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Advanced BiofuelsTask Force Report
Commonwealth of
Massachusetts
Spring 2008
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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
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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
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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
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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
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Commonwealth o Massachus7
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
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Advanced Biofuels Task Force Report 8
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.
Recommendations of the ask Force:
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
Report o the Advanced Biouels Task ForceEXECUTIVE SUMMARY
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Advanced Biofuels Task Force Report 10
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.
Recommendations of the ask Force:
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
Report o the Advanced Biouels Task ForceEXECUTIVE SUMMARY
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.
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Commonwealth o Massachus11
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.
Recommendations of the ask Force:
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.
Report o the Advanced Biouels Task FoEXECUTIVE SUMMA
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Advanced Biofuels Task Force Report 12
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.
Recommendations of the ask Force:
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.
Report o the Advanced Biouels Task ForceEXECUTIVE SUMMARY
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Commonwealth o Massachus13
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.
Report o the Advanced Biouels Task FoEXECUTIVE SUMMA
Governor Patrick, Senate
President Murray, and Speaker
of the House DiMasi announced
the creation of an Advanced
Biofuels Task Force
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