042308 final biofuels exec summ

8/14/2019 042308 final biofuels exec summ

1/15

Advanced BiofuelsTask Force Report

Commonwealth of

Massachusetts

Spring 2008


2/15


3/15


4/15

The potential or economic growth, environmental protection, and the improvement o our energy security issignicant. Out o respect or the magnitude o this task, we held public hearings throughout the state to learnrom academic institutions, communities, environmental groups and industry representatives the lessons theyhave learned and the wisdom they wished to pass along. This included input on research and development,production, commercialization, distribution, and utilization. We have tapped into expertise close to home

and around the world, explored what other states and countries have implemented or are in the process oimplementing, and reviewed the most current scientic research.

We hope that these recommendations will be o use to you in considering legislative and administrative actionsto promote the development o an advanced biouels industry in the Commonwealth. We look orward toollowing up with you in the coming weeks.

Sincerely,

Secretary Ian A. BowlesEnergy and Environmental Aairs

(Chair)

David W. CashEnergy and Environmental Aairs(Secretarys designee)

Bruce A. Jamerson

CEO, Mascoma

Colin SouthPresident, Mascoma (designee)

David S. DavenportDepartment o Revenue

Representative Bradley H. Jones, Jr.Minority Leader

Senator Pamela P. ResorChair, Joint Committee on Environment,

Natural Resources and Agriculture

Senator Benjamin B. DowningChair, Senate Committee on Ethics and Rules

Senator Bruce E. Tarr

Assistant Minority Leader

Representative Brian S. DempseyChair, Joint Committee onTelecommunications, Utilities, and Energy

Representative Frank I. SmizikChair, Joint Committee on Environment,Natural Resources and Agriculture


5/15

Table of Contents

Letter from the Commonwealth of Massachusetts Advanced Biofuels ask Force .............. 1

EXECUTIVE SUMMARY:Report of the Advanced Biofuels ask Force .............................................................................. 5

Introduction:

Advanced Biofuels ask Force Report ....................................................................................... 15

Chapter 1:

Te Economic Potential of an Advanced Biofuels Sector in Massachusetts ........................ 19

Chapter 2:

Te Energy and Environmental Lifecycle of First Generation and Advanced Biofuels ...... 27

Chapter 3:Biofuel FeedstocksEnergy Crops, Biomass, and Waste Products ...................................... 41

Chapter 4:

Statutory and Regulatory Mandates, Regulatory Flexibility.................................................. 51

Chapter 5:

Promoting Infrastructure for Delivery and Distribution of Biofuels ................................... 59

Chapter 6:

Grants, Loans, and ax Incentives ............................................................................................. 71

Appendices

Appendix A: Chapter 1: Methodology for Economic Impact Analysis .....................................81

Appendix B: Chapter 5: Fuel Infrastructure ................................................................................... 85

Appendix C: Advanced Biofuels Task Force Oral and Written Testimony ........................ 86

Appendix D: Bibliography and Resources ....................................................................................... 87

Appendix E: Other State Policies....................................................................................................... 94

Appendix F: Advanced Biofuels Task Force Scoping Document............................................... 95


6/15


7/15

Commonwealth o Massachus5

In November 2007, the Governor, Senate

President and Speaker o the House announced

the creation o an Advanced Biouels ask Force

to promote the development o an advanced

biouels industry in the Commonwealth. At

that time, the price o oil was about $85 per

barrel. In the ve months the ask Force has

been doing its work, the price has risen roughly30%, reaching $110 per barrel. By itsel, the

dramatically rising cost o energy would be

reason enough or

Massachusetts to

seek alternatives

to imported ossil

uels. But there

are many more

reasonsthe

opportunity to

become the globalcenter or advanced

biouels; growth

o jobs in R&D,

production and commercial applications; and

reduction in harmul emissions.

In this context, the ask Force was charged with

drating a strategy to seize opportunities related

to biouels development and explore their

economic, energy, and environmental benets

and costs. Tis report outlines such a strategy.

