Future of Renewable
Energy
&
Role of State
Government
Will Hughes
Wisconsin Department of Agriculture,
Trade & Consumer Protection
Overview
• BioEnergy Scope and Future
– BioFuels
– BioPower
– BioProducts
• Rationale for Government Intervention
– Federal Role
– State Role
BioEconomy Scope
Renewable Product Matrix
Biomass
Feedstocks
Intermediate
Platforms
Building
Blocks
Secondary
Chemicals
Intermediates
Products/Uses
Industrial
H2
Methanol
Starch
Biobased
Syn Gas
SG
Mixed alcohols
Fuel oxygenates
Methyl esters, Formaldehyde, Acetic acid, Dimethylether,
Dimethylcarbonate, Methyl amines, MTBE, olefins, gasoline
Reagents-building unit
Antifreeze and deicers
Higher alcohols
Linear and branched 1º alcohols, and mixed higher alcohols
Oxo synthesis
products
Olefin hydroformylation products: aldehydes, alcohols, acids
Solvents
Iso-C4 molecules, isobutene and its derivatives
Green solvents
Iso-synthesis
products
C2
Ammonia synthesis, hydrogenation products
Fischer-Tropsch
Liquids
-olefins, gasoline, waxes, diesel
Specialty chemical
intermediate
Fermentation products, Propylene glycol, malonic, 1,3-PDO,
diacids, propyl alcohol, dialdehyde, epoxides
Emulsifiers
Hemicellulose
Glycerol
Acrylates, L-Propylene glycol, Dioxanes, Polyesters, Lactide
Chelating agents
Lactic
C3
3-Hydroxypropionate
Acrylates, Acrylamides, Esters, 1,3-Propanediol, Malonic acid
and others
Amines
Propionic acid
Plasticizers
Pharma. Intermediates
Polyvinyl acetate
Lignin
Sugars
Glucose
Fructose
Xylose
Arabinose
Lactose
Sucrose
Starch
Serine
2-amino-1,3-PDO, 2-aminomalonic, (amino-3HP)
Succinic acid
THF, 1,4-Butanediol, -butyrolactone, pyrrolidones, esters,
diamines, 4,4-Bionelle, hydroxybutyric acid
pH control agents
Unsaturated succinate derivatives (see above)
Malic acid
Polyvinyl alcohol
Aspartic acid
Hydroxy succinate derivatives (above), hydroxybutyrolactone
3-Hydroxybutyrolactone
Amino succinate derivatives (see above)
Acetoin
Hydroxybutyrates, epoxy--butyrolactone, butenoic acid
Polyacrylamides
Butanediols, butenols
Polyethers
Threonine
C5
Itaconic acid
Diols, ketone derivatives, indeterminant
Furfural
Textiles
Carpets, Fibers, fabrics, fabric
coatings, foam cushions, upholstery,
drapes, lycra, spandex
Safe Food Supply
Food packaging, preservatives,
fertilizers, pesticides, beverage
bottles, appliances, beverage can
coatings, vitamins
Methyl succinate derivatives (see above), unsaturated esters
Polyacrylates
Polypyrrolidones
Phthalate polyesters
Environment
Water chemicals, flocculants,
chelators, cleaners and detergents
Communication
Molded plastics, computer casings,
optical fiber coatings, liquid crystal
displays, pens, pencils, inks, dyes,
paper products
Levulinic acid
Many furan derivatives
PEIT polymer
Glutamic acid
Xylonic acid
Xylitol/Arabitol
-aminolevulinate, 2-Methyl THF, 1,4-diols, esters, succinate
Polyhydroxypolyesters
Amino diols, glutaric acid,substituted pyrrolidones
Nylons (polyamides)
Housing
Paints, resins, siding, insulation,
cements, coatings, varnishes, flame
