Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway Biofuels Law and...

Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway

Biofuels Law and Regulation Conference

Sam JacksonMay 2, 2014

2Copyright 2014, Genera Energy Inc.

Company Overview

• Privately held biomass supply solutionscompany based in Vonore, TN

• Bringing an industrial approach and experience to agricultural biomass supply

- Energy crop production, biomassprocessing, project management

• The most experienced company in the countryproducing, handling, and processing a widevariety of biomass feedstocks

- Purpose grown crops, residues

• Proprietary biomass feedstock processing

• Extensive partners up & down the value chain

2

167 Tellico Port RoadVonore, TN 37885(423) 884-4111 – tel.www.generaenergy.com

Dr. Sam Jackson accepting the 2013 Sustainable Biofuels Award for Sustainable Feedstock Innovation,Awarded at the World Biofuels Markets 2013 Congress & Exhibition, the largest international gathering of its kind.


Land Owners & Farmers

Long-term land leases & easements

Biomass crop services: establish, manage, harvest,

collect, store, transport

Long-term biomass feedstock supply contract

On-time, sustainable delivery of high quality

biomass feedstock

Biomass Consumers

(primarily technology &

project developers)

EnergyCrops

BiomassFeedstocks

What We Do

Copyright 2014, Genera Energy Inc.

Land Accumulation& Control Model

Optimized Planting & Establishment Success

Multi-system Cost Analysis& Harvest Scheduling

Maintain Quality & Minimize Cost

Risk Management& QA/QC

Data-Rich Feedstock Supply & Cost Model

Preferred InputSupplier Network

Full Cycle Production & Maintenance

Moisture Management & Optimized Location

Project-SpecificSystem Design

Genera’s Integrated Solution DeliversEnergy Grange™ Management Supply ASSURE™ System BIN-SPEC™ ProcessingProprietary

GIS Model

Planning Energy Crop Establishment & Production Harvesting, Logistics & Inventory Milling & Material Handling


• Land recruitment– Real-world, grounded

information is key– Integrated, long-term land

control

• Achieving projected crop yields– Weather impacts– Management consistency

• Inventory risk– Storage degradation– Fire, other catastrophic events

• Things beyond our control– Commodity price swings– Oil costs– Policy changes

Managing Risk

Crops InventoryThe Unknown

Land


• Land is key in biomass production

• Landowners will require:– Economic benefit– Long-term consistency in

income through bankable contracts

– Low cost or assisted cost establishment

– Risk management tools– Technical assistance

Land Availability and Recruitment


• Grower contracts should:– Be backed by a bankable entity– Provide adequate economic

return w/adjustments– Be of long duration (10 yrs or

longer)– Share risk among partners– Provide sources of technical

assistance

• Annual crops provide flexibility

• Contracts will take different forms, from full supply services to simple land leases

• Risk elements must be addressed in contracts:– Land ownership changes

• Sales• Death• Bankruptcy

– Production requirements• Volume• Quality

– Compositional– Moisture

Land Availability and Recruitment


• Supplying biomass year round, with consistent quality is key

• Feedstock production risk includes– Yield

• Environmental impacts• Management impacts• Disease/Pests

– Quality• Variability• Foreign materials

Crop Production Risk


• Long-term storage introduces risk– Quality loss/change over time

• Chemistry• Dry matter loss• BTU loss

– Catastrophic loss• Fire• Weather

• Efficient industrial supply chain management required– Chain of custody– Proper handling and storage

Inventory Risk


• Commodity price swings– Can significantly change

availability of land (pricing)– Changes competitiveness of

biomass crops– Defines the importance of

long-term contracts to protect investment in perennial crops

• Oil costs– Price at the pump matters to

the majority of the voting public

– Biofuels must be competitive and understood by the public

The Unknown


• Government Policies– Inconsistency and variability

deters innovation and investment

– RFS• Annual evaluations on policy ,

whether positive or negative, do not help advance an industry

• The RFS will drive investment at a low cost to the Federal Government if maintained for an extended period

The Unknown

• Government Policies– EPA Approved Pathway

Process• Must be streamlined and

made more transparent• Biomass sorghum in pipeline

for over two years!


• Land Recruitment– BCAP and similar programs

• Overcome high upfront costs for producers

• Must be implemented effectively

– Alternative biomass markets– State-based

incentives/programs

• Government Policies– Consistency!– Loan guarantee programs

tailored to feedstock supply chains

– State-based incentives programs

Mitigating Risks


• Crop Production– Crop insurance

• Expand traditional yield-based risk management programs

– Continued varietal improvement• Establishment• Disease and pest resistance• Herbicide tolerance• Productivity• Conversion efficiency

Mitigating Risks


• Feedstock Portfolio– Multiple feedstocks to feed

one facility– Provides land recruitment

flexibility (annual vs. perennials

– Increases ability to do year-round delivery• Reduces risk and cost

associated with storage

– Provides a buffer for climatic and disease/pest impacts

• Integrated Management– Systems matter

• Biomass supply is more than a collection of individual unit operations

• Integration of entire systems is critical

– Consistency• Efficient and reliable supply of

a consistent quality biomass requires the high degree of coordination

– Continuous Innovation• Continuous improvement

reduces cost significantly

Addressing Risk Across the Supply Chain


2. Generate more consistent quality, improving yields and lowering operating costs

Genera’s Integration Improves Economics

Cost Per Ton

$55

1. Lower feedstock cost by as much as 33%

Reduce overall cost volatility, enhancing “financability” of downstream project

$85

Quality


Summary

• Feedstock risks are real and must be addressed

• Knowledgeable Planning eliminates many risks

• Genera provides de-risked, scalable feedstock supply and processing solutions– Specialized in providing

consistent, uniform industrial biomass feedstocks

Genera Energy Inc.167 Tellico Port RoadVonore, TN 37885

423.884.4110 – Phone 423.884.4129 – Fax

www.generaenergy.com

Sam Jacksonsjackson@generaenergy,com

Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway Biofuels Law and...

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