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CARB Proposes New Regulations for Alternative Diesel Fuels
In a public workshop held yesterday, the California Air Resource Board discussed its proposed new regulations for alternative diesel fuels as well as conventional diesel fuels. There are a wide range of issues on the table which can best be reviewed on the CARB website for the proceeding. Of particular interest to the advanced biofuels community, CARB is proposing a phased process for introducing alternative diesel fuels to the California market. Prior to supplying any alternative diesel fuel to market, a producer would need to obtain a Memorandum of Exemption (MOE) granted by CARB. I raised the issue that the language was sweeping and would perhaps be more restrictive than the federal standard established by the Fuels and Fuel Additive Registration system found in 40 CFR Part 79 (FFARs). FFARs authorizes producers to provide some pre-commercial supply which can be highly valuable to companies testing and proving out new fuels for the marketplace. CARB officials who attended were receptive to further input on this issue during the public comment period. CARB encouraged public comments by June 24th if possible though the formal period is longer than that.
Fourth White Paper Released by House Committee
The House Committee on Energy and Commerce released its fourth white paper on the Renewable Fuel Standard. The white paper discusses the energy impacts of the RFS and the changes in US energy demand in the five years since the RFS passed. The paper calls for comments regarding the impact of the RFS on demand, petroleum prices, and how the RFS could be improved to better meets its energy security goals. The next House white paper will address fraud issues. Comments on the RFS energy white paper are due by June 21st.
Voting Underway for Biofuels Digest Hottest Partners List
Voting is underway for the 2013 Hottest Partners in Biofuels and BioBased Products, a poll conducted by our friend Jim Lane of Biofuels Digest. Poll categories include:
- Distributors
- Engineering, procurement & construction
- Enzymes, yeasts & sugars
- Feedstocks (energy crops)
- Feedstocks (gases and residues)
- Finance (early-stage)
- Finance (commercialization)
- Lab services
- Pretreatment systems
- Professional counselors & consultants (legal, finance, etc)
- Separation, microharvest, informatics & catalysis systems and services
- Processing systems and services
- Vehicle & vehicular equipment systems
- R&D Partners
- Strategic customers (fuels)
- Strategic customers (bio-based products)
We encourage all Digest subscribers to vote. Of course, we'd appreciate your vote. Stoel Rives is listed in the Professional Counselors category.
If you are not already subscribing to the Digest, we recommend it as an informative and sometimes entertaining daily report that is available for both the biofuel and the biochemical industries. You can subscribe here.
RIN Futures Become a Reality
In a development that will increase liquidity and transparency in the RIN market, two major providers are making RIN future contracts available to be traded. Both CME Group and the IntercontinentalExchange (ICE) will have RIN products available to be traded by mid May. CME Group and ICE will enable over the counter trading (OTC) of D4 RINs, D5 RINs, and D6 RINs. D6 RINs are the most common RINs, typically fulfilled by corn ethanol production. D5 RINs are the most flexible premium RINs, representing advanced biofuel that may consist of biogas, advanced drop in fuels, or other fuel types that meet the 50% GHG reduction standard. D4 RINs are biomass-based diesel RINs, fulfilled primarily by biodiesel and renewable diesel fuels. The development of a futures market could provide a substantial boost to the development of advanced biofuel facilities by enabling their financing. Many financial market participants have in the past regarded RIN revenue as too speculative to include in a plant's pro forma but are likely to be reassured by the presence of RINs in the OTC market. We speculated in our recent white paper that the EPA's rulemaking on Quality Assurance Programs (QAPs) could facilitate the establishment of a RIN futures market. See http://www.stoel.com/showarticle.aspx?Show=10180
Comment Period Coming to a Close for EPA's Proposed Rule Creating New Quality Assurance Program for Renewable Identification Numbers
On February 21, 2013, the U.S. Environmental Protection Agency ("EPA") opened the comment period on a proposed rule that would create a Quality Assurance Program ("QAP") to combat fraudulently-created Renewable Identification Numbers ("RINs") – a serial number assigned to a volume of biofuel for the purpose of tracking its production, use and, trade. A public hearing on the proposal was held in Washington, D.C. on March 19, 2013. Interested parties must submit their comments no later than 30 days thereafter, or by April 18, 2013, if they hope to influence the rulemaking process.
The QAP is intended to respond to the growing problem of fraudulently-created RINs, a practice wherein RINs are created and sold without the manufacture of the corresponding volume of biofuel. It aims to establish a set of options, or quality assurance procedures, to verify RIN validity and then also creates an affirmative defense against civil liability for obligated parties who purchase RINs under a QAP program that are later found to be invalid. This proposed change amends the EPA's original "buyer beware" approach, which imposed strict liability on all obligated parties that transferred or used invalid RINs, no matter the RIN's origin. The "buyer beware" approach failed to stem the tide of invalid RINs from entering the marketplace, as more than $100 million in fraudulent RINs were identified in the three years after the creation of the standard. Indeed, the "buyer beware" approach led to unintended consequences for smaller, less established biofuels producers, as the increased risk of EPA enforcement actions led obligated parties to favor more established producers.
For more information on the proposed regulatory changes to the Renewable Fuel Standard program, specifically the QAP's effect on the RIN market, download the recently published white paper by Stoel Rives lawyers Graham Noyes and Sara Bergan.
California Public Utilities Commission Opens New Rulemaking on Biomethane
The California Public Utilities Commission has commenced a new rulemaking to implement Assembly Bill (AB) 1900, on the use of common carrier gas pipelines for biomethane. In the rulemaking, the CPUC will develop standards and requirements for biomethane injected into pipelines, as well as pipeline access rules to ensure non-discriminatory open access to the system. Under current tariffs, most gas utilities specifically decline to accept or transport gas from landfills. Under AB 1900, the CPUC is also directed to adopt policies and programs that promote the in-state production and distribution of biomethane. This aspect of AB 1900 is being handled in the CPUC's existing proceeding on implementation of the state 33% RPS. The California Energy Commission is charged with implementing other provisions of AB 1900, including identifying impediments that limit procurement of biomethane in California and offering solutions to those impediments.
In January 2013, the CPUC updated the scope of its 33% RPS proceeding to also implement Senate Bill (SB) 1122, requiring investor-owned utilities to procure at least 250 MW of electrical generation from new bioenergy projects. A third bioenergy bill, AB 2196, allowing electrical generating facilities using landfill or digester gas to qualify for the California RPS, will largely be implemented by the Energy Commission. This suite of legislation from the 2011-2012 California Legislative Session offers new opportunities in California for the bioenergy and biogas industries, after the setback suffered in March 2012 when the Energy Commission suspended the RPS-eligibility of biogas.
EPA Proposes 2013 RFS2 Volume Obligations
Last Thursday, the Environmental Protection Agency released its proposed rule for the 2013 Renewable Fuel Standard ("RFS2") volume obligations. Every year the EPA is required to determine and publish the annual volume requirements for each class of renewable fuel that obligated parties will have to comply with for the upcoming year under the RFS2 program. The volumes required under the proposed rule for 2013 are as follows (generally in ethanol equivalent volume): 14 million gallons of cellulosic biofuel, 1.28 billion gallons of biomass-based diesel (actual volume), 2.75 billion gallons of advanced biofuel, and 16.55 billion gallons of renewable fuel. As always the categories are nested and the advanced biofuel volume includes the volumes set for the cellulosic and biomass-based diesel categories. The renewable fuel category accounts for all renewable fuel including traditional corn starch ethanol.
Three of the four categories are consistent with the volumes set forth by statute. The volume for cellulosic biofuel, however, is set by this rule because it must be the lesser of the statutory volume and EPA's projection of industry production for any given year. As with each ruling prior to this one under the program, EPA set a dramatically lower cellulosic biofuel volume than the statutory volume based on its assessment of the industry's status. Rather than 1 billion gallons as would otherwise be required by statute, EPA is requiring obligated parties to account for 14 million gallons of cellulosic fuel. Despite the dramatic reduction from the statutory requirement, this is significant because it is an increase over the 2012 standard of 10.45 million gallons that has been the subject of considerable recent controversy.Continue Reading...
Graham Noyes Among the "Top 100 People in Bioenergy" for 2012-13
I'm excited to report that my colleague and fellow Renewable + Law blogger Graham Noyes was recently named among the "Top 100 People in Bioenergy" by readers of Biofuels Digest and the publication's editorial board. Graham was one of only three attorneys to make the list, which was headed by U.S. Agricultural Secretary Tom Vilsack for the third consecutive year. CEO Jonathan Wolfson and President Harrison Dillon of client Solazyme placed fourth in the list.
More than 300 individuals received votes in the annual poll, including company executives, scientists, researchers and policy leaders. Overall, leaders from organizations in 13 different countries were recognized in the poll. You can read the full list here.
Congrats, Graham!
Requests to Waive US Renewable Fuels Standard Denied by EPA
The U.S Environmental Protection Agency (EPA) today announced it has denied requests from the Governors of Arkansas and North Carolina to waive Renewable Fuel Standard (RFS) volume requirements, based on the effects of the drought on feedstocks used to produce renewable fuel in 2012-2013. The petitions, filed in August, triggered a review process to determine if the implementation of the RFS requirements would severely harm the economy of those states.
After considering the nearly 30,000 comments received during the public comment period and empirical evidence, such as the prices of RINs and market commodities, the agency's economic analyses did not produce sufficient evidence of severe economic harm that would warrant the granting of the waiver request. The EPA analyzed 500 scenarios and found no impact from the RFS program on corn, food or fuel prices in 89% of those scenarios. In the 11% of scenarios where RFS impacts were shown, the impact was less than a 1% change in corn prices. EPA acknowledged that "this year's drought has created significant hardships in many sectors of the economy, particularly for livestock producers. However, the agency's extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS would have little, if any, impact on ethanol demand or energy prices over the time period analyzed."
In its 83-page Notice of Decision (PDF file), EPA interpreted the waiver provision in a manner consistent with its prior response to the first RFS waiver request from Texas in 2008, which was also denied. In both cases, Section 211(o)(7)(A) of the Clean Air Act was interpreted as providing narrow authority. In order to grant a waiver, EPA would have had to determine with a high degree of confidence that implementation of the mandate would not only contribute to economic harm, but would itself severely harm the economy of the State or region requesting the waiver.
While the issue is politically charged, EPA's decision making process in waiver requests focuses on the legal standard established by the Clean Air Act. The waiver is essentially a pressure relief valve for the program but is only available when the very high standard of severe harm is met. EPA utilized an updated version of an Iowa State University model to analyze 500 scenarios. In 89% of the scenarios, the model indicated that the implementation of the RFS program would have no impact on ethanol production and corn prices. This is consistent with the market reality that ethanol blending is driven primarily by factors other than the RFS, in particular blending economics and the value of ethanol as an oxygenate. A significant additional factor considered in the EPA analysis is the availability of rollover RINs from prior years that can be utilized by obligated parties. To the extent that rollover RINs are used this year, this factor would change significantly should similar drought conditions return next year.
While this waiver request has now been resolved, interested parties continue to follow EPA rulemaking activities relating to the RFS closely. It is anticipated that the agency will address the issue of RIN fraud in a pending rulemaking. Thanks to my colleague Sara Bergan for her assistance in reporting the EPA's RFS waiver decision today.
EPA Docket ID: EPA-HQ-OAR-2012-0632
New Advanced Biofuels Practice Page and Legal Guide for Advanced Biofuels
Stoel Rives has long been a trusted advisor to the biofuels industry. Since the industry's inception, we have assisted biofuel companies in launching ventures, obtaining financing, ensuring regulatory compliance, licensing technology, negotiating agreements, and leveraging incentives and government programs. As the industry has evolved and expanded, our practice has remained on the cutting edge while maintaining focus on the needs of our clients.
Today, we are pleased to announce the launch of our Advanced Biofuels practice. We have assembled an experienced team of attorneys capable of meeting the diverse needs of the emerging Advanced Biofuels industry. Our attorneys possess a wealth of expertise in the full range of relevant legal areas including intellectual property, regulatory issues, financing, mergers and acquisitions, litigation, real estate, permitting, and contract negotiations. Our advanced biofuel attorneys already represent multiple advanced biofuel companies and have invested time in learning the industry and its unique legal requirements. The backgrounds and experience of the team, along with additional resources and publications can be found on our new Advanced Biofuels practice webpage: www.stoel.com/advancedbiofuels
In conjunction with the launch of our website and the announcement of our Advanced Biofuel team, we are also releasing the Law of Biorefineries and Advanced Biofuels. This publication is the first of its kind, providing the industry with a guide to the legal issues that developers of advanced biofuels projects face. We hope that you find our resources informative, and we look forward to working with you in this dynamic industry. The new guide can be downloaded free of charge at www.stoel.com/lawofseries
Comment Period Closes for RFS Waiver Request: EPA Receives Nearly 30K Public Comments
The deadline for public comments on petitions seeking a waiver of the Renewable Fuel Standard (RFS) expired last night on October 11, 2012. The Governors of Arkansas and North Carolina had submitted separate requests, in letters dated August 13, 2012 and August 14, 2012, asking for a waiver of RFS volume requirements. Under Section 211(o)(7)(A) of the Clean Air Act, the Administrator of the EPA is permitted to waive national volume requirements of the RFS in whole or in part if implementation of those requirements would severely harm the economy or environment of a state, a region, or the United States, or if the Administrator determines there is an inadequate domestic supply of renewable fuel. Such a waiver may either be triggered through petition by one or more States, a party subject to RFS program requirements, or at the Administrator's own motion. If a waiver is granted, it can last no longer than one year, but may be renewed by the Administrator after consultation with the Secretary of Agriculture and the Secretary of Energy.Continue Reading...
Governor Brown Signs Three Biogas Bills Into Law
Here's a California law update from my partner Wayne Rosenbaum in San Diego:
The California legislature continues to emphasize the importance of renewable energy for the State's environment and economy. Of the renewable energy bills passed by the legislature and signed by the Governor this year, three of them focused on biogas. Some of the aspects of these bills actively encourage the increased use of biogas for electricity generation by calling on the California Public Utilities Commission ("CPUC") to look at access to transmission facilities and setting minimum procurement quotas for public utilities. These new laws will also regulate the quality and sources of the biogas that can be used. Here's a brief summary of some important provisions in each:
SB 1122 requires the CPUC to direct the electrical corporations (PG&E, SDG&E, and SCE) to collectively procure at least 250 megawatts of cumulative rated generating capacity from developers of bioenergy projects that commence operation on or after June 1, 2013.
AB 1900, chaptered as Health and Safety Code 25420 et seq., seeks to do three things primarily:
- Regulate chemicals of concern. AB 1900 requires state agencies to compile a list of, and regulate, compounds and elements of concern that could pose resins? to human health that are found at significantly higher concentrations in biogas than in natural gas. The bill also prohibits the sale or transmission of biogas generated at hazardous waste landfills.
- Identify barriers to procurement. AB 1900 requires the CPUC to hold public hearings to identify the impediments to procurement of biogas in California, including interconnections. It then requires the CPUC to adopt policies and programs to promote the in-state production and distribution of biogas.
- Adopt pipeline access rules. AB 1900 requires the CPUC to adopt pipeline access rules that ensure non-discriminatory access to the gas pipeline system for biogas generators.
Among other things, AB 2196 amends the definition of a renewable electrical generation facility under the California Energy Commission's Renewable Energy Resources Program . The new definition provides that if the RPS program eligibility of a facility is based on the use of landfill gas, digester gas, or another renewable fuel delivered to the facility through a common carrier pipeline, the transaction for the procurement of that fuel, including the source of the fuel and delivery method must meet certain conditions including green biomethane claims and greenhouse gas reduction claims.
California Issues 2012 Bioenergy Action Plan
The California Bioenergy Interagency Working Group has released its 2012 Bioenergy Action Plan, with the goal of facilitating the development of bioenergy in California on a variety of levels, including research and development support, streamlining and consolidating permitting, facilitating access to transmission, pipelines, and other distribution networks, and policies and laws to monetize the benefits of bioenergy. The Working Group is a broad coalition of state energy, environment, and resources agencies, including the California Public Utilities Commission, Energy Commission, Air Resources Board, Natural Resources Agency, Cal Fire, Cal Recycle, and the Department of Food and Agriculture, as well as the California Biomass Collaborative and the Central Valley Regional Water Quality Control Board. The 2012 Plan builds on the Working Group's 2006 and 2011 Bioenergy Action Plans, providing a more detailed set of actions for the constituent agencies to undertake and incorporating more of Governor Brown's policies for energy, waste reduction, and job creation. Bioenergy has met some obstacles in California in recent times, including challenges by major and local environmental groups to biomass-fueled electrical generation contesting claims of greenhouse gas neutrality and the Energy Commission's suspension, in most cases, of pipeline biomethane as an eligible renewable fuel for gas-fired facilities to help meet the state's 33% renewable portfolio standard. A concerted focus by the state agencies on specific Action Plan items will undoubtedly help move bioenergy forward in California. Bioenergy advocates should also keep an eye on several bioenergy and biomethane bills still active during this last week of the California 2011-2012 Legislative Session, including A.B. 1900, A.B. 2196, and S.B. 1122.
