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 OilOther ProductsUS Department of Energy 2005Slide courtesy of 6 BioIndustrial Partnership 7. Renewable Chemical ValueSlide courtesy of BioAmber 8. Large forestry biomass resource and large (but declining) forest products industryLarge agricultural biomass resource, and successful track record in creating an ethanol industry through effective state policy 9. Minnesotas Biobased Chemicals Cluster XL Terra Segetis ReluceoLonza CortecButrolix Entropy SolutionsEarthClean Cargill Industrial Oils West Central Ammonia DevelopmentBioAmberNatur-tec NatureworksAgristrand BiocompositesButamax GevoCargill BioHStarch TechCHSSlide courtesy of 9 BioIndustrial Partnership 10. Renewable Materials Value ChainNext Generation BiorefineryFarmers/ForestersFormulator/ RefineryEnd Product ManufacturingRetail, End Uses10 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 (EPAs RFS2) 100%20%90%Reduction80%50%70%Reduction60% Reduction60% 50%80%40%GHG Intensity30%50% GHG Intensity20% 10%40% GHG Intensity0%GasolineCorn Ethanol Advanced BiofuelCellulosic BiofuelCompared to gasoline:Corn Ethanol 20% GHG ReductionAdvanced Biofuel 50% GHG ReductionCellulosic Biofuel 60% GHG Reductione.g. bio-butanole.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 MNs 1st Generation Plants18 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 doesnt pick technology winners. They simply award the projects that cross the finish line. Minnesota has history with this approach, through the states 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 MNs 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 states 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 ChainNext Generation BiorefineryFarmers/ForestersFormulator/ RefineryEnd Product ManufacturingRetail, End UsesSlide courtesy of 32 BioIndustrial Partnership 32. Existing Biorefineries Across Minnesota33 33. Minnesota World Leading Cluster of Biochemical Company Headquarters34 34. Mississippi35 35. Louisiana36 36. Energy Use In ProductionEnergy use (MJ /kg)Energy Savings 52% 100 90 80 70 60 50 40 30 20 10 088.888.742.69BioAmber S * APetro AA (Thermal) Petro AA (Catalytic)*Field-to-Gate Energy and Greenhouse Gas Emissions Associated with Succinic Acid Produced At BioAmbers Facility In Sarnia Ontario, August 2012Slide courtesy of BioAmber 37. Ontario, Canada 30K MT Production of Bio-Succinic Acid Will SAVE 212,000 tonnes of CO2e per yearSlide courtesy of BioAmber 38. Sarnia Production of 30,000 MT Bio-Succinic Acid will SAVE 1.6 Trillion Btu of energy per yearSlide courtesy of BioAmber 39. Bio-SA: Lower Cost Than Petroleum SA Lower Cash Cost TODAYHistorical Data past 29 years when oil > $30/barrelPetroleum SuccinicCASH COSTCompetitive with Oil at $35 / BarrelBio-Succinic Cost Advantage for BioAmberCost Advantage for Petroleum@ $80 barrel oil@ $6.00 bushel cornCost Advantage Will Drive Market Share Growth In This $3.8 Billion Market OpportunitySlide courtesy of BioAmber