Minnesota bill aims to create cellulosic biomass incentives

By Erin Voegele | March 17, 2015

Legislation pending in Minnesota aims to establish state production incentives for advanced biofuels, renewable chemicals and biomass thermal. The measure was introduced in the Minnesota House of Representatives and the Minnesota Senate in early February.

The House version of the bill, H.F. 536, was introduced on Feb. 2 by Reps. Rod Hamilton, Jeanne Poppe, Paul Anderson, Jason Metsa, Ron Kresha, and Bob Gunther. Reps. Bud Nornes and Debra Kiel later signed on to support the measure. The Senate version of the bill, S.F. 517, was also introduced on Feb. 2 by Sens. Tom Saxhaug, David Tomassoni, Julie Rosen, and Bill Weber. Sen. Scott Dibble later signed on to support the legislation.

According to the text of H.F. 536, the bill would create an incentive $2.1053 per MMBtu of annual production of cellulosic advanced biofuels. For advanced biofuel produced from sugar or starch, the incentive would be $1.053 per MMBtu of annual production. The incentive would be available to eligible producers for 10 years after the start of production at a specific location. Eligible facilities producing advanced biofuel using agricultural cellulosic biomass would be eligible for a 20 percent bonus payment for each MMBtu produced from agricultural biomass derived from perennial crops, or from farms where cover crops are used.  Total payments for an individual producer would be capped at 2,850,000 MMBtu per year, with the cap for total payments made under the program set at 17,100,000 MMBtu annually.

The legislation indicates the advanced biofuel production incentive would be available for eligible facilities that source at least 80 percent raw materials from Minnesota. If a facility is sited within 50 miles of the state boarder, raw materials may be sourced from a 100-mile radius. The bill specifies the raw materials must be from agricultural or forestry sources, or from solid waste. Eligible facilities must be located within Minnesota and begin production at a specific facility by June 30, 2025, but must not begin above 95,000 MMBtu of annual biofuel production before July 1, 2015. The bill also notes eligible facilities can include existing companies and facilities that add additional advanced biofuel production, as well as new companies and facilities. The advanced biofuel facilities, however, must produce at least 95,000 MMBtu per year to be eligible. The incentive would not be available for conventional corn ethanol or conventional biodiesel.

Eligible advanced biofuel producers that utilize cellulosic biomass would be required to submit a responsible biomass sourcing plan to the Minnesota commissioner of agriculture prior to applying for the production incentive. The plan would include a detailed assessment of how the agricultural cellulosic biomass would be produced and managed and include the producer’s approach to verifying that biomass suppliers are following the plan. It would also discuss how the producer will encourage continuous improvement during the life of the project and include specific goals and timelines for making progress. An annual report would also be submitted that includes data on progress being made to meet plan goals.

According to the legislation, many of the facility location and biomass-sourcing requirements would be the same for the renewable chemical production incentive and the advanced biofuel incentive. To be eligible, renewable chemical facilities must produce at least 3 million pounds per year. In addition, renewable chemicals produced through processes that were fully commercial before Jan. 1, 2000 would not be eligible. The renewable chemical production incentive would be 3 cents per pound of sugar-derived renewable chemical, 3 cents per pound of cellulosic sugar, and 6 cents per pound of cellulosic-derived renewable chemical. The incentive would be available to a particular facility for 10 years after the start of production. An eligible facility producing renewable chemicals from agricultural cellulosic biomass would be eligible for a 20 percent bonus payment for each MMBtu produced from agricultural biomass that is derived from perennial crops or from acres where cover crops are used. Eligible producers who utilize agricultural cellulosic biomass would also be required to submit a responsible biomass sourcing plan. Total renewable incentive payments would be capped at 99,999,999 pounds for an eligible producer on an annual basis, and 599,999,999 pounds per year for the entire incentive program.

The biomass thermal incentive would have facility and feedstock requirements similar to the other two incentives. To be eligible, facilities would be required to produce at least 1,000 MMBtu per year. The amount of the incentive would be $5 per MMBtu of biomass thermal production produced at a specific location for 10 years after the start of production. Eligible facilities using agricultural biomass would be eligible for a 20 percent bonus payment for each MMBtu produced from agricultural biomass that is derived from perennial crops or from acres where cover crops are used. Eligible producers who utilize agricultural cellulosic biomass would be required to submit a responsible biomass sourcing plan to the Minnesota agricultural commissioner. Total payments to an eligible thermal producer would be capped at 30,000 MMBtu per year, with the total incentive for all eligible producers capped at 150,000 MMBtu annually. While eligible facilities can blend cellulosic feedstock with other fuels in the production facility, only the percentage attributable to cellulosic material listed would be eligible to receive the producer payment.

The bill appropriates $2.5 million in fiscal year 2016 to the program, along with $2.5 million in fiscal year 2017.

A full copy of H.F. 536, along with a link to the companion Senate bill, is available on the Minnesota Legislature website