MGA Bioeconomy and
Transportation
Working Group Meeting
January 15, 2009
Indiana University-Purdue
University Campus Center
Overview of BTAG Policy Options
General focus
• What should we do NEXT?
• What can GOVERNORS do?
• Is now the time to be working on this, or a
few years from now?
BT1.1: Market Pull and Distribution
Infrastructure
• Focus of policy: “Green Fuel Retailers”
Program
– Rates fuels based on GHG LCA, consistent
with LCFS
– Incentives based on GHG emissions
– Includes a variety of fuels: biofuels, hydrogen,
electricity, NG, propane.
BT 1.1 cont…
• Implementation mechanisms:
– Providing a payment based on quantity of a
fuel sold
– Grants for refueling infrastructure
– Public education
– Research specifically on fuel supply and
infrastructure issues (e.g. high ethanol
blends)
– Certification (UL certification for example)
BT 1.1 cont…
• Goal: 50% of regional fuels supplied by biofuels and
other advanced transportation fuels by 2050
• Existing programs:
– MI Green Retailers Program Proposal (limited grant program for
infrastructure – converting existing gas pumps to biofuels)
(robust green retailers program is only proposed at this point)
– Illinois has a successful biodiesel incentive program for blends
above B10, consumers given a tax break.
• Barriers to consensus?
• Interest in implementation:
– Yes, but there is no money right now
– Must be complementary w/ LCFS – you need both
– No major objections
BT 1.1 Gap Analysis & Next
Steps
• Research on counter-cyclical tax/subsidy, a.k.a. “Green
Fuel Retailers” program, and how such approaches
(value based pricing, feebates, etc) have worked in other
states
– Illinois biodiesel tax structure
– Iowa’s bioenergy initiatives
• Suggest potential stakeholder group
• Develop a timeline with numerical targets
• Propose a dollar amount and funding source
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 1.2 – LCFS
• Recommendations in progress
• Slight adjustment of goals – producing
recommendations rather than a model rule
– One recommendation would be a model rule as a
next step
– Sets up a process for designing the mechanism,
developing LCA protocol, etc.
• Indirect Land Use Issue resolved for now
– Document is silent on this issue, leaves it for a future
“Regional Coordinating Body” to resolve once more
information is available
• Recommendations in final draft
BT 1.2 cont…
• Goal: Reduce average GHG emissions per unit of fuel
10% in 10 years relative to a baseline (may be
increased)
• Other programs:
–
–
–
–
CA
EPA
MA
EU
• Barriers to consensus?
– If we go into land use, it will create a lot of challenges
– Caution linking w/ CA or MA program
– Sustainability remains a challenge. Refer to BT 5 - Biomass
BT 1.2 Gap Analysis & Next
Steps
• Create a detailed timeline with steps
between now and implementation (model
rule writing, assembling regional
coordinating body, etc.)
• Propose a dollar amount and suggest
funding source
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 1.3: Increase Vehicle Fuel
Efficiency
• “The policy is designed to reduce GHG
emissions from on-road vehicles and offroad engine vehicles (including marine, rail
and other off-road engine and vehicles
such as construction equipment) through
technology deployment designed to cut
GHG emission rates per unit of travel
activity.”
BT 1.3 cont..
• One leg of three legged stool (along w/ LCFS and
reduced vehicle trips)
• Create incentives for vehicles based on their GHG
emissions per mile.
• Mechanisms for increased vehicle fuel efficiency:
–
–
–
–
–
–
Incentives for buying low GHG vehicles
Education campaigns for low GHG vehicles
State procurement of low GHG vehicles
HOV access for low GHG vehicles
Implementation of Clean Car programs
Incentives for retooling manufacturing to produce low GHG
vehicles
BT 1.3 cont…
•
Goal:
– “Reduce emissions from on-road engines/vehicles by at least an additional 15%
by 2020 (consistent w/ CA Clean Car) from current adopted baseline policies
through more efficient technologies and operations. Reduce emissions from offroad transportation sources through use of more efficient technologies and
operations by xx% by 20xx”
•
Other programs:
– CAFÉ
– CA Clean Car (in 15 states)
•
Barriers to consensus?
•
Implementation likelihood:
– Implementation mechanisms are currently very general. More work is needed
– General interest
– Ecodriver program is a good one, the incentive program is tougher because of
funding, etc, and success may be more difficult
– Agree – LCFS is definitely a higher priority.
– You have to have all three legs of the stool. This one stays a priority.
