Policies and Strategies for Increased Biomass and Bioenergy Use in the

United States 

Helena Li ChumNational Renewable Energy Laboratory,

Golden, Colorado, USA

February 2002Conference on Sustainability in Energy Production and Utilization

in Brazil: The Next Twenty Years, UNICAMP, Sao Paulo, Brasil

Outline

• Context – R&D – Portfolio of incentives

• Retrospective of 25 Years• Role of Biomass, Bioenergy and

Biobased Products for a Sustainable Future

USA Renewable Energy 2000

Energy Health

Defense

Carter BushReagan Clinton PresidentBush

197800.51.52.52.03.0

1.019931983

NuclearOil, Gasand Shale Coal

Renewables

Budget Year1988 1998Billion Dollars (1999)

1978GeothermalHydroelectric and OtherBiomass and Biofuels

Wind, Photovoltaicand Other Solar

00.40.80.61.0

0.2 19931983 Budget Year1988 1998Billion Dollars (1999)

Billion Dollars (1999)

Policy2b

19780

0.5

1.5

2.5

2.0

3.0

1.0

19931983

Nuclear

Oil, Gasand Shale

Coal

Renewables

Budget Year1988 1998

Billio

n D

ollars

(199

9)

1978

Geotherm al

Hydroelectric and O ther

Biomass and B iofuels

W ind, Photovoltaicand Other Solar

0

0.4

0.8

0.6

1.0

0.2

19931983Budget Year

1988 1998

Bill

ion D

olla

rs (199

9)

Bill

ion D

olla

rs (199

9)

Po lic y2 b

Million Dollars (1999)

78 1980050100150200250

1985

Transportation

Unallocated FEMPIndustrialBuilding Technology

1990 1995 1999Budget Year policy2d

19780

400600800

200 19931983 Budget Year

Advanced Clean Fuels (Coal)

Advanced Research Technology (Coal) Clean Coal TechnologyAdvanced PowerSystems(Coal)Petroleum& SyntheticFuelsNatural Gas 1988 1998Million Do

llars (1999)

p o lic y2d

19780

400

600

800

200

19931983Budget Year

Advanced C lean Fuels (Coal)

Advanced R esearch Techno logy (Coal)

C lean C oal Technology

Advanced Pow er

System s(Coal)

Petroleum& S ynthetic

Fuels

Natural G as

1988 1998

Millio

n D

ollars

(1999)

Comparative U.S. DOE R&D Funding for Energy Technologies

Federal Financial Interventions and Subsidies in Energy Markets: Primary Energy. SR/01AF/99-03 Washington D.C., USA, Energy Information Administration, 1999. (www.eia.doe.gov/fuelrenewable.html); Federal Financial Interventions and Subsidies in Energy Markets1999: Energy Transformation and End Use. SR/01AF/2000-02 Washington D.C., USA, Energy Information Administration 2000. (www.eia.doe.gov/fuelrenewable.html)

12%RE $

$0

$20

$40

$60

$80

$100

$120

$140

77 79 81 83 85 87 89 91 93 95 97 99

Fiscal Year

Mill

ion

200

0 $

Biobased Products - includes Forest Products and Agriculture

Energy from Municipal Waste-EMW

Alcohol Fuels R&D & Market Development

Biomass, Biofuels, Biopower, Bioenergy

DOE Bioenergy and Biobased ProductsKey policies shifted periodically

• Reduce dependence ofenergy imports - mainly oil

• Resolve supply and demand imbalances with market forces &supporting government policies• Move to R&D role

• Increase renewable energy and energy efficiency priority• Cost-share R&D throughpublic-private partnerships

Carter BushReagan ClintonPresident

Land PlantsFresh water

PlantsSea water

Plants

Technical Processes

BiologicalProcesses

Wolfdraw.cdr

Bio logicalPhotosynthesis

TechnicalPhotosynthesis Photolysis

Hydrogen

Food

Agriculture Forestry Fishery

Feed ConstructionMaterial

Chemical RawMaterial

Wastes

Energy Resource

Bio logical Conversion

to M ore D esirable Fuel Form

M ethane Hydrogen

DirectCom bustion

Pyrolysis

Low Btu Gas

Heavy O ils Char

Hydrogenation

High Btu Gas Oil

Solar Energy

Wolf, M. (1974). Utilization of Solar Energy by Bioconversion - An Overview. Subcommittee on Energy, Washington, D.C., Congress of the United States: 2 - 23. Used to guide the NSF Research Applied toNational Needs that generated the programs onFuels from Biomass in FEA/ERDA/DOE (1974-1977)

