Beyond Theory—Creating a New Biomass Energy Market in the Midwest

Gary RadloffMidwest Energy Policy Director

MissionThe WBI helps the talent within Wisconsin and the

Midwest create, evaluate, commercialize, and promote bioenergy solutions. 

Provide:• Research • Education • Outreach

Areas: • Biopower• Biofuels• Biomaterials

Develop collaborative projects, targeting:

• Biomass supply • Sustainable biomass

utilization

Collaborate with: • Academia• Industry• Governmental Agencies• NGOs

Wisconsin Bioenergy Initiative

Bioenergy

Feedstocks

•Animal waste

•Wood

•Miscanthus

•Corn

•Sugar

•Switchgrass

Biofuel

ethanol, cellulosic ethanol, biodiesel

Biopower

digesters, cofiring, CHP

Bioproducts

plastics, chemicals

• What is the biomass energy market opportunity?

• Why Cooperatives can play a critical role in market development.

• Learning about the challenges and making them opportunities.

• Other issues as we move ahead.

Key Themes

Regional Answer

• One Answer– Return to our roots – resources come from

what we can sustainable produce– Bio-based economy

• Benefits– National and homeland security, – Rural economic advantages– Environmental benefits at the global,

regional, and local levels

Midwest Biomass

Bioenergy Technologies

•Wood or pelletized biomass – combustion, gasification, & pyrolysis

•Starch- and sugar-derived ethanol•Seed oil, waste oil, food and rendering

waste - biodiesel•Anaerobic digesters and biogas from

renewable waste•Advanced biofuels - Cellulose-derived

fuels, sugar catalysis, algal fuels

Utilities 1.2 mil tons/yr

State (6 heating plants)

350,000 tons/yr

______________________Subtotal 1.5 mil tons/yr

Estimate of available wood biomass

1.0 mil tons/yr*

Need to grow or source

500,000 mil tons/yr

Estimated Biomass Needs

* DNR Projection

Benefits of Biomass Cooperatives

• Long-term business relations with members for agronomy services and commodity aggregation.

• Skills with arranging timing and scheduling of delivery of commodities

• Skills with transportation and other delivery costs• Assistance with securing contracts and pricing• Assistance with government programs such as the

Biomass Crop Assistance Program (BCAP)

Biofuel Facility Siting Website• Site and source concepts

– maps for viewing and download

Role of Biomass Aggregator

• Consistent quality of fuels at competitive prices

• Understanding of competing fuels including coal, natural gas, propane and wind.

• Understanding of contracts • Transportation and storage issues

Biomass Competition

•Bioenergy industry forming – competing for low cost, high quality biomass

•Traditional industry–Agriculture (food, feed & bedding)–Forest Products (building products, pulp & paper)–Fuelwood & pellets

•Expanding & new industries–Biopower–Biorefineries –Cellulose-derived fuels – advanced biofuels

Marginal Land for Bioenergy Crops

• Prototypical crops– Corn

• emblematic of row crops• lots of information on yield under different conditions

– Switchgrass• represents a range of proposed bioenergy crops• emerging research

– Willow hybrids• woody biomass harvested with agronomic equipment• limited information on conditions, productivity

Marginal Land for Bioenergy Crops

• Imprecise definition of marginal land:– acceptable levels of environmental degradation– technology adaptation: planting and harvesting

equipment and crop varieties adapted to dry, wet, or steep terrain

– adequate return on investment in capital equipment and inputs

Switchgrass Corn Hybrid Willow

Productive Land, Underutilized

Marginal Land Productive Land,

Underutilized Marginal Land

NAME

Non-ag open land

Hay/CRP/ Fallow

Ag.

Moderate erosion

or drought hazard

Significant erosion or drought hazard

Non-ag open land

Hay/CRP/ Fallow

Ag.