D.C. Circuit Rejects Challenge to Introduction of E15 Ethanol Fuel Blend
In a decision released this morning, the DC Circuit rejected a challenge to the introduction of E15, a gasoline blended with 15 percent ethanol, under an EPA waiver grant. Currently, the national gasoline supply consists largely of E10, a 10 percent ethanol/gasoline blend. With fuel manufacturers confronting mandatory annual increases of renewable fuels under the Renewable Fuel Standard (RFS), Growth Energy, a trade association representing the ethanol industry, had sought an EPA waiver for a new 15 percent ethanol/gasoline blend. The EPA provided partial waivers (1 and 2), under the Clean Air Act for the E15 blend, restricting the fuel's use to light duty motor vehicles and engines from model-year 2001 and newer. Three sets of industry groups representing engine manufacturers, food producers and petroleum suppliers then sued, challenging the EPA's waivers.
The Ruling
In a 2-1 decision, the court declined to make a decision on the merits, finding that the petitioners lacked standing to bring the action. In a strongly worded dissent, Circuit Judge Brett Kavanaugh disagreed. Kavanaugh then addressed the merits of the case, finding they were "not close." He concluded that in granting the E15 partial waiver the "EPA ran roughshod over the relevant statutory limits."
Where We Go From Here
The decision preserves flexibility for implementing the RFS renewable fuels mandates – for now. However, the lack of a decision on the merits means the EPA waiver process remains vulnerable to judicial challenge. In the meantime, the debate over corn-based ethanol fuel mandates may be shifting to Congress, as predictions for historically low corn crop yields continue to accumulate.
Download a copy of the decision in Grocery Manufacturers Association, et al v. Environmental Protection Agency (PDF)
Southwestern Public Service Company Seeks Renewable Energy
Southwestern Public Service Company ("SPS"), a subsidiary of Xcel, has issued a request for proposals to diversify its existing renewable energy portfolio in New Mexico. SPS is seeking, on an annual basis, approximately 88,705 MWh of "Other" renewable energy generation as defined by the New Mexico Public Regulation Commission Rule 572 NMAC (i.e., other than solar and wind) or an equivalent amount of biogas of approximately 665,300 MMBtu to be in commercial operation no later than January 1st, 2015.
Bidders that intend to submit a proposal are REQUIRED to submit a Notice of Intent to Bid no later than Friday August 31st, 2012. The submission deadline is 5:00 P.M. Mountain Time on Monday, October 1st, 2012. More information can be found here on Xcel Energy's web site.
Stoel Rives Earns Top Professional Services Position in Biofuels Digest's Hot 40 Partners
Stoel Rives is honored to have been named the top partner in the Professional Counselors and Services category by the readers of Biofuels Digest, the most widely read daily news digest in the biofuels industry. Biofuels Digest Publisher Jim Lane and his team produce a great on-line magazine and some of the best conferences in the industry, and we are proud that the readership values the work of the firm.
Stoel Rives attorneys provide counsel on all aspects of biofuel and biochemical projects and are committed to providing valuable assistance to this exciting and dynamic industry. The firm continues to focus on bioenergy project development including real estate, permitting, financing, commercial agreements, RFS and regulatory work. Firm attorneys have extensive experience with both first and second generation projects and regularly provide useful resources for the sector which are available for download here.
Biofuels Digest's Hot 40 Partners recognizes the industry's top forty partners, as voted by the readers of Biofuels Digest and a panel of international selectors. According to Jim Lane, readers voted for companies that add credibility to their efforts, and accelerate their path to commercialization. The Biofuels Digest is an indispensible news source for the biofuels industry, covering producer news, research, policy, conferences, and financial news. The Digest reaches over 28,000 subscribers each weekday, and also publishes in-depth market research and data, including the Quarterly Biofuels Business Outlook, and the Advanced Biofuels Project Database.
EPA Releases Green Diesel Notice of Violation
Yesterday the EPA released the third major Notice of Violation ("NOV") against a biofuel producer in the past six months under the Renewable Fuel Standard ("RFS"). The NOV states that EPA has determined that Green Diesel, LLC of Houston, Texas, generated 60,034,033 invalid Renewable Identification Numbers ("RINs') with a current market value of perhaps $85 million. Coming on the heels of 31 settlement agreements relating to the Clean Green Diesel and Absolute Fuels RINs, this NOV is likely to trigger immediate market reaction. The EPA has been enforcing invalid RIN cases first against the RIN generator then subsequently against the obligated party, i.e., the company that uses the RINs for compliance with RFS. Obligated parties under the RFS are petroleum refiners and importers in the U.S. About a month after the Clean Green Fuel filing, the EPA filed NOVs against the obligated parties. It remains to be seen whether EPA will do so again. The agency may instead rely upon its past actions and its recently released Interim Enforcement Response Policy to motivate corrections by obligated parties.
Some market participants have criticized the EPA for their managing of the RFS program and questioned the RFS program itself. In response, the biofuel industry and particularly the National Biodiesel Board have taken significant steps to address the validity issues. While there is significant time delay as many of the alleged activities date back to 2010, it appears that the EPA enforcement activities have motivated substantial due diligence activities that will serve the RFS program participants well in future years. The immediate challenge is in addressing the new Green Diesel NOV and the resulting contractual implications for market participants who transacted in these RINs. The rapid growth in the value of the RIN market has certainly presented substantial challenges. Nonetheless, private market responses to date suggest that the resourceful biofuel and petroleum industries can weather these storms and ultimately make the RFS program more effective toward its goals of reducing U.S. dependence on foreign oil imports and reducing GHG emissions.
BioEnergy Law Alert: EPA Issues Notice of Violation to Absolute Fuels
On February 2, 2012, the Environmental Protection Agency ("EPA") issued a Notice of Violation ("NOV") of the Renewable Fuel Standard ("RFS") to Absolute Fuels, a company located in Lubbock, Texas. The NOV alleges that between August 31, 2010, and October 11, 2011, Absolute Fuels generated over 48 million Renewable Identification Numbers ("RINs") and that all of these RINs were invalid. This EPA action is likely to have a substantial impact on the overall RIN market and could be followed by related NOVs to other market participants.
The Absolute Fuels NOV represents the second major enforcement action by the EPA under the RFS. The first action alleged invalid generation of over 32 million RINs by Clean Green Fuel. The Clean Green Fuel action proceeded with a criminal filing by the U.S. Attorney for the District of Maryland and was followed by the EPA's filing of 24 NOVs against the companies that utilized the Clean Green Fuel RINs for compliance with RFS obligations. EPA did not allege that the obligated parties that received the Clean Green Fuel RINs had any knowledge or reasonable basis to have knowledge regarding the RINs' invalidity. This alert provides an analysis of the regulatory basis for these EPA enforcement actions.
EPA Enforcement of RFS2 Heats Up
The Environmental Protection Agency (EPA) is exercising its authority and enforcing the requirements of the Clean Air Act's renewable fuel standard (RFS) program. The EPA issued twenty-four notices of violation on November 7, 2011, to petroleum refiners, importers and exporters of renewable fuel.
Following a filing last month of criminal charges of wire fraud, money laundering, and violations of the Clean Air Act (CAA) against an individual, Rodney R. Hailey, the EPA issued civil notices of violations (NOVs) to the entities that relied upon the allegedly invalid Renewable Identification Numbers (RINs) generated by Mr. Hailey. The companies involved are obligated parties under the RFS program and thereby, subject to Renewable Volume Obligations (RVOs) designed to demonstrate compliance with the renewable fuel standards set by Congress -- 36 billion gallons by 2022.
Stoel Rives issued a legal update on these matters, among the first enforcement actions initiated by the EPA under the RFS2 requirements. The entire update can be read here.
Joint Agency Effort to deploy $510 Million to Support Drop-In Aviation and Marine Biofuels
Yesterday, President Obama announced that the U.S. Departments of Agriculture ("USDA"), Energy ("DOE"), and Navy ("USN", and together with the USDA and DOE, the "Agencies") will invest up to $510 million over the course of the next three years to support advanced drop-in aviation and marine biofuels to power military and commercial transportation. This is a follow up to President Obama's Blueprint for a Secure Energy Future (the "Blueprint"). In the Blueprint, the President expressed a desire to begin construction on at least four commercial-scale cellulosic or advanced bio-refineries over the next two years and challenged the Agencies to work together to spur the development of competitively priced substitutes for diesel and jet fuel.
The USDA, DOE and USN responded to the Blueprint by signing a Memorandum of Understanding (the "MOU"). The MOU outlines a plan for the Agencies to partner with the private sector to construct or retrofit several drop-in biofuel plants and refineries. The agencies have stated goals of limiting our nation's dependence on foreign oil for national, providing tactical and strategic advantages for our military and creating economic opportunities in rural communities. We expect that the USDA will take the lead on addressing feedstocks, the DOE will take the lead on technology, and the USN will be the initial primary consumer of the advanced biofuels.
Each of the Agencies have committed to spending $170 million over the next three years and an Executive Steering Group (the "ESG") will be established to coordinate the programs. It is expected that the ESG will work with the Agencies to develop and release solicitations to industry beginning in December 2011. The solicitations will be issued in accordance with the Defense Production Act (50 U.S.C. App. 2061 et seq), the Commodity Credit Corporation Charter Act (15 U.S.C. 714 et seq), the Economy Act (31 U.S.C. 1535) and other appropriate authorities. Consequently, rights in inventions made as a consequence of, or in direct relation, of these solicitations will be administered in accordance with the applicable Agency's governing laws and policies.
Sustainable Aviation Fuels Northwest Releases Report
The Sustainable Aviation Fuels Northwest (SAFN) is the first stakeholder effort to review the challenges surrounding the production of sustainable aviation fuels and to develop a regional solution.
The initiative was launched in July 2010 by Boeing, Alaska Airlines, the Ports of Portland, Seattle and Spokane– and Washington State University. Climate Solutions, a Northwest clean-energy nonprofit, managed the stakeholder process that included a wide range of groups across aviation, biofuels production, environmental advocacy, agriculture, forestry, federal and state government agencies, academic research and technical consultancies. Stoel Rives was proud to be a participant in the process and to provide specific input regarding incentives, and the Renewable Fuel Standard.
We hope that you find the report useful and informative, see http://www.safnw.com/ for further information.
Unused ARRA Grant Funds Related to Electric Vehicles, Alternative Fuel Vehicles and Infrastructure Projects
Puget Sound Clean Cities Coalition has announced that it has roughly $400,000 in unused ARRA grant funds available for alternative fuel vehicle and infrastructure projects.
Examples of eligible vehicles include:
- Vehicles using alternative fuels recognized by the Energy Policy Act (complete list here: http://www1.eere.energy.gov/vehiclesandfuels/epact/about/epact_fuels.html);
- Fuel Cell Electric Vehicles;
- Electric Hybrid Vehicles (including certain Plug-in Hybrid Vehicles);
- Hydraulic Hybrid Vehicles;
- Neighborhood Electric Vehicles; and
- Certain Bio-Diesel Vehicles (if replacing gasoline powered vehicles).
Infrastructure projects must be related to the storage, distribution, dispensing of advanced fuels or electric vehicle supply equipment. Examples of eligible infrastructure projects include:
- New dispensing facilities, or additional equipment or upgrades to existing refueling sites;
- Facility upgrades or building modifications necessary to accommodate alternative fuels for fleet garages and other maintenance centers;
- Solar charging systems dedicated to providing on-site vehicle motive electrification
Funding requests must be between $100,000 and $400,000 with a minimum 10% non-federal match. Precise requirements of this grant are located at http://www.pugetsoundcleancities.org/documents/CleanCitiesFY09FOAModification007.pdf
LexisNexis Selects Renewable + Law Blog to its Top 50 Environmental Law Blogs List
Having first reported to our readers in February that LexisNexis had nominated the Stoel Rives Renewable + Law Blog for its Top 50 Environmental Law & Climate Change Blogs for 2011 award, we are pleased to announce we made the list of winners! In publishing its Top 50 list, LexisNexis declared that our Renewable + Law bloggers' "avowed passion for solar energy, wind energy, biofuels, ocean and hydrokinetic energy, biomass, waste-to-energy, geothermal and other clean technologies is evident in the care they take with this blog-the posts are frequent, the topics are interesting and cutting edge, and the writing is top notch."
Thanks again to all our readers who make regular use of Renewable + Law Blog and those who wrote in to support us for this award. We're honored and inspired, and we plan to keep those Blogs and letters coming.
Budget Compromise Looks OK for Projects in DOE Loan Guarantee Pipeline
The current version of the budget compromise provides relatively good news for projects seeking DOE loan guarantees. During the past several months, renewable energy projects in the DOE's Loan Guarantee pipeline have been exposed to substantial uncertainty as a result of the budget crisis in DC. The developers of these projects have previously invested substantial resources to apply to the program which would become wasted effort if the program funds evaporate as the projects wait for DOE approval. The Loan Guarantee Program Office led by Jonathan Silver was clearly aware of this issue and prudently allowed all open solicitations to expire in early 2011 without issuing any new ones. The renewable energy project developers' concern has been that the budget deal would involve a substantial claw back of previously appropriated funds that have not yet been committed to projects.
The battle is not yet resolved but the current compromise is encouraging for these projects. There is a claw back of $18.183 billion in uncommitted funds but these were funds appropriated under provisions that required that the Credit Subsidy Cost to be paid by developers. The Credit Subsidy Cost was the bane of the Loan Guarantee Program as it essentially required the program applicant to cover the present value risk that the project would default on the loan. The Stimulus Bill solved this problem and greatly increased the attractiveness of the Loan Guarantee Program by appropriating funds to cover the Credit Subsidy Cost. Similarly, the current budget compromise appropriates an additional $1.183 billion in funds and allows these funds to be utilized to cover Credit Subsidy Costs. Thus, while the provision claws back funds, these are funds that were not attractive due to program limitations whereas new funds are appropriated to the preferred program. In addition, the proposed legislation imposes an Office of Management and Budget certification of compliance requirement as a control on the program.
The current bill is HR 1473 and is likely to be voted on later this week and thus is still subject to amendments. To obtain the latest details and access to the bill, see the Open Congress site at http://www.opencongress.org/bill/112-h1473/show
Upcoming Energy Conference Highlights
Through industry presentations and publications as well as through our blog, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.
Visit our website for the latest calendar of events. Upcoming highlights include:
Renewable Energy World Conference & Expo North America 2011
March 8-10, 2011 – Tampa, FL
Featuring speakers Bill Holmes, Greg Jenner, David Benson and Ramona Monroe. Visit us at booth #726 in the Exhibit Hall.
Tax Equity Financing for Renewables
March 16 - Webinar
This webinar, part of EUCI's Law of Renewable Energy Series, is instructed exclusively by Stoel Rives Partners Gary Barnum, Greg Jenner, Kevin Pearson, and Moderated by Ed Einowski. It will provide a refresher on the 1603 grant, the PTC and the ITC, and discuss the requirements and complexities of bonus depreciation, and the opportunities to utilize New Market Tax Credits.
Biomass for Power, Fuels and Chemicals
March 21-22 – Minneapolis, MN
Visit with Mark Hanson, Jennifer Martin, Bill Holmes, and John Eustermann, who will cover topics from PPAs and feedstock agreements to project due diligence and case studies.
Solar Power Finance & Investment Summit
March 22-24 – San Diego, CA
Join speakers Morten Lund and Howard Susman along with Julia Pettit, David Quinby, Brian Nese, Jennifer Martin, Kristen Castaños, Greg Jenner and David Benson in sunny San Diego – save 15% on conference registration with code 111561
Solar EPC and Long-Term Component Supply
March 28 – Webinar
Stoel Rives Partners Ed Einowski, David Hattery and Morten Lund will serve as the exclusive instructors for this webinar, part of the Law of Renewable Energy Series presented by EUCI.
National Hydropower Association's Annual Conference
April 4-6 – Washington, DC
Cherise Oram will discuss how best to navigate the Endangered Species Act at the Federal Energy Regulatory Commission licensing, relicensing and mid-license stages as she presents, "Working Toward Successful ESA Outcomes."
This Week in Biofuels, A Patent Perspective
On December 7, 2010 the United States Patent Office published several new biofuels-related patents, including one to Amyris Biotechnologies relating to a jet fuel or diesel fuel including a bioengineered isoprenoid component.
- US Patent 7,846,712 (Alliance for Sustainable Energy, LLC) claims an isolated polynucleotide having an amino acid sequence that is at least 95% identical to the sequence of KmLAT1, an arabinose transporter gene cloned from Kluyveromyces marxianus. The specification relates more broadly to providing new yeast strains capable of using L-arabinose to produce ethanol at relatively high yield. According to the specification, this can be achieved: 1) by introducing two L-arabinose transporters, specifically introducing KmLAT1 and PgLAT2 (from Pichia guilliermondii), into yeast such as S. cerevisiae to improve arabinose transport kinetics; and 2) by cloning bacterial araA, araB and araD genes into yeast such as S. cerevisiae in which the aldose reductase gene is disrupted to enable making ethanol from L-arabinose.
- US Patent 7,846,323 (Syntroleum Corporation) claims a method of making an isoparaffinic product useful as a jet fuel, as well as a method of co-producing liquid petroleum gases (LPG), isoparaffinic naptha and jet fuel. The specification describes the method as involving a hydrotreating step, a hydroisomerizing step, and a fractionation step having recycle of the hydroisomerization products. More specifically, a renewable feedstock of triglycerides and/or free fatty acids such as from animal fats, animal oils, vegetable fats, vegetable oils, plant fats, plant oils, rendered fats, restaurant grease, waste industrial frying oils, and/or fish oil is hydrotreated to produce a hydrotreated heavy fraction including n-paraffins. In the case of the method for producing the isoparaffinic product, the hydrotreated heavy fraction is hydroisomerized to produce an isoparaffinic fraction and a heavy fraction, which are separated so that the heavy fraction can then be recycled back to the hydroisomerization step. In the case of the method of co-producing LPG, isparaffinic naptha and jet fuel, the hydrotreated heavy fraction is hydroisomerized to produce a hydroisomerized heavy fraction and isoparaffin. The hydroisomerized heavy fraction is recycled back through the hydroisomerizer and is then itself hydroisomerized to produce an isoparaffinic product, which is fractionated to produce LPG, isparaffinic naptha and jet fuel. According to the specification, the jet fuel has improved cold flow properties.