BT 1.3 Gap Analysis & Next
Steps
• Research where the individual policies recommended in
this cluster have been implemented in the past and
analyze potential for application in the Midwest
• Expand on what types of incentives we could use to
advance vehicle technology
• Suggest potential stakeholder group
• Propose a dollar amount and funding source
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 2.1 Demand Management:
“Pay-As-You-Drive”
•
•
•
Provide incentives for auto insurance companies to
institute a “pay-as-you-drive” (PAYD) system for
policyholders.
Implement policies and strategies that make more of
the fixed costs of driving into variable costs related to
VMT and emissions. Possibilities include CO2-based
registration fees, a VMT tax, congestion pricing, and a
fuel tax.
Use new revenue streams for less GHG-intensive
travel options (e.g., public transit, vanpooling,
commuter benefits, and commuter options).
Existing Programs
•
•
•
•
•
MnDOT pilot underway to test VMT fees (no results are yet available), and PAYD
insurance.
GMAC and OnStar Low-Mileage Discount Rates
Since mid-2004, the General Motors Acceptance Corporation Insurance has offered
mileage based discounts to OnStar subscribers located in certain states. The system
automatically reports vehicle odometer reading at the beginning and end of the policy
term to verify vehicle mileage. Motorists who drive less than the specified annual
mileage receive insurance premium discounts of up to 40%:
The Federal Highway Administration’s Value Pricing Pilot Program is now
providing funding for PAYD insurance simulation projects in Georgia and
Massachusetts.
Distance-Based Program
– Progressive Insurance offers distance-based insurance in Oregon, Michigan, and
Minnesota.
– The program uses Global Positioning System technology to track vehicle location and use.
– Farmers Insurance is reported to also be considering a similar program.
•
TripSense(SM)
– In August 2004, the Progressive Direct Group of Insurance Companies introduced
TripSense, a usage-based auto insurance discount.
BT 2.1 cont…
•
Goals:
–
•
For PAYD insurance–assume market penetration of 25% in 2015 and 50% in 2025
Barriers to consensus:
–
Impact on rural groups who have no other choice than to drive long distances, there are
some reservations
•
•
•
Implementation likelihood
–
–
–
•
Separating into commercial and non-commercial may solve this problem
Also looking at per-GHG fees rather than per-VMT fees so that users can get around the fee
Barriers to adoption are different in various states
This is a direction the market is going
Rural social justice issues are a barrier – need to have a transition to ease the transition to
more efficient vehicles.
Other questions:
–
Will rural groups (such as northern Manitobans) be penalized when they have no other travel
options?
•
A per-VMT fee may have that impact (maybe per-GHG fees would be better)
BT 2.1 Gap Analysis & Next
Steps
• Examine feasibility of Midwest-wide
distance-based insurance
• Assemble stakeholders from the sectors
listed under the “Parties Involved”
subheading and get input on implementing
such a program that combines public and
sector entities
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 2.2: Transportation Choice
• Support the Midwest Regional Rail
Initiative (complementary w/ CREATE)
• Mass Transit
• Bike infrastructure
•
BT 2.2 cont…
Goal: Expand travel choices to reduce vehicle miles driven and flown (%)
–
–
–
Intercity passenger rail
Mass transit
Non-motorized transportation, including:
•
•
–
•
Biking
Walking
Water transportation (water taxis, etc)
Other programs:
–
Many
•
Barriers to consensus:
•
•
Implementation liklihood
Other:
–
–
MI has non-motorized trails (walk, bike, etc); Use the non-motorized term to be more inclusive
This is being debated now as part of the stimulus package – is there an opportunity for us to play a role. Timeline
– many groups are now sending recommendations to the cmte. The stimulus bill will probably pass in January.