Moderate erosion

or drought hazard

Significant erosion or drought hazard

Productive if drained

Suitable Suitable

if drained

Unsuitable

ADAMS 2,147 2,009 41,117 1,183 13,378 7,026 20,627 534 1,638 46,422 11,767 72,801

ASHLAND 1,744 348 22,090 468 3,946 14,205 3,922 0 32,564 26,988 37,997 94,510

BARRON 30,051 98,990 52,619 5,667 37,500 105,380 37,437 5,587 13,116 187,959 6,039 29,684

BAYFIELD 134 628 50,312 264 3,078 40,702 5,003 0 46,850 53,874 10,675 45,167

BROWN 19,270 64,897 35,498 782 25,988 83,502 32,059 384 4,045 126,855 8,926 42,561

BUFFALO 6,142 12,388 19,964 23,312 7,456 13,925 18,006 22,985 1,546 75,600 1,691 36,991

BURNETT 1,949 6,390 34,482 3,321 4,123 11,656 12,453 1,003 13,773 50,464 14,149 85,029

VILAS 1,289 179 2,944 529 2,773 252 2,407 0 7,058 5,183 30,010 110,976

WALWORTH 35,057 28,380 15,838 2,779 36,173 29,145 12,220 2,779 11,250 66,595 500 25,453

WASHBURN 1,445 8,462 29,751 6,282 3,148 14,173 15,665 762 8,242 50,770 9,524 50,166

WASHINGTON 32,536 33,094 23,501 5,175 35,828 35,370 19,529 5,174 26,525 88,679 1,657 39,010

WAUPACA 31,300 35,759 39,533 1,900 40,041 39,568 22,876 1,900 11,702 106,488 4,880 91,744

WAUSHARA 7,444 5,267 49,178 7,739 30,128 12,423 37,562 1,925 0 63,814 3,379 90,014

WINNEBAGO 42,713 29,942 19,157 6,822 50,245 34,516 16,280 41 10,050 82,642 1,528 48,081

WOOD 46,390 14,160 12,636 152 50,847 15,216 6,760 84 9,462 73,131 17,862 120,536

…

Biomass Market • Craig’s List of biomass

– Listings of biomass generation• what kind of material is being generated• how much?• where is it?• who has it?• costs?

Biomass Market • Craig’s List of biomass

– biomass generating enterprises• wood by-products - mills, pulping, etc.• food processing waste - vegetables, dairy, etc.• breweries• CAFOs

– biomass creating activities - voluntary registry• municipal operations - leaves, compost, lake weeds, etc.• forestry - thinning, harvest slash, etc.• road maintenance

Standards for Bioenergy Crop Production on Marginal Land

• Principles: Sustainability, Resiliency and Suitability

• Best practices on the land• Tiered standards• Multiple dimensions: soil and crop

management, ecosystem services, feasibility and sustainability

Carbon SequestrationSource: Parton et al. 1994. National Estimate of Carbon Sequestration using the CENTURY Model

Biomass Crop Assistance Program (BCAP)

• BCAP was designed to support agricultural producers in producing biomass crops and collecting biomass for sale to commercial-scale facilities that commit in writing to use the biomass to produce fuels or power. The program is also intended to improve water quality through reduced water use and surface water protection. Environmental quality can increase with less fertilizer compared to traditional row crops and encouraging the use of perennial crops, which are better for soil, air, water and wildlife. The program has two distinct pieces: 1) biomass crop establishment; and 2) assistance for the harvest, storage, processing and transportation of biomass materials for energy.

BCAP Eligibility

• To participate in the biomass crop establishment portion of the program, a group of farmers or a "biomass conversion facility" (any facility that will use the biomass to make biobased products or energy, heat, power, or advanced biofuels) must submit an application to USDA that defines the borders of the proposed production area and identifies the variety of biomass crop to be used at the facility. The application also must include a commitment from at least one biomass conversion facility in the area to use the biomass in their facility. All biomass production must occur on either agricultural land or industrial private forest land. USDA will determine whether projects meet the minimum threshold for selection, based on criteria in the statute and others to be determined by USDA (presumably through rulemaking.)

BCAP Criteria

• The BCAP statutory criteria include: • The amount of crops to be produced and the likelihood that they will

actually be used to produce energy • The amount of biomass likely to be available from sources other than the

crops grown with support from the BCAP • The local economic impact of the project • The opportunity for local investors to participate in the ownership of the

facility • The participation of beginning or socially disadvantaged farmers • The environmental impacts of the proposal • The variety of agronomic practices and species – including mixes of

different crops – proposed within a BCAP area • The range of crops across projects areas

BCAP Incentives to Producers

• Ag producers in project areas will receive a payment for up to 75% of establishment costs. Establishment costs refer to the costs to convert lands from an existing use to the new energy crop. Incentives also include an annual payment intended to compensate the producer for the opportunity cost associated with growing an energy crop on the land. Land that was formerly in a row crop will likely receive more than land that was fallow or pasture. The annual payments can continue for up to 5 years if the producer is growing a perennial grass and up to 15 years if the crop is trees. Ag producers are required to implement a conservation plan on the enrolled land and to agree to provide information to USDA for research purposes.

BCAP Incentives to Collectors

• Any person collecting and selling biomass crops or agricultural or forest waste for energy is entitled to receive this payment. The payment is structured as a match; whatever the biomass collector (whether the farmer or some other person) is paid by the biomass user facility, USDA will match dollar for dollar, up to $45 per dry ton. Materials not eligible for this payment include animal waste and byproducts, food and yard waste and algae.

Biomass Grades and Standards

• What will be important?• BTU Content• Organic Range• Moisture Content• Size and shape• Woody Source? Ag Source? Muni Waste?

Things to Think About

• How do we risk share?• How do we become business partners?• How do we include eco-system benefits into

biomass cropping?• How do we all succeed? • Sustainability

www.wbi.wisc.edu

Contact InformationGary Radloff

gradloff@wbi.wisc.edu608-890-3449