- US Patent 7,846,222 (Amyris Biotechnolgies) claims a fuel composition comprising one of a group of specified isoprenoid compounds such as farnesane, among other ingredients, and having a flash point of at least 38 degrees C. The specification is directed to a method of biologically manufacturing the isoprenoid compounds referenced in the claims. The specification exemplifies the production of alpha-farnesene and Beta-farnesene in bioengineered E.Coli and S. cerevisiae host strains, and the chemical hydrogenation of the microbially-derived Beta-farnesene to farnesane.
DOE Announces $30 Million for Next Generation Biofuels Research
DOE announced on December 14, 2010 that funds will be made available for small-scale process integration projects that support the development of advanced biofuels. The biofuels could replace gasoline or diesel without requiring special upgrades or changes to the vehicle or fueling infrastructure. The funding opportunity announcement, reference number DE-FOA-0000337 (the "FOA") will provide up to $30 million over the next 3 to 4 years to support up to 5 projects.
Successful proposals will focus on optimizing and integrating processes that convert biomass into biofuels and bioproducts that can be used to support hydrocarbon fuels and chemicals. These process improvements could include, for example:
- Pretreatment methods that alter the biomass to improve the yield of sugars in subsequent process steps;
- More cost-efficient enzymes that produce sugars;
- Fermentation organisms and catalysts that convert the sugars into fuel and chemical intermediates.
Successful applicants will demonstrate the economics and efficiency of their proposed process.
This FOA is largely focused on agricultural residues but other feedstock sources can be proposed if the applicant can show compelling evidence that the feedstock will be sustainably available by 2015. However, certain feedstocks and processes are excluded from the scope of this FOA:
- Proposals that use pure sugar feeds and 'model' hydrolysates are not eligible for funding under this FOA
- Proposals that include thermochemical processes (example: fermentation of syngas from a gasification process).
- Early- and late-stage processes (i.e. prior to pretreatment and saccharification or after conversion to final product) will not be eligible for funding.
- If a catalytic conversion process is proposed, the hydrogenation process may not be included in the proposed process improvements to be funded under this FOA.
A complete description of the FOA solicitation, eligibility requirements, and application instructions can be found at https://www.fedconnect.net/FedConnect/PublicPages/PublicSearch/Public_Opportunities.aspx
Applications must be submitted through Grants.gov by no later than 11:59 p.m. EST on February 7, 2011. Applicants are requested (but not required) to submit a letter of intent by January 17, 2011.
Energy Law Alert: EPA Publishes CO2 Geologic Sequestration Rule in Federal Register
On Friday, December 10, 2010, EPA published in the Federal Register its final rule governing the underground injection of carbon dioxide (CO2) for geologic sequestration (GS) under the Safe Drinking Water Act (SDWA). EPA released a pre-publication version of this rule back on November 22, 2010. Stoel Rives previewed the pre-publication version on our Renewable Energy + Law Blog. This alert highlights some key deadlines included in final rule, as published last Friday.
Background: Last Friday's rule focuses on protecting underground sources of drinking water (USDW) from endangerment due to CO2 GS activities. The rule was promulgated pursuant to EPA's SDWA authority. The rule, which becomes effective on January 10, 2011, resulted from a proposed rule issued by EPA on July 25, 2008 (73 FR 43492) and a notice of data availability and request for comment by EPA on August 31, 2009 (74 FR 44802).
For more information about how last Friday's rule could affect your CO2 injection plans, feel free to contact one of the following Stoel Rives' attorneys.
Geoffrey Tichenor at (503) 294-9389 or firstname.lastname@example.com
Jerry Fish at (503) 294-9620 or firstname.lastname@example.com
Thomas Wood at (503) 294-9396 or email@example.com
Sara Bergan at (503) 294-9336 or firstname.lastname@example.com
Sarah Johnson Phillips at (612) 373-8843 or email@example.com
Eric Martin at (503) 294-9593 or email@example.com
This Week in Biofuels, A Patent Perspective
On December 2, 2010, the United States Patent Office published two Novozymes applications relating to bioethanol production from lignocellulosic biomass and an Iogen application relating to bioethanol production from lignocellulosic. On the same date, the World Intellectual Property Organization published a Solazyme application relating to biodiesel, renewable diesel and jet fuel production.
- US Patent Pub. No. 2010/0306879 (Novozymes) is directed to polypeptides having cellobiohydrolase activity useful for saccharifying cellulosic material in the production of ethanol. The patent application identifies two Family 6 Cellobiohydrolase polypeptides, one isolated from Thielavia hyrcaniae NN045097 and one isolated from Thielavia hyrcaniae NN045178.
- US Patent Pub. No. 2010/0304437 (Novozymes) is directed to polypeptides having cellulolytic enhancing activity and to saccharifying cellulosic material in the production of ethanol using an enzyme composition in the presence of a polypeptide having cellulolytic enhancing activity. According to the specification, 'cellulolytic enhancing activity' means a biological activity catalyzed by a GH61 polypeptide that enhances the hydrolysis of a cellulosic material by enzyme having cellulolytic activity. The specification provides a procedure for determining celluloytic enhancing activity and identifies an Aspergillus fumigatus gene encoding a Family 61 polypeptide having cellulolytic enhancing activity.
- US Patent Pub. No. 2010/0304438 (Iogen) is directed to modified beta-glucosidase enzymes that exhibit improvements in one or more kinetic parameters (i.e KG, KG2, kcat) relative the wild type beta-glucosidase. The application generically refers to modified Family 3 beta-glycosidases, which comprise genetically engineered amino acid substitutions selected from V43I, V43C, V101A, V101G, F260I, F260V, F260Q, F260D, 1543N, 1543A, 1543S, 1543G, and 1543L (TrCel3A numbering) and which have an amino acid sequence that is at least 80% identical to the amino acid sequence of the parental Family 3 beta-glycosidase from which it is derived. The application more specifically refers to modified beta-glucosidase enzymes derived from the Trichoderma reesei Cel3A beta-glucosidase and which have amino acid substitutions at one or more of positions 43, 101, 260 and 543, and optionally have further substitutions at least at one or more positions 66, 72, 96, 235, 248 and 369. According to the specification, the modified beta-glucosidases are useful in industrial process requiring efficient conversion of cellobiose to glucose, such as the hydrolysis of pretreated lignocellulosic feedstock.
- WO2010/138620 (Solazyme) relates to methods of extracting a lipid from a microorganism. The method involves: lysing a cultured microorganism to produce a lysate, wherein the microorganism has not been subjected to a drying step between culturing and lysing; treating the lysate with an organic solvent for a period of time sufficient to allow the lipid from the microorganism to become solubilized in the organic solvent; and separating the lysate into layers comprising a lipid:organic solvent layer and an aqueous layer. The specification exemplifies the use the microalgae as Chlorella protothecoides as the microorganism and coconut oil as the organic solvent. The specification also indicates that Prototheca moriformis can be preferably used and discusses methods of culturing and transforming Prototheca. The application also relates to methods for producing hydrocarbon or lipid compositions for production of biodiesel, renewable diesel, jet fuel, and lipid surfactants, the compositions having various carbon chain lengths, including C8, C10, C12, C14 and C18.
Biofuels Law Alert: EPA Releases Final Renewable Fuel Standards for 2011
EPA has completed the roll out of the complex RFS2 program by setting renewable fuel quantity requirements for 2011. EPA severely curtailed the cellulosic biofuels standard from 250 million gallons to six million gallons based on limited industry growth. Looking forward to 2012, however, the agency identified a potential surge to 300 million gallons of production. EPA held firm on both the overall renewable fuel standard at 14 billion gallons and advanced biofuels at 1.35 billion gallons despite the cellulosic cut. Other contentious RFS2 issues including retroactive Renewable Identification Numbers ("RINs") and foreign feedstock were also resolved.
For the full alert, please click here.
If you have additional questions regarding RFS2, please contact Graham Noyes at (206) 386-7615 or email@example.com.
REMINDER: Applications for SBIR and STTR Phase I Grants Due November 15th
Don't forget that the deadline for Phase I grant applications under the U.S. Department of Energy's ("DOE") Small Business Innovation Research ("SBIR") and Small Business Technology Transfer ("STTR") programs is 8:00 p.m. Eastern, November 15, 2010. Qualified small businesses with strong research capabilities in science or engineering in any of the research areas identified in the September 28, 2010 Funding Opportunity Announcement are encouraged to apply. Phase I grants of up to $150,000 will be awarded in FY 2011 under the SBIR; and grants of up to $100,000 will be awarded under the STTR.
The Phase I Technical Topics document lists several areas of particular interest for the renewable energy industry. Note that the following is not an exhaustive list. The full list and descriptions can be found in the Phase I Technical Topics document.
- Advanced Cooling and Waste Heat Recovery: Advanced Cooling; Advanced Waste Heat Recovery; Geoexchange heat pump (GHP) component R&D; Innovative GHP System/Loop Designs.
- Production of Bioenergy and Biofuels from Cellulosic and Non-Food Biomass: Biomass Feedstock Stabilization and Drying; Biomass Torrefaction; Sugar Catalysis to Advanced Biofuels and Chemical Intermediates; Pyrolytic Thermal Depolymerization.
- Hydrogen and Fuel Cells: Reducing the Cost of High Pressure Hydrogen Storage Tanks; Fuel Cell Balance-of-Plant; Demonstration of Alternative-Fuel Fuel CElls as Range Extenders.
- Innovative Solar Power: High Efficiency, Low Cost Thin Film Photovoltaics; Low Cost Building Integrated Photovoltaics; Static Module PV Concentrators; Solar-Powered Water Desalination; Distributed Concentrating Solar Power ("CSP").
- Advanced Water Power Technologies: Pumped Storage Hydropower; Advanced Hydropower Systems; Wave and Current Energy Technologies; Advanced Component Design for Ocean Thermal Energy Conversion Systems.
- Wind Energy Technologies: Transportation and Assembly of Extremely Large Wind Turbine Components for Land-Based Wind Turbines; Wind Energy Capture in Non-Conventional Wind Resources; Offshore Grid Infrastructure Hardware Development; Offshore Mooring and Anchoring Technology.
Detailed descriptions of each subtopic are included in the Phase I Technical Topics document.
Summary of Federal Biofuels Incentives
The Congressional Research Service has put out a useful and concise summary of federal programs that provide direct and indirect incentives for biofuels. The report lists over eighteen active programs administered by five different agencies including the U.S. Department of Agriculture; Department of Energy and Internal Revenue Service. For each program, the report lists the authorizing legislation, the annual funding, the expiration date and the targeted beneficiaries of the programs.
A copy of the report can be found at http://www.stoel.com/files/R40110.pdf.
A special thanks to Penny Hill Press for making this report available.
House Passes Algae-based Renewable Fuel Promotion Act of 2010
On September 28, 2010, the House of Representatives passed the Algae-based Renewable Fuel Promotion Act of 2010 (H.R. 4168). The Act amends the Internal Revenue Code to (1) expand the definition of "cellulosic biofuel" to include algae-based biofuel for purposes of the cellulosic biofuel producer tax credit; and (2) provide for accelerated depreciation of property used in the production of algae-based biofuel. The legislation now will proceed to the Senate. For the complete text, please click here.
California Energy Commission Proposes Revisions to RPS Guidebooks
An alert written by Stoel Rives partners Seth Hilton and John McKinsey:
The California Energy Commission RPS staff has proposed some significant and potentially important revisions to the RPS Eligibility Guidebook and the Overall Program Guidebook. Written comments on the proposed revisions are due September 10, 2010, by 5:00 p.m. The CEC will consider approval of the revisions at the November 17, 2010 CEC Business Meeting. The revisions would become effective immediately upon adoption.
Some of the most significant changes proposed to the RPS Eligibility Guidebook include:
- Facility operators and fuel suppliers would now be required to verify that fuel meets RPS eligibility requirements.
- Biogas use would now be allowed to generate electricity at the fuel processing site. If not, the biogas must be transported by one of three methods to the electric generating facility.
- The eligibility of biogas would now be expanded to include electric generating facilities located outside of California (but within the WECC – must deliver to pipeline that is directly linked to California).
- Biomass facilities could now use up to 5% nonrenewable fuel if the facility participates in the Existing Renewable Facilities Program and up to 2% if the facility participates only in the RPS program.
- Facility operators would now be required to provide verifications that fuel meets RPS eligibility requirements.
Fuel Cells:
- Fuel cells would now be allowed to use the following renewable fuels in electrochemical reaction to generate electricity: landfill gas, digester gas, other RPS-eligible gases, and Hydrogent or hydrogen-RCI gases derived from a non-fossil fuel or feedstock through the use of power generated by an RPS-eligible resource.
Out-of-State Facilities:
- The proposed changes would require submission of environmental documentation to support the analysis submitted on Laws, Ordinances, Regulations and Standards requirements.
Multiple Fuel Facilities – Measurement Methods:
- The proposed changes would require all facilities using multiple energy inputs to select and submit an appropriate measurement method, or submit an alternative, that will be used to measure the contribution of each resource. Such measurements would apply to three categories: combustion and fuel cell, non-combustion thermal, and non-thermal electric generating technologies (excluding fuel cells).
CEC staff also proposes changes to the Overall Program Guidebook, including changes to the definitions of biogas, biomass, central station and distributed generation, commercial operation and hydroelectric.
Perhaps equally important, CEC staff will consider further changes immediately after the November 17 CEC Business Meeting, including for example, limitations on biogas delivery via injection into natural gas pipelines. CEC staff has asked for stakeholder input on additional areas, which can be found at http://www.energy.ca.gov/portfolio/notices/2010-08-30_Staff_Workshop_Revised.pdf.
If these changes are important to you, comments will be accepted up to September 10 and again at the CEC Business Meeting on November 17.
If you have any questions about the issues of this update, please contact:
Seth Hilton at (916) 319-4749 or firstname.lastname@example.com
John McKinsey at (916) 319-4746 or firstname.lastname@example.com
Good News and Bad News for DOE's Loan Guarantee Program
There has been a wave of good and bad news this past week regarding the DOE's Loan Guarantee Program. On the positive side, Secretary Chu announced on Friday that the Department would be adding an additional compliance period for the Innovative Solicitation. The current deadline for the Part I application under the program is August 24th. Secretary Chu announced the applications would be accepted until October 5th thus providing six more weeks of time to applicants. Secretary Chu did not extend the Part II deadline and cannot extend the September 30, 2011 start construction deadline as that deadline was established by the Stimulus Bill itself. Still, the extension was generally viewed as a respite and perhaps an indication of a willingness to further extend the program.
On the bad news side, the Senate approved the FMAP state aid bill to avert teacher layoffs and pay for Medicaid which is to be funded in part by taking $1.5 billion in funds that the Stimulus Bill appropriated to the DOE Loan Guarantee program. Clearly driven by Pay-Go requirements, this is a reminder of the $2.0 billion fleecing that the Loan Guarantee Program suffered when Cash for Clunkers program was passed. While it has been promised that the funds will be restored, the fact that the Cash for Clunkers funding has not yet been restored raises concern about whether the restoration will occur.
This Week in Biofuels, A Patent Perspective
From our colleague Edna Vassilovski:
On July 29, 2010, the following U.S. patent applications were published relating to biofuels:
U.S. Pat. Pub. No. 20100191022 (Undisclosed assignee) relates to the use of Arundo donax feedstock in a gasification process to produce ethanol. According to the application, ethanol is produced substantially without by-products except for an ash stream of the inorganic plant nutrients.
U.S. Pat. Pub. No. 20100191008 (Energy & Environmental Research Foundation Center) relates to a process for the simultaneous production of chemical feedstocks and fuel blendstocks such as jet fuel from biomass feedstock, and specifically from unsaturated and polyunsaturated vegetable oils and/or algal oils. The process involves integrating metathesis reactions with other processes to produce suitable chain-length fuel components and chemicals.
U.S. Pat. Pub. No. 20100191004 (Sartec) relates to the use of certain metal oxides to catalyze the production of pentose and hexose derivatives from carbohydrates. Embodiments include the use of alumina, hafnia, titania and zirconia to catalyze the production of 5-hydroxymethylfurfural (HMF) or a biofuel from glucose, sucrose, fructose, and cellulolose at a temperature of greater than 100 degrees C.
U.S. Pat. Pub. No. 20100190259 (Undisclosed assignee) relates to a recombinant thermophilic, Gram-positive bacterium, a strain of B. thermoglucosidasius, having an ldh (lactate dehydrogenase) mutation and in which the stability of the ldh mutation has been enhanced. The application also relates to a process for improving the stability of the mutation by specific homologous recombination between a plasmid and the insertion sequence within the ldh gene. According to the specification the strain is useful for producing of ethanol in fermentation.