•
•
Options – vehicle stuff, infrastructure
Asks of Green Groups:
–
–
–
–
–
–
–
–
–
•
New start
Transit rehabilitation
Amtrak
Bike/ped
Anti-idling
Habitat connectivity
Highway stormwater
Fuels loan guarantees
SWOT team – Eric Sundquist
What should we work on:
–
–
–
–
Water transportation and ports
Rail transit
Biofuels possibly
Auto industry?? – focus may be on battery technology
BT 2.2 Gap Analysis & Next
Steps
• For the Midwest Regional Rail Initiative (MWRRI):
– Talk to principles involved in early stage of this process to get a
sense of where it stands now and what needs to be done to get
momentum behind it again
– Specify potential funding source
• For mass transit and cycling/pedestrian oriented development:
– Develop a timeline with numerical targets
– Research Gov. Doyle’s Climate Change Task Force section on
bicycle and pedestrian expansion for specifics as a starting point
– Research state or other regional initiatives for passenger rail and
mass transit development and use as templates to draft a
Midwestern policy or initiative
– Determine stakeholders and assemble a stakeholder group
• For both: Propose a dollar amount and funding sources
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT2.3: Transportation Planning and
VMT reduction
• Elements:
– Resources for local governments,
metropolitan planning association, municipal
planning associations, state agencies,etc to
change development patterns to explicitly
reduce VMT
– Change in strategy for state DOTs
BT 2.3 cont…
• Some sample mechanisms:
– Move spending from new highway capacity to
“fix it first” approach
– Stop creating incentives for high-VMT projects
through TIF funding
– Remove minimum parking requirements
– Encourage more compact development
– Fund “complete streets”
BT 2.3 cont…
• Goal: VMT per capita reduction of 50%
relative to a 2005 baseline by 2050
• Other programs:
• Barriers to consensus:
BT 2.3 Gap Analysis & Next
Steps
• Assemble a stakeholder group
• Draft a Midwestern policy based on Washington state’s
H.B. 2815 as precedent for:
– Establishing an official body to oversee VMT
reductions, made up of members from Midwestern
state government entities complementary to the ones
in the Washington program
– Making periodic reports about VMT based on
relationships between a series of benchmarks
– Estimating costs for a Midwest-wide program and
determining a funding source
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 2.4: Freight GHG Reduction
• Under development
• Likely modeled after the CREATE project
• CREATE background:
–
–
–
–
–
–
Freight and passenger rail improvement program
Centered on Chicago right now
Designated by Congress
Variety of benefits
Links with passenger rail
Move truck freight to rail – calculate pollution
reduction
– Various
BT 2.4
• Barriers:
• Other programs:
– MI has a similar proposal in climate process, it
was supported. Can find it on CCS website for
MI.
BT 2.4 Gap Analysis & Next
Steps
• Assemble a stakeholder group complementary to
CREATE’s membership ( the State of Illinois, City of
Chicago, Metra, Amtrak, Association of American
Railroads, and the U.S. Department of Transportation)
to:
– identify specific areas where infrastructure investment
is needed
– use CREATE’s budget as a starting point to estimate
funding needs for
– use the Chicago Regional Environmental and
Transportation Efficiency (CREATE) program as
precedent to draft a Midwestern freight rail investment
program
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 3.1: Advanced Technology
Commercialization
• Existing language focuses on commercialization
of advanced biofuels
– Prior discussion about broadening the focus to
include a variety of low carbon fuels (H2, electricity,
batteries, etc)
• Select projects for support based on a
competitive process
• Supply grants for scale-up of projects
• Develop funding mechanisms to support groups
of producers in developing projects using
advanced technologies
BT 3.1
•
•
•
•
Quantitative goals:
Other programs:
Barriers to consensus?
Comments:
– You need to involve people involved in tech
transfer
BT 3.1 Gap Analysis & Next
Steps
• Decide whether or not to roll these recommendations
into a cross-cutting Advanced Technology
Commercialization cluster across all MGA work groups
• Assemble a stakeholder group
• Determine funding sources and amounts
• Assign what government bodies would administer which
programs
• Use Future Gen and other advanced technology
commercialization programs as a template
• Move workforce development suggestions under the
appropriate heading
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 3.2: Technical Assistance
• Provide technical assistance to projects
based on their potential to reduce GHG
emissions, and improve economic
development and energy security
• Sample mechanisms:
– Fund FEED studies
– University consortium should offer technical
assistance to projects
BT 3.2 Gap Analysis & Next
Steps
• Assemble a stakeholder group
• Draft a set of potential policies designed to meet the
needs stated in the current draft
• Research of similar policies or initiatives that can be
used as a guideline or template and use existing policies
as a template for a Midwest-wide version
• Conduct funding analysis
– Sources
– Amounts
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 3.3: Regional research
collaboration
• Leverage the Region’s exceptional
research and intellectual property
generation capabilities in order to better
bring them to bear on low carbon
transportation technologies (biofuels,
batteries, fuel cells, etc).
BT 3.3 cont…
• Mechanisms:
– Bring together university leaders from around
the region, agree on areas for collaboration
– Develop an information clearinghouse on
conversion technologies
– Develop working relationships with risk capital
sources to secure funding
– Fund development of 3 projects to bring to
commercialization
BT 3.3 cont…
• Goals (listed in document)
• Other programs
• Barriers to consensus
– Avoid duplication – there are a lot of efforts
underway.