1974

Biomass: 2000

Fuels

Primarily Ethanol from lignocellulosic

Heat, Electricity, Combined Heat and Power

Chemical ProductsForest/Paper

Products

Hydrogen from Renewables a Separate Program

Bioenergy Pathways - 2000

Resource Transformation Marketplace

Co-firing

&

Bioprocess

AdvancedTurbine

Fuel Cells

SNGDMEH2

Fischer TropschLiquids

Mixed Alcohols

Methanol

MTG

Ethanol

Fermentation

Chemicals

Direct Combustion

LignocellulosicCrops orResidues

Electricity

Gasification

HydrolysisDedicatedCrops

Biomass Feedstocks – DOE/ORNL andCollaborators

Species Studied

1977-1983 1985 1991

>100 woody species

screened

25 woody species

experimentaltrials 2 woody

modelspeciesselected

35 herbaceous species

screened

1 herbaceous model

speciesselected

1984-1990

Time

Protein Engineering at DOE/NREL

•Discovery of thermal tolerant enzymes: cellulases and xylanases

• 2 - endoglucanase patents• 1 - -D-glucosidase patent• 1 - dextranase patent• 1 - exoglucanase patent (filed)

A. cellulolyticus EI

B. Adney, M. Himmel 1996J. Sakon 1997

J. Sakon 1999J. Baker M. Himmel 1999

Ki EIwt = 2 mM CB

Ki EI245G = 30 mM CB

•Site Directed Mutagenesis–Acidothermus EI and T. reesei CBH I

Yellowstone Natl ParkProspecting early ’80sPermit #2621YELL

More than 200 peer reviewed papers20 patents and applications

Several awards

Systems ApproachesThe Salix Project

Location: Dunkirk and Geneva NY

Project Details 2 x 10.0 M W biom ass additions to 100 M W coal fired bo ilers

Feedstocks: u rban and w ood res idues increasing contribu tion of dedicatedfeedstock supply - hundreds o f acres

sa lix

Environmental, Ecological, Institutional and Life Cycle

Biomass Power Life Cycle Greenhouse Gas Emissions

-600

-400

-200

0

200

400

600

800

1000

1200

-150

-100

-50

0

50

100

150

200

250

300

350

g C

O2-

equi

v / k

Wh

g C

arbo

n-eq

uiv

/ kW

h

DedicatedBiomass

IntegratedGasificationCombined

Cycle

AveragePulverized

CombustionCoal

Coal/biomasscofiring (15%)

Direct-firedBiomass ResidueCurrent industry

Natural gascombined cycle

Mann, M. K.; Spath, P. L. (2001). Comparison of the Environmental Consequences of Power from Biomass, Coal, and Natural Gas. Kyritsis, S., et al., eds. 1st World Conference on Biomass for Energy and Industry: Proceedings of the Conference held 5-9 June 2000, Sevilla, Spain. London, UK: James & James Ltd.; Vol. I: pp. 65-68

a

January 2001

Biomass ResearchAnd Development

Board Created in 1999

in responseto Executive Orderand the BiomassResearch and

Development Act of 2000.

Biomass R&D TechnicalAdvisory Panel started

in 2000See http://www.bioproducts-bioenergy.gov/

Increased FederalGovernment Coordination

From Inventory of FY98R&D Activities: $253 MiDOE + USDA = $228 Mi

DOE = $108 MiUSDA = $120 Mi

Key Agencies

Portfolio of Non-R&D Actions

• Payments either directly to consumers or producers or indirectly through energy excise taxes foregone;

• Reduced taxes through preferential tax rates, tax credits (R&D expenses offsetting taxes), tax deferrals, and income-reducing measures;

• Investment incentives such as accelerated capital depreciation;

• A variety of loan programs;• A number of voluntary programs with industry;• Use of the federal government purchasing power to

increase biomass and bioenergy use.

1971

500

0

1000

2000

3000

1500

2500

3500

Industry

Com m ercial

M SW & LFG

Residential

EthanolUtility

1975 1980

Year B iom assp rim ary

1985 1990 1995 1999

CleanAirAct

Amend.

