Oregon's BETC Reform

In energy circles Oregon has been well known in the last ten years for it's generous Business Energy Tax Credit (BETC) which offers up to 50% off the capital cost of a project back as an income tax deduction.  Better yet if you are a low cash flow start up you can "Pass-Through" this BETC for 35% of face value cash up front.  So if you build a $1,000,000 project in theory Oregon will give you a $500,000 income tax break over five years and you can sell this tax break to an investor for $350,000 cash.

Its no doubt one of the greatest deals for project development out there.  Throw into that mix a huge clean energy consumer base and utility connection to wheel power to the California market and you've got a strong comparative advantage in Oregon.  I know I've done several project that would not have happened without the BETC which have directly created jobs at my family's business.  I've also used the BETC as a down payment with a bank as part of financing.  Its a great economic development tool but the lack of boundaries on the program has blown up its use.  Solar panel manufacturers, wind farm developers, and a few large projects have exploded the dollar figure this tax credit brings.

So in Oregon the Department of Energy (ODOE) has been under fire for the Business Energy Tax Credit  taking a large cash draw in the economic downturn.  The fact that the alternative energy tax break is primarily being taken by the Wal-Mart, large banks, and other huge corporations hasn't polished its image any either.  Corporate welfare is never a great selling point.  This causing Oregon's Legislature to push a "reform" to bring down the total dollar figure of the BETC.

First a law capping total dollars came down.  Then rules were written to figure out how to stay within the budget.  So the rules are set and now is the time to pay attention as any potential new project I may come across will be playing in this new league.  Through the recession I haven't had much in the way of project opportunity.  Just trying to keep momentum moving forward for what we built pre-2008.  Taking a look there are things I agree with and those I don't.

First I don't see any reference to property tax impact of a capital project (and I didn't in the debate during the reform). The local positive impact of these projects isn't considered at all.  If the state is losing on the income tax side but funneling more in a much more permanent base of property tax revenues I would call that great policy.  Unfortunately the only focus isn't on long term revenues but instead on a single ticket price

I've always thought the controversy of corporations taking BETC's to avoid income tax is over stated.  In fact its safe to say if it wasn't for the BETC many of these companies wouldn't have realized the same amount of income tax (then avoided by a BETC) by creative and legal accounting gimmicks to minimize profits in Oregon.  I am very confident that the BETC funnels what otherwise would have been money leaving Oregon into capital investments that raise local property taxes far in excess of their real cost to Oregon's general fund.

Now back to the actual reform.  One good thing is they moved the one year BETC opportunity up to a $20,000 one year project (meaning I can take a tax credit in one year instead of taking it over five years). Short payback of tax credits is very good for small businesses seeing great years and investing in improving their operation.  In the small business community you never know what the next year holds so five year paybacks are a tough sell for a BETC.   Better yet, one year is very positive for the type of projects I do with refueling infrastructure which can be kept under $20,000 if we work at it.  It's also very good for retrofit projects as well so local smaller scale contractors will benefit from this.

As of right now there is a cap of $300 million  in BETC money established through 2011's state budget.  Of this $300 million $218 million potential projects has already been pre-certified.  So in theory its already spent.  But of course it probably won't be close to spent.  It begs the question, how does this work that projects take years and are unpredictable and therefore when the BETC vests to being taken might effect other budget years?

There is a Q&A page but it hasn't posted any questions and answers.  I definitely have small talk to make next time I run into an ODOE staffer.  Just that much more reason to get to local conferences I guess.

To help they have created a "tiered" approach.  ODOE shows an under $500,000 project costs, $500,000 to $6,000,000 project cost, and of course an upward of $6,000,000 project.  This will be interesting.  It does not mention how they will break out the remaining sum of cash between these projects.  I also am curious what happens if you apply pre-project, don't get a pre-certification, then start building and finish in a specific time frame.  If other's in that tier didn't finish can you take their budget allotment?

Oh well. As with all changes questions and ideas pop up.

Oregon Startup makes Biobased News

Diesel Brewing hits the biz wire.

I've never heard of this start up before but I'm intrigued. In particular butanol has a real promise to be used in biodiesel production as well as a gasoline blend stock. As it relates to biodiesel the butanol can be used as the alcohol in the transesterfication process.

Primarily methanol is the alcohol used. When butanol is used supposedly the gel point of the biodiesel drops significantly below 0 degrees.

Their formal website is http://www.dieselbrewing.com/

I neither endorse or am familiar with anyone associated with Diesel Brewing. I just saw the news and thought it interesting.