– The word “leverage” – we should be more
specific about what this means
BT 3.3 Gap Analysis & Next
Steps
• Assemble a stakeholder group
• Draft a set of potential policies designed to meet the
needs stated in the current draft
• Research of similar policies or initiatives that can be
used as a guideline or template and use existing policies
as a template for a Midwest-wide version
• Conduct funding analysis
– Sources
– Amounts
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 4.1: Develop Biobased
Products
Mechanisms:
– Catalog biobased products
– Create a certification scheme for biobased
products, w/ logo and branding
– Base certification on economic, social, and
environmental factors, with GHG impact
based on life cycle assessment
– Promote through education and incentives
BT 4.1 cont…
• Goals
• Other programs
– OH report on biobased products
– Should build on existing biobased product
procurement partnership through MGA
• Other:
– Integrate w/ OH report
BT 4.1 Gap Analysis & Next
Steps
• Assemble a stakeholder group
• Continue dialogue with USDA Biopreferred staff to
determine where the Midwestern regional group could
add additional value
• Draft a set of potential policies based around
conversation with the Biopreferred group designed to
meet the needs stated in the current draft
• Conduct funding analysis
– Sources
– Amounts
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
4.2: Regional Infrastructure for Biobased
Product Manufacturing
• Goal
The efficiency of the regional infrastructure will be improved
to support the development of the region’s biobased
products industry
• Mechanisms
– Convene biobased products supply chain
parties to determine transportation modes for
current and future product distribution
– Regional study to determine deficiencies and
efficiency loss in the supply chain
• Identify supply chain enhancements
BT 4.2 cont….
– Feasibility study on proposed supply chain
enhancements
– Develop and carry out implementation plan of
identified feasible supply chain enhancements
• Other programs:
• Other:
BT 4.2 Gap Analysis & Next
Steps
• Assemble a stakeholder group
• Identify group(s) to conduct the recommended series of
studies and develop white papers
• Draft policy recommendations, if any are needed, that
pertain to infrastructure specifically needed for biobased
products
• Research of similar policies or initiatives that can be
used as a guideline or template and use existing policies
as a template for a Midwest-wide version
• Conduct funding analysis
– Sources
– Amounts
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 5.1: Perennial Biomass Supply
Mechanisms:
– Map available biomass, improve regional biomass inventories
– Promote regional feedstock demonstrations, with the goal of
demonstrating a variety of feedstocks in areas most appropriate
for them (prairie grass in the plains states, forestry in the forestry
states, residues in the cornbelt, etc)
– Use biomass for ecological restoration
– Implement voluntary land use tools and incentives
– Biomass harvesting on CRP
– Form biomass commodity groups
– Target incentives for perennial crops based on ecosystem
services
– Develop technological innovations in equipment
BT 5.1 cont…
• Related policies:
– RIM-CE
– BCAP in Farm Bill
• Goals:
• Barriers to consensus:
– It’s a good idea, it should be consistent with the Farm Bill. It’s a
50/50 match, so coming up w/ the other half is the tough part.
– Funding is a challenge for everything.
– Sustainability essential component/requirment
– Not “especially” for sustainable projects – they have to be
sustainable all the time
– Need language for how we will deal with the sustainability issue
starting next year.
BT 5.1 Gap Analysis & Next
Steps
• Suggest potential stakeholder group
• Use the best parts of existing programs as
a template for:
-- Regional policy goals
– Any known federal and state funding
sources?
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 5.2: Feedstock Logistics
• Develop feedstock systems for production, harvest,
transport, densification, and storage of biomass
• Research need: Identify, by product, the potential
feedstock contribution to reducing GHG through
displacing use of fossil fuels and carbon sequestration to
determine the most effective feedstocks.
• Mechanisms cover:
– Equipment and storage for biomass feedstock production.
– Allow short-rotation fiber production under traditional private
forestry land programs and associated tax programs.
– Produce improved maps of forestry biomass resources
– Evaluate use of rail for transporting biomass
– Evaluate development of nodes for densifying and transporting
biomass
5.2 cont…
• Existing programs:
– 1515 in North Dakota, plethora of others
under USDA Farm Bill, Energy Bill
• Goals: mapping production nodes and
travel ways.
• Other:
– Need to talk about water transportation as
well as rail – don’t overlook barges down the
Mississippi, etc.
BT 5.2 Gap Analysis & Next
Steps
• Suggest potential stakeholder group
• Research precedent and rulemaking
process
• Create a body made up of transportation
department staff and stakeholders in the
biomass energy industry in order to set up
a common set of biomass transportation
regulations for the region by 2011
• Specify funding sources and amounts
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 6.1: Wealth Creation
• This policy option will work in conjunction
with other proposed options to encourage
and facilitate the deployment in the
Midwest of technologies developed here
and to accrue to the region and its local
communities the value-added margins
available from these new technologies.