US Pat. Pub. No. 20100190226 (Iogen Energy Corporation) relates to a process for feedstock pretreatment. The process involves wetting grasses, cereal straws or stover of a particular length, pressing the wet feedstock through one or more roll presses, slurrying the pressed feedstock, and subjecting the slurried feedstock to dilute acid pretreatment to produce pretreated feedstock. According to the specification, the process allows for the crushing and shearing of feedstock and the removal of much of the soluble salts, proteins, sugars, alkaline compounds and organic acids from the feedstock.
U.S. Pat. Pub. No. 20100189076 (Verenium) relates to lignocellulolytic enzymes that hydrolyze sugarcane bagasse. According to the specification, the enzymes hydrolyze soluble cellooligsaccharides and arabinoxylan oligomers into monomer xylose, arabinose and glucose.
U.S. Pat. Pub. Nos. 20100187822 and 20100187818 (Louisville Clean Energy) relate to a combined heat and power production system, which improves the energy efficiency of individual production systems in the combination. Specifically, gasification, combined heat and power/combined-cycle, methane reactor, biodiesel, and ethanol fermentation methods of energy production are combined such that waste heat from one method serves directly as the heat reservoir for a successive method.
U.S. Pat. Pub. Nos. 20100186736 and 20100186735 (SunOpta BioProcess Inc.) relate to a method and apparatus for conveying cellulosic feedstock. The '736 application discloses an apparatus comprising a holding tank having an inlet and an outlet, wherein the outlet is at an elevation below the inlet, and at least one screw conveyer having a variable pitch along its length. In operation, the apparatus withdraws cellulosic feedstock from the tank in a direction transverse to the direction of travel of the feedstock through the tank. According to the specification, embodiments of the invention enable actively withdrawing feedstock from different portions of the outlet, preferably evenly from across the outlet, leading to a achieving a generally uniform residence time of feedstock in the tank. The '735 application discloses a similar apparatus but which includes two conveyers, the first conveyer delivering a first portion of the feedstock in a first direction, and the second conveyer delivering a second portion of the feedstock in a second direction.
U.S. Pat. Pub. No. 20100186291 (China Fuel (Huabei) Bioenergy Technology Development Co., Ltd.) relates to a process for producing biofuel via co-gasification of cellulosic biomass and coal in the presence of a catlyst. According to the specification, the process is a highly effective method of producing biofuel because the mixed use of cellulosic biomass and coal provides syngas, with a composition approaching the optimal ratio for producing methanol and ethanol, in a one-step gasification. The specification also suggests that co-gasification can reduce the ash fusion temperature of coal.
The Week in Biofuels, A (U.S.) Patent (Application) Perspective
From our colleague Edna Vassilovski:
The following U.S. patent applications published this week relating to biofuels.
U.S. Pat. Pub. No. 20100184161 (The Regents of the University of California) discloses a thermophilic endo-beta-1,4 xylanase derived from Acidothermus cellulolyticus useful in the hydrolysis of lignocellulosic material.
U.S. Pat. Pub. No. 20100184151 (Iogen) discloses a process in which a recycle stream containing calcium carbonate and/or calcium hydroxide is used to pH adjust acid pretreated lignocellulosic feedstock. The calcium carbonate and/or calcium hydroxide arises from calcium native to the lignocellulosic feedstock. According to the specification, the process can lead to significantly reduced amounts of alkali and therefore improved economics.
U.S. Pat. Pub. No. 20100184130 relates to a method for increasing the oil yield from the green biomass of plants, and a plant that has been genetically modified such that its green biomass has at least 10-fold the amount by weight of triacylglycerols and at least 2-fold the amount by weight of total extractable fatty acids as compared to the green biomass of its non-genetically modified counterpart.
US Pat. Pub. No. 20100181034 (Greenfield Ethanol Inc.) relates to a lignocellulosic biomass pretreatment process wherein the amount of inhibitory compounds of downstream hydrolysis and fermentation are reduced. The process includes exposing biomass to steam at elevated temperature and pressure for a preselected amount of time and during which time volatile and/or liquid purge streams are systematically operated to remove inhibitory compounds.
From our colleague Edna Vassilovski:
July 15, 2010: WIPO published over a dozen patent applications relating to biofuels. DuPont, Novozymes, BP Biofuels UK, Xyleco and Borregaard Industries each had one or more PCT applications publish as follows:
1. DuPont.
Seven PCT applications published relating to pretreatment of biomass for second generation biofuels. The majority of the applications are directed to organic solvent pretreatment processes in which lignin is extracted and enzymatic saccharification is enhanced.
WO2010080464 discloses pretreating biomass in the presence of an organic solvent solution under alkaline conditions in the presence of ammonia and optionally an additional nucleophile to fragment and extract lignin without loss of hemicellulose.
WO2010080462 discloses pretreating biomass in the presence of organic solvent under alkaline conditions in the presence of elemental sulfur and optionally one or more alkylamine and/or one or more additional nucleophiles to fragment and extract lignin.
WO2010080461 discloses pretreating biomass using an organic solvent under alkaline conditions in the presence of one or more sulfide (hydrosulfide) salt and optionally one or more additional nucleophile to fragment and extract lignin.
WO2010080460 discloses pretreating biomass using an organic solvent solution under alkaline conditions in the presence of one or more organo-mercaptan such as thioglycolate and optionally one or more additional nucleophile to fragment and extract lignin.
WO2010080434 discloses pretreating biomass using an organic solvent solution under alkaline conditions in the presence of one or more alkylamine and optionally one or more additional nucleophiles to fragment and extract lignin. According to the specifications of each of the above applications, the disclosed processes surprisingly result in significantly improved lignin fragmentation and extraction and high carbohydrate retention.
WO2010080436 discloses pretreating biomass through simultaneous oxidative degradation and selective extraction of lignin using a solvent solution comprising water in combination with at least one Mn(III) salt.
WO2010080489 discloses pretreating biomass under conditions of high solids and low ammonia concentration and contacting the biomass with a gas comprising about 0.1 to about 20 percent by volume ozone.Continue Reading...
EPA Issues Proposed RFS2 Rules for 2011
The EPA has issued proposed RFS2 rules for 2011 that provide some indications that the agency is dedicated to jump starting the advanced biofuels industry. Most notably, the EPA held fast to an overall mandate of 13.95 billion gallons of renewable fuel. While the agency intends to deviate downward on cellululosic biofuels with a cut of 90% or more anticipated, the proposed rule maintains the overall Advanced biofuel mandate at 1.35 billion gallons and the Biomass-based diesel requirement at 800 million gallons. Thus the agency is paying significant attention to the existing capacity of the biodiesel industry despite the lack of approval for the blender's credit six months into the year. Biofuel supporters hope that this policy gap will be addressed shortly or that RIN values will continue to increase for Biomass based diesel.
The proposed rule contains two other notable components: tentative but retroactive RIN credit for canola, sorghum, pulpwood and palm oil biofuel producers; and a petition process for foreign countries to avoid the onerous feedstock obligations that now apply in favor of the aggregate approach available within the US. The referenced feedstocks have been under consideration by EPA for Life Cycle Analysis since prior to the original RFS2 Final Rule was released but the work has still not been completed. The severe challenge for this group of biofuel producers is that EPA has previously indicated that RIN generation would trigger only when the pathway was certified. EPA's proposed new flexibility is an improvement but still falls short of providing full RIN value for these producers due to the lag time and uncertainty associated with the approach. The proposed petition process for foreign countries is an apparent attempt to level the playing field for foreign producers who now must trace and certify feedstocks such as soy and corn in a manner not required within the US.
The rules will be published in the Federal Register shortly and the public comment period will likely run to approximately August 13th.
New Tool for Renewable Energy Investors, Entrepreneurs, and Companies
On June 30, 2010, the U.S. Department of Energy ("DOE") launched its Technology Commercialization Portal (the "Portal"). The Portal is an online resource that provides a mechanism for investors, entrepreneurs and companies to identify new technologies coming out of DOE laboratories and other participating research institutions. Relevant technologies include:
- Advanced Materials
- Biomass and Biofuels
- Building Energy Efficiency
- Electricity Transmission and Distribution
- Energy Analysis Models, Tools and Software
- Energy Storage
- Geothermal
- Hydrogen and Fuel Cell
- Hydropower, Wave and Tidal
- Industrial Technologies
- Solar Photovoltaic
- Solar Thermal
- Vehicles and Fuels
- Wind Energy
The Portal contains marketing summaries about the various DOE technologies that are available for licensing. Each marketing summary describes a technology's applications, advantages, benefits and state of development. Further, the Portal also provides access to information on patents and patent applications that have been created using DOE funding since 1992.
The Portal is located at http://techportal.eere.energy.gov/
DOE: up to $11 Million for Biofuels Technology Development
The DOE announced today that it will provide up to $11 million over three years for improving the conversion via pyrolysis of non-food biomass to biofuels, that can use the existing fueling infrastructure. (Pyrolosis is the process that decomposes biomass using heat without oxygen to produce bio-oil.)
Successful applications for projects will (among other things):
- Address how to make corrosive bio-oils compatible with the current infrastructure
- Catalytically de-oxygenate the molecular fragments in bio-oils
- Demonstrate the ability to produce a liquid transportation hydrocarbon fuel that can be blended at up to 30 percent by weight with petroleum fuels, or produce an upgraded bio-oil compatible with existing petroleum refining unit operations
- Include an analysis of greenhouse gas reductions using the applicant's technology
DOE anticipates selecting three to four projects under this announcement and will require a minimum of 20% cost share from applicants. Eligible applicants include universities, national laboratories, or companies.
The deadline for the applications is July 9, 2010. Go to Grants.gov. for a copy of the funding opportunity and application.
Washington Revising its State Energy Strategy
The Washington State Department of Commerce (formerly the Department of Community, Trade and Economic Development or CTED) has announced that it is attempting to revise Washington's comprehensive energy plan (the "State Energy Strategy").
The State Energy Strategy was last revised in 2003, and it does not serve current energy realities and forecasts. Therefore, the Washington State Legislature has tasked the Department of Commerce with updating the State Energy Strategy while taking account the following three goals and nine principles:Continue Reading...
RFS2 Deadlines are Rapidly Approaching
Several deadlines relating to the implementation of RFS2 are rapidly approaching and should be strictly followed by renewable fuel producers to avoid loss of the value of RINs under the new system. Producers who miss the registration deadline of July 1, 2010 will be unable to generate RINs until they have completed the registration process and 60 days have passed. Thus, a producer who completes registration on July 2 will not be able to generate RINs until September 1.
All producers must provide the following registration documents to EPA by the July 1 deadline:
- Engineering Review of the Facility – this must be done by a third-party qualified engineering firm and meet RFS2 requirements.
- Process Heat Fuel Supply Plan – this plan is required, as process heat is one of the aspects of plant performance that EPA considers in evaluating GHG performance.
- Records of actual production or copies of applicable air permits to allow EPA to determine the facility's baseline volume.
For producers who use yard waste, food waste or the biogenic portion of municipal solid waste as their feedstock, a feedstock plan must also be submitted.
Additional RFS2 compliance information is available on the RFS website: http://www.epa.gov/otaq/fuels/renewablefuels/.
In addition to the registration requirements, deadlines are also approaching regarding the technical amendments EPA promulgated to RFS2, published in the Federal Register on May 10 at Volume 75, No. 89, page 26026. The EPA published these amendments, some of which have generated controversy, through the use of a direct final rule. To request a public hearing, commenters must provide notice to EPA by May 25, 2010. Adverse comments must be filed no later than June 9, 2010. Further details and the technical amendments are available at http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm
2010 International BIOMASS Conference and Expo - May 4-6, 2010
This year's International BIOMASS Conference and Expo will be held in Minneapolis, Minnesota on May 4-6. The 6 program tracks will provide specified topic panels and discussions on Crop Residues, Dedicated Energy Crops, Forest and Wood Processing Residues, Livestock and Poultry Wastes, MSW and Urban Wastes as well as Food Processing Residues.
Please join Mark Hanson, Jennifer Martin, David Quinby, Kevin Johnson, Kevin Prohaska, Joe Thompson, Edna Vassilovski, Mary Sennes, Katie Roek , Bill Holmes and Debra Frimerman for a Stoel Rives-sponsored lunch on Day 1 of this year's International Biomass Conference or stop by Booth #609 in the Expo to speak with our attorneys. We'll also be debuting our new Law of Biomass, the latest installment in the highly regarded Stoel Rives' "Law of" series, and complimentary copies of the new book will be on offer at our booth.
David Quinby, partner in the Minneapolis office, will moderate Track 4: Livestock & Poultry Waste: Downstream Approaches to Upgrading Biogas Quality, Wednesday, May 5 at 3:30 p.m. and Jennifer Martin, partner in the Portland office, will present as part of the Bonus Panel: Biomass to Energy Projects: Key Issues to Consider in Power Purchase and Feedstock Agreement, Thursday, May 6 at 1:30 p.m.
We look forward to seeing you at the Conference! To learn more or to register for this event, please visit: http://biomassconference.com/ema/DisplayPage.aspx?pageId=About.
• When: 5/4/2010
• Where: Minneapolis Convention Center, Minneapolis, MN
Free Webinar on New Advanced Renewable Fuel Standard/RFS2
A quick follow up on my post last month regarding my colleague Graham Noyes' white paper on the EPA's sweeping revision of the federal Advanced Renewable Fuel Standard (RFS2). On April 20, Graham and his co-author Clayton McMartin will participate in a live Q&A webinar with Biofuels Journal publisher Myke Feinman on the new RFS2. Topics will include:
• The Four Categories of Fuel under RFS2
• Why All Producers Must Register Their Facilities
• What RINs will be Reinstated, Why, How, and When
• Lifecycle Analysis (GHG) and the Impact on Biofuel Markets
• Integration of RFS1 and RFS2
• Sweeping Changes in the RIN Program with RFS2
• Violations and Penalties
• The Seven Types of RINs
• The "Nesting" of Standards and the Potential Impact on Business
• EPA's New Role with the Moderated Transaction System (EMTS)
Registration and participation in the webinar is FREE. Click here to register for the advanced renewable fuel standard (RFS2) webinar with Biofuels Journal.
White Paper Explains New Advanced Renewable Fuel Standard/RFS2
My colleague Graham Noyes and Clayton McMartin of Clean Fuels Clearinghouse recently published a white paper on the massive and staggeringly complex revision of the federal Advanced Fuel Standard (RFS) issued by the U.S. Environmental Protection Agency on February 3, 2010. Graham and Clayton describe how this second generation renewable fuel initiative (RFS2) will bring industry and government together in ways never before experienced by the fuels industry.
With a view to helping market participants develop comprehensive cost/benefit and compliance strategies, Graham and Clayton structure their discussion according to the following key topics:
- Legal background and new statutory requirements of RFS2;
- Compliance implications of updates to the Renewable Identification Numbers ("RINS") process; and
- Issues important to particular market participants, including producer obligations, new fuel pathways, importer issues and RIN trading economics.
Download a free copy of the Renewable Fuel Standard/RFS2 White Paper (PDF)
Growing America's Fuel - President Obama Announces Strategies to Achieve U.S. Biofuels Goals
President Obama met today with a bipartisan group of governors from around the country and announced a series of steps the administration is taking to boost biofuels production in the United States. The President's Biofuels Interagency Working Group released a report spelling out ways to promote the development of the biofuels industry in the United States in connection with the long-term renewable fuels standard of 36 billion gallons per year by 2022. The report, Growing America's Fuel, focuses on government strategies to achieve the renewable fuels standard and the target for 100 million gallons of cellulosic biofuels in 2010. The strategies include supporting the development of first and second generation biofuels with the additional focus on accelerating third generation biofuels development and supporting feedstock research and demonstration. The report addresses the use of regional supply chain systems to ensure all fuels produced are compatible with the U.S. transportation fuel infrastructure.
President Obama also announced the creation of an Interagency Task Force on Carbon Capture and Storage. Representatives from the DOE and the EPA will co-chair the task force which will develop a plan for affordable carbon capture and storage technology in the next ten years, with a goal of bringing five to ten commercial demonstration projects on line by 2016.
Secretary Chu Announces $80M for Biofuels
DOE Secretary Chu's announcement today regarding $80 million of ARRA funding for biofuels is potentially a positive development for the long-term development of the biofuels industry. What is worrisome from a practical perspective is the division of funding. The National Alliance for Advanced Biofuels and Bioproducts, centered in St. Louis, received $44 million to develop a systems approach for the sustainable commercialization of algal biofuel and bioproducts. The National Advanced Biofuels Consortium, based here in the Pacific Northwest, received up to $34 million to develop infrastructure compatible biomass-based fuels. Meanwhile eight infrastructure projects received up to $1.6 million to support expanded fueling infrastructure for ethanol blends. While the Administration is ahead of the curve in recognizing the importance of long-term support for the development of advanced biofuels, it is overlooking the increasingly challenging environment in first generation biofuels. Simply put- and purely in my opinion- there will be no second generation of biofuels if the first generation does not again thrive. The ethanol industry has hit a blend wall that the EPA has not been willing to help them overcome in the short term. Adding $1.6 million in E-85 infrastructure is but a chip in that wall when one considers the massive costs involved in building a national infrastructure. On the biodiesel side, the current industry has not yet received an extension of its tax credit and was already facing severe challenges. The investors who supported the expansion of the first generation biofuels industry are still tracking their investments and the policy support for the industry. While government funding will further the development of the science of advanced biofuels, private sector involvement will be essential to the ultimate commercialization of these fuels. To accomplish its ultimate goals, the Administration will need to begin to address these issues in a systematic manner.
