risk of boondoggle projects.
– State government doesn’t pick technology winners. They simply
award the projects that cross the finish line.
– Minnesota has history with this approach, through the state’s
ethanol producer payment.

20. Policy 1: Producer Incentive
• Eligibility and Incentive levels
– Biobased Chemicals
• $0.03/Ib
• Up to $60,000,000 over 10 years
– Advanced Biofuels
• $0.10/gal
• Up to $30,000,000 over 10 years
– Cellulosic Biofuels and Cellulosic Diesel
• $0.20/gal
• Up to $60,000,000 over 10 years
– Certain Biomass Thermal projects
• $10/mmbtu
• Up to $2,000,000 over 10 years
• Additional sustainability bonus for use of certified feedstocks, or for
following state-approved best management practices

21. Policy 1: Producer Incentive
• Qualified Facilities
– Must source raw materials (sugar, biomass) from
Minnesota
– Raw material must be from agricultural or forestry
sources, or from organic content of municipal solid
waste.
– Facility must be located in Minnesota
– Facility must begin operation after January 1, 2015
(including existing facilities with significant retrofits to
allow new production after January 1, 2015)

22. Policy 2: Public/Private Equity
Investments
• Summary: Create a new state-funded public/private
investment pool to make equity investments in
Minnesota-based biobased chemical and advanced
biofuel companies to support growth and
innovation, and help companies cross the “valley of
death” to commercialization.

23. Policy 2: Public/Private Equity
Investments
• Why do this?
– Already permitted under state statute governing the Environment and
Natural Resources Trust fund
– Secure MN’s leadership in a potentially $500 billion industry
– Support innovative MN start-up companies, in a sector where MN is
currently the world leader
– Assure MN companies stay in the state, despite competition from
other states; counteract venture fund pressure to move companies to
CA and other states where funds are located.
– Attract $4 in outside funding for every $1 invested by the state of MN
– Significant outside match assures vetting of companies and
technologies by outside investors, and protects state investments.
– State also manages risk by making multiple investments.

24. Policy 2: Public/Private Equity
Investments
• Policy detail:
– State should aim to make 5-10 total investments of $2-10 million each
(total state investment of between $10-100 million).
– The state should form a partnership with a qualified lead investor who
will take responsibility for attracting other investors, and conducting
due diligence and company valuations and negotiating investments.
– State should require a 4:1 match for any state investment, represent
no more than 20% of total investment in a given company (required by
statute).
– Favor companies that receive SBIR investment in scoring system, along
with other criteria.
– Possible source of funding: State Environment and Natural Resources
Trust fund, or other state investments managed by the State Board of
Investment.

25. Policy 2: Public/Private Equity
Investments
• Only invest in companies that are:
– Headquartered in Minnesota and have the majority of
their operations in Minnesota.
– Primary operations devoted to developing biobased
chemical or advanced biofuel technology.
– Evidence of movement towards commercial-scale
production.
– Investment targeting companies in “pre-commercial”
stage to assist moving towards commercial scale.
– Invest in companies that have already attracted
significant venture capital investment (more than $50
million) (include SBIR as a criteria)

26. Policy 3: Bonding for Community-Scale
Biomass Thermal Projects
• Summary: Provide bonding funding for capital
investments in biomass heating plants and district
energy facilities to support that state’s biomass
thermal industry while reducing energy bills and
environmental impact.

27. Policy 3: Bonding for Community-Scale
Biomass Thermal Projects
• Biomass heating and district energy are proven
technologies that are being operated at scale in
Minnesota and around the world.
• There are numerous biomass heating projects
proposed around the state.
• Bonding funding helps communities to finance
large, multi-building projects and projects at
public facilities that are difficult to finance.
• Several studies show strong economics for these
facilities.

28. Policy 3: Bonding for Community-Scale
Biomass Thermal Projects
• A few examples of projects that would
immediately benefit from a state bonding bill
include:
– City of Grand Marais District Heating Project
– City of Ely District Heating Project
– Itasca Community College
– Itasca State Park
– Soudan Underground Mine State Park

29. Other policies
• Support Department of Biosystems
Engineering Bonding Request
• State procurement of biobased products
• Product stewardship

30. Additional context slides

31. Renewable Materials Value Chain
Next Generation
Biorefinery
Farmers/Foresters
Formulator/
Refinery
End Product
Manufacturing
Retail, End Uses
Slide courtesy of
32
BioIndustrial Partnership

32. Existing Biorefineries Across Minnesota
33

33. Minnesota –
World Leading
Cluster of
Biochemical
Company
Headquarters
34

34. Mississippi
35

35. Louisiana
36

36. Energy Use In Production
Energy use (MJ
/kg)
Energy Savings 52%
100
90
80
70
60
50
40
30
20
10
0
88.8
88.7
42.69
BioAmber S *
A
Petro AA (Thermal) Petro AA (Catalytic)
*Field-to-Gate Energy and Greenhouse Gas Emissions Associated with Succinic Acid Produced At BioAmber’s Facility In Sarnia Ontario, August 2012
Slide courtesy of
BioAmber

37. Ontario, Canada 30K MT Production of Bio-Succinic
Acid Will SAVE 212,000 tonnes of CO2e per year
Slide courtesy of
BioAmber

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

39. Bio-SA: Lower Cost Than Petroleum SA
Lower Cash Cost TODAY
Historical Data past
29 years when oil >
$30/barrel
Petroleum Succinic
CASH COST
Competitive with Oil at $35 / Barrel
Bio-Succinic
Cost Advantage
for BioAmber
Cost Advantage
for Petroleum
@ $80
barrel oil
@ $6.00
bushel corn
Cost Advantage Will Drive Market Share Growth In This $3.8 Billion Market Opportunity
Slide courtesy of
BioAmber