Oh How they Forget

Sawdust a.k.a. "Biomass" was a common heating and boiler fuel in the Pacific NW. Very common. You can see the remnants of these hoppers and belt systems attached like skeletal remains on older buildings. They exist all over the older parts of Oregon. Which makes the following story reasonably funny.

From this week's Wallowa Chieftan Article:

"On Friday, Sept. 19, the first-ever biomass boiler system to be installed in an Oregon School District will be the subject of a much-anticipated gathering at Enterprise High School. The ribbon-cutting, dedication and tour of the facility will take place from 1 to 3 p.m., and the public is invited to attend."

Its funny when high-tech is really the fuel of yester-year with the additional controls of a computer aided combustion and recirculated exhaust gas improving the efficiency and emissions of the fuel. But of course the argument would be - it's new to them.

Good News for Oregon's Trillium Fiber Fuels

From: Chris Beatty
To: biofuels4oregon@lists.onenw.org
Sent: Thursday, May 01, 2008 6:10 PM
Subject: [biofuels4oregon] Trillium FiberFuels receives DOE grant

May 1, 2008

Trillium FiberFuels receives $100,000 grant for cellulosic ethanol research

Trillium FiberFuels of Corvallis, Oregon has been selected by the US Dept. of Energy to receive a Small Business Innovative Research (SBIR) Grant to develop a key process for cellulosic ethanol. The Trillium technology will substantially improve ethanol yield from feedstocks such as straw and forest residues. Trillium president Chris Beatty commented: “We are very pleased with this support and validation of our approach. We are excited about taking this technology to the next level.”

Range Fuels: Biogass to Ethanol

I came across an article I thought worth sharing. Two points of interest. The initial article was found at BusinessGreen.com and is worth reading.

One - Range Fuels, a biofuel startup, got a significant amount of direct investment. This to support its efforts in turning woody biomass into liquid fuel which are about to be commercially scaled in their first plant in Georgia under construction now. This round of funding came on the heels of another $76 million awarded by the US DOE to also support their technology.

Two - The process explained of how they will make their cellulosic ethanol. The article called it a "thermo-chemical" technique of turning wood into liquid fuel.

From my guessing this is a fancy way of saying they burn the wood, pull off the exhaust gas (now technically referred to as "biogas) and introduce the biogas to an environment that includes a catalyst. The catalyst in turn would create certain or pull out molecule chains that would then be further refined into liquid fuel (i.e. cleaned up).

Interesting stuff. I hope to have time to put up more on this technology process. I've read a little about it and seen presentations at conferences. Either way I need to learn more about it. Something in my gut says this is going to be the next big focus. Primarily because the combined heat and power potential probably fits extremely well with existing corn based ethanol and therefore could be readily adopted as a plant expansion for existing ethanol producers.

My thoughts are that we will be hearing increasingly more about Range Fuels going forward if for no other reason than they have the money to push for earned media coverage and must justify the cash they've recently pulled down.

NOTE: This blog first mentioned Range Fuels after they recieved a large investment from Vinod Kholsla. See the previous DieselGeek Post on the subject.

25x25 Responds to Time Magazine Article

FROM AN EMAIL ADDRESSED: "To all 25'x25 Partners, April 2, 2008

Responding to widespread inaccuracies in this week's Time magazine cover story, the 25x'25 National Steering Committee is responding with a letter to the editors of Time expressing disappointment with the questionable characterization of biofuels and their role in the issue of greenhouse gas emissions in "The Clean Energy Scam," by Michael Grunwald. The letter was authored by steering committee member and former Congressman Thomas W. Ewing, who is also the Immediate Past Chairman of the USDA and DOE Biomass Research and Development Technical Advisory Committee. The entire letter follows:


As a former Member of Congress and a leader in a diverse alliance of agricultural, environmental and conservation organizations working together to advance clean energy solutions, I am greatly disturbed with Time magazine's April 7th feature story on biofuels. In this article, Michael Grunwald criticizes biofuels yet offers no alternative to using petroleum to meet our energy needs - much of which comes from the Middle East.

Members of our alliance share the author's anxiety for the continued health of the Amazon rain forest and other "carbon sinks" that nature has provided around the globe. As champions of many forms of land-based renewable energy (biomass, wind energy, solar power, geothermal energy and hydropower, in addition to biofuels), we agree that environmentally sensitive lands should not be exploited in pursuit of renewable fuels.