1000 Peta Joules = 1 Exa Joule =0.95 Quads

OTA (1981). Energy from Biological Processes. Washington, D.C., Congress of the United States, Office of Technology Assessment: p 113. EIA (2000). Renewable Energy Annual 1999. DOE/EIA 0603(99) Washington D.C., USA, 117. (www.eia.doe.gov/fuelrenewable.html)

PublicUtility

RegulatoryPolicy

ActPURPA

Crude OilWindfallProfitsTax Act

EnergyPolicy

ActEPAct

TransportationEquity

Act

EnergyTax Act

EnergyConservation &Reauthorization

Act

BiomassR&DAct of2000

Examples of Bioenergy and Biobased Products Facilities

Bioenergy Electricity Generation, 1981 - 1997

0

2,000

4,000

6,000

8,000

10,000

12,000

1981 1983 1985 1987 1989 1991 1993 1995 1997

Year

Cap

acit

y, M

W

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Gen

erat

ion

, T

Wh

Ref: EIA, Annual Energy Review 1997, Renewable Energy Annual 1995

700,000 MWUS capacity

3,000 TWhUS generation

Brazil: 350 TWh; Portugal: 39 TWh; UK: 343 TWh

Bi kWh=TWh

$15 billion capital

66,000 jobs

IPP

PURPACreated

Market Certainty

California’s 20 years of BioPower

NNNNNNF

gas

Elec-tricityHeat

Fan

ElectricGenerator

StirlingBurner Gasifier

FeedScrew

Fuel Bin

Stirling PCS

StirlingEngine

Biomass

Gasifier

GasClean-up

CombustionTurbine

Steam

HRSG

Gasification Combined Cycle

Historical U.S. Ethanol Consumption

0.00

0.02

0.04

0.06

0.08

0.10

0.12

1981 1984 1987 1990 1993 1996

Year

Ref: Energy Information Administration, http://www.eia.doe.gov/pub/energy.overview/aer98/txt/aer1003.txt

6-7 billion6-7 billionLitersLiters

1% gasoline1% gasoline

• Capacity 2000Capacity 20009 billion Liters9 billion Liters

• 2010 projected2010 projectedcapacitycapacity

12 billion Liters12 billion Liters

Ethanol in Ethanol in BrazilBrazil10-15 10-15

billion Litersbillion Liters

45 firms$3 billion invested

40,000 jobsReplaceReplaceMTBE?MTBE?

Quads

Ethanol and Corn TrendsPartial Waiver of Excise Taxes Continues Through 2007

Bioethanol Production

+ =

“Cooking” catalyst

+ heat+

time

sugarsand

residual solids

(lignin)

ethanolfermentationand recovery

ligninutilization(boiler fuel)

Decouple sugar cost from commodity food marketLower production cost

Alternative-Fueled Vehicles by Type - Year 2000

LPG

CNG

LNG

MeOH 85%

MeOH

EtOH 85%

EtOH 95%

Electricity

Total Number: 432,000/220 million vehicles

EPAct 1992

Replacement of boilers at the equipment Replacement of boilers at the equipment replacement time with integrated gasification replacement time with integrated gasification combined cycle could make the industry an combined cycle could make the industry an exporter of up to 30GW by 2030exporter of up to 30GW by 2030

- RD&D- RD&D- support of demonstration- support of demonstration-1st of a kind commercial1st of a kind commercial

-Several conceptsSeveral concepts- Lower cost learning - Lower cost learning curve curve

Agenda 2020American Forest &Paper Association

EPA (2001). Basic Facts - Municipal Solid Waste, Office of Solid Waste Information. 2001.

www.epa.gov/epsoswer/non-hw/muncpl/facts.htm

Summary of Key Bioenergy Federal Subsidies -- 1999

Type Amount,

million 2000 $

Use/Uptake by Private

Sector*

Renewable Energy Production Incentive (direct expenditure)

$2.6 Wood residues & landfill gas. Year to year appropriation – considered less effective than others

Internal Revenue Code, Section 29 Tax Credits

$4.0 Alternative fuel (non-conventional) production credit - effective

Alcohol Fuel Credit $15 -- Somewhat effective production credit

Revenue loss estimate for the partial exemption from Excise Tax for Alcohol Fuels

$680-$725

Primarily used for ethanol – very effective in driving increased production. This revenue loss is offset by less direct govt payment to farmers due to increased grain consumption*EIA/SR/01AF/99-03, Federal Financial Interventions and Subsidies in Energy Markets 1999:

Energy Transformation and End Use, 2000; Renewable Energy 2000: Issues and Trends, Feb 2001, DOE/EIA –0628 (2000).GAO/RCED-00-301R Tax Incentives for Petroleum and Ethanol Fuels, 2000

Tax Incentives for Ethanol Fuels Created Market Certainty

Tax IncentiveExpressed as Federal Outlay Equivalents

Summed over

Years

Adjusted to

2000$

Ethanol – Partial exemption from the excise tax for alcohol fuels

1979-2000 $7.5 to $11 billion(Treasury or Joint Committee on Taxation calculations). This revenue loss is offset by less direct govt payment to farmers due to increased grain consumption