It is the result o intensive work by the ask

Force, legislative and executive sta, our public

hearings throughout the Commonwealth, and

input rom academic experts as well as a wide

range o industry, environmental, community,

and other stakeholders.

Biouels are substitutes or liquid petroleum

uels, including gasoline, diesel, and heating

oil, that are derived rom renewable organic

matter and promise several advantages over

ossil uels. Petroleum products

used or transportation currently

contribute more than a third

o greenhouse gas emissions in

Massachusetts. Due to limitations

in domestic supplies, relianceon petroleum makes the U.S.

dependent on imports rom oreign

nations, many o them politically

unstable. And Massachusetts,

having no supplies o our own, pays

high prices or imports rom around the country

and around the world.

Advanced biouels, which are dened in ederal

law as those that yield a net liecycle reduction

o at least 50% in greenhouse gas emissions

compared with ossil uels, oer particular

advantages or the environment as well as

the Massachusetts economy

including playing to our strengths

in research and technology

development and sustainable

orestry.

Tis Executive Summary briey

reviews the main ndings o the

ask Forces report and provides

the policy recommendationsresulting rom its deliberations. Te

report has six chapters:

Chapter 1 Te Potential Economic

Opportunities o an Advanced Biouels Sector

in Massachusetts

Report of the Advanced Biofuels Task ForceEXECUTIVE SUMMARY

Governor Deval Patrick stresses the

potential of Advanced Biofuels

Senate President Therese Murrray

speaking at the announcement

Speaker Salvatore DiMasi addresses

the audience on biofuels


8/15

Advanced Biofuels Task Force Report 6

Chapter 2 Te Energy and Environmental

Liecycle o First-Generation and Advanced

Biouels

Chapter 3 Biouel FeedstocksEnergy Crops,

Biomass, and Waste Products

Chapter 4 Statutory and Regulatory Mandates,

Regulatory Flexibility

Chapter 5 Promoting Inrastructure or

Delivery and Distribution o Biouels

Chapter 6 Grants, Loans, and ax Incentives

Chapter 1 Te Potential Economic

Opportunities of an Advanced Biofuels

Sector in Massachusetts

Given the states intellectual capital and

academic and laboratory resources or research

and development,

supporting an advanced

biouels sector oers

potentially signicant

opportunities or

economic development

and job creation.

In-state production

o advanced biouels

derived rom eedstock

grown in Massachusetts

could replace about 6%

o our gasoline use, reducing our dependence on

imported energy sources while generating jobs

at home and boosting the states growing energy

sector. Biouels have the potential to keep

marginal agricultural land in productiona

benet or a state like Massachusetts, whichvalues small-scale arming as part o its

economic and physical landscape.

As an emerging technology, the economic

viability o advanced biouels still needs to be

proven, however, and will depend signicantly

on the true extent o the greenhouse gas

reductions these uels provide.

Te ask Force estimates that a mature

advanced biouels industryincluding

technology development, eedstock cultivation,

and processing into uelcould contribute

$280 million to $1 billion per year or the

Massachusetts economy by 2025, while

generating 1,000 to 4,000 permanent jobs

and 150 to 760 temporary construction jobs.

Including indirect multiplier eects, we

estimate the permanent gains as $550 million to

$2 billion and 2,500 to 9,800 jobs.

Chapter 2 - Te Energy and

Environmental Lifecycle of

First-Generation and Advanced Biofuels

Depending on the eedstocks utilized (corn,

soybeans, waste oil, switchgrass, tree trimmings,

the organic portions o municipal solid waste),

the energy source used to convert the eedstocks

(coal, natural gas, renewables), and the land on

which the eedstocks are grown (land already

in production, orests or grasslands converted

to croplands), biouels can either reduce or

increase greenhouse gas emissions relative to

ossil uels.

Without considering indirect impacts rom

changes in land use, corn ethanol could reduce

greenhouse gases by approximately 20% relative

to petroleum, possibly more i production

processes are improved. Soybean-based

biodiesel gets much better initial reviews, with

greenhouse gas benets estimated to be in the

70% range.