Unfortunately, the story's message of concern is undermined by misinformation about biofuels and an over-simplified analysis of complex systems. The implication that biofuel production is responsible for the destruction of the Amazon rain forest ignores the reality that ever increasing worldwide demand for food and fiber is the primary cause of land use change in this and other regions. Simply eliminating biofuels will not stop land use changes from occurring, and in countries like Haiti that have already lost their forests, biofuels could help reestablish forests and offer more affordable and sustainable energy options. Similarly, information in the story about a recent study, which claims land-use changes brought about by increased biofuel production are producing more greenhouse gas emissions (Searchinger et al.), only tells half the story. What is missing is that Searchinger's methodologies have been widely questioned by respected biofuel life-cycle analysis researchers such as Michael Wang, with the Center for Transportation Research at the Argonne National Laboratory, who counter that Searchinger et al. used outdated, if not incorrect, data to reach their conclusions.

The story's reference to a UN food expert's dramatic condemnation of biofuel production fails to mention that the UN Food and Agriculture Organization almost immediately distanced itself from the remarks. The head of the UN Food Program recently noted that higher energy costs, erratic weather and low stocks are big factors contributing to the high cost of food around the globe.

Of particular concern is the ready dismissal of emerging technologies that will allow us to produce next generation biofuels from non-food feedstocks sustainably grown on underutilized and marginal lands not suited for food production. Conservation tillage and other agriculture and forestry residue management practices used to produce biomass energy feedstocks can also provide a constant buildup of soil organic carbon. Researchers at Ohio State have concluded that the total potential of carbon sequestration in U.S. soils, counting croplands, grazing lands and woodlands, is nearly 600 million metric tons of carbon, or the equivalent of more than 2,200 million metric tons of carbon dioxide emissions - about 33 percent of total U.S. emissions.

We encourage the editors of Time to contribute to a much-needed discussion of the role renewable resources will play in improving national security and the environment while moving us closer to energy independence. We simply ask that they demand a basic level of accuracy and balance from the stories that they run.


The Full Press Packet and no doubt more will be coming at the 25x25 main website shortly.

Fueling Oregon with Sustainable Biofuels

The Oregon Environmental Council has a new report they have recently published. Its an impressive document which covers a great deal of ground in a short number of pages. I'm only half way through it but I can tell you its worth the read if your into the subject.

Meticulously researched but easy to read. In depth citation while still being accessible as they compact many complex issues into a few paragraphs each. If you are doing any research paper on biofuels I recommend this document as a starting point. Daniel Gilman, the primary author, did an excellent job.

This pamphlet looks like a great starting off point for something much bigger. I realize that's not the way it normally works with research documents but I really like what I'm seeing and its really relevant to the debate going on nationally now. I also can't help but notice that most of this book could be exported to any state in the U.S. and still be just as relevant as it addresses the technological issues associated with biofuels.

Download the PDF here: Fueling Oregon with Sustainable Biofuels, October 2007.

Also worth checking out are many of the other research and informational projects the OEC has been involved in. Available from their website under Publications as well as the OEC's Biofuels4Oregon page which also offers a listserve for Oregon relevant biofuels information.

NOTE: This post originally released 11-26-07

Willow - Potential Biofuel Feedstock

Joel Ens, a grad student from the University of Saskatchewan, has proposed willow as a potential biofuel and biomass feedstock. The willow offers characteristics of growing long consistent branches rapidly. The full article available by stopping by the Biobased News.

I've never heard of a pruning a fast growing tree. Looking this direction might have real potential for Oregon. Oregon being a highly productive nursery tree state, the Willamette Valley having a great deal of rain fall, and the idea of landscaping trees serving a dual purpose should be promising.

I have heard similar proposals around bamboo as a great perennial crop. The big difference with willow being a twenty year scope of rotation versus a few years for bamboo. The bamboo root ball become to dense after a few years but bamboo as a crop should allow multiple harvests a year. The great consistent rain fall of the Willamette Valley in Oregon also contributing a great deal to the productive potential for a bamboo biomass crop.

The Bioprocessing Revolution

Mark Zappi has an op-ed piece that popped up on the Biobased News site. Zappi is the dean of Engineering and Director of the Bioprocessing Research Laboratory at the University of Louisiana.

A Peek into the New Industrial Revolution - Bioprocessing

Its worth reading. Spot on explanation in what I see happening as well.

An excerpt below:

The industrial revolution of the 1800’s and 1900’s was based on steel, fossil fuels, bricks, and mortar. Now these are staples in America’s industrial toolbox. However, most experts agree that the next industrial revolution that is just beginning is one that will be based on biology-based materials or biomass.

This revolution will usher in a totally new paradigm in terms of how society views both farm products and our organically rich wastes. Agriculture will diversify from producing only foodstocks to producing both crops for food and crops for chemical production, or in other words, both foodstocks and chemical crops. Chemical companies are investing tremendous monetary and intellectual capital in biotechnology that focuses on harnessing the vast chemical potential of plants. The result will surely be new relationships blossoming between the agricultural and chemicals production industries.