Income Tax Credits for Alcohol Fuels

1980-2000 $198-$478 million(Treasury or Joint Committee on Taxation calculations)

Petroleum industry excess of percentage over cost depletion

1968-2000 $82 billion

Petroleum industry expensing of exploration and development cost

1968-2000 $42-$54 billion(Treasury or Joint Committee on Taxation calculations)

Alternative (non-conventional) Fuel Production Credit

1980-2000 $8.4-$10.5 billion(Treasury or Joint Committee on Taxation calculations)GAO/RCED-00-301R Tax Incentives for Petroleum and Ethanol Fuels, 2000

Foss

il Fu

els

Create targeted markets to increase investment

• Commercial Market Potential– Renewable Portfolio Standard (RPS) for Electricity Proposals at Federal level (not enacted)

could establish a % of renewable electricity required by any company selling electricity in a competitive market (to have or buy from a company that has excess renewables -- tradable obligation)

– RPS enacted at several stateshttp://www.eren.doe.gov/state_energy/policy_content

– Renewable Fuel Standard proposals at the Federal level (not enacted) could establish % renewable fuel in the pool

States with Renewable Portfolio Standard

State Portfolio StandardConnecticut New Renewables: 0.5% by 7/1/2000 increasing by 0.25 %

each year through 7/2009.

Existing renewables increase from 5.5 percent to 7% by 2009.

Maine 30% standard.

Massachusetts 1% starting in 2003, increasing by 0.5% through 2009, and an additional 1% per year thereafter.

Nevada 0.2% and increasing to 1% by 2010, half of which is to come from solar power.

New Jersey 2.5% in 2000 increasing to 6.5% by 2012.

Pennsylvania 2% increasing by 0.5% annually subject to cost limitations.

Texas 2000 megawatts new renewable generating capacity by 2009 with 400 MW to be installed by 2003.

Arguments for Renewable Portfolio Standard

• Helps to diversify a state's energy supply.

• Promotes environmentally-benign forms of electricity.

• Creates initial market demand to help make fledgling industries viable.

Arguments Against Renewable Portfolio Standard

• Increases costs to consumers.

• Customers and the market should be able to select what types of electricity are produced, not mandates.

• The environmental benefits often accrue elsewhere rather than in-state.

• Provides an unfair market advantage to renewable energy technologies.

Outcomes of Government Actions 25 Years

• Primary Energy – doubled in 20 years• Electricity Production – tripled in 10 years• Ethanol Fuels Production – increased a factor of 16 in 20 years• Forest Products Energy Self-sufficiency increased by nearly

50% in 20 years. • Forest Products/Pulp and Paper Energy Intensity decreased initially and resumed increase in

the 1992-1998 period.• Overall Agriculture/Energy Interactions – complex (somewhat negative for soybean and

cattle; somewhat positive for poultry)• Municipal solid waste management --

– Safe and responsible. – Recycling rates tripled in 30 years. – Primary energy from MSW/landfills increased by a factor of

6 in 20 years.

• Significant emissions reductions, including carbon, and landfill reduction were achieved.• Significant economic development including rural.

National Renewable Energy Laboratory

Operated for the U.S. Department of Energy by M idwest Research Institute • Battelle • Bechtel

Bottom Line• Bioenergy - Biopower – Biofuels - Bioproducts

– Intersection of • Energy• Agriculture• Forestry• Environment• Regional/Municipal Residue Management• Chemical Industry Feedstocks• Economic Development

– Understanding and fostering important and productive interactions is key.– Outstanding scientific/technological progress

can help design sustainable integrated systems.

Policies, with multiple objectives to be achieved simultaneously,Policies, with multiple objectives to be achieved simultaneously,science, and technology can lead to sustainable use of the resourcescience, and technology can lead to sustainable use of the resource

References

• Helena L. Chum & Ralph Overend, “Biomass and Bioenergy in the United States”, in press Advances in Solar Energy Conversion (2002)

• Fostering the Bioeconomic Revolution in Biobased Products and Bioenergy,http://www.bioproducts-bioenergy.gov

• Helena L. Chum & R. Costello, 2001). Overview of Policies and Strategies for Biomass and Bioenergy in the United States. Kyritsis, S., et al., eds. 1st World Conference on Biomass for Energy and Industry: Proceedings of the Conference held 5-9 June 2000, Sevilla, Spain. London, UK: James & James Ltd; pp. 1248-1252

• Chum, H. L.; Overend, R. P. (2001). Biomass and Renewable Fuels. Fuel Processing Technology. Vol. 71(1-3), June 2001; pp. 187-195