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A Case Study Journey in Cultivating Advanced Biofuel Projects

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A Case Study Journey in Cultivating Advanced Biofuel Projects. Dr. Mark A. Edelman, Professor Dept of Economics and Extension Economist Community Vitality Center Director Iowa State University Biofuels Law and Regulation Conference - PowerPoint PPT Presentation
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A Case Study Journey in Cultivating Advanced Biofuel Projects Dr. Mark A. Edelman, Professor Dept of Economics and Extension Economist Community Vitality Center Director Iowa State University Biofuels Law and Regulation Conference
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Page 1: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

A Case Study Journey in Cultivating

Advanced Biofuel Projects

Dr. Mark A. Edelman, ProfessorDept of Economics and Extension Economist

Community Vitality Center DirectorIowa State University

Biofuels Law and Regulation Conference University of Illinois Urbana-Champaign

April 19, 2013

Page 2: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

PC’s In Project Development

• Credibility• Capital• Pathway (Permitting)• Profits

Page 3: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Table 1. Ownership Statistics for Iowa Biofuel Plants organized as Limited Liability Companies, 2005-2008.

Average Median MinimumMaximum

Owners 367 167 3 1,533% IA Owners 89 99 01 100# Individuals 346 161 3 1,533% Individual 81 91 1 100

Owned# Iowa Farm 168 75 0 745

Owners% Owned by 31 38 0 62Iowa FarmersSource: Iowa Dept of Revenue

Page 4: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Economic Impact of Owner Distributions for a Case Study 100mgy Ethanol Plant,

2006-2010. • $54.6 million in Distributions to Investors• Two years with no payouts

Indirect & Induced Economic Effects • $14.7 million New Income• 431 jobs• $46 million of new sales, primarily in retail

trade and serves categories

Page 5: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010

AmountMatch

1. Poet Project Liberty $14.750 m $231.4 m30mgy cellulosic ethanol

2. Dupont Danesco $9 m $226.1 m 30mgy cellulosic ethanol3. Bioprocess Algae-Green $ 4.168 m $4.738 m

Plains Energy R&D4. Quad Co. Corn Processors $1.45 m $7.702 m

Cellulosic DDG Process5. Avello Bioenergy –ISU R&D $2.5 m $4.644 m

Biomass to asphalt, shingles,fuel & chemicals

Page 6: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010

6. AmbroZea (ISU/UI) R&D $ 1.5 m $ 14.5 mMulti-tasking Yeast

7. Growth-Design Energy $ 1.5 m $ 7.805 m

2nd Generation Biodiesel8. Amana Renewable Energy $ 1.082 m $ 4.077 m

Anaerobic Digester9. PL Energy On-farm Poultry $ 2 m $ 3 m

Litter Gasification to Power10. Renew Energy Systems -- mobile $ 250 k $ 637 k

solid biomass briquette plant 11. SynGest Menlo LLC -- FEED-1,2 $2.5 m $3.5 m

Bio-Ammonia Fertilizer Production

Page 7: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010By 2010,

• $38 m of 71 m obligated in 31 projects

• Leverage 10-1

• Amaizing Energy MEButanol Project – IPF initially approved 2009– $2 m with $8 m match contingent on DOE grant– Anti-corn bias: double output from same corn– Patent Applied July 2008 – Received Feb 2013

Page 8: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Iowa Innovation Demonstration Program 2007-2012

• Awarded $13 m to 101 companies• $140 k average – less than power fund

3rd Party Economic Impact Study• 79 companies received $8.7 million• $150 m in added value• Supported 1100 total jobs• $49 m annual earnings• $2.1 million annual tax revenue• State payback on revenue—less than 5 years

Page 9: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Policy Uncertainty from Washington

1. Budget Uncertainty2. Farm Bill Uncertainty3. Program Uncertainty4. RFS Uncertainty

Page 10: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

What Must Project Developers Do to De-Risk Projects?

1. Off-take Agreements2. Feedstock Agreements3. Technology Demonstrated4. Efficient Design & Construction Warranty5. Operations and Maintenance Experience6. Industry Standard Financial Projections

Page 11: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

What can Universities Do to Assist Project Development Success?

• Recognize 3 sources of New Technology Intellectual Property

• IP from Academic Research (Faculty, Students, Staff)

• Corporate Partnership R&D Budgets

• Small Company Entrepreneur Patents

• Only 3 % of U.S. Patents come from Academy (MIT Center for Industrial Performance)

Page 12: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

What can Universities Do to Assist Project Development Success?

• Allocate Some Outreach Resources & Technical Assistance Accordingly

• Recognize that not all Clients want or need university research capacity;

– Retired Chemical Engineer– Small R&D Company with SBIR

• Project Development & Management Expertise• Facilitation of Access to Capital

Page 13: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

So what can Universities Do?

• Develop/Organize Institutional Capacity• Collaborative Multi-disciplinary Teams• Individuals with Experience & Track Record

• Facilitate Partnerships to Address Capital Gaps• Ag Ventures Alliance VAAP Biz Dev Coop• Rural Development Partners (NMTC)• Alumni/University Foundation Role

• Optional Portion Pensions/Retirement Funds for Community Reinvestment

• Company Creation Incentives > Grants & Journals

Page 14: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

What can the Private Sector Do?

• Change: “We are an Operating Company—Not An R & D Company”

• Didn’t work for Buggy Manufacturers • Billions of $ Sitting on Sidelines?• Expansion with existing technology no

guarantee for success• Strategic Partnerships in mutual Interest can

generate mutual benefit• Nation was built on Innovation, Capitalism &

Entrepreneurial Spirit

Page 15: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Summary and ConclusionsAgricultural Research • U.S. Government $2 billion• Private Sector $3 billion

China Agricultural Research $45 billion

Will we make the investments necessary to remain the world’s global innovator for the benefit of our future generations?

Page 16: A Case Study Journey  in Cultivating  Advanced Biofuel Projects

Contacts:

Dr. Mark EdelmanCommunity Vitality CenterIowa State UniversityPhone: 515-298-1871

Email: [email protected]


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