Show me the Money: $564 Million Awarded to Integrated Biorefinery Projects
In an earlier blog post, Debra Frimerman reported that the U.S. Department of Energy was seeking applications for grants to help promote the construction and operation of pilot, demonstration, and commercial scale integrated biorefinery projects. Today, DOE announced the selection of 19 projects to receive up to $564 million in grant money authorized by the American Recovery and Reinvestment Act.Continue Reading...
EPA: Possible Increase in "Blend Wall"
The U.S. Environmental Protection Agency ("EPA") expects to make a final determination in mid-2010 regarding a potential increase in the current 10% allowable ethanol content in fuel, the so-called "blend wall".
In May 2009, Growth Energy, a biofuels industry association headed up by General Wesley Clark, requested a waiver that would allow the use of up to 15 % ethanol in gasoline. As mandated by the Clean Air Act, EPA was required to respond to the waiver request by December 1, 2009. The EPA responded earlier this week in a letter explaining that despite not completing all the applicable tests, early test results on 2 vehicles indicated that engines in newer (i.e. later than 2001) vehicles could probably handle an ethanol blend higher than the current limit. The EPA's final determination will follow completion of testing on 19 vehicles (the number recommended by the Department of Energy ("DOE")) which may take another 6 months.
The EPA recognizes that the limit on blends must be raised to achieve the renewable fuel mandate of 36 billion gallon by 2022. EPA has been reviewing public comments and working with DOE to determine the feasibility of a higher ethanol blend. Concerns include the impact on engine component longevity when a higher blend is used long term and appropriate labeling at the fuel pump.
Full text of the letter: http://www.epa.gov/otaq/additive.htm
Come Visit Us at E3, The Midwest's Premier Energy, Economic and Environmental Conference, on Nov. 17, 2009
As a proud Exhibit Hall sponsor of E3, the Midwest's premier energy, economic and environmental conference, Stoel Rives LLP would like to encourage you to attend this annual event. Hosted by the University of Minnesota's Initiative for Renewable Energy and the Environment, E3 will focus this year on the intersection of innovative technologies and policies, environmental benefits and emerging market opportunities across the renewable energy spectrum.
Stoel Rives attorneys Mark Hanson, Bill Holmes and Greg Jenner are part of the event faculty. Mark will moderate a panel presentation on the challenges and opportunities of converting carbon dioxide to fuels. Bill will moderate a panel discussing exactly how sophisticated smart power grids need to be in order to scale up renewables as a major U.S. energy contributor. Greg, meanwhile, will participate in a panel discussion on the most efficient and effective strategies for financing renewable energy projects.
For more information and to register, please visit the following link: http://bit.ly/XUUjJ. We hope to see you there, and encourage you to visit our booth (#24). In addition to our presenters, Debra Frimerman, Kevin Johnson, Kevin Prohaska, Katie Roek, Mary Sennes, Joe Thompson and Vicki Twogood will be available to discuss any questions you may have. Don't forget to pick up complimentary copies of our Law of Series handbooks, including The Law of Solar, The Law of Wind, The Law of Biofuels, The Law of Building Green, Lava Law,and our most recent additions The Law of Algae and Show Me the Money: The Law of the Stimulus (2d ed).
Clean Energy Jobs and American Power Act Promotes Advanced Renewable Fuels
The Chairman's Mark of the Clean Energy Jobs and American Power Act contains proposed language that would clarify that algae-based and other advanced fuels are included in the definition of biofuels for purposes of the Renewable Fuel Standard. The Environment and Public Works Committee started legislative hearings today on the Clean Energy Jobs and American Power Act.
News from the 2009 Northern Plains Bioeconomy Conference
Below are some perspectives from the recent 2009 Northern Plains Bioeconomy Conference, as attended (and prepared by) my colleague, Joel Dahlgren.
According to Dr. Bruce Dale, a professor of chemical engineering at Michigan State University (MSU), in a carbon-constrained world, cellulosic biomass is the cheapest energy per dollar of gigajoule (GJ) of energy produced. At $60 per ton paid for biomass material, cellulosic ethanol costs $4 per GJ of energy produced, which compares to $6 per GJ for sugarcane purchased for $93 per ton, $9 per GJ for petroleum for $50 per barrel for crude oil, or $6.50 per GJ for coal purchased for $150 per ton (this price per ton includes the cost of carbon capture).
Until recently, I was under the impression that cellulosic ethanol was facing difficult obstacles. But that perception was challenged when I heard Dr. Dale's presentation at the 2009 Northern Plains Bioeconomy Conference in Fargo, North Dakota, sponsored by North Dakota State University (NDSU). Now, I will not be surprised if within five years companies whose plans to produce cellulosic ethanol have been frustrated by the difficulty of breaking down cellulose will successfully produce cellulosic ethanol from switchgrass, corn stover, miscanthus, DDGs and other cellulosic material as well.
Dr. Dale is developing a biomass pretreatment process called AFEX (batch process) or FIBEX (continuous process) that may revolutionize the production of cellulosic ethanol. The ethanol yield from pretreated biomass is an estimated two-and-a-half times that of untreated biomass. Dr. Dale's objective is to produce clean, fermentable sugars for an estimated six cents per pound. These pre-treatment processes are expected to be commercialized within five years if the Department of Energy (DOE) grant that these universities have applied for is approved.
AFEX/FIBEX employs a reactor to treat and explode biomass with hot liquid anhydrous ammonia for five to 10 minutes. One key advantage of the AFEX/FIBEX pre-treatment process is that it can be used to co-produce animal feed. Co-producing animal feed with cellulosic ethanol reduces the break-even point by up to 50% over a single-product approach.
Dr. Dale stressed that we are not faced with the choice of food or fuel; as a society, we can have both reasonably priced. Our society can also enjoy rural economic development, less expensive food, improved environmental conditions and a declining reliance on petroleum.
Dr. Dale is also working on a densification process that produces material that is three to five times as dense as untreated biomass and pelletizes the material for transportation and storage. A densification process allows for larger, centrally located biomass refineries with outlying pretreatment facilities. The densified biomass material is more economical to transport, and it stores more easily, much like corn or soybeans.
This project is a joint effort of NDSU, South Dakota State University (Brookings, SD) and MSU (Lansing, MI). MBI International is a member of this group as well. MBI is a 501(c)(3) that is owned by the MSU Foundation. These participants have applied for a DOE grant, and they intend to build a large biorefinery if the grant is approved by the DOE.
For additional information on this conference or on any topics discussed in this posting, please contact Joel or any of our other biofuels attorneys.
$13 Million Awarded from the Rural Energy for America Program
In an earlier blog, my colleagues, Debra Frimerman and Janet Jacobs reported about the Rural Energy for America Program ("REAP"), in general and specifically in regards to small wind projects. REAP is a Department of Agriculture ("USDA") program that provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems. Eligible renewable energy systems include those that generate heat, electricity or fuels from wind, solar, biomass, geothermal, hydro power, and hydrogen based feed stocks.
The USDA has announced that it has awarded more than $13 million in REAP funds for 233 renewable energy projects in 38 states. Examples of the awards include a $1.8 million guaranteed loan and $500,000 grant for Milford Wind Energy, LLC; a $435,271 guaranteed loan and $435,271 grant for Unaka Forest Products, Inc.; and a $15,000 grant to Pacifica Marine, Inc.
Continue Reading...
November 17: Energy, Economics and Environment (E3) Conference
The University of Minnesota's annual conference on Energy, Economics and the Environment – E3 – will be held in St. Paul on November 17. Hosted annually by the University of Minnesota's Initiative for Renewable Energy and the Environment (IREE), this year's conference will explore current technologies, environmental benefits and market opportunities in renewable energy.
Stoel Rives will be a sponsor of the E3 conference and will, as usual, host a booth at the event. Minneapolis tax partner Greg Jenner will join a panel to discuss "What's the most efficient and effective strategy for financing renewable energy projects?" To review the agenda and register for the conference, click here.
Free Webinar on Loan Guarantee Program Hosted by DOE
The U.S. Department of Energy is hosting a free webinar on "How to Build a Strong Application" for the DOE Loan Guarantee Program on Tuesday, September 8, 2009 from 1:00 PM - 2:00 PM EST. The webinar is intended to explain the loan guarantee program and help lenders and applicants navigate the application process. DOE will also be providing suggestions on how to create a strong loan guarantee application.
DOE recently released two solicitations under the program for innovative energy efficiency, renewable energy and advanced transmission and distribution technologies and transmission infrastructure investment projects. DOE is particularly interested in wind, closed-loop biomass, open-loop biomass, geothermal, landfill gas, trash-to-energy, hydropower and solar projects that are able to commence construction before September 30, 2011.
DOE will be hosting a series of free webinars on the application process over the next few months.
Australia passes 20% renewable energy target by 2020
From my colleague Adam Walters:
On August 20 the Australian government announced the passage of a bill quadrupling its Renewable Energy Target (RET) to ensure that 20% (approximately 45,000 GWh) of Australia's electricity is generated from renewable energy sources by 2020.
How does Australia's RET Scheme Work?
The RET scheme is an expansion of Australia's Mandatory RET scheme introduced in 2001, the first of its kind in the world. It works through the creation and sale of Renewable Energy Certificates (RECs) by renewable power generators to "liable parties" (mainly large-scale electricity utilities and consumers), who must provide a designated quantity of REC's to Australia's renewable energy regulator to demonstrate compliance and avoid having to pay charges for any shortfall. One of the changes brought about the new legislation is to increase from $40/MWh to $65/MWh.
Renewable energy sources eligible for accreditation under the RET scheme include: solar, wind, hydro, tidal, wave, biomass and geothermal, as well as solar water heaters and other smaller generation units. Hydro has historically dominated Australia's renewable energy landscape, but recent project announcements and funding opportunities for wind and solar projects signal greater diversification of the industry, particularly for proven technologies.Continue Reading...
Friday Webinar on Commercialization of Advanced Biofuels (Algae)
On Friday August 28, Eric Lindeman of The Energy Daily will be moderating a webinar about "Advanced Biofuels: What Are the Commercial Possibilities? Why All the Interest in Algae?" My partner, the always-entertaining John Eustermann, will be speaking at the Webinar along with Connie Lausten (VP, Regulatory and Legislative Affairs, New Generation Biofuels (NGBF)) and Glenn Johnston (VP, Regulatory Affairs, GEVO, Inc.). You can sign up for the Webinar at http://www.theenergydaily.com/events/bio_fuels_webinar/
Stoel Rives recently published its new "Law of Algae", a guide to the business and legal issues affecting the development of a commercial scale algae biofuels facility. We've introduced The Law of Algae in an on-line "wiki" format because the processes, technologies, and issues are changing rapidly with the commercialization of algae. The wiki format enables us to update the book frequently to bring you the most current information, so feel free to stop by often!
IRS Issues Notice on Depreciation of Ethanol Facilities
On Monday, August 24, the IRS issued Notice 2009-64. The notice sets forth a proposed revenue ruling that concludes that ethanol facilities are depreciable over 7 years (rather than 5 years). A link to the notice appears below.
The proposed ruling classifies ethanol facilities as assets used in Waste Reduction and Resource Recovery Plants (7 years) and not assets used for manufacture of Chemical and Allied Products (5 years).
The IRS did not state when it will issue a final revenue ruling. The notice does request comments , which must be submitted by November 23, 2009.
The reasoning underlying the proposed ruling is subject to potential criticism. This may explain why the ruling was issued in proposed form and comments requested.
Clients that are interested in learning more about the proposed ruling or submitting comments should speak with their favorite Stoel Rives attorney.
We are pleased to announce that the first edition of THE LAW OF ALGAE is available now. The LAW OF ALGAE is a guide to the business and legal issues in developing a commercial scale algae biofuels facility. We are introducing THE LAW OF ALGAE in an on-line "wiki" format where the contents can be accessed at www.LawOfAlgae.com. Because the processes, technologies, and issues are changing rapidly with the commercialization of algae, the wiki format enables us to update the book frequently to bring you the most current information.
THE LAW OF ALGAE is one in a series of "LAW OF" books that Stoel Rives LLP has produced over the past five years. The others include THE LAW OF WIND—A Guide to Business and Legal Issues, LAVA LAW—Legal Issues in Geothermal Energy Development, THE LAW OF BUILDING GREEN—Business and Legal Issues of Sustainable Real Estate Development, THE LAW OF OCEAN AND TIDAL ENERGY—A Guide to Business and Legal Issues, LEX HELIUS: THE LAW OF SOLAR ENERGY—A Guide to Business and Legal Issues, The Law of Cooperatives, and SHOW ME THE MONEY—The Law of the Stimulus Package. If you are interested in any of these books, please visit our website at http://www.stoel.com/lawofseries.aspx to request a copy.
Fish Farms?: Algae to Fuel Entrepreneurs Are Moving Up the Food Chain
Today, the Wall Street Journal's Russel Gold reported that entrepreneurs are looking into massive algae blooms in the Gulf of Mexico that create "dead-zones" for sea life as a potential feedstock of algae for biofuel production. The dead zones are a result of run-off of fertilizers and other agricultural waste creating nutrient rich areas for algae to grow. Eventually, the algae sinks to the ocean floor where it is consumed by bacteria that, in the consumption process, also depletes the local oxygen. The sea life in the area either dies or swims elsewhere for its oxygen supply.
Apparently, LiveFuels Inc., a Silicon Valley start-up, is taking it to the next level. Instead of focusing on harvesting the algae from these dead zones to turn into biofuel, they are experimenting with releasing into these dead zones fish that would act as "algae grazers". The algae-stuffed fish would then be processed for their oil to produce biofuel. However, the algae blooms are seasonal and move around, so Russel Gold's article suggested that mobile fish farms may be needed.
Show me the Money: DOE Proposes Amendments to its Loan Guarantee Program
Today, the Department of Energy (DOE) issued a notice of proposed rulemaking to amend 10 CFR Part 609, the rule regulating the loan guarantee program authorized by section 1703 of Title XVII of the Energy Policy Act of 2005. The two principal goals of section 1703 of Title XVII are to encourage commercial use of new or significantly improved energy-related technologies and to achieve substantial environmental benefits. (See these recent alerts regarding the DOE loan guarantee program and the related application process)
After reexamining Title XVII, the DOE has concluded that the statute does not require a first lien on all project assets. DOE has discovered that its current requirement that it be in lien position is in conflict with the financing structure of many energy projects. For example, many utility scale power plants are jointly owned by public power agencies, cooperative power systems and investor-owned utilities. In these cases, it may not be commercially feasible to obtain a lien on all project assets or the credit of a sponsor may be sufficient to support a more modest pledge of assets.
Furthermore, DOE has found that other parties are interested in participating as co-lenders, co-guarantors, or insurers of Title XVII loans. However, these other parties expect to share, on a pari passu basis, in any collateral securing such loans.
Consequently, DOE proposes two amendments to the current rules:
- Delete the requirement of a first priority lien on all project assets and leave to the Secretary (of DOE) the determination of an appropriate collateral package, as well as intercreditor arrangements; and
- Allow the Secretary (of DOE) to determine if pari passu lending is in the best interests of the United States
Continue Reading...
Stoel Rives Sponsors the 2009 Algae Biomass Summit
Stoel Rives, LLP has decided to sponsor the 2009 Algae Biomass Summit ("2009 ABS"). The Algal Biomass Organization ("ABO") is hosting the 2009 ABS in San Diego this October 7-9th. The event will take place at the Marriot San Diego Hotel & Marina.
This year's ABS will discuss the emerging issue of algae as a feedstock for biofuels and other products. In an earlier article (available here), oil giant Exxon-Mobil's $600 million investment into this area marks a significant upward trend of interest in this area. Exxon's investment involves a partnership with Synthetic Genomics, a biotechnology company founded by the genomics pioneer J. Craig Venter. Venter, along with other leaders in the algae biofuels world, will be attending the 2009 ABS, and will also be the opening keynote speaker.
Shortly after Exxon's announcement, the U.S. Environmental Protection Agency ("EPA") announced that it will measure the greenhouse gas impacts of algae-based biofuels in its final rule to implement the renewable fuels standard (for the article, click here). Algae as a renewable feedstock for biofuel is a hot area of development and those that are interested in getting involved and learning more about it, should consider attending the 2009 ABS.
Registration is currently open. Those interested in taking advantage of early registration prices must register for the 2009 ABS prior to September 1st.
Show me the Money: $5.5 million available for Ethanol Blends
Today, the Department of Energy (DOE) announced the release of a funding opportunity announcement (FOA) related to ethanol blends. The FOA provides up to $5.5 million from the American Recovery and Reinvestment Act to increase the use of higher ethanol blends through expanding refueling infrastructure and funding outreach to promote public awareness.
$3.5 million is available to fund refueling infrastructure related to higher ethanol blends. Potential projects include modifications, upgrades, or expansions of fuel pumps at retail gas stations.
$2 million is available to fund national campaign projects that increase public awareness of the benefits, safety, and use requirements of higher ethanol blends.
Applications for this FOA are due October 4, 2009.
USDA Accepting Biomass Assistance Applications
On July 29, 2009, USDA Farm Service Agency (FSA) Administrator Jonathan Coppess announced that biomass conversion facilities can begin signing up to participate in the Biomass Crop Assistance Program (BCAP), which will help increase production of renewable energy. The program, authorized in the 2008 farm bill, provides financial assistance to producers who deliver eligible material to biomass conversion facilities and the FSA will provide financial assistance to collect, harvest, store and transport eligible materials.