retardents, adhesives, carpeting
Lactones, esters
Oil
Citric/Aconitic acid
5-Hydroxymethylfurfural
C6
EG, PG, glycerol, lactate, hydroxy furans, sugar acids
Polyhydroxypolyamides
1,5-pentanediol, itaconic derivatives, pyrrolidones, esters
Bisphenol A replacement
Gluconic acid
Numerous furan derivatives, succinate, esters, levulinic acid
Polycarbonates
Glucaric acid
Caprolactam, diamino alcohols, 1,5-diaminopentane
Lysine
Sorbitol
Ar
Gallic acid
Dilactones, monolactones, other products
polyhydroxyalkonoates
Ferulic acid
Glycols (EG, PG), glycerol, lactate, isosorbide
polysaccharides
Phenolics, food additives
Direct
Polymers & gums
DOE Biomass Program Multi-Year Technical Plan, 2003
Recreation
Footgear, protective equipment,
camera and film, bicycle parts & tires,
wet suits, tapes-CD’s-DVD’s, golf
equipment, camping gear, boats
Polyurethanes
Gluconolactones, esters
Phenol-formaldehyde resins
Protein
Fuels, oxygenates, anti-freeze, wiper
fluids molded plastics, car seats, belts
hoses, bumpers, corrosion inhibitors
Resins, crosslinkers
Fumaric acid
C4
Transportation
Reagent, propionol, acrylate
Malonic acid
Cellulose
Corrosion inhibitors, dust control,
boiler water treatment, gas
purification, emission abatement,
specialty lubricants, hoses, seals
poyaminoacids
Health and Hygiene
Plastic eyeglasses, cosmetics,
detergents, pharmaceuticals, suntan
lotion, medical-dental products,
disinfectants, aspirin
BioProducts
• Chemicals
• Materials
BioMaterials
BioMaterials include
novel applications and
traditional items.
• PLA: Corn-based
polymer can be used in
fabric or in heavy duty
plastic.
• Milk Paint: Traditional
form of paint used in
the 1800s that utilizes
dairy milk as its base.
Substantial Influence of Industrial
Biotechnology in Selected Markets
1,400
90
Market Size
USD billion
1,000
Fine
50
Polymers
250
Bulk
370
$160 - 280 billion
CAGR
Biotech Inroads today
Examples
+5.5%
Biopharmaceuticals
60%
+3.5%
3GT, polylactic acid
10-15%
+2.0%
Ethanol, adipic acid,
acrylamide
10-15%
+3.0%
Detergents, lubricants,
Fragrances, food chemicals
0-50%
380
300
Specialties 400
560
2000
2010
2010 Share
Source: McKinsey and Company, 2003
When will the BioIndustry
Happen?
Achieving the vision will require an entirely new toolbox
– a set of technologies that is unique from that of the
petroleum-based chemical industry.
20%
Fast uptake
Slow uptake
10%
2000 Today
~ 2010
Time
Source: McKinsey and Company, 2003
Renewable Energy
Report Card
National
Renewable Energy
Use (percent of total)
6%
Wisconsin
4.5%
Minnesota
2.0%
Iowa
4.0%
Source: US Energy Information Agency
US Energy Consumption by Energy
Source
Energy Source
(Quadrillion BTU)
2000
2001
2002
2003
2004
Total
98.961
96.464
97.952
98.714
100.28
Fossil Fuels
84.965
83.176
84.070
84.889
86.186
Natural Gas
23.916
22.861
23.628
23.069
23.000
Petroleum
38.404
38.333
38.401
39.047
40.130
Renewables
6.158
5.328
5.835
6.082
6.117
Hydroelectric
2.811
2.242
2.689
2.825
2.725
Geothermal
0.317
0.311
0.328
0.339
0.340
