1. Building a Stronger Minnesota
Bioeconomy:
2014 Legislative Priorities
Austin, MN
December 17, 2013

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. 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

6. Renewable Chemical Value
Slide courtesy of
BioAmber

7. Iowa

8. Mississippi
9

9. Louisiana
10

10. Jurisdictions Providing Financing
Assistance for Bioindustrial projects
• Iowa, Mississippi, Louisiana, North Dakota
(and others)
• Thailand
• China
• E.U.
• Canada
• Brazil
• And others…

11. What “could
be” if MN’s
Policy
Environment
Favored New
Bioeconomy
Projects?

12. Case Study: Cellulosic Ethanol
• Southern MN facility, co-located with ethanol
plant.
• Feedstock: Corn stover, switchgrass
• $250 million construction investment
• $20 million annual payments for feedstock
• 100-200 construction jobs
• 40 permanent jobs
• 180 permanent indirect jobs

13. Case Study: BioCNG
• Anaerobic Digestion facility utilizing turkey
litter, beet pulp, agricultural residues, and
other organic materials.
• Producing Compressed Biogas for use as
renewable fuel
• Also producing nutrient products
• Economics TBD

14. 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 biofuel-neutral,
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

15. 2014 Legislative Goals
• Create programs to attract commercial-scale
production of biobased chemicals and
advanced biofuels
• Create a program to encourage investment in
early stage bioindustrial companies
• Bond for community-scale biomass thermal
energy projects

16. Success of MN’s 1st Generation Plants
Ethanol industry supports 12,600 jobs and generates over $5
billion annually in economic activity. (MDA)
17

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

18. 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.

19. Policy 1: Producer Incentive
• Eligibility and Incentive levels
– Biobased Chemicals
• $0.03/Ib
• Up to $60,000,000 over 10 years
– Advanced cellulosic biofuels
• $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

20. 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)

21. Additional context slides

22. Displacing the WHOLE Barrel of Oil
Other Products
US Department of Energy 2005
Slide courtesy of
23
BioIndustrial Partnership

23. www.mnbioeconomy.org

24. Minnesota’s Biobased Chemicals Cluster
XL Terra
Segetis
Reluceo
Lonza
Cortec
EarthClean
Gevo
Entropy
Solutions
Cargill Industrial
Oils
BioAmber
Natur-tec
West Central Ammonia
Development
Butamax
Butrolix
Natureworks
Agristrand
Biocomposites
Cargill BioH
Starch Tech
CHS
Slide courtesy of
25
BioIndustrial Partnership

25. Renewable Materials Value Chain
Next Generation
Biorefinery
Farmers/Foresters
Formulator/
Refinery
End Product
Manufacturing
Retail, End Uses
26

26. 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

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

28. 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

29. 2014 Policy Priorities

30. 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.

31. 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.

32. 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.

33. 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)

34. 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.

35. 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.

36. 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

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

38. Renewable Materials Value Chain
Next Generation
Biorefinery
Farmers/Foresters
Formulator/
Refinery
End Product
Manufacturing
Retail, End Uses
Slide courtesy of
39
BioIndustrial Partnership

39. Existing Biorefineries Across Minnesota
40

40. Minnesota –
World Leading
Cluster of
Biochemical
Company
Headquarters
41

41. 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 SA
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

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

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

44. 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