But recent research nds that it is critical to

take land use changes into account. Shiting a

substantial part o the worlds ood supply touel production is likely to cause orests and

grasslands to be converted to crop arming

somewhere in the world. It would take decades

or uture crops planted on these lands to absorb

the amount o carbon dioxide that is released

(due to burning and decomposition o trees,

plants and soil) when they are initially cleared

or arming.

Report o the Advanced Biouels Task ForceEXECUTIVE SUMMARY

Congressman William Delahunt

speaking at the announcement


9/15


As a result o direct and indirect changes in land

use, use o corn ethanol, soy biodiesel, and other

crop-based uels may result in even greater

greenhouse gas emissions than burning gasoline

and petroleum diesel, though it is essential to

use direct and indirect impacts o petroleum

production in any comparison to biouels

production. Te scientic analyses or true

apples to apples comparisons are still being

developed, so no rm conclusions can be drawn.

Better environmental results are expected rom

advanced biouels, such as those derived rom

cellulosic sources. Cellulosic uels, including

cellulosic ethanol, can be made rom eedstocks

such as tree trimmings and switchgrass, which

require little or no ertilizer or pesticides. Teycan be grown on agriculturally marginal lands

and thus do not necessarily compete with ood

production. As a result, they may yield as much

as a 90% reduction in carbon dioxide emissions

compared with gasoline. But since cellulosic uel

is not yet produced on a commercial scale and

the technology is still evolving, there are still

uncertainties about environmental impacts

though compared with rst generation biouels,

these advanced biouels oer much promise.

Recommendations of the ask Force:

Develop standards or liecycle evaluation1.

that consider the carbon and environmental

impacts o biouels, including potential

impacts on agricultural, orest and other

land use in Massachusetts and on a

global basis, using denitions like those

employed in Caliornia and included

in the new ederal energy law. Teseevaluations must include both direct and

indirect impacts, as well as consideration

o impacts on environmental justice. Due

to the complexity o liecycle analysis, to

the extent possible Massachusetts should

make use o analyses done by other parties,

including the Caliornia Air Resources

Board, U.S. EPA, and the European Union.

Liecycle evaluation methods should put2.

biouels, petroleum uels, and other energy

sources or vehicles (such as electricity and

hydrogen) on a level playing eld, assessing

secondary and indirect impacts or all.

o receive state support or biouels3.

development and/or use, a particular biouel

must provide

a substantial

reduction in

greenhouse

gas emissions

relative to

petroleum

uels on a

liecycle basis.

Te state4.

should

ensure that

developers o reneries meet stringent water

discharge limits and select technologies that

reduce water needs.

Since biouel made rom in-region waste5.

materials, such as waste oils, is likely to have

lower greenhouse gas and environmental

impacts than biouel rom virgin materials,state agencies should have the latitude

to exempt uel produced rom waste

materials rom a ull liecycle greenhouse

gas emissions analysis. However, state

agencies should require a review that

considers the highest reuse option or the

waste eedstock (including recycling) and

conduct appropriate environmental reviews

o biouel production processes that seek to

minimize potential air and water impacts,

as well as chemical and energy use.

Support the development and6.

implementation o uel quality standards

(or example, ederal ASM standards) to

provide consumer assurance o reliability o

advanced biouels.

Report o the Advanced Biouels Task FoEXECUTIVE SUMMA


10/15


Chapter 3 Biofuel FeedstocksEnergy

Crops, Biomass, and Waste Products

In comparison with other states, Massachusetts

is not a large agricultural producer, and so has

limited potential to benet economically romrst-generation crop-

based biouels such as

corn ethanol and soy

biodiesel.

Te Commonwealth

has greater potential

to capitalize on

second-generation, or

advanced, cellulosic

eedstocks such as

agricultural switchgrass,

willow and crambe

(an industrial oil crop that grows well in cool

climates), agricultural waste products (such

as cranberry waste), orest residues and wood

rom sustainably managed orests, and the

organic component o municipal solid waste.

