Minnesota Moves to Retake Lead in Advanced Fuels, Renewable Chemicals and Biomass Thermal

March 4, 2014

Since Minnesota became the first state to require ethanol in its fuel supply, its leadership in the development and deployment of advanced biofuels, renewable chemicals and biomass thermal power has eroded as more states seek to attract leading renewable energy companies with lucrative financing assistance packages. Even so, Minnesota has remained a leader due to its development expertise, technical knowledge and access to world class raw materials and people. With the introduction of a new bill in the Minnesota House and Senate, Minnesota is poised to establish itself once again as the state to commercialize advanced biofuels, renewable chemicals and biomass thermal projects.

House File 2456 and Senate File 2101 establish a number of incentives, including:

  1. A Renewable Chemical and Advanced Biofuel Capital Equipment Loan Fund in an amount and terms to be determined by the Commissioner of the Department of Agriculture;
  2. A program to make cash payments available to eligible producers of advanced biofuel at a qualifying facility. Producer payments would be $2.1053/MMBtu for production from cellulosic biomass and $1.053/MMBtu for production from sugar or starch, with payments being made for ten years after start of production. Total payments under this program will be limited to $30,000,000 per year and no one producer may not exceed $6,000,000 per year.
  3. A program to make cash payments available to eligible producers of renewable chemicals at a qualifying facility. Producer payments would be $0.03 per pound of sugar-derived renewable chemical, $0.03 per pound of cellulosic sugar, and $0.06 per pound of cellulosic-derived renewable chemical produced at a specific location for ten years after the start of production. Like the advanced biofuels producer payment program, total payments will be limited to $30,000,000 per year and no one producer may not exceed $6,000,000 per year.
  4. A program to make cash payments available to eligible producers of biomass thermal at a qualifying facility. Producer payments would be $5.00 per MMbtu of biomass thermal production produced at a specific location for three years after the start of production. Production must have begun by June 30, 2020, and the total program payments will not exceed $1,000,000 per year or $100,000 to any producer in one year.

A qualifying facility must source at least 80 percent of its feedstock from Minnesota and they must be from agricultural or forestry sources or the organic content of municipal solid waste. Existing biofuels , as well as new, producers are eligible for the payment. Advanced biofuels facilities must produce at least 950,000 MMBtu per year, renewable chemicals facilities must produce at least 30,000,000 pounds per year and biomass thermal facilities must produce at least 7,500 MMBtu per year to qualify

The cash payment incentives are designed to replicate the success of the Minnesota ethanol producer payment program from the 1990’s that helped launch Minnesota to the vanguard of the renewable fuels industry.

The bill is the result of over a year of hard work by the members of the Bioeconomy Coalition of Minnesota (www.mnbioeconomy.org). Todd Taylor, of JUX Law Firm, was an active participant in the Coalition and part of the policy committee that helped draft the bill.

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