Biomass conversion facilities and material owners or producers should contact their FSA state offices or visit the FSA website for more information. FSA will begin accepting applications from biomass facilities interested in participating in the BCAP.
The purpose of the matching payments is to assist biomass producers with the CHST cost of delivering biomass to a qualified biomass conversion facility. Biomass conversion facilities may become "qualified" by submitting a Memorandum of Understanding (MOU) to the FSA state offices. Once a facility becomes qualified, eligible material owners or producers who deliver biomass to that facility may be eligible to receive CHST payments. Eligible material owners or producers who market eligible material to a qualified biomass conversion facility may apply for the matching CHST payment at their FSA county office. An application must be submitted before the eligible material is sold and delivered to a qualified biomass conversion facility, where it will be reviewed by the FSA and county offices before CHST payments are authorized.
For additional information, please contact John Eustermann or any of our other energy attorneys.
EPA Shows Positive Interest in Algae
From InsideEPA.com (reproduced essentially verbatim with the permission of the publisher Inside Washington Publishers):
EPA will measure the greenhouse gas (GHG) impacts of algae-based biofuels in its final rule to implement the renewable fuels standard (RFS) in response to growing interest in the renewable feedstock, including recent announcements by Exxon-Mobil (as noted in an earlier article) and Dow Chemical that they are undertaking separate projects to help commercialize the technology. Algae is a particularly tempting feedstock choice because it can be engineered to sequester large amounts of carbon dioxide (CO2) and because algae-based biofuel has a similar molecular structure to gasoline, allowing it to be used in the existing transportation infrastructure. These qualities could help the fuel sidestep controversy associated with corn-based ethanol, which some say cannot meet the CO2 reduction goals of the RFS and which, due to its corrosivity, can impact engines, pipes and fuel pumps.
EPA fuels official Sarah Dunham said the agency considers algae "a promising feedstock" that will be included in the final RFS rule. EPA issued its RFS proposal earlier this year to expand biofuels use in line with congressional mandates, and is taking comment on the proposal through Sept. 25. Dunham was speaking to a July 16 meeting of a National Academy of Sciences panel on reducing greenhouse gas emissions from the transportation sector. Algae-based fuels could be considered under the advanced biofuel or bio-based diesel portion of the RFS, according to the proposed rule.
Funds Available to Repower Biorefineries
USDA recently announced that it will deploy up to $20 million to encourage the use of renewable biomass as a replacement fuel source for fossil fuels as well as to provide process heat or power in the operation of eligible biorefineries. Eligible biorefineries are biorefineries that meet all of the following criteria:
- Convert renewable biomass into biofuels and biobased products and may produce electricity
- Located in rural areas
- In existence on or before June 18, 2009
- Primary production is liquid transportation biofuels
USDA may make payments under this program to any biorefinery that meets the program requirements for up to three years. USDA will determine the amount of payments to be made to a biorefinery based on the following factors:
- Quantity of fossil fuel a renewable biomass system is replacing
- Percentage reduction in fossil fuel used by the biorefinery
- Cost effectiveness of the renewable biomass system
- Economic benefit to the community
- Potential to improve the quality of life in rural America
The number of payments will vary and be based on the number of applicants and availability of funds but will not exceed $5 million or 50% of total eligible product costs. Applications are due by November 1, 2009.
$22 Million for Community Renewable Energy
The Department of Energy (DOE) announced this week that up to $22 million from the Recovery Act would be allotted to up to 4 eligible communities nationwide in order to encourage utility-scale renewable energy systems that provide clean, reliable, and affordable energy supplies for their communities, while creating jobs and new economic development opportunities. The projects will demonstrate how multiple renewable energy technologies, including solar, wind, biomass, and geothermal systems, can be deployed at scale to supply clean energy to communities. Eligible applicants are local and state governments, Indian Tribes and Tribal Energy Resource Development Organizations or Groups.
Successful applicants will be awarded financial assistance to support the implementation of an integrated renewable energy deployment plan for a community, and the construction of renewable energy systems. DOE expects each project to also have substantial private sector investment in addition to the funds from DOE. Completed applications are due September 3, 2009 and the DOE will select awardees by the end of November 2009.
Algal Fuels Developments
The recent blog posting (available here) regarding Exxon's $600 million investment in biofuels served as a reminder to me that comments are due soon (August 3, 2009) on the Department of Energy's draft "National Algal Biofuels Technology Roadmap" (the "Roadmap").
The Roadmap was prepared by a working group commissioned by DOE. The working group was commissioned to assess the current state of algae technology and to determine the next steps toward commercialization. For more information, see my earlier blog.
To submit comments, complete the "Algal Road-Mapping: Request for Information (RFI) Response Form" and submit it as an attachment to an e-mail message addressed to firstname.lastname@example.com
Further, Gary Hunt has reported (available here) that Prize Capital, LLC has issued a $10 million algae fuel prize to encourage the development of advanced algal fuels. For more information about this contest, click here.
Show me the Money: Applications Available for the Washington State Energy Program
Washington previously received $60.9 million in Recovery Act funding for its State Energy Program ("SEP"). The Washington Legislature later provided $38.5 million to the Washington State Community, Trade and Economic Development ("CTED") agency to administer a loan and grant program for eligible projects in the areas of energy efficiency, renewable energy and clean energy innovation (see our earlier blog entry here for more details). The deadline for submitting a notice of intent to apply is July 27, 2009 at 5:00 p.m. Pacific time, and the application is due August 17, 2009 at 5:00 p.m. Pacific time.
I attended an informational meeting held by CTED on July 13, 2009. The meeting provided an overview of the loan and grant program, as well as funding details, eligibility guidelines and evaluation criteria. Eligible projects can receive between $500,000 to $2 million in loans and grants in the first round, with the requirement that applicants provide other sources of funding at least equal to the amount of the loan or grant request. The non-SEP funding may include amounts spent or committed to the project since January 1, 2009. Projects will be evaluated based on the feasibility and quality of the project plan, the experience and qualifications of the project team, the ratio of matching funds to SEP funds, job creation, and energy savings/production. CTED intends to announce award decisions in September 2009.
Exxon Sinks $600M Into Algae-Based Biofuels in Major Strategy Shift
Oil giant Exxon Mobil Corp., the world's largest and richest publicly traded oil company, is making a major jump into renewable energy with a $600 million investment in algae-based biofuels. Exxon is joining Synthetic Genomics Inc., a biotechnology company founded by the genomics pioneer J. Craig Venter, to research and develop next-generation biofuels from sunlight, water and waste carbon dioxide by photosynthetic pond scum.
The partnership will last five to six years and will involve the creation of a new test facility in San Diego to study algae-growing method and oil extraction techniques. Exxon's investment includes $300 million for in-house studies and potentially more than $300 million to Synthetic Genomics to scale up the technology for commercial production if research and development milestones are successfully met.
The partnership admits that it faces many obstacles, such as type of algae to use, the algae-growing environment, and the scale required for commercial use, to achieve this commercial production goal. Even in light of these challenges, algae holds many potential advantages over other sources of biofuels. One advantage is that algae grows in areas not suited for food crops, using pools of brackish water or even farming them in seawater. Additionally, algae needs carbon dioxide to grow, a benefit that could be used to help cut greenhouse gas emissions that cause global warming.
Show me the Money: Applications Available now for Washington's State Energy Program
On July 1, 2009, Washington State's Department of Community, Trade and Economic Development ("CTED") issued application guidelines and forms for its State Energy Program ("SEP") (available by clicking here). The American Recovery and Reinvestment Act of 2009 (the "Recovery Act") provided $60.9 million in new funding for Washington's SEP. Subsequently, the Washington Legislature allocated $38.5 million to CTED to administer a loan and grant program for energy efficiency and renewable energy program (see our client alert, available here, regarding the legislative action).Continue Reading...
Advanced Biofuel Producer Payments - FY 2009 Deadline Approaching!
Advanced biofuels producers must enroll by August 11, 2009 to be eligible to receive payments from the USDA for FY 2009 production under Section 9005 of the 2008 Farm Bill. Eligible producers of advanced biofuels may receive payments for advanced biofuels produced from October 1, 2008 through September 30, 2009 (FY 2009). $30 million is available for distribution under this program for advanced biofuels producers in FY 2009.
The amount of payments made to individual producers will depend on the number of program participants and the volume of advanced biofuels being produced. Payments will be made in one lump sum to eligible producers after FY 2009. Contact your local USDA Rural Development State Office for application materials or to learn more.
EPA Extends RFS 2 Comment Period
Last week, the US EPA extended the rulemaking period on RFS 2 until September 25, 2009. This extends the period by 60 days. While this rulemaking is highly complicated and contentious, it is unclear that extending the comment period will improve this situation. In addition, the effective date of the regulations continues to be delayed. This could undermine Congress' intentions in passing the Energy Independence and Security Act that established RFS 2. Let's hope EPA is able to move quickly and efficiently in finalizing and implementing the regulations.
Stoel Rives Expands Its San Diego Office
We welcome energy attorneys Morten Lund and David Quinby to the firm's San Diego office as members of the Energy and Telecommunications group. They join attorneys Howard Susman and Brian Nese. The San Diego office has relocated to a larger space at 12265 El Camino Real, Suite 303, to accommodate further expansion (new contact information below).
The California energy team's capabilities also include real estate, land use and permitting, equipment procurement and construction, state and federal regulation, environmental matters, and dispute resolution.
Stoel Rives has received a national ranking for its Renewables and Alternative Energy practice from Chambers USA: America's Leading Lawyers for Business (2009), rating among the top law firms in this category. The firm has been at the forefront of growth in renewables in recent years and represents many of the industry leaders in solar, wind energy, geothermal, biomass, hydroelectric, ocean, combined-cycle natural gas, carbon sequestration and biofuels project development in California, the United States, Canada and abroad.
For more information about the Stoel Rives Renewable Energy Group, visit www.stoel.com/renewableenergy or contact:
Howard Susman at (8... or firstname.lastname@example.com
Show me the Money: Florida, Idaho, and Kansas State Energy Programs Received $77.1 Million from the Recovery Act
On June 24, 2009, the Department of Energy ("DOE") announced more than $204 million in Recovery Act funding to ten states for their State Energy Programs ("SEPs").
Here is a summary of how the monies will be used in Florida, Idaho, and Kansas:
Florida's SEP will fund energy efficiency, renewable energy, and alternative fuels projects in the state. Florida will deploy these funds through several loan and grant programs to promote the commercialization of new clean technologies. Florida was awarded $50.4 million, and will receive an additional $63 million after demonstrating successful implementation of its SEP.
Idaho's SEP will launch a set up new programs, including the Renewable Energy Business Development Program, to further renewable energy development in the state while creating new jobs and stimulating the economy. Further, new zoning regulations will be created to attract renewable energy developers and projects. Idaho received $11.4 million and will receive more than $14 million in additional funding after demonstrating successful implementation of its SEP.
Kansas's SEP will launch several initiatives to boost energy efficiency in commercial buildings, increase financial options for renewable energy, and increase cost savings for individual homeowners in its state. A portion of the money will also be deployed to create a new utility rate price plan and to fund an energy audit rebate plan. Kansas received $15.3 million and expects to receive an additional $19 million after demonstrating successful implementation of its SEP.
My colleagues are blogging on the other states that received funds.
A Minnesota biodiesel plant that has been shuttered for more than one year was approved for a $25 million loan from the U.S. Department of Agriculture ("USDA"). This loan is the second made by its Rural Development division under Section 9003 of the Farm Bill (the Biorefinery Assistance Program).
The loan is to help SoyMor Biodiesel, a 30-million gal/yr plant in Albert Lea "diversify its operations." The old plant could only process soy bean oil and the feedstock costs effectively put it out of business. The USDA Rural Development loan will allow SoyMor to process multiple types of feedstocks for the production of biodiesel. Construction will begin once the plant has secured debt financing and will last approximately six months. The plant employed about 32 people in its heyday.
SoyMor will use Renewable Energy Group (REG) proprietary technology for the upgrades and once the plant is up and running, REG will market the plant's biodiesel.
Show me the Money: Conneticut and Utah State Energy Programs
Today, the Department of Energy ("DOE") announced more than $204 million in Recovery Act funding to ten states for their State Energy Programs ("SEPs").
Here is a summary of how the monies will be used in Connecticut and Utah:
Connecticut will use its SEP funding to further a variety of programs. Examples include the deployment of alternative-fuel vehicles and in-home energy audits. In-home energy audits involve a specialist performing an energy assessment, weatherizing the home, and installing energy conservation devices. After demonstrating successful implementation of its plan, the state will receive an additional $19 million, for a total of $38 million.
Utah will use its SEP funding to collect data about potential renewable energy resources in the state and to improve energy efficiency. The energy efficiency program will provide financial incentives to upgrade residential, commercial, public education, and government buildings. New construction developments will also qualify for rebates if they meet specific energy efficiency goals. After demonstrating successful implementation of its plan, the state will receive an additional $17 million, for a total of $35 million.
My colleagues are blogging on the other 8 states that received funds today.
Show me the Money: $57 million Deployed to 30 Biomass Projects
On June 11, 2009, the Department of Agriculture ("USDA") announced that thirty projects, located in fourteen states, would receive $57 million in Recovery Act funding. Of these funds, $49 million will be for wood-to-energy grants and $8 million is for biomass utilization.
These funds will serve two important objectives. First, the funds will promote the development of biofuels from wood and stimulate renewable energy infrastructure. Second, the projects will create a market for low value woody biomass that would otherwise constitute fuel for wildfires.
For information about specific projects, please call the United States Forest Service or go to http://fs.usda.gov
Air Force Seeking Biomass Plant on Texas Base
The Air Force has announced a presolicitation related to biomass project on Dyess Air Force Base in Texas. A request for proposals is expected to be issued on July 15, 2009.
The Air Force is seeking proposals from private contractors to fund, design, construct, operate, and maintain the biomass energy plant. Feedstocks will be municipal solid waste and/or biomass.
The Air Force will enter into a power purchase agreement for the renewable energy generated from the plant. The contractor is free to sell the renewable energy credits to others.
For more information on this project, contact email@example.com and reference Solicitation # Dyess-Biomass-Plant-0900001
Show me the Money: USDA funded Research for Small Businesses
The Department of Agriculture ("USDA") is now accepting proposals for its Small Business Innovation Research Program ("SBIR"). SBIR has $18.5 million available to fund research projects that address important problems facing American agriculture. Research areas include, but are not limited to:
- Biofuels and biobased products;
- Air, water, and soils;
- Rural development;
- Aquaculture; and
- Animal Manure management
Individual awards can be as high as $90,000 and proposals are due September 3, 2009. For more information click here.
Click here for more information on USDA funding opportunities.
Biomass Crop Assistance Program
The USDA has released a proposed Notification for Funds Availability (NOFA) for the Collection, Harvest, Storage and Transportation (CHST) of eligible biomass material. CHST is one of the programs under the Biomass Crop Assistance Program, which was created by the 2008 Farm Bill.
The purpose of CHST is to provide matching funds to eligible persons or entities for the collection, harvest, storage and transportation of eligible material delivered to qualified biomass conversion facilities. Through this program, the Commodity Credit Corporation will provide matching payments on a dollar for dollar basis for each dry ton of eligible biomass delivered to a qualified biomass conversion facility, up to a maximum of $45 per ton. The matching payments are available to eligible persons or entities delivering the biomass to the facility who have the right to collect or harvest the biomass and are considered the owners of it.
The NOFA, once finalized, will be used to administer payments for CHST in advance of the rule on the Biomass Crop Assistance Program. Comments on the NOFA are being requested through August 10, 2009.
For more information on USDA funding opportunities, please see our recent alert.
Show me the Money: Seminar for Identifying Funding for Renewable Energy Projects
The American Recovery and Reinvestment Act provides almost $94 billion dollars in direct and indirect spending to clean energy company and projects. See Show me the Money: A Guide to Sources of Funding through the American Recovery and Reinvestment Act.
On June 17, 2009, I will be speaking in Cle Elum, Washington about how to get your project "shovel ready" for Stimulus Funding. The seminar will also include sessions on identifying sources of funding and application mechanics.
Show Me the Money: Renewable Energy Financing in the Farm Bill
In an earlier blog, my colleague, Debra Frimerman reported about the Rural Energy for America Program (REAP). REAP provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems.
REAP is a program under the Food, Conservation, and Energy Act of 2008 (the "2008 Farm Bill"). The 2008 Farm Bill also includes numerous other programs to help develop renewable energy in rural areas and promote the production of sustainable feedstocks for renewable energy production. Please see this recent alert for specifics.
National Algal Biofuels Technology Roadmap
The Department of Energy ("DOE") has issued a Request for Information ("RFI") to solicit feedback on the DOE's draft "National Algal Biofuels Technology Roadmap" (the "Roadmap").
The Roadmap was prepared by a working group commissioned by DOE. The working group was commissioned to assess the current state of algae technology and to determine the next steps toward commercialization.
DOE is specifically seeking feedback related to the following questions:
- What areas omitted by the Roadmap would be important in defining R&D needs as they pertain to the following topics?
a. Algae biology
b. Algae cultivation
c. Algae processing (harvesting and dewatering)
d. Extraction
e. Fuel conversion
f. Fuel end-use
- Are there any additional, key areas that should be included or any areas that need further elaboration?
- Are there errors or misrepresentations of any information that need to be addressed?
- Is there over-representation of certain barrier areas relative to other areas that warrant editing?
