Busy Season for Bioenergy

You may not have noticed, but interesting things have been happening in Washington with regards to bioenergy.  In fact, it’s been quite a busy few months of new project and policy developments.

In December, the U.S. Department of Agriculture (USDA) announced $10 million in research grants to spur production of bioenergy and biobased products with a heavy emphasis on sustainability.  A few days before that, a new biomass Combined Heat & Power (CHP) project was re-announced for Laurens County, Georgia.  Then, just before Christmas, the U.S. EPA finalized regulations for industrial boilers, issuing the Boiler Maximum Achievable Control Technology (MACT) rule, which will not only reduce toxic pollution, but will also help spur greater efficiency across a range of U.S. industrial and commercial energy users. And, on New Year’s day, a slew of biomass-related policies were included in the “fiscal cliff” bill.  Let’s review this flurry of announcements in chronological order:

On December 6th, Georgia’s Governor Nathan Deal announced that Dublin-based Green Power Solutions will open a power plant in Laurens County, co-located at the existing paper mill owned by SP Fiber Technologies. The new 56MW plant will co-generate both power to the grid and steam for the paper mill’s processes – providing more efficient use of the biomass.  This project was first proposed in 2011, which is why we call it a “re-announcement.” The power purchase agreement (PPA) for this project is with Georgia Power, and has already been approved by the Georgia Public Service Commission.  If the project gets financed and built, more CHP will be good to see, and will certainly benefit the climate more than the old, inefficient boilers.

The December 14th USDA grants announcement was significant for the Southeast because five of our major universities will benefit:

•    University of Georgia (UGA), in Athens, GA, will receive $345,689;
•    University of Florida (UFL), in Gainesville, FL, will receive $994,847 in two separate grants;
•    Duke University, in Durham, NC, will receive $349,084;
•    Clemson University, Clemson, SC, will receive $50,000; and
•    University of Tennessee (UTK), Knoxville, TN, will receive $350,000.

These awards are through USDA’s National Institute of Food and Agriculture (NIFA) Agriculture and Food Research Initiative (AFRI). AFRI’s sustainable bioenergy challenge area targets the development of regional systems for the sustainable production of bioenergy and biobased products that:

•    contribute significantly to reducing dependence on foreign oil,
•    have net positive social, environmental, and rural economic impacts and
•    are compatible with existing agricultural systems.

NIFA’s AFRI addresses the many environmental, social and economic benefits and trade-offs of biofuels development. Projects were awarded in four areas: 1) policy options for and impacts on regional biofuels production systems, 2) impacts of regional bioenergy feedstock production systems on wildlife and pollinators, 3) socioeconomic impacts of biofuels on rural communities, and 4) environmental implications of direct and indirect land use change.  We’re glad to see that the many experts at UGA, UFL, Duke, Clemson and UTK will be able to continue their work on sustainable biofuels and provide new insights and data to assist in biofuels policy development.

 

Wood chips in auger-feed bin at Boulder County public works district heating plant.

EPA’s December 22nd release of the finalized rules for industrial boiler MACT standard is a real breakthrough.  According to the World Resources Institute (WRI),

These new environmental standards will not only reduce toxic pollution, but will help spur greater efficiency across a range of U.S. industrial and commercial energy users. The EPA has taken steps to ensure that the rule will promote energy efficiency investments by improving environmental performance while increasing flexibility for affected facilities. This is good news for the manufacturing workforce, for public health, and for the climate.”

As a result, we expect that existing biomass boilers here in the Southeast will be encouraged to run more efficiently and cleanly, and any new biomass boilers installed have a very strong incentive towards generating both power and heat (CHP). This is where we can realize the greatest benefits of utilizing renewable biomass.

Finally, on New Year’s day, Congress passed the American Taxpayer Relief Act of 2012, which was signed into law on January 2nd by the President. This tax package, referred to as the “fiscal cliff” bill, contained a number of items relating to biomass. Notably, the tax credits for biopower and biofuels were extended, and the Farm Bill’s Energy Title was re-authorized (but, without funding).

The Production Tax Credit (PTC) was extended for wind power, biopower, and other forms of renewable energy. See our earlier post on the PTC and wind power.  Specific to biopower, a few changes were made, such as the “in-service” date for which a project could receive the credit.  As Biomass Magazine reported,

“The placed-in-service date is no longer an issue, as the construction deadline has now replaced it. As long as a qualifying biogas or biomass energy facility has met the construction deadline of Jan. 1, 2014, it will be eligible for the production tax credit.”

Before this change of law, biopower projects were required to be “in service” before the end of the year to benefit from the production tax credit.

The impacts of this change on the 40+ proposed biopower projects in the Southeast region is not likely to be huge. Under the best circumstances, it takes 3 years to propose, plan, permit, and finance a biopower project (not including construction). Some projects may require 5 to 10 years of lead-time before construction. So realistically, this is good news only for a the handful of projects that are already well-advanced in their development, with strong PPAs in hand, the bulk of financing secured, and most permits in place.

Also in the “fiscal cliff” bill, the producer tax credits and depreciation rules for cellulosic ethanol were extended for a year. For biodiesel, the tax credit that expired at the end of 2011 was renewed until 2014. Also, algae was included in the list of allowed feedstocks for the designation of “second generation biofuel.” This category, more commonly called “advanced biofuels,” will play an increasingly large role under the U.S. Renewable Fuel Standard.

Although the new legislation also extended the 2008 Farm Bill through the 2013 fiscal year, at the last minute, mandatory funding for energy title programs was removed.  This is a major disappointment that cuts the jobs-boosting power and potential of programs like the Rural Energy for America Program (REAP) and Biomass Crop Assistance Program (BCAP).

This collection of policies paves the way for better, more efficient use of biomass to help meet our energy needs and to support our local economies while also helping the climate.  Continued vigilance is needed to monitor the growth of this sector and to promote sustainability policies to ensure that the economic and climate benefits of bioenergy are realized.

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As a follow-up to my blogpost: Related to the subject of EPA’s new industrial boiler MACT standards… In the words of one biomass industry guy, Novaspect’s Kurt Schmelzer said boiler tune-ups and other efficiency measures are “about saving money and being good environmental stewards.” – April 10, 2013, International Biomass Conference and Expo.


Comment by John Bonitz on April 10, 2013 11:36 am


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