Minn. bills to incentivize biofuel, biochemicals, biomass thermal

By Erin Voegele | March 17, 2014

Legislation pending in the Minnesota Legislature aims to create incentives for renewable chemicals, advanced biofuels, and biomass thermal energy.

In the Minnesota House of Representatives, H.F. 2456 aims to create a capital equipment loan program for renewable chemicals and advanced biofuel. It would also create incentive programs for advanced biofuel production, renewable chemical production and biomass production. A companion bill, S.F. 2101, was also introduced in the Minnesota Senate.

H.F. 2456 was introduced on Feb. 27. A hearing on the measure was scheduled to be held by the House Agriculture Policy Committee on March 13.

According to the text of the legislation, the capital equipment loan portion of the measure would established a renewable chemical and advanced biofuel revolving loan fund that is eligible to receive appropriations and make loans. The state agriculture commissioner is tasked with creating the loan program. All repayments of loans generated from the fund, including principal and interest, would be redeposited to the fund.

The incentive program would be available for qualified facilities that source at least 80 percent of their raw materials from Minnesota. The feedstock must be from agricultural or forestry sources or from the organic content of municipal solid waste (MSW). Eligible facilities include those that begin operation after Jan. 1, 2015. Existing facilities that expand production after this time can also qualify. To be eligible for the program, advanced biofuel facilities must produce at least 950,000 MMBtu per year. Similarly, renewable chemical facilities must produce at least 30 million pounds per year, and biomass thermal energy projects must produce at least 7,500 MMBtu per year to be eligible.

Payments to advanced biofuel producers would be made to eligible producers that began production by June 30, 2020. The payment amount for each eligible producer’s annual production is $2.1053 per MMBtu for advanced biofuel from cellulosic biomass and $1.053 per MMBtu for advanced biofuel made from sugar or starch). To be eligible, the producers need to meet certain guidelines for feedstocks. A $30 million per fiscal year cap is placed on payments for advanced biofuel producers. There is also a cap on individual payments.

The renewable chemical production incentive also requires eligible producers to begin production by June 30, 2020. The amount of the payment is 3 cents per pound of sugar-derived renewable chemical, 3 cents per pound of cellulosic sugar and 6 cents per pound of cellulosic-derived renewable chemical. The incentive is also subject to certain feedstock requirements and includes a $30 million cap. As with the biofuel incentive, a cap is also placed on individual payments.

The biomass thermal production incentive is formatted in a similar fashion, with a payment of $5 per MMBtu of biomass thermal production. While similar feedstock requirements apply to the thermal incentive, the legislation places a smaller $1 million cap on payments each fiscal year, with a $100,000 cap on individual producer payments.

Additional information on H.F. 2456 and S.F. 2101 is available on the Minnesota State Legislature website.

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