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A Case Study Journey in Cultivating Advanced Biofuel Projects

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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A Case Study Journey in Cultivating Advanced Biofuel Projects

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  1. 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 University of Illinois Urbana-Champaign April 19, 2013

  2. PC’s In Project Development • Credibility • Capital • Pathway (Permitting) • Profits

  3. Table 1. Ownership Statistics for Iowa Biofuel Plants organized as Limited Liability Companies, 2005-2008. Average Median Minimum Maximum 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 62 Iowa Farmers Source: Iowa Dept of Revenue

  4. 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

  5. Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010 Amount Match • Poet Project Liberty $14.750 m $231.4 m 30mgy cellulosic ethanol • Dupont Danesco $9 m $226.1 m 30mgy cellulosic ethanol 3. Bioprocess Algae-Green $ 4.168 m $4.738 m Plains Energy R&D 4. Quad Co. Corn Processors $1.45 m $7.702 m Cellulosic DDG Process 5. Avello Bioenergy –ISU R&D $2.5 m $4.644 m Biomass to asphalt, shingles, fuel & chemicals

  6. Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010 6. AmbroZea (ISU/UI) R&D $ 1.5 m $ 14.5 m Multi-tasking Yeast 7. Growth-Design Energy $ 1.5 m $ 7.805 m 2nd Generation Biodiesel 8. Amana Renewable Energy $ 1.082 m $ 4.077 m Anaerobic Digester 9. PL Energy On-farm Poultry $ 2 m $ 3 m Litter Gasification to Power • 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

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

  8. 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

  9. Policy Uncertainty from Washington 1. Budget Uncertainty Farm Bill Uncertainty Program Uncertainty RFS Uncertainty

  10. What Must Project Developers Do to De-Risk Projects? • Off-take Agreements • Feedstock Agreements • Technology Demonstrated • Efficient Design & Construction Warranty • Operations and Maintenance Experience • Industry Standard Financial Projections

  11. 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)

  12. 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

  13. 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

  14. 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

  15. Summary and Conclusions Agricultural 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?

  16. Contacts:Dr. Mark EdelmanCommunity Vitality CenterIowa State UniversityPhone: 515-298-1871Email: medelman@iastate.edu

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