Biomass
2.907
2.640
2.648
2.740
2.845
Solar
0.066
0.065
0.064
0.064
0.063
Wind
0.057
0.070
0.105
0.115
0.143
Clean Energy Projected Growth
2005 – 2015
$US Billions
Biofuels
$52.5
2005
2015
$15.7
Wind Power
$48.5
$11.8
Solar Power
$51.1
$11.2
Fuel Cells
$15.1
$1.2
$0
$20
$40
$60
TOTAL
$80
$100
$120
$140
$160
$167.2
$39.9
Source: Clean Energy Trends 2006
Biofuels
• Ethanol
• Biodiesel
• Future
Technology
– Cellulosic
– Forestry
Geography of Ethanol Production
Ethanol Facility Capacity
Million Gallons per Year (mmgy)
100 to 340
50 to 100
25 to 50
10 to 25
0 to 10
Ethanol Facility Operating Status
Construction
Operating
Proposed
Corn Production Density
Bushels/Square Mile
40,000 to 61,800
20,000 to 40,000
10,000 to 20,000
5,000 to 10,000
1,000 to 5,000
0 to 1,000
U.S. Ethanol Volume Trajectory
16,000
History
14,000
Forecast
10,000
8,000
6,000
4,000
2,000
Sep.-Aug. Crop Year
Renewable Fuels Standard (Crop Yr. Equivalent)
Ethanol Prodn., Slow Growth After 2007/08 (No Cellulosic)
Ethanol Prodn., High Growth After 2007/08 (No Cellulosic)
2012/13
2011/12
2010/11
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
0
1999/00
Million Gallons
12,000
Ethanol among the first and biggest markets to
profit from low-cost biomass feedstock
Cost reduction
US market growth
(DOE estimate)
US cent/gallon
Cost
15
Billion gallons
Total
130
Ethanol Price
Range
90
Corn
Based
10
70
40
5
Biomass
based
Corn Now Mid Long
Biomass-based
ethanol
Source: US Department of Energy; GOBI International; NREL; MBI; McKinsey
0
2000
05
10
15
2020
(Legislation to support fuel
ethanol also in Canada,
Europe, Brazil, others)
Biodiesel Facilities in U.S.
Bellingham
Seattle
Velva
Salem
Belgrade
Ironton
Gladstone
Redwood Falls
Martinez
Greenfield
Clinton Chicago
Claypool
Sergeant Bluff
Vinton
Minden
Berthoud
Denver
Beatrice
Saybrook
Bethel
Mexico
Unknown
Dove Creek
Monte Vista
Bakersfield
Taos
Port Hueneme
Coachella
Durant
Tucson
Dallas
Corsicana
Biodiesel Facility Capacity
(Acres per Sq. Mile)
(Million Gallons per Year)
250 to 365
200 to 250
150 to 200
100 to 150
25 to 100
0 to 25
(44)
(168)
(170)
(168)
(424)
(735)
Biodiesel Facility Status
Active
(62)
Construction (14)
Proposed
(55)
© 2006 Informa Economics, Inc.
50 to 80
(3)
25 to 50 (17)
10 to 25 (23)
1 to 10 (72)
0 to 1 (16)
Newark
Middletown
Pittsburgh
Clayton
Morristown
Butler
Guymon
Roaring Springs
Kilmarnock
Ashville
Batesville
Mount Olive
Lewisburg
Nettleton
Rome
Moundville
Meridian
Brunswick
Mobile
Giddings
Seabrook
Poteet
Laredo
Albany
Mt. Vernon
Eve
Tulsa
Soybean Acreage Density
Fulton
DeForest
Milford
Ukiah
Unknown
Lakeland
Boston
US Biodiesel Capacity Outlook
Capacity
1000
900
Million Gallons Per Year
800
IF THE TAX INCENTIVE IS NOT
EXTENDED BEYOND 2008, THEN
CAPACITY EXPANSION WILL BE FLAT
OR DECLINE.
700
600
500
400
300
200
100
0
2004
Source: Informa Economics
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Capacity
2015
New National Goals
US Senate and House signed concurrent
resolutions to support all 25x25 policy.