To submit comments, complete the "Algal Road-Mapping: Request for Information (RFI) Response Form" and submit it as an attachment to an e-mail message addressed to email@example.com
Comments must be provided by no later than 11:59 PM EDT on August 3, 2009.
LLC Law Monitor
Renewable energy developers often use limited liability companies (LLCs) as project companies and to form entities for other purposes. My partner Doug Batey has started a new law blog that will likely be helpful to those charged with setting up, understand and maintaining these LLCs. Here's today's announcement:
Stoel Rives LLP is pleased to introduce its new LLC law blog, LLC Law Monitor, at www.llclawmonitor.com
The LLC Law Monitor focuses on the rapidly developing laws affecting limited liability companies. LLCs are a popular form of business entity and are a relatively new development in the law. LLC statutes vary from state to state, and cases of first impression are being decided by state courts every month.
In light of this new and evolving legal environment, Stoel Rives has launched LLC Law Monitor to provide business executives, attorneys, accountants and other professionals engaged in or working with LLCs with timely updates and insights on the new and developing laws shaping this burgeoning business sector.
LLC Law Monitorauthor Douglas L. Batey has nearly 30 years of experience advising executives on corporate and business legal matters. His experience includes counseling clients in a wide range of industries on company formation, mergers and acquisitions, and general corporate governance matters.
We hope that you will find the LLC Law Monitor helpful.
Douglas L. Batey
Apply Now for REAP Grants and Loan Guarantees
The USDA announced today that it is accepting applications under the Rural Energy for America Program ("REAP"). REAP provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems.
REAP funds are available in the following amounts:
- Grants for energy efficiency projects are available for up to the lesser of $250,000 or 25% of the project costs.
- Grants for renewable energy systems are available for up to the lesser of $500,000 or 25% of the project costs.
- Grants for feasibility studies for renewable energy systems are available for up to the lesser of $50,000 or 50% of the costs of the study.
- Loan guarantees are available for up to the lesser of $25 million or 75% of the project costs.
Applicants must be agricultural producers or rural small businesses. Agricultural producers are farmers or ranchers that obtain more than half of their gross income from agricultural operations. Small rural businesses are small businesses, as determined in accordance with the Small Business Administration's small business size standards, located in rural areas. Applications are due July 31, 2009.
Doing Business with Indian Tribes
My colleagues Michael O'Connell and Stephen Kelly, both of whom have a great deal of experience representing clients engaged in energy and natural resources transactions with Indian tribes, are putting on a webinar entitled "Doing Business with Indian Tribes." Since the best private lands are often already spoken for, renewable energy developers are looking more and more at developing projects on public lands and Tribal lands. The Webinar that Mike and Steve are presenting will discuss doing business with tribes generally, but their presentation will be relevant to those seeking to develop renewable energy projects in partnership with Indian tribes or on tribal lands.
Details are as follows:
Please join Stoel Rives attorneys Michael O'Connell and Stephen Kelly for a webinar on Doing Business with Indian Tribes on Wednesday, June 10, 2009. They will conduct a lively, interactive program that will cover:
There are over 550 federally recognized Indian tribes. Indian tribes engage in a broad range of business transactions governed by a complex array of federal, tribal and state laws. Stoel Rives is pleased to offer a webinar that will offer you tools to recognize the unique legal status of Indian tribes and how it affects business transactions with Indian tribes.
- Tribes and tribal business structures
- Contracting, sovereign immunity, and dispute resolution
- Leases, easements, and other agreements for use of tribal land
- Tribal and federal environmental reviews and approvals
- Taxation issues
Wednesday, June 10, 2009
Complimentary (lunch included)
Or at your computer. Information on how to access the webinar will be provide to those who register.
We will validate parking for most nearby parking garages.
Space is limited! Register online by Monday, June 8.
Washington's American Recovery and Reinvestment Act Comprehensive Application
On May 11, the Washington Department of Community, Trade, and Economic Development ("CTED") filed an application with the United States Department of Energy to receive American Recovery and Reinvestment Act ("ARRA") funds for Washington's State Energy Program ("SEP"). The application contains funding for renewable energy, energy efficiency, and farm energy assessments. Once the SEP is approved, funding will commence through CTED with advice from the Clean Energy Leadership Council.Continue Reading...
$50 Million Allocated to Support Algae Research
As part of the DOE's announcement last week to provide $786.5 million from the American Recovery and Reinvestment Act to accelerate advanced biofuels research and development, the DOE allocated $50 million to create an algae biofuels consortium to accelerate demonstration of algae biofuels. As many companies are working toward the commercialization of algae biofuels, this infusion of money into research and development will help to promote commercially feasible algae biofuels production.
Additionally, Prize Capital, LLC has announced the creation of a $10 million algae fuel prize that is focused on advanced algae biofuels technologies. While the final details of the competition have not been released, planning is underway.
$480 Million Available for Integrated Biorefinery Projects
Last week DOE released a new funding opportunity announcement for up to $480 million for pilot-scale and demonstration-scale integrated biorefinery projects. An integrated biorefinery uses an "acceptable feedstock" to produce a biofuel or bioproduct as the "primary product." Acceptable feedstocks include:
- Algae
- Certain woody biomass
- Renewable plant materials so long as it is not generally intended for use as food
- Crop reside (cobs, stover, etc.)
- Yard and food waste
- Certain post-sorted MSW
The projects must be either pilot-scale (processing at least one dry tonne of feedstock per day) or demonstration-scale (processing at least 50 dry tonnes of feedstock per day).
The maximum award for a pilot-scale project is $25 million and the maximum award for a demonstration-scale project is $50 million. Generally, the cost share requirements from non-Federal sources are 20% for pilot-scale projects and 50% for demonstration-scale projects.
Applications are due June 30, 2009. Although not required, DOE suggests all prospective applicants submit a notice of intent to apply, which can be submitted through May 29, 2009.
Visit www.grants.gov or www.fedconnect.net for more information on this opportunity.
$18 Million of Value-Added Producer Grants Available
USDA Rural Business-Cooperative Service is accepting applications for $18 million in Value-Added Producer Grants. Funds are available for value-added agricultural projects, including farm-based renewable energy projects, for either planning or working capital purposes. Examples of eligible projects include developing ethanol and biodiesel plants, pelletizing biomass and installing anaerobic digesters.
The maximum grant award is $100,000 for a planning grant and $300,000 for a working capital grant. Applicants must provide matching funds of at least 100% of the grant award. Eligible applicants include (1) independent agricultural producers, (2) eligible agricultural producer groups, (3) farmer-owned or rancher-owned cooperatives and (4) majority controlled producer-based businesses.
Check out our client alert on this opportunity for more information.
President Obama Directs USDA to Promote and Expand Biofuels
On, May 5, 2009, President Obama announced federal efforts to increase investment and use of advanced biofuels. The President signed a Presidential Directive establishing the Biofuels Interagency Working Group, ordering the Department of Agriculture ("USDA") to implement financing opportunities from the Food Conservation and Energy Act of 2008 ("FCEA"), and announcing additional Recovery Act funds for renewable fuel projects.
The Biofuels Interagency Working Group will be co-chaired by the Secretaries of Agriculture and Energy and the Administrator of the Environmental Protection Agency. The Biofuels Interagency Working Group will coordinate existing policies and identify new policies to support the development of sustainable next-generation biofuels production.
President Obama has directed the USDA to immediately begin restructuring existing renewable fuels investments in order to preserve industry employment and develop a comprehensive approach to accelerate the production of American biofuels. Further, the USDA has 30 days to begin deployment of renewable energy financing opportunities from the FCEA. Financing opportunities under the FCEA include loan guarantees and grants for research, development, construction and retrofitting of demonstration and commercial scale biorefineries.
President Obama also announced that $786.5 million from the American Recovery and Reinvestment Act (for more information on the American Recovery and Reinvestment Act please see Show Me the Money: The Law of the Stimulus) will be used to expand commercial biorefineries and jumpstart advanced biofuels research and development. The money will be divided as follows:
- $480 million for integrated pilot and demonstration scale biorefinery projects
- $176.5 million for commercial-scale biorefinery projects
- $110 million for fundamental research
- $20 million for ethanol research
"Show Me The Money"
We announce the publication of a guide to federal clean energy funding opportunities under the $787 billion American Recovery and Reinvestment Act ("ARRA"). Titled "Show Me The Money," the guide reviews the various programs and potential sources of federal funding for clean energy companies and projects. The guide addresses funding opportunities under the ARRA for each of the following energy industry areas: wind, solar, biofuels, biomass, smart grid, transmission, geothermal, marine and hydrokinetic, green building, energy efficiency, advanced battery and fuel cell technology, clean energy equipment manufacturing, green vehicles and clean coal. The guide also contains information about some of the funding opportunities and updates at the federal and state level which we will continue to track closely.
Clean Energy Projects To Become Eligible for Washington State's Energy Freedom Program
Washington State's legislature has passed a bill expanding the Energy Freedom Program and the uses to which the Energy Freedom Account can be put. Previously, funds from the Energy Freedom Account could be applied to biofuels projects only, and appropriations from the Energy Freedom Account to a separate account - the Green Energy Incentive Account - could be used solely to develop alternative fuels fueling stations and related projects. The bill extends the Program to clean energy projects, energy efficiency and energy technologies and establishes a Energy Recovery Account as another means of funding innovative renewable energy projects through loans or grants. A more detailed Client Alert will be issued once Governor Gregoire signs the bill.
Upcoming Webinar: Four Primary Ways the Stimulus Bill will Impact the U.S. Wind & Biofuels Industries
Biofuels Journal and Wind Today Magazine are hosting this free webinar on April 14, 2009 at 2 p.m. Central Time.
Please join me and my colleague, Graham Noyes, as we discuss the Obama Administration's economic stimulus package and how it will impact the wind and biofuels industries.
REGISTER HERE: https://www1.gotomeeting.com/register/244944960
There will also be a live Twitter feed available at #stimulusbill
Topics covered include:
• Stimulus Grants and the DOE Loan Guarantee Program - the Administration has provided $2.5 billion in grants for R&D and Demonstration projects; expanded the Loan Guarantee Program by $5 billion; as well as promised to streamline the application processes and speed the release of funds to biofuels plants and other projects under these programs.
• The Production Tax Credit vs. the Investment Tax Credit - review of the varying incentive programs available for wind energy projects.
• Grants In Lieu of Tax Credits - consideration of when grants will provide the highest value for projects.
• The Pending Smart Grid and how this is likely to impact the rapidly growing but transmission constrained wind industry in the U.S.
President Obama Clamps Down on Lobbyists and First Amendment
On March 20th, President Obama issued a directive to the heads of executive branch departments and agencies. The directive is aimed at achieving the laudable goal of ensuring merit based decision-making for grants and other forms of stimulus funds provided by the American Recovery and Reinvestment Act of 2009 (usually referred to as the Stimulus Bill). It seems that while candidate Obama promised repeatedly during his campaign to limit the influence of lobbyists in Washington DC, the passage of the Stimulus Bill has sent record numbers of lobbyists to D.C. to scramble for federal dollars.
In apparent response to this, President Obama has singled out registered lobbyists and regulated their contacts with the executive branch. His directive provides that "executive department or agency officials shall not consider the view of a lobbyist registered under the Lobbying Disclosure Act of 1995, concerning particular projects, applications, or applicants for funding under the Recovery Act unless such views are in writing." Officials are directed to inquire regarding the possible presence of registered lobbyists both upon the scheduling and commencement of phone calls and in-person conversations "with any person or entity concerning particular projects, applications, or applicants for funding under the Recovery Act." If any registered lobbyists are detected, the directive forbids them from attending the meeting or participating in the phone call.
Not surprisingly, the American League of Lobbyists (ALL) has objected to the Obama Administrations restrictions. In a demonstration that politics does indeed sometimes make strange bedfellow, ALL has been joined by the ACLU and the Citizens for Responsibility and Ethics in Washington (CREW). In a letter to the President released Tuesday, these three groups requested that President Obama rescind the constitutionally offensive provisions of the directive immediately.
As tempting a political target as they may be, registered lobbyists have a place in our political system and rights under our Constitution. The President should heed the groups' advice and tailor his directive to enable transparency while not muzzling any voices--including those paid to advocate.
Bonus depreciation available for cellulosic ethanol
The Internal Revenue Service has issued a new private letter ruling in which it concluded that a cellulosic ethanol plant is eligible for special bonus depreciation. The IRS concluded in PLR 200910007 that a taxpayer's demonstration plant would qualify even though the plant will produce ethanol through fermentation subsequent to hydrolysis rather than as a direct output of the hydrolysis process.
As a reminder, a special bonus depreciation allowance was provided for cellulosic ethanol facilities IRC sec. 168(l)). Bonus depreciation allows taxpayers to claim a depreciation deduction for 50% of a plant's cost in the year the plant is placed in service. However, the way in which the provision was drafted apparently created concern that the provision would only apply in certain narrow ways. The ruling alleviates that concern, with the IRS concluding that the provision is to be interpreted broadly "in light of the purpose it was intended to serve."
Congressional leaders have just announced that they have reached an agreement on the details of a stimulus package. The details have yet to be announced, other than the total cost of the bill is estimated to be $789 billion. That amount is less than either the House or Senate bill.
We will post details as they become available and will be sending out an alert. Congressional leaders are currently meeting with their respective caucuses to obtain their approval. The Conference Committee is expected to meet in formal session immediately after.
Is More Bad By-Product News Coming for Biofuels Producers?
(this article was written by my colleague, Rick Goldfarb, and may also be accessed at www.foodliabilitylaw.com)
2008 was a terrible year for makers of ethanol and biodiesel. Huge spikes in the prices of raw materials, natural gas and transportation and drops in the prices they received for their main products have driven many of them to cut back production, shutter plants or even seek bankruptcy protection. In addition, U.S. biodiesel producers saw themselves faced with an antidumping investigation by the EU that might affect their export market.
If you thought it couldn't get any worse, hang on.
The National Grain and Feed Association reports that at the International Feed Expo in Atlanta on January 27, Dr. Daniel McChesney of the Food and Drug Administration spoke about studies the agency has reviewed concerning distillers' grains, the main by-product of ethanol, and glycerin, the main by-product of biodiesel. The information presented by the FDA's Center for Veterinary Medicine is of concern to anyone in the biofuels industry, as well as anyone who feeds livestock or purchases, processes or consumes meat and poultry.
The FDA has tested 45 samples of distillers' grains from ethanol plants and in over half of them detected antibiotics, including virginiamycin, erythromycin and tylosin. NGFA later learned that the concentration of those antibiotics exceeded the level (0.5 ppm) from a letter of no objection relating to virginiamycin issued in 1993 to the predecessor of Philbro Animal Health. There are no safe levels established for the other two antibiotics in feed grain. The FDA has 15 more samples to test and intends to make its final report available this summer.
With regard to biodiesel-derived glycerin, Dr. McChesney stated that the FDA does not consider it to be GRAS, or generally recognized as safe, for use as animal feed. Two issues raised concerns:
· Many samples contained more methanol than the 150 ppm level recognized as safe for animal feed; and
· Samples contained salt in concentrations as high as 16,500 ppm.
Accordingly, the FDA will be conducting a safety review of glycerin as a by-product of biodiesel. This will focus on the type of feedstock used, the manufacturing process and how the glycerin is introduced into feed.
Developing markets for by-products has been a significant challenge for the emerging biofuels industry. The latest news of the FDA's concerns about both distillers' grains and glycerin will increase those challenges in an already difficult environment.
Governor Kulongoski Proposes Nine Bills to Promote Renewable Energy Projects, Energy and Fuel Efficiency
Oregon Governor Ted Kulongoski continues to take aggressive action in the green business realm. Having made renewable energy one of his budget priorities, Gov. Kulongoski filed nine bills under the climate change umbrella to be considered in the 2009 legislative session. According to Gov. Kulongoski, the bills will "build on our leadership in renewable energy that will create jobs and reduce greenhouse gas emissions."Continue Reading...
Deadline Approaching for Minnesota Biodiesel Grants
The Minnesota Department of Agriculture has announced that it will be providing $300,000 in grants to qualified applicants to use for the addition of infrastructure that would allow for the blending of biodiesel in all types of weather, including cold conditions. Facilities must offer biodiesel for a minimum of five years, contingent upon the availability of diesel or biodiesel fuel. The Grantee must notify the Minnesota Department of Agriculture in writing in the event that diesel or biodiesel fuel is not readily available. Complete information is available on the Department's website.
The deadline for submitting applications is December 12, 2008.
Dingell Unseated; Waxman to Head House Energy and Commerce Committee
In a move that could have a significant impact on the energy sector (and create a buzz among political science departments) nationwide, Representative Henry Waxman (D-CA) has dethroned Representative John Dingell (D-MI) in his nearly 28-year post as chairman of the influential Committee on Energy and Commerce. The 137-122 secret vote has shaken up the seniority system that has driven the caucus for decades. It also replaces a long-time friend of the auto industry with someone who has been championed by environmentalists for his positions on clean air and global warming.
Waxman's ascension to the Energy and Commerce Committee chairmanship is particularly significant because the committee shepherds legislation on climate change, energy, and health care—all of which are key priorities of the Obama Administration. Waxman (who also has a strong leadership record on health care issues) has pushed for aggressive targets for carbon emissions reductions, more stringent auto emissions standards, and a national cap-and-trade program. Although Dingell recently proposed legislation that would impose gradual reductions in greenhouse gas emissions, Waxman has put forth much more ambitious climate change legislation.