Potential benets include keeping marginal or

threatened agricultural lands in production,

providing income rom open lands not currently

in agricultural production, displacing imported

uels, and providing a market or waste oils.

otal in-state eedstocks could replace roughly

6% o petroleum imports, although these same

materials are also under consideration or use in

electricity generation and thermal applications,

where they might displace coal, natural gas,

or petroleum uel, and potentially be used or

transportation via plug-in hybrid or electric car

technology.


Note: A variety o tax and other state incentives

have the potential to support the development

o advanced biouels eedstocks in the

Commonwealth. Recommendations relating

to state incentives are discussed in detail in

Chapter 6.

Conduct additional eld trials and1.

commercial demonstration plots on

biomass crops in Massachusetts to

determine optimal crops, production

methods and costs or the state. rials

on marginal agricultural land and other

working landscapes are o particular

interest. Evaluation o these trials should

include environmental impacts (including

carbon emissions and soil sequestration)

and inrastructure needs or planting,

harvesting, and transporting materials.

Expand a preliminary UMass study on2.

economic potential o energy crops in

Massachusetts to include other crops

and non-agricultural marginal lands andto improve yield and cost assumptions.

Develop a spatial model illustrating

potential lands that may be conducive to

biomass crops.

Support development work (genomic and3.

breeding) on energy crops such as crambe

and switchgrass, to improve crop yields and

biouel production.

Explore opportunities to promote4.

algae production by the Massachusettsaquaculture industry, and bioengineering

research at Massachusetts companies and

universities.

Conduct an internal review o all state5.

agricultural preservation and assistance

programs or the purpose o integrating

energy crop production. Explore the

benet o establishing capacity at the state

Department o Agricultural Resources and

UMass Extension to provide outreach andtraining to armers and other landowners

interested in establishing early commercial

plantations.

Complete the current work o the6.

Massachusetts Sustainable Forest

Bioenergy Initiative on woody residue and

orest biomass eedstock and consider



11/15


12/15


uel cells. Because the market or uels in the

Northeast is regional, rather than state-by-state,

and the LCFS is a complex tool, it would be ar

preerable to implement it on a regional basis.


Prioritize eorts to achieve near-term1.

implementation o a regional, technology-

neutral and perormance-based Low Carbon

Fuel Standard. Position Massachusetts as a

leader in this regional development. Given

the uncertainty o regional coordination,

however, the Commonwealth should also

move orward without delay in designing

a Massachusetts-specic LCFS thatother states and provinces can adopt.

Te Standard should include liecycle

greenhouse gas reduction standards, as

discussed in Chapter 2 o this report, and

should reward companies or perormance-

based results in achieving such reductions.

Consider incentives to promote the best2.

uses o sustainably harvested biomass,

whether as a replacement or transportation

uels or in other energy applications, such

as a liquid uel substituting or heating oil

or as a solid uel used directly or space

heating and/or electricity generation. Tis

would move the state arther along the

continuum o being technology-neutral,

searching or the most cost-eective means

o reducing petroleum use and greenhouse

gas emissions.

While a Massachusetts Low Carbon Fuel3.

Standard is being developed, implement

transitional, careully targeted mandates,such as requirements or minimum

percentages o biodiesel in motor and

heating uel. Mandates should require

that the uels yield substantial liecycle

greenhouse gas reductions, including

direct and indirect impacts such as those

on land use, while not increasing the

release o other pollutants; and should be

limited, such as by being tied to in-state

production o the eedstocks and by phasing

out as a Low Carbon Fuel Standard comes

into existence. Mandates should be as

exible and technology-neutral as possible.

Use o a trading system or meeting the

requirements should be considered,

although the regulatory complexities this

would add must be weighed careully.

Te state should ensure that temporary,4.

pilot scale bioreneries are allowed to

proceed ater review o appropriate

environmental saeguards and evidence

that the pilots results will be useul

i it succeeds. Analysis o potential

contaminants contained in or producedrom the processing o waste products such

as construction and demolition waste, the

organic raction o municipal solid waste,

and biosolids rom wastewater treatment

plants. MassDEP should review its

regulatory authority to determine whether

revisions are needed to allow pilot scale

waste-to-uel production. MassDEP should

assist in the review o pilot scale projects

(whether or not they need a permit) to

ensure that, when a proponent seeksapproval or a commercial project, those

permits can be issued in a timely manner.