– 25% fuel and 25% power by 2025
• Wisconsin 25 x 25
– 1.0> billion gallons of renewable fuel
– Top 10 bioproduct producing state
Government Intervention
Governor Doyle Announces Four UW Campuses to Be Energy Independent By 2012
Governor Doyle Proposes $450 Million Public, Private
Investment Strategy to Develop Renewable Energy
Governor Blagojevich unveils ambitious energy
independence plan to reduce Illinois’ reliance on foreign oil
Illinois provides $25 million in grants for biofuels plants
GOVERNOR PAWLENTY ANNOUNCES TESTING OF E85
CONVERSION KITS
Governor Pataki Unveils Innovative National Policy To Dramatically
Reduce Our Dependence On Foreign Oil
USDA-DOE MAKE AVAILABLE $4 MILLION FOR BIOMASS GENOMICS
RESEARCH
First E85 station opens in Florida
Rationale for Intervention
• Macro Policy
– Energy Independence
– Economic Development
– Environmental Benefits
• Micro Policy
– Shared Risk
• Research and Development
• Commercialization
• Market/Consumption
2005 Energy Policy Act
• Mandate 7.5 billion gallons of
biofuels by 2012
– Celluosic 1 billion gallons by 2015
• Ethanol Excise Tax Credit
– Ethanol blend $.51/gal
– Small producer production credit
– Bidiesel tax credit -$1/gal thru 2008
• CCC BioEnergy Program
US Energy Policy
Focus on renewable energy and energy
efficiency for vehicles and homes.
Vehicles
• Flex Fuel Vehicle Tax Incentive
• Clean Diesel Regulations
• Extend Ethanol and Biodiesel Tax Benefits
• Advanced Batteries--Lithium
• Cellulosic Ethanol
• Hydrogen Fuel Cell Vehicles
State Renewable Energy Incentives
with Biomass Provisions
http://www.dsireusa.org/
1) Financial Incentives
– State Grant Programs
53
– Production Incentives for Renewable Power Generation
27
– Loan Programs
60
– Property Tax Incentives
37
– Personal Income Tax Incentives
25
– Corporate Tax Incentives
27
– Sales Tax Incentives
20
– Industrial Recruitment Incentives
10
– Rebate Programs
104
State Renewable Energy
Incentives with Biomass
Provisions (cont’d)
2) Rules & Regulations
–
–
–
–
–
–
Construction and Design Policies
14
Generation Disclosure Rules
23
Green Power Purchasing/Aggregation Policies 19
Net Metering Rules
36
Public Benefit Funds
17
Renewable Portfolio Standards/Set Asides/Goals
24
– Mandatory Utility Green Power Option
5
Fuel Incentives-Fed/State
(use and conservation)
Grants Tax Incentive Other
Federal
20
13
7
Wisconsin
1
1
2
Minnesota
1
1
1
Iowa
3
4
4
Source: US Energy Information Agency
Midwest States’ Best Practices
• Implement statewide biofuels use
requirement
– Since 1997, Minnesota has required all gasoline
sold in the state to be E10.
• Encourage the purchase of flex fuel vehicles
– Governor Blagojevich proposed a $500 in state
sales tax credit on flex fuel vehicles
• Adjust tax rates to encourage additional
biofuel consumption
– Kansas signed a bill to reduce motor vehicle fuel
tax on E85 by 7 cents.
Midwest States’ Best Practices
• Create R&D fund to encourage emerging
technology
– Kentucky’s public universities support energy
research through their Energy Research and
Development Program
– WI BIO grants 12 projects; $1m,
• Use state’s purchasing power to create
demand for biofuels
– Executive Order 141- cut State’s petro gas by
20% by 2010 and 50% by 2015
The Future
“Our plan for the emerging bio-based
economy will rely on our natural and
agricultural resources, historic strengths in
manufacturing, research and quality
workforce. These world class assets are
what sets Wisconsin apart from
competitors. And we want local and
producer ownership to be a priority as this
part of our economy develops.”
Rod Nilsestuen, Secretary, Wisconsin
Department of Agriculture, Trade &
Consumer Protection