Also of note is Obama's recent appointment of Philip Schiliro, a longtime aide to Waxman, as the new White House director of Congressional relations. This appointment is considered to be significant in that it provides Waxman with a direct channel to the White House. Congressional insiders have also noted that House Speaker Nancy Pelosi is a close ally of Waxman's. This web of connections underscores the potential for the Obama Administration and Congress to work closely together to usher in major changes to U.S. climate change policy.
Congress Extends PTC and ITC--More Analysis to Follow
In an email alert that we just sent out, my colleagues in the Stoel Rives Tax Section report:
Today the House passed, and President Bush signed into law, H.R. 1424, which includes the Energy Improvement and Extension Act of 2008 (the Act). The Act contains the much-anticipated extension of the production tax credit (PTC) and investment tax credit (ITC) sunset dates.
The Act extends the PTC placed-in-service sunset date for certain wind and refined coal facilities until December 31, 2009, and extends the PTC placed-in-service sunset date for certain other qualifying facilities until December 31, 2010. The Act also expands the PTC to include certain marine and hydrokinetic renewable energy facilities placed in service on or before December 31, 2011.
The Act extends the ITC placed-in-service sunset date for solar, fuel cell and microturbine property until December 31, 2016 and expands the ITC to include combined heat and power system property, qualified small wind energy property, and geothermal heat pump system property.
In addition, H.R. 1424 contains a variety of other renewable energy tax provisions, including provisions allowing the energy credit to offset alternative minimum tax liability; increasing the amount of the biodiesel and renewable diesel fuel credits and extending the sunset dates until December 31, 2009; authorizing new clean renewable energy bonds and qualified energy conservation bonds; and extending the energy efficient commercial buildings deduction and the new energy efficient home credit.
Our Tax Section is working on preparing a more detailed analysis of the tax aspects of HR 1424. If you'd like to receive updates concerning H.R. 1424 and other renewable energy and clean tech issues, please subscribe to our Renewable Energy Mailing List.
Utah and the U.S. Department of Energy See Promise in Algae Research for Biofuel Production
On September 29, 2008, the U.S. Department of Energy announced a $900,000 government grant to Utah State University (USU) and Montana State University for the team's plan to grow species of algae that can thrive in geothermal vents and in the Great Salt Lake. This research is one of six biofuel projects throughout the country funded by the U.S. Department of Energy. The Utah Science Technology and Research (USTAR), a Utah legislative initiative, sees so much promise in this, and other USU biofuel research, that USTAR has awarded the USU Biofuels Program $6 million for five years. USTAR makes highly-selective, strategic investments in research with the potential to benefit Utah's economy. The goal of biofuel research is to find or develop a renewable fuel that is dependable and economically viable. Algae that consumes carbon dioxide could be used to consume the carbon dioxide released from power plants' waste gases and the oils produced would be converted into fuel. Using algae in this way requires an algae that can tolerate the high temperature environment of a power plant and therefore the research team is growing an algae in geothermal vents. In addition, the team is hoping to produce biofuels from algae grown in a saltwater environment, such as our oceans and the Great Salt Lake, which would spare tapping more valuable fresh water resources. There is great interest in this research because algae is not subject to the same problems of other biofuels and may very well prove a viable fuel source. Algae doesn't compete with corn or other crops for good farmland and its production wouldn't drive up food costs. Algae can produce up to 10,000 gallons of oil per acre. Any technological advances learned by this particular research is likely several years away, but USU plans to produce an algae-biodiesel that is cost-competitive by 2009.
Senate Passes Renewable Extensions
Despite the urgency of the crisis gripping Wall Street, the Senate stepped up yesterday to resoundingly pass HR 6049. The bill must still be reconciled with the competing House version, HR 6899, particularly on the pay-go issues associated with energy measures. The White House released an administration position on HR 6049 suggesting that, while the President opposes the revenue raisers in the bill which raise taxes on the oil and gas industry, the President does not plan to veto the bill. The Senate is pushing the House with this leverage to coalesce behind the Senate version.
Kudos to renewable energy leaders like Senator Cantwell and Representative Inslee who have steadily advocated for the industry. Unless one of the pending bills is successful, the sun will set on the Production Tax Credit, Investment Tax Credit and several related measures that have proven highly effective in the expansion of the wind, solar and biofuels industries. Congress is scheduled to adjourn on September 26th for the electoral season and perhaps the remainder of 2008. Absent a quick Congressional action compromise behind a unified bill, these renewable industries will suffer from lost investment, delayed projects and the dark cloud of future uncertainty.
The Production Tax Credit (PTC) applies to facilities utilizing wind, open and closed-loop biomass, landfill gas, geothermal, hydropower and waste to produce energy. The "placed in service date" in the PTC determines whether qualifying facilities will be eligible for crucial federal subsidies to improve their project economics. The solar energy and fuel cell Investment Tax Credit (ITC) provides powerful subsidies to these promising industries. The biodiesel blenders excise tax credit is crucial to the growth of this industry that is seeking to diversify into next generation feedstocks. While not strictly in the renewables sector, carbon sequestration, energy efficiency, plug-in vehicles, smart grid expansion and incentives for idling reduction units in heavy duty trucks are other promising energy programs awaiting extension or approval.
As referenced above, it is not the renewable energy sources, efficiency measures, or energy innovations that create the central dispute but the issue of "pay go" or "pay as you go". A broad consensus has emerged that a diversified energy policy is an imperative. The problem arises from the price tag. The simple concept of "pay as you go" is that Congress should simultaneously appropriate or otherwise pay for any expenditures that it includes in a particular piece of legislation. The price tag for the comprehensive new energy package has been in the range of $17 to $18 billion dollars over the next 10 years. Notably, even the use of the 10 year cost evaluation period has caused recurring problems for the renewable energy industry as it encourages Congress to pass shorter term measures that cost less under the pay as you go accounting rules.
The two key pending bills in Congress illustrate the controversy vividly. The "Comprehensive American Energy Security and Consumer Protection Act" (HR 6899) passed the House on September 16th. The "Energy Improvement and Extension Act of 2008" (HR 6049) is the bill that was passed in the Senate with the sponsorship of Senators Baucus, Grassley and Reid. The two bills would both address the price tag issue by repealing some oil and gas domestic production tax subsidies and changing the rules for the calculation of foreign oil and gas extraction income. Renewable industry proponents had recently been encouraged that tentative compromises would allow one of the bills to be passed, thereby extending the sunset dates on the energy programs.
The hurricane and the crisis in the financial markets have shortened the time opportunity for Congress to work out the details of the compromise. There is speculation that even if Congress fails to act this year, a compromise will be reached next year that will be retroactive to January 1st. In other words, If Congress fails to act this year to extend the credits, they will act sometime next year and provide credits to the respective industries for the time when no credits were in place.Continue Reading...
Article: The Implications of Ethanol Plant Optimization
A recent article co-authored by Boise partner John Eustermann in Ethanol Producer magazine highlights certain considerations that plant managers must keep in mind in the event of ethanol plant optimization. These considerations include examination and re-evaluation of common project-related documents, such as technology licenses and permits/site control issues, when investigating optimization activities or technological modifications to the plant.
Algae Takes Wing
The August 16-22, 2008 issue of NewScientist features a very interesting article called "A tank of the green stuff" (pages 34-37). Airlines are facing volatile and rising fuel costs, plus the risk of fuel shortages. Unlike land transport, which it least in theory can be converted to run entirely on electricity, air travel depends on energy-dense kerosene. As if that weren't bad enough, the aviation industry is a significant source of carbon dioxide emissions that will come under increasing scrutiny as countries try to manage and eventually reduce their emissions.
So the airlines are looking seriously at turning biofuels into aviation fuel. The problem with first generation biofuels (apart from an unfortunate but solvable tendency to clog in high-altitude cold conditions) is that they require large amounts of feedstock to produce. When Virgin Atlantic airlines test-flew a 747 from London to Amsterdam earlier this year, it used a biofuel made from coconut and babssu oil produced by Imperium Renewables of Seattle. But according to NewScientist, that flight alone would have consumed 3 million coconuts had it been run entirely on biofuels. That's why Virgin and its partners stressed that the flight was "proof of concept." Because of the large volumes involved, NewScientist estimates that biofuels derived from Jatropha and even biomass (e.g., waste timber) would use up huge swathes of land (much larger than France and Germany, respectively) .
Enter algae. Biofuel from algae could be produced, in theory, at 36 tonnes per hectare. To satisfy the 2007 consumption of jet fuel, that would require commiting 66,000 square kilometers to algae produce--an area about the size of Ireland. That certianly sounds a bit more manageable!
There are many technical hurdles between now and commercial production of algae, but the airlines may provide an important catalyst for the development of this new technology. Related stories on the topic can be found in The Minneapolis Star-Tribune and Biodiesel Magazine.
Recognizing that algae is likely to be among the most important next generation of biofuels, Stoel Rives is in the process of preparing the new Law of Algae, which will be our eighth "Law of" book (unless, of course, we can come up with a catchier title between now and the publication date), Stay tuned--the new book should be available in October. Please subscribe to our Renewable Energy Mailing List if you'd like to receive notice when the Law of Algae is published.
Global Principles and Criteria for Sustainable Biofuels
The Roundtable on Sustainable Biofuels last week released Version 0.0 of its "Global Principles and Criteria for Sustainable Biofuels Production." This diverse group includes representatives from World Wildlife Federation, BP, Bunge, the Dutch Ministry of Housing and the Environment, the Forest Stewardship Council, the University of California at Berkeley and the World Economic Forum. They have been hard at work for the past year establishing an objective framework for enabling a true cost benefit analysis of biofuels that incorporates environmental, economic and social justice criteria. They welcome input into their process and have opened the document for six months of feedback which can be provided via www.bioenergywiki.net
Hopefully, this process will yield substantial success. As an early participant in the US biodiesel industry, I can attest that the benefits of biofuels appeared quite compelling and almost self-evident as compared to conventional petroleum fuel. Those in the industry with a strong interest in environmental issues typically considered corn ethanol and soy biodiesel as transition fuels that would establish the viability of a more diverse transportation energy portfolio by leveraging the existing farm economy. After market entry with these transition fuels, the road would be paved for superior feedstocks as we are witnessing today with cellulosic material, waste feedstock material and even algae.
In retrospect, the Roundtable of Sustainable Biofuels should have been founded a decade ago rather than last year. With an earlier start, such an organization might have achieved great progress in injecting some objective criteria into the "food vs. fuel" debate and propelled the industry in a more sustainable direction. In the absence of these criteria, some of the debaters have used these crucial (and emotional) issues to advance their own agendas and the biofuels industry has lacked the framework to establish its own best practices.
More Steps Towards Biofuels at the Pump
Legislation recently introduced by Representatives Herseth Sandlin (D-SD) and Rep. John Shimkus (R-IL) would, if enacted, provide increased access to ethanol and biodiesel at the pump. The bipartisan legislation would "enhance the Alternative Fuel Vehicle Refueling Property Credit. Currently, the Alternative Fuel Vehicle Refueling Property credit allows gas station owners to claim a 30 percent tax credit for the cost of installing clean-fuel vehicle refueling property up to a maximum of $30,000. The legislation raises the amount of the credit from 30 percent of the cost of qualifying property to 50 percent, up to a maximum of $100,000, and allows station owners to claim the value for the entire cost of dual purpose fuel dispensers."
Boise partner John Eustermann believes that it has been understood for some time now that one of the hurdles the biofuels industry has been struggling with to date is the lack of appropriate mechanisms to encourage and enhance the distribution of the fuels to the end user or retail consumer, and that any mechanism that can increase the availability of biofuels at the pump should lend some relief to the industry and is welcomed by its advocates. Whether the proposed E85 and Biodiesel Access Act gains the necessary traction it needs to be fully effective at the street level will be interesting to see. The motivation behind the proposal certainly makes sense from a biofuel industry economic perspective. Whether competing interests agree, however, may be another story.
EPA Denies Texas RFS Waiver Request
EPA issued its decision yesterday on Texas' request to reduce the nationwide Renewable Fuels Standard (RFS). EPA denied the request, stating that the "RFS remains an important tool in our ongoing efforts to reduce America's greenhouse gas emissions and lessen our dependence on foreign oil, in aggressive yet practical ways." EPA stated that it received and carefully considered more than 15,000 public comments in response to the Texas request, which was the first such request under the RFS program.
For more discussion on this contested topic, see previous blog by Seattle Partner Graham Noyes.
The New (2nd) Edition of the "Law of Biofuels"
Stoel Rives has now published seven original Law of books covering various topics in the renewable energy industry. To write these books, our attorney-authors draw on over 20 years of legal and business experience in wind, geothermal, biofuels, and other renewable energy resources. The books are intended to provide a succinct but thorough overview of industry segments in a way that is practical, business-oriented and not overly legalistic.
Of course, the renewable energy world is changing constantly. This Renewable + LawSM Blog is our effort to stay on top of these issues as quickly as they emerge. But at least once each year, we also update our Law of books. The update process helps us develop a deep and immediate understanding of complex issues, and it's a great way to build a proficient team of lawyers who know how to work efficiently together.
The Law of Biofuels (2d Ed) will be making its debut at the Stoel Rives booth (No. 718) at The American Coaliton for Ethanol (ACE) conference on August 12-14 at the Qwest Center in Omaha, Nebraska . You can also order it or download it online. The new book includes a chapters on Next Gen Biofuels, technology and licensing, financing, tax, siting and permitting, construction, commercial contracts, and real estate. Biofuels attorneys from all of Stoel Rives' contributed their insights to this book
At the ACE conference, my partner David Quinby, an old hand at biofuels and energy M&A, will be speaking on a panel addressing "Ethanol Today & Tomorrow: Growing and Selling Considerations," in which he will explain how biofuels plants can grow, diversify, recapitalize or sell in today's world of narrow margins and volatile markets. Dave promises an exciting presentation, a little like "The Dark Knight" but with more humor.
EPA Stalls Regarding RFS Waiver
EPA Administrator Stephen Johnson granted himself a continuance last week to make his decision on whether to grant Texas Governor Rick Perry's request for a waiver of the Renewable Fuel Standard (RFS). As an attorney accustomed to living with deadlines, I certainly appreciate the lure of being able to grant oneself a continuance. Like many others participating in the biofuels industry, however, it is somewhat frustrating to encounter yet another delay on the policy front.
To be fair, Administrator Johnson has his work cut out for him in resolving this issue. Advocates on both sides see potentially substantial impact from a decisive ruling on the waiver. The waiver provision has been described as a pressure relief valve for the RFS. The interesting thing about this pressure valve is that no one knows what pressure the valve will withstand before it releases. Oil industry advocates would prefer a "hair trigger" type pressure release valve whereas biofuel advocates would like to see a more robust fixture.
Governor Perry's request has some unique attributes. He actually based his request not on the RFS causing difficulty for the petroleum industry- which would have been difficult since ethanol has typically been less costly than gasoline and in ample supply- but on food and livestock supply arguments. Governor Perry's request also precedes the ramp up period in the RFS when the real challenges will likely begin and thus his request could be viewed as an early attempt to hobble the RFS.
Let us hope that cooler heads prevail. Given the tremendous energy security and cost issues presently caused by our fossil fuel dependence, now is not the time for the EPA to start buckling on the RFS. As noted by the NBB's CEO, Joe Jobe, "If the RFS is waived or cut in half in 2008, then the growth of all biofuels, including 'advanced biofuels' such as biodiesel, will be severely hindered." As Jobe and others have noted, these advanced biofuels may hold the real key to relieving the pressure on both fuel and food prices in the future.
Ethanol - Coming Soon to a Pipeline Near You?
According to John Eustermann, a partner in our Boise office specializing in biofuels, while the measure is seen by those in the ethanol industry an encouraging step towards moving ethanol to the retail pump, it's part of a long-term effort he's seen to augment the almost exclusive transport of ethanol via rail cars. Challenges will include the potential incompatibility and understanding the short- and long-term risks of transporting fuel-grade ethanol through pipelines, whether dedicated or existing.
Stoel at the American Coalition for Ethanol Conference
The American Coalition for Ethanol's 21st Annual Ethanol Conference and Trade Show will be held August 12-14 at the Qwest Center in Omaha, Nebraska. This event will be a great opportunity for you to keep up with what is going on in the ethanol industry. You'll hear from people about what is happening legislatively, and you will also hear from people involved with many of the ethanol plant projects around the country. David Quinby (Principal at Stoel Rives) will be sitting on the morning panel:
"Ethanol Today & Tomorrow: Growing and Selling Considerations"
In these days of narrow margins and volatile markets, ethanol producers are talking about consolidation, mergers & acquisitions. Plants can grow, diversify, economize, recapitalize or sell. Learn about the questions to ask and steps to take today, to make it tomorrow.
Please visit us at Booth #718 to pick up the newest version of our "Law of Biofuels" book!
The Role of Biofuels Producers in Climate Change
A recent article by Stoel Rives Boise Partner John Eustermann highlighted the role that biofuels producers can play in climate change in the United States as voluntary carbon trading markets continue to mature and carbon legislation becomes more likely. The article provides an overview of the current state of the carbon credit trading market in the United States, as compared to those countries which are signatories to the Kyoto Protocol, and identifies the benefits to companies who enter the voluntary market in the United States in anticipation of establishment of a formal trading market.
The article, entitled "Committing to Carbon Credits," appears in the July 2008 issue of Biofuels International magazine. Another recent article of John's on the topic was featured in the April 2008 issue of Ethanol Producer magazine, entitled "Capturing the Value of Carbon Credits in Biofuels Projects."