Biomass Opportunities

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Biomass Opportunities

• John S. Laney
• Stoel Rives LLP

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What is Biomass

• Biomass is defined by Merriam Websters Online
  Dictionary as plant materials and animal waste
  used especially as a source of fuel
• Based on the definition of biomass in the 2005
  Energy Act, Biomass is any solid, nonhazardous,
  cellulosic material derived from forest-related
  resources, solid wood wastes, agricultural
  wastes, and plants exclusively as a fuel.

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Biomass Resources
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What is Biomass Crops
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What is Biomass Animals
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What is Biomass Trees
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What is Biomass Trash from Organic Materials
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What is Biomass Wood Residue
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What is Biomass Ag Waste
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What is Biomass Animal Waste
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Biomass Energy

• Biomass energy is energy that is derived from a
  biomass source.

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Biomass Energy Examples

• Combustion of wood chips
• Conversion of biomass into Syngas
• Anaerobic Digestion
• Waste to Energy
• Garbage Burning
• Landfill Gas Projects
• Ethanol/Biodiesel and next generation /
  cellulosic

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Biomass Drivers

• Renewable Portfolio Standard
• Green House Gas Reduction Laws
• Renewable Energy Credits
• Tax Credits and Grants in Lieu of Tax Credits
• Wood to Energy Grants

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Benefits of Biomass

• Renewable energy transportation fuels
• Domestic source of energy
• Healthy forest/reduce wildfire danger
• Turning a waste into a product
• Air quality benefits
• Greenhouse gas reduction
• Rural economic development
• Promoted by federal, state, and even local policy

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Reducing the Carbon Impact
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Biomass Energy Projects

• Fibrominn Benson, MN
• 55 MW plant that uses 700,000 tons per year of
  turkey litter in combination with agricultural
  biomass that will power 60,000 homes.
• 202 million debt financing structured as an
  investment grade vehicle (Fitch Rated BBB-/BB)
  packaged as a traditional Sale-Leaseback

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Biomass Energy Projects

• Beatrice Biodiesel Beatrice, NE
• 50Mgpy biodiesel production facility. Feedstock
  consists of crude soy oil.
• Total project cost is 65 million consisting of
  30.3 million in equity, 28 million in a senior
  debt facility, 1.7 million tax increment finance
  package, and a 5 million working capital
  facility.

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Biomass Energy Projects

• Cornerstone BRAD Sioux County, IA
• Anaerobic digester facility currently under
  construction. Facility converts animal waste and
  food processing byproducts into pipeline grade
  methane gas.
• Total project cost is 25 million. Financing
  terms undisclosed.

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Biomass Energy Projects

• Snowflake White Mountain Power Snowflake, AZ
• 24MW plant expected to be operational in the
  first half of 2008. The plant will use woody
  waste material and paper plant sludge.
• 55 million project financing, consisting of bank
  debt, a tax-exempt bond issue and a supporting
  letter of credit facility.  Part of the bank debt
  was syndicated through the farm credit system. 
  Project financing was structured over an 18 year
  tenor with floating rate interest rates swapped
  for fixed rates at closing.

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USDA Incentives

• The Biomass Crop Assistance Program (BCAP)
  provides direct payments to material owners for
  the collection, harvest, storage, and
  transportation of eligible feedstock materials
  to qualified Biomass Conversion Facilities.
• Rural Energy for America Program provides grants
  and loans for renewable energy systems and
  energy efficiency improvements programs.
• Community Wood Energy Program provides grants for
  communities to acquire or upgrade wood energy
  systems.
• Woody Biomass Utilization Grants encourage the
  use of forest waste products as feedstock
  materials for Biomass facilities

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Stimulus Grants

• 50 million for Wood-to-Energy Grants
• 15 million to develop supply systems to handle
  and deliver high tonnage biomass feedstocks for
  cellulosic biofuels production
• 224 million for 110 projects to reduce
  underbrush, small trees, and other hazardous fuels

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Energy Bonds

• Clean Renewable Energy Bonds (CREBS)
• Qualified Energy Conservation Bonds (QECB)
• Recovery Act Development Bonds
• Recovery Act Facility Bonds

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Stimulus Bill Tax Incentives

• Production Tax Credit (PTC)
• Closed-Loop Biomass 2.1 per kilowatt hour
• Open-Loop Biomass 1.1 per kilowatt hour
• Investment Tax Credit (ITC)
• Grant in Lieu of ITC

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Keys to Success for Biomass Projects

• Location (rail access for feedstock)
• Management
• Feedstock Supplies
• Project Size
• Differentiation / Competitive Advantage
• Tax Credits
• Commercialization of Cellulosic and Next Gen
  Biomass

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Conclusion Challenges ? Opportunities
Please go to our website (www.stoel.com)
for a downloadable copy of one of our four books
or pick up a postcard, fill it out, and we will
mail the one(s) you request free of charge!
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Presented by

• John S. Laney
• Stoel Rives LLP
• 600 University Street
• Suite 3600
• Seattle, WA 98101
• Phone [phone]
• jslaney_at_stoel.com