Governors Biomass Task Force Recommendations Presenter: Jim Kerstetter, Ph.D.

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Governors Biomass Task ForceRecommendationsPr
esenter Jim Kerstetter, Ph.D.

• December 17, 2004

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Biomass Benefits

• Energy
• Reduces dependence on foreign oil.
• Diversifies the states energy portfolio.
• Economy
• Strengthens rural economies by providing new jobs
  and keeps dollars local.
• Creates new markets for low value products.
• Reduces trade deficit.
• Environment
• Improves air and water quality.
• Turns waste and problematic materials into
  revenue sources.

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Unique Characteristics of Biomass

• Biomass is organic material that is available on
  a renewable or recurring basis including but not
  limited to
• 1. Forest-related materials
• 2.     Agricultural-related materials
• 3.     Animal waste
• 4.     Solid woody waste materials
• 5.     Crops and trees planted for the purpose
  of being used to produce energy
• 6.     Landfill gas, wastewater treatment gas,
  and biosolids.
• 7.     Segregated municipal solid waste MSW
  (excluding tires, medical and hazardous waste)

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Unique Characteristics of Biomass

• USES
• Transportation Fuels
• Ethanol
• Biodiesel
• Biocrude Oil
• Electricity
• Heat
• Products
• Oils
• Plastics
• Solvents
• Chemical Intermediates
• Adhesives
• Dyes, Pigments, and Ink
• Detergents

CONVERSION PROCESSES
BIOMASS FEEDSTOCK
Gasification Fermentation Acid
Hydrolysis Hydro-thermal liquefaction Combus
tion Co-firing
Wood Waste MSW Agricultural Crops Agricultural
Residues Animal Wastes
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• Barriers
• High cost of biomass conversion equipment.
• Tax pyramiding on biomass resources.
• Both barriers are cross-cutting among all
  biomass projects.
• Recommendation 1
• Provide a deduction from gross receipts tax for
• 1) harvesting and selling biomass materials and
• 2) equipment purchased to process biomass into
  biopower, biofuels or biobased products.

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Administration

• Process is same as Filmmaker Gross Receipts Tax
  Deduction
• EMNRD certifies that the business is a qualifying
  biopower, biofuels and biobased products
  business.
• Taxation and Revenue Department issues a
  non-taxable transaction certificate to be
  presented to the vendor at the time of purchase.

Fiscal Impact

• 2005/2006 Due to lead times for permitting, land
  acquisition, financing, ordering and build-out of
  equipment the fiscal impact within the first two
  years would be minimal.
• Currently there are only two biopower projects
  and three biofuels projects under consideration
  within the state. Some of these projects are
  likely to use tax-exempt Industrial Revenue Bonds.

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• Barriers
• New technology makes financing difficult.
• Market is unpredictable.
• Recommendation 2
• Require that all highway gasoline fuels contain
  10 ethanol (E10) and all highway diesel fuels
  contain 20 biodiesel by 2008
• if competitively priced.

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Turns Waste and Problematic Materials into
Revenue Sources
Conversion Options
MSW
Cow Manure
MRF
Gasifier
AlcoholSynthesizer
Sawdust Wood Chips
Ethanol_at_ 1.00/gallon
Natural Gas _at_ 3/mmbtu
Forest Thinnings
Electricity _at_ 5-6 cents/kWh
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25 Ton/Day Gasifier
Ethanol Synthesizer
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Administration

• All transportation fuel is regulated by the New
  Mexico Department of
• Agriculture, Petroleum Standards Bureau under the
  Petroleum Products
• Standards Act. The Bureau inspects, samples,
  tests and enforces.

Fiscal Impact This proposed recommendation
would not take effect until 2008 to allow
reasonable time for scale-up to meet the mandate.
Other StatesCurrently both Minnesota and Hawaii
(Blending is to begin in April of 2006) have
mandated E10 in all gasoline. No state, to
date, has mandated both E10 and B20, New Mexico
would be the first. The federal Energy Bill has
contained provisions requiring a percentage or
number of gallons of all gasoline nationally
contain ethanol.The current phasing out of MTBE
(a transportation fuel oxygenate) by 19 states
will provide an export market for New Mexico
produced ethanol.
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Projected Ethanol Production
2001 Highway Fuel Use Gasoline 866M
gallons Diesel 405M gallons
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• Barriers
• New technology makes financing difficult.
• Market is unpredictable.
• Recommendation 3
• Amend the Alternative Fuels Tax Act to include
  gasoline blends of 75 to 85 ethanol (E85) and
  diesel blends of 20 biodiesel (B20) which will
  afford them the same reduced excise fuel tax
  provided to compressed and liquefied natural gas
  and liquefied petroleum gas.

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Administration

• Enactment of this recommendation would have
  minimal
• additional administrative burden. Tax is
  administered
• by the blender, in same manner as existing excise
  
• taxes.

Fiscal Impact2005 6,000 to 8,000 in state
excise tax reductions.2006 8,000 to 15,000 in
state excise tax reductions.
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• Barrier
• Biomass heating is a commercial technology but
  has yet to be embraced within New Mexico.
• Recommendation 4
• Require state facilities to perform a life-cycle
  cost analysis for new heating or co-generation
  installation that includes biomass fuels and to
  require use of biomass if the life-cycle analysis
  shows biomass no greater than 20 higher than the
  other alternatives.

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Administration

• General Services Department and Public Education
• Department would be required to include a
  life-cycle
• cost analysis of biomass heating for all new
• construction.

Fiscal ImpactThe fiscal impact would be based
on the number of new building projects within the
next two years and then be capped based on a
life-cycle analysis that shows biomass to be no
greater than 20.
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Benefits of Recommendations

• Encourage major investment in new industry
• Create hundreds of new jobs, especially in rural
  areas
• Generate millions of dollars of new revenues
  subject to taxation
• Reduce or eliminate environmental impacts of
  current waste disposal practices
• Expand and diversify states energy portfolio
• Establish New Mexico as a Biomass Energy Leader