And then Zappi waves a big Louisiana flag around this emerging industry bringing this technological shift's significance home:

And Louisiana? I believe that our great state will continue its leadership role as a source of chemicals and fuel. Louisiana is one of the leading states when considering its capability to produce tremendous tonnage each year of biomass. Given the vast chemical production and supporting transportation infrastructure in place coupled with its highly productive agricultural capability, Louisiana should emerge as a leader in bioprocessing.

This is the first time I've come across Zappi. So far I like what I see and it's definitely worth a Google. I especially love those advocates for bioproducts who bring the new technology into context. Mark Zappi does a great job of doing that in this piece.

Fischer-Tropsch and Jet Fuel Research

Recently, there seems to be quite a bit of news around aviation grade biofuels. Primarily the highest profile being Virgin Atlantic Airlines and The U.S. Department of Defense (see Syntroleum).

A biofuel meeting jet fuel specifications is starting to become a holy-grail technology of sorts. On par with ethanol produced from corn-stover. There is a very simple argument that a bio-jet fuel can be classified as a paradigm shifting technology. That if perfected would allow one of the largest energy uses in the first world economies to leap frog beyond petroleum.

The big stumbling block to this paradigm shifting concept is the low tolerances required to operate a plane a mile in the sky. If you can make a jet fuel, as the logic goes, you now can make any fuel. The scale, scope and specifications required offer up aviation as the pinnacle of what a biofuel must be to truly arrive on the world stage.

Essentially its pretty simple. If there is a fuel problem while airborn, as we used to while I worked as a flightline refueler in the Air Force, the crew has the rest of their lives to figure it out. Being the solution development time in this situation is minutes instead of the typical "five years out" a DOE grant holder gets away with the stakes become a little higher.

These are the constraints of aviation fuels (commonly called either Jet-A or the military nomenclature of JP-8). A biofuel/syn fuel must operate at extremely varied altitudes and temperatures (typically -30 degrees Fahrenheit and lower). It must store well and be predictable when aging (i.e. we must be able to give it a shelf life and quality assurance system). The fuel also must have better emissions than petro-Jet A, a similar cost per Btu, and of course the basic consistency regardless of the feedstock the fuel is derived from. You also have specification constraints as well to operate in existing jet turbine engines (i.e. it must look like Jet-A to existing engines; this being expressed typically in specific gravity, cetane, ingrained water content, etc.....).

Enter good old Fischer-Tropsch as the hoped solution. With a product typically called "syn-diesel" this technology is proven but expensive. It also pulls a consistent product out of such feedstocks as coal, agricultural waste, solid waste, and just about anything with a significant Btu content. So like most issues of energy, the issue becomes who can commercially demonstrate the better iteration of a technology invented by old dead Nazis.

A story covering the basics of this ongoing endeavor of the search for a bio-aviation-fuel popped up this morning. Check it out in the Aviation International News online.

Range Fuel CEO Interview

Cleantech.com has an interview with Range Fuels' Mitch Mandrich about the first commercial scale cellulosic ethanol plant going forward. The planned plant being backed by Kholsa Ventures and billed at 100 million gallons a year at completion with a initial volume of 20 million gallons.



Its always fun to read first hand accounts and opinions from those pushing the initial biofuels business model boulder up that steep hill of cutting edge business attempts. I especially love reading the thoughts of those I.T. and Dot.Com refugees who are making a go in biofuels.

The interview is worth the read. Several mentions of note from the interview:

Range Fuels technology is modular (hence the initial 20 million gallon number with a permitted target of 100 million gallons).

Ultimate goal for Range Fuels would be "a billion gallons really as fast as [they] can."

They want to deploy their modular technology throughout the world (hence its a fairly large scale distributive technology).

Range Fuels technology is multi-feedstock and Mandrich makes mention of it's potential for municipal solid waste.

Range Fuels' funding situation is "fine" according to Mandrich. I guess $50 million in seed funding from the US DOE goes along way.

Take a look: BIOenergy Blog Ring

The first link that caught my eye was the BIOconversion Blog with an article about woody biomass as a feedstock consideration. In particular the role woody biomass can play in sequestering carbon as well as producing wealth. This blog is part of a series of blogs shown in the graphic below. All worth checking out.
In the BIOenergy blog post, the author C. Scott Miller, starts with a map (see below) of renewable energy developments throughout the U.S. and asks the question: What about the blanks spaces in the map?

