A Case Study Journey
in Cultivating
Advanced Biofuel Projects
Dr. Mark A. Edelman, Professor
Dept of Economics and Extension Economist
Community Vitality Center Director
Iowa State University
Biofuels Law and Regulation Conference
University of Illinois Urbana-Champaign
April 19, 2013
PC’s In Project Development
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Credibility
Capital
Pathway (Permitting)
Profits
Table 1. Ownership Statistics for Iowa Biofuel Plants
organized as Limited Liability Companies, 2005-2008.
Average
Median
Owners
367
167
% IA Owners 89
99
# Individuals 346
161
% Individual 81
91
Owned
# Iowa Farm 168
75
Owners
% Owned by 31
38
Iowa Farmers
Source: Iowa Dept of Revenue
Minimum
3
01
3
1
Maximum
1,533
100
1,533
100
0
745
0
62
Economic Impact of Owner Distributions
for a Case Study 100mgy Ethanol Plant,
2006-2010.
• $54.6 million in Distributions to Investors
• Two years with no payouts
Indirect & Induced Economic Effects
• $14.7 million New Income
• 431 jobs
• $46 million of new sales, primarily in retail
trade and serves categories
Iowa Power Fund Advanced Biofuel and
Biomass Projects Approved, 2007-2010
1. Poet Project Liberty
30mgy cellulosic ethanol
2. Dupont Danesco
30mgy cellulosic ethanol
3. Bioprocess Algae-Green
Plains Energy R&D
4. Quad Co. Corn Processors
Cellulosic DDG Process
5. Avello Bioenergy –ISU R&D
Biomass to asphalt, shingles,
fuel & chemicals
Amount
$14.750 m
Match
$231.4 m
$9 m
$226.1 m
$ 4.168 m
$4.738 m
$1.45 m
$7.702 m
$2.5 m
$4.644 m
Iowa Power Fund Advanced Biofuel and
Biomass Projects Approved, 2007-2010
6. AmbroZea (ISU/UI) R&D
Multi-tasking Yeast
7. Growth-Design Energy
2nd Generation Biodiesel
8. Amana Renewable Energy
Anaerobic Digester
9. PL Energy On-farm Poultry
Litter Gasification to Power
10. Renew Energy Systems -- mobile
solid biomass briquette plant
11. SynGest Menlo LLC -- FEED-1,2
Bio-Ammonia Fertilizer Production
$ 1.5 m
$ 14.5 m
$ 1.5 m
$ 7.805 m
$ 1.082 m
$ 4.077 m
$2m
$3m
$ 250 k
$ 637 k
$2.5 m
$3.5 m
Iowa Power Fund Advanced Biofuel and
Biomass Projects Approved, 2007-2010
By 2010,
• $38 m of 71 m obligated in 31 projects
• Leverage 10-1
• Amaizing Energy MEButanol Project
– IPF initially approved 2009
– $2 m with $8 m match contingent on DOE grant
– Anti-corn bias: double output from same corn
– Patent Applied July 2008 – Received Feb 2013
Iowa Innovation Demonstration Program
2007-2012
•
•
Awarded $13 m to 101 companies
$140 k average – less than power fund
3rd Party Economic Impact Study
• 79 companies received $8.7 million
• $150 m in added value
• Supported 1100 total jobs
• $49 m annual earnings
• $2.1 million annual tax revenue
• State payback on revenue—less than 5 years
Policy Uncertainty from Washington
1.
2.
3.
4.
Budget Uncertainty
Farm Bill Uncertainty
Program Uncertainty
RFS Uncertainty
What Must Project Developers Do
to De-Risk Projects?
1.
2.
3.
4.
5.
6.
Off-take Agreements
Feedstock Agreements
Technology Demonstrated
Efficient Design & Construction Warranty
Operations and Maintenance Experience
Industry Standard Financial Projections
What can Universities Do to Assist
Project Development Success?
• Recognize 3 sources of New Technology
Intellectual Property
• IP from Academic Research
(Faculty, Students, Staff)
• Corporate Partnership R&D Budgets
• Small Company Entrepreneur Patents
• Only 3 % of U.S. Patents come from Academy
(MIT Center for Industrial Performance)
What can Universities Do to Assist
Project Development Success?
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Allocate Some Outreach Resources & Technical
Assistance Accordingly
•
Recognize that not all Clients want or need university
research capacity;
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–
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Retired Chemical Engineer
Small R&D Company with SBIR
Project Development & Management Expertise
Facilitation of Access to Capital
So what can Universities Do?
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Develop/Organize Institutional Capacity
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Facilitate Partnerships to Address Capital Gaps
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Collaborative Multi-disciplinary Teams
Individuals with Experience & Track Record
Ag Ventures Alliance VAAP Biz Dev Coop
Rural Development Partners (NMTC)
Alumni/University Foundation Role
Optional Portion Pensions/Retirement Funds
for Community Reinvestment
•
Company Creation Incentives > Grants & Journals
What can the Private Sector Do?
• Change: “We are an Operating
Company—Not An R & D Company”
• Didn’t work for Buggy Manufacturers
• Billions of $ Sitting on Sidelines?
• Expansion with existing technology no
guarantee for success
• Strategic Partnerships in mutual Interest can
generate mutual benefit
• Nation was built on Innovation, Capitalism &
Entrepreneurial Spirit
Summary and Conclusions
Agricultural Research
•
U.S. Government
•
Private Sector
$2 billion
$3 billion
China Agricultural Research
$45 billion
Will we make the investments necessary to
remain the world’s global innovator for the
benefit of our future generations?
Contacts:
Dr. Mark Edelman
Community Vitality Center
Iowa State University
Phone: 515-298-1871
Email: medelman@iastate.edu