BT 6.1 cont…
•
•
•
assure that cooperatives, municipal authorities, other local and communityowned entities, and small investors are not excluded from government
incentive programs
give bonding authority or access to bonding funds to co-ops, municipal
utilities, and other local and community-owned entities
State and regional programs will be established to underwrite loans to
existing biofuel facilities to purchase fixed cost technology that will
accomplish one or more of the following:
– Reduce GHG emissions
– Improve the energy balance of the facility
– Improve the productivity of the facility (defined as an increase in the value of total
products produced vs. the cost of the inputs of production)
•
Fund the upgrading (or expansion to add cellulosic) of corn ethanol plants to
cellulosic ethanol plants (don’t use the term “upgrade”, this won’t
necessarily happen this way, assume its new cellulosic plants)
– Funding should include improved efficiency
– Funding should include add-in cellulosic like Poet’s project
– Should also include entirely new cellulosic ethanol plants
6.1 cont…
• Goals
• Existing programs
• Barriers to consensus
– No barrier
BT 6.1 Gap Analysis & Next
Steps
• Suggest potentail stakeholder group from sectors
suggested in this section
• Research other industries that have utilized state/federal
funding pools for startup and capital improvement
projects and where those funds came from as well as
how effective this was in building out the industry
• Research ways to leverage Midwestern intellectual
capital based on intellectual property issues in other
industries
• Conduct funding analysis
– Sources
– Amounts
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 6.2: Workforce Development
• Create collaborative workforce
development programs between industry,
state governments and educational
institutions that will staff and drive the
development of bioeconomy and clean
energy jobs
6.2 cont…
Develop a focused approach by building on a solid foundation of labor
market data and analysis:
• Target specific sectors within the ‘green jobs’ area
• Use good labor market data to drive initiatives
• Measure and evaluate new jobs programs as they are created
Build good jobs through partnerships, linking economic development
and job creation:
• Employ energy standards as green job creation tools
• Promote bioeconomy and green energy clusters
• Link economic development in the sector to workforce development
• Develop coalitions and partnerships
• Integrate green jobs initiatives into existing workforce systems
Focus attention on job quality, access for all, and upward mobility in the
green economy
6.2 cont…
• Establish coordinators in each states dept.
of workforce development
• State funds for creation of new curriculum
• Fund better analysis of labor market
trends
6.2 cont…
• This has morphed into a cross-cutting
issue. Other groups will be contributing
ideas and implementation mechanisms
• Of growing significance to governors in the
region
BT 6.2 Gap Analysis & Next
Steps
• Research need: Using the list of sources currently in the
document, research how to improve curriculum and
other training resources needed to build out regional
expertise
• Use cited funding for similar programs at the state level
to determine amount and source(s) of funding needed to
meet program needs at the regional level
Implementation
• What should happen next?
– Who
– What
– When
• What can governors do?
BT 7 Bioenergy Incentives
• Very little content developed for this option
• Assemble a stakeholder group
• No potential policies identified, gather from
other policy option
• Determine specifics in terms of:
– a timeline with numerical targets
– policy precedent
– potential funding sources and amounts
BT 8 Next-Generation
Regulation
• This section is blank, except for an
introductory paragraph about regulation
and permitting processes for new
technologies.
• No potential policies identified, borrow
from others
• Determine specifics in terms of:
– a timeline with numerical targets
– policy precedent
– potential funding sources and amounts
LCFS
General updates:
– Consensus reached in the working group
– Next step: advance to MGA steering cmte
• Any feedback on the process?
• Modeling:
– We are pursuing funding for a study
– Any input on what should be in it?
– Seeking general approval to move forward.
LCFS
• Next steps:
– Figure out who should be on RCB
– Begin filling out the STC
– Develop a 2009 work plan
Implementation Discussion
• LCFS is already in place
• NCBC may volunteer to take on Extension
functions in several areas:
– Biomass supply logistics
– Perennial biomass supply
– Advanced technology commercialization
– Technical Assistance
– Research Collaboration
Some policies become “Crosscutting”
• Workforce development
• Wealth creation
• Advanced technology commercialization
New policies
• Batteries – we inherited from cross-cutting
discussion
Are there policies that seem lower
value?
• Lack of immediate need?
• More of a legislative rather than
regional/governors priority?
• Lack of logical implementation steps?
What implementation priorities do
you prefer?
• Can governors do something about it, with
your support (no legislative priorities)?
• Does it require immediate action?
• Are there obvious steps we can take soon
to move this forward?
• What are the chances of success?
Model discussion
• LCFS questions:
– Address key questions from document for
how to model an LCFS.