What renewable energy should be considered if you don't have a wind, solar, or agricultural resource immediately available. The answer of course being woody biomass. He also points to the wealth generating and economic development success of ethanol in his argument. This argument for biofuels being a potential urban/rural political divide bridge in Oregon (see quote below).

"The revitalization of the Corn Belt is illustrative of what could happen in the forest regions of the country- hundreds of biorefineries, billions of gallon of liquid fuel, stronger feedstock prices, revitalized communities, tens of thousands of jobs, rising land equity and stronger communities."

I came across this over the weekend. A really good blog examining the big questions floating around the piece forest thinning might play in the clean-tech energy sector. It also offers depth rarely seen explaining cellulosic ethanol and wood. The depth of his knowledge, information provided, and most of all his examination is pretty impressive.

I highly recommend taking a look.

Progress on the Algae Front

Algae Link announces a new type of algae photobioreactor (or what I call algae growing tubes). Shipped as a sheet and folded into a tube when it arrives. Making it the least expensive to ship, store, and construct (or so the Press Release says).

Algae hobbyists, scientists, and inventors rejoice.

Just a mention. The big hurdle with algae is keeping the strain you farm clean. There are so many strains of algae and its so prevalent everywhere in the world its always the case for an unexpected (and less productive/non productive) strain to pop up in your algae system. When a manufacturer or inventor starts talking about a nano-tech filter that guarantees algae purity - that's when to start listening.

Biomass to Hydrogen

Is it me or has this been the week of hydrogen crossing over into biofuels? The USDA must be doing a good job of finding well developed science and unleashing it on new biofuel and biomass efforts..

Here is another one: Microbes plus sugar equals hydrogen...

Using the collection's database information, the team is searching for microbes that "eat" biomass sugars (e.g., glucose and xylose from corn stover) and are electrochemically active. That means they can transfer electrons from fuel cell sugars without help from costly chemicals called mediators. The electrons, after traveling a circuit, combine with protons in a cathode chamber, forming hydrogen, which can be burned or converted into electricity.

One thing not mentioned that would make this really sexy to the 'out-side-the-box' set. Cellulosic hydrogen. For energy geeks that would be the ten year old boy equivalent of ninjas fighting robots over stolen magic pirate treasure.

Vegetable Oil Fuel Cell

Another good catch by Richard Stuebl over at the Cleantech Blog.

It had to happen. The hydrogen crowd is crashing the biofuel party. Its good to see as this party is alot more fun anyways. Fewer PhD's and more entrepreneurs makes for a sector that steps hard and pushes envelopes.

Technology Management (a.k.a. TMI) demonstrates first-ever use of vegetable oil in solid oxide fuel cell.
See picture to the right.

This same fuel cell has also ran on diesel, propane, natural gas, and JP8 jet fuel (which is also cross listed as Jet A, No. 1 Diesel, or K1 Kerosene in many parts of the world). Logically I would assume this means their fuel cell can also run unrefined petroleum distillates and I'd even bet unpolished glycerin.

This is another one of those small scale distributive technologies. Or in a nutshell described simply as expensive and small scale. Small scale works though in remote energy production from multiple sources of liquid fuel. Hence distributed, away from large power generation infrastructure.

There has been a real cross over the last year of technologies that were in development during the age of sub-$40 a barrel petroleum. These already promising technologies making the necessary flexibility to include biofuels (the hot energy of today).

Funny how the very technologies that were oh-so sexy when hydrogen was the future pick up the ability to use other fuels the moment the grant money requires something other than hydrogen.

More about the fuel cell technology at FMI's site as well as a good history of their financial support from grants at FMI's news site.

Switch Grass News Done Right

Wired Magazine does Switchgrass this month. They explain the whole potential and pitfall of cellulosic ethanol in three paragraphs shown below:

On a blackboard, it looks so simple: Take a plant and extract the cellulose. Add some enzymes and convert the cellulose molecules into sugars. Ferment the sugar into alcohol. Then distill the alcohol into fuel. One, two, three, four — and we're powering our cars with lawn cuttings, wood chips, and prairie grasses instead of Middle East oil.

Unfortunately, passing chemistry class doesn't mean acing economics. Scientists have long known how to turn trees into ethanol, but doing it profitably is another matter. We can run our cars on lawn cuttings today; we just can't do it at a price people are willing to pay.

The problem is cellulose. Found in plant cell walls, it's the most abundant naturally occurring organic molecule on the planet, a potentially limitless source of energy. But it's a tough molecule to break down.

As always with Wired. Its worth the read. As far as a primer on cellulosic ethanol goes you'll be hard pressed to find a source that does it as well.