Bioeconomy Production Incentive Program Summary
First Special Session, Senate File 5 – Omnibus agriculture, environment and natural resources
appropriations bill:
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Appropriation for Bioeconomy production incentive can be found on page 11, lines 13 – 32
Statutory language for program can be found on pages 42-50, sections 57-61
Section 57: Definitions
“Advanced biofuels” means a renewable fuel, other than ethanol derived from corn starch that has a
lifecycle greenhouse gas emissions that are at least 50 percent less than baseline (gasoline) lifecycle
greenhouse gas emissions. Advanced biofuel pathways are approved by the US Environmental
Protection Agency (Minnesota Statues § 239.051 and (federal) Public Law 110-140). Types of fuels
include:
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Ethanol derived from cellulose, hemicellulose or lignin
Ethanol derived from sugar of starch (other than corn starch)
Ethanol derived from waste material, including crop residue, other vegetative waste material,
animal waste and food waste and yard waste
Biomass based diesel
Biogas (including landfill gas and sewage waste treatment gas) produced through the
conversation of organic matter from renewable biomass
Butanol or other alcohols produced through the conversion of organic matter from renewable
biomass
Other fuel derived from cellulosic biomass
“Biomass thermal” means using organic materials, such as wood or agricultural residues, to supply a
source of commercial heat or industrial process heat.
“Renewable chemical” means a chemical, polymer, monomer, or plastic that is not sold primarily for use
as food, feed, or fuel and that has a biobased percentage of at least 51 percent as determined by
testing representative samples using American Society for Testing and Materials specification D6866.
Section 58: Advanced Biofuel Production Incentive
Facility Eligibility
Eligible facilities have a ten year window, from July 1, 2015 – June 30, 2025 to begin operation. Once
operation begins production the clock starts on an annual incentive payment for 10 years. Any
production that occurs after June 30, 2035 is not eligible for the incentive payment.
Eligible facilities must source at least 80 percent raw materials from Minnesota and must be from
agricultural or forestry sources of from solid waste. If an eligible facility is located 50 miles or less from
a state border, raw materials can be taken from up to a 100 mile radius from the production facility.
Prepared by 1 Advanced biofuel facilities must produce at least 95,000 MMbtu (approximately 1 million gallons) of
advanced biofuel to be eligible for the program. Facilities must not produce more than 95,000 MMbtu of
annual biofuel production before July 1, 2015. This provision allows early adopters to be eligible for the
program and provides assistance to bring projects to commercial-scale production.
Incentive payments
Payments are calculated on a btu basis in order to equalize energy density among different types of
fuel produced.
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$2.1053 per MMbtu (equal to ~ $0.20/gal) for advanced biofuel from cellulosic biomass
$1.053 per MMbtu (equal to ~ $0.10/gal) for advanced biofuel from sugar or starch (other than
corn starch)
Incentive payments are available for 10 years from the start of production. For example of a facility
begins operation in 2019, incentive payments are available until 2029.
Total payments to an eligible facility may not exceed 2,850,000 MMbtu of advanced biofuel production.
This is $3 million for a sugar or starch (other than corn starch) facility or $6 million for a cellulosic
facility.
Total payments to all eligible facilities may not exceed the amount necessary for 17,100,000 MMbtu of
advanced biofuel production. This would provide incentive payments to a maximum of 6 advanced
biofuel facilities, depending on size.
For cellulosic biofuel utilizing crop residues there is a requirement for facilities to add in the use of
perennial crops or biomass from cover crops as a feedstock source. Requirements apply to the
payment schedule for an individual project and not when the program is authorized or in effect. Eligible
facilities would receive a production incentive for 10 years following successful commissioning.
a. Year 1: 10%
b. Year 3: 30%
c. Year 5 and beyond: 50%
Section 59: Renewable Chemical Production Incentive
Facility Eligibility
Eligible facilities have a ten year window, from July 1, 2015 – June 30, 2025 to begin operation. Once
operation begins production the clock starts on an annual incentive payment for 10 years. Any
production that occurs after June 30, 2035 is not eligible for the incentive payment.
Eligible facilities must source at least 80 percent biobased content from Minnesota and must be from
agricultural or forestry sources of from solid waste. If an eligible facility is located 50 miles or less from
a state border, biobased content can be taken from up to a 100 mile radius from the production facility.
Renewable chemical production facilities must produce at least 3,000,000 pounds of chemicals to be
eligible for the program. Facilities must not produce more than 3,000,000 pounds of renewable
chemicals before July 1, 2015. Renewable chemicals produced through processes that are fully
commercial before January 1, 2000 are not eligible. This provision allows early adopters of renewable
chemical technology, which have commercial scale production facilities outside of Minnesota, to
develop commercial projects in Minnesota.