Te state should support the demonstration5.

o operational, maintenance and

environmental impacts rom the use o

waste-based renewable uels in commercial

boilers or turbines. Funding or the

purchase o biouels and to oversee tests

done at state acilities may be needed.

State environmental agencies should adoptreasonable reporting requirements or

those deciding to burn advanced uels.

Te continued use o existing permitted

uel, i the advanced biouel is unavailable,

should be allowed.

Further research and analysis should be6.

done to evaluate the benets and costs o

policies to support biouels development


A Low CarbonFuel Standard isa perormance-

based,technology-

neutral way to

set limits ongreenhouse gas

emissions withoutmandating

specifc uelcontent. Bynot picking

winners amongtechnological

alternatives, theLCFS allows the

best approachesto powering

vehicles to winout over time.


13/15


through a regulatory ramework, including

those in (3) above, on an expedited timeline.

Chapter 5 Promoting Infrastructure for

Delivery and Distribution of Biofuels

For Massachusetts to become a national leader

in the development and use o advanced biouels

as a substitute or petroleum, the inrastructure

or biouels delivery and distribution will have

to be in place. Consumers will need to be able to

use biouels in their vehicles and homes in order

to make them a true alternative to petroleum

products.

Te Commonwealth has no crude oil

production, no rening capacity, and no direct

service by a major interstate petroleum pipeline.

All petroleum products are imported rom

two main sources: domestic rened products,

originating in the Gul Coast, and imports

supplied primarily by Canada, Venezuela and

the U.S. Virgin Islands.

While ethanol and biodiesel are both used

almost exclusively in blends with petroleum,

their supply chain and inrastructure needs

dier signicantly. For biouels to transitionsuccessully rom the current usage o corn-

and soy-based eedstocks in low blends

into a signicant industry in the region,

accommodations will be needed in the

mechanisms by which Massachusetts meets its

uel needs in transportation, heating, and other

usesmechanisms that are now geared almost

exclusively to the use o petroleum products.


Implement limited-cost investments in1.

inrastructure or ethanol and biodiesel,

subject to budget constraints, such as

E85 stations along major state highway

corridors, and possible assistance or

storage and distribution o biodiesel.

Study the benets and costs o measures2.

to increase the share o ex-uel vehicles

in Massachusetts, including mandates and

incentives. Such research should take into

account both short- and long-term impacts

on actual greenhouse gas emissions and

other environmental concerns. Explore

policies to induce automakers to provide

more uel-efcient ex-uel vehicle models

than are currently available. For its own

eet, the state should purchase ex-uel

vehicles that exceed the average CAFE

standard mileage requirements or each

vehicle class.

Subject to3.

state budgetconstraints,

provide incentives

to encourage

development o

smaller regional

bioreneries,

especially or

cellulosic biouels,

that utilize locally

available uel including waste eedstocks.

Support pilot deployment o plug-in hybrid4.

and all-electric vehicles, including ex-uel

plug-in hybrid vehicles, in both light-duty

and heavy-duty vehicle classes.

Investigate the costs and benets o5.

incentives or additional heated storage

tanks and blending inrastructure at

regional terminals.

Support rail reight inrastructure or6.

biouels as part o a broader policyo promoting rail over road reight

transportation.



14/15


Chapter 6 - Grants, Loans, and ax Incentives

Aggressive expansion o an advanced biouels

industry holds the promise o jobs and economic

growth as part o a larger clean energy sector

that capitalizes on Massachusettss advantagesin technology, venture capital, sustainable

orestry and a highly skilled workorce. In

addition, advanced biouels oer the prospect o

environmental benets in the orm o reduced

greenhouse gas emissions as they displace the

use o imported petroleum in our engines and

urnaces. Reducing oil imports is also vital

to the energy security o the U.S. as a whole.

o realize this promise o global leadership,

job creation and retention, economic growth,

and environmental benets, Massachusettsshould begin rigorous benet-cost analysis to

identiy the nancial tools that can develop the

sector. Such an eort must necessarily account

or revenue impacts and direct and indirect

environmental impacts.