Prepared by 2 Incentive payments
Payments are calculated on a per pound basis.
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$0.06 per pound of cellulosic-derived renewable chemical
$0.03 per pound of sugar-derived renewable chemical
$0.03 per pound of cellulosic sugar (defined as sugar derived from cellulosic biomass from
agricultural or forestry resources)
Incentive payments are available for 10 years from the start of production. For example of a facility
begins operation in 2019, incentive payments are available until 2029.
There is a bonus payment provision to provide an additional incentive for renewable chemical
production from agricultural biomass to use perennial or cover crop feedstocks. Bonus structure is 20
percent for each MMbtu produced from perennials or cover crops.
Total payments to an eligible facility may not exceed 99,999,999 pounds of renewable chemical
production. This is $3 million for a sugar derived facility or $6 million for a cellulosic derived facility.
Total payments to all eligible facilities may not exceed the amount necessary for 599,999,999 pounds
of renewable chemical production. This would provide incentive payments to a maximum of 6
renewable chemical facilities.
Section 60: Biomass Thermal Production Incentive
Facility Eligibility
Eligible facilities have a ten year window, from July 1, 2015 – June 30, 2025 to begin operation. Once
operation begins production the clock starts on an annual incentive payment for 10 years. Any
production that occurs after June 30, 2035 is not eligible for the incentive payment.
Eligible facilities must source at least 80 percent raw materials from Minnesota and must be from
agricultural or forestry sources. If an eligible facility is located 50 miles or less from a state border, raw
materials can be taken from up to a 100 mile radius from the production facility.
Biomass thermal facilities must produce at least 1,000 MMbtu (approximately 20,000 square feet of
building space) of biomass thermal energy to be eligible for the program.
Incentive payments
Payments are calculated on a btu basis.
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$5.00 per MMbtu
Incentive payments are available for 10 years from the start of production. For example of a facility
begins operation in 2019, incentive payments are available until 2029.
There is a bonus payment provision to provide an additional incentive for biomass thermal production
from agricultural biomass to use perennial or cover crop feedstocks. Bonus structure is 20 percent for
each MMbtu produced from perennials or cover crops. This would increase the per MMbtu payment
from $5.00/MMbtu to $6.00/MMbtu.
Total payments to an eligible facility may not exceed 30,000 MMbtu of biomass thermal production.
This is an annual incentive payment of $150,000 per facility.
Prepared by 3 Total payments to all eligible facilities may not exceed the amount necessary for 150,000 MMbtu of
biomass thermal facilities. This would provide incentive payments to a maximum of 5 biomass thermal
facilities.
Feedstock Sustainability Provisions for Sections 58, 59 and 60
Forestry derived cellulosic biomass must follow the Minnesota biomass harvesting guidelines as
developed by the Minnesota Forest Resources Council (MFRC). Brushland harvesting would use
guidelines specific to brushlands. If biomass is harvested from land parcels greater than 160 acres,
certification is required from Forest Stewardship Council, Sustainable Forestry Initiative, or American
Tree Farm System. Uncertified land from parcels 160 acres or less and federal land must be harvested
by a Minnesota certified master logger and have a forest stewardship plan. For all of these provisions,
equivalent standards and certifications from neighboring states can also be used.
Agricultural derived cellulosic biomass receiving a production incentive is required to submit a
Responsible Biomass Sourcing Plan to the Commissioner of Agriculture. Plan should outline how
agricultural biomass will be managed to preserve soil quality, not increase soil and nutrient run-off,
avoid introduction of invasive species, limit negative impacts on wildlife and reduce GHG emissions.
Plan should also include numeric targets, producer verification methods, and strategies for continuous
improvement of biomass management. Facilities will annually report to MDA on plan progress and goal
attainment. MDA will review submitted reports and is authorized to reduce or cease payments for failure
to comply with plan specifications.
Reporting
Eligible facilities will file a claim for payment to MDA based on amount of production during the
preceding quarter. Filings are due to MDA quarterly, the last day of October, January, April and May.
Production incentive payments will be made 15 days following the quarterly claim filings.
Section 61: Department of Agriculture is required to submit an annual report on the incentive payment
program to the legislative policy committees with primary jurisdiction over environment and agriculture.
The report will detail production that occurred in Minnesota during the previous year and total incentive
expenditures under the advanced biofuel, renewable chemical and biomass thermal programs.
Appropriation
Biofuel incentives: A total biennium appropriation of $2 million; $500,000 in FY 2016 and $1.5 million in
FY 2017. Any money not spent on incentive payments is available to the Commissioner for the
agricultural growth, research, and innovation program.
Prepared by 4