As a general matter, state governments have the

ability to use their own nancial resources to

aid particular industries whose growth they see

as being in the public interest. Generally, the

instruments at their disposal or this purpose

include grants, loans, and the state tax code.

Massachusetts has used these tools in recent

years to provide targeted assistance in a number

o areas, including or manuacturers, R&D

companies, biotechnology, and the lm industry.

Tis chapter discusses the applicability o these

options to the emerging biouels industry, and

makes recommendations about how to tailor

state nancial incentives to maximize the

industrys potential in the Bay State.

Most existing ederal and state biouel subsidies,including various tax incentives, are designated

or rst generation biouels, mainly corn-based

ethanol and soy-based biodiesel. Such policies

are common in states with large agricultural

sectors, but would have relatively little

potential or providing economic benets in

Massachusetts. Advanced, or cellulosic-based,

uels are more promising candidates or support

rom the Commonwealth, since we have greater

ability to supply eedstock or them and produce

them.


Exempt cellulosic biouels rom the states1.

gasoline tax, with a sunset date. An

excise tax exemption will encourage uel

distributors to purchase cellulosic ethanol

when available, and minimize the risk

associated with investment in cellulosicbiouel development.

Conduct rigorous benet-cost analysis o2.

prospective nancial support policies or

the biouels industry, comparing benets

(including greenhouse gas reduction,

employment gains, energy security, and tax

revenues rom economic development) with

costs (including environmental impacts,

state budgetary costs, and consumer/

business expenses).

Subject to state budget constraints and3.

liecycle environmental and greenhouse gas

criteria, consider the use o production tax

credits and other tax incentives targeted

at advanced biouels production and

commercialization in those cases where

analysis shows that projected benets

exceed costs. o better assist pre-prot

rms, study the implications o making tax

credits reundable or transerable.

Subject to budget constraints, consider the4.

costs and benets o implementing state tax

credits or the production o in-state biouel

and biomass eedstocks rom managed

orests and the cultivation o energy crops.



15/15


Benets to be considered should include

stimulating investment in orestry and

agriculture, improving the market demand

and competitiveness o these eedstocks

relative to residue sources o woody

biomass, and maintaining and improving

the Commonwealths working landscapes.

(See discussion in Chapter 3)

Subject to budget constraints, authorize5.

state unding or research in partnership

with private companies and universities

to improve existing technologies or

converting wastes, including cranberry

and other agricultural residues, to carbon-

reducing, environmentally benecial uels.

Beore putting such technologies to work ona wide scale, however, subject the diversion

o waste products or biouels to ull

environmental and economic analysis. (See

discussion in Chapter 3)

Subject to state budget constraints and6.

liecycle environmental and greenhouse

gas criteria, create a und that would

provide grants and loans to attract

advanced biouels R&D, demonstration, and

production acilities to the Commonwealth

in those cases where analysis shows that

projected benets exceed costs.

Phase out nancial incentives or7.

producers and consumers o biouels withimplementation o a Low Carbon Fuel

Standard, since the standard will provide

durable incentives to achieve greenhouse

gas reductions and displacement o

petroleum uels at the lowest cost to

consumers on a perormance-based,

technology-neutral basis. However, R&D

incentives may have a longer-term role in

state support or the industry.

Include biouels in priorities or state-level8.

research on renewable energy, presumably

associated with a state college or university.

Tis educational institution should take

the lead in identiying and pursuing ederal

unding in collaboration with biouels

companies.


Governor Patrick, Senate

President Murray, and Speaker

of the House DiMasi announced

the creation of an Advanced

Biofuels Task Force

042308 final biofuels exec summ

Documents

Transcript of 042308 final biofuels exec summ