mga bioeconomy and transportation working group meeting january 15, 2009 indiana university-purdue...

MGA Bioeconomy and Transportation

Working Group Meeting

January 15, 2009

Indiana University-Purdue University Campus Center

Overview of BTAG Policy Options

General focus

• What should we do NEXT?

• What can GOVERNORS do?

• Is now the time to be working on this, or a few years from now?

BT1.1: Market Pull and Distribution Infrastructure

• Focus of policy: “Green Fuel Retailers” Program– Rates fuels based on GHG LCA, consistent

with LCFS– Incentives based on GHG emissions– Includes a variety of fuels: biofuels, hydrogen,

electricity, NG, propane.

BT 1.1 cont…

• Implementation mechanisms:– Providing a payment based on quantity of a

fuel sold– Grants for refueling infrastructure– Public education– Research specifically on fuel supply and

infrastructure issues (e.g. high ethanol blends)

– Certification (UL certification for example)

BT 1.1 cont…

• Goal: 50% of regional fuels supplied by biofuels and other advanced transportation fuels by 2050

• Existing programs:– MI Green Retailers Program Proposal (limited grant program for

infrastructure – converting existing gas pumps to biofuels) (robust green retailers program is only proposed at this point)

– Illinois has a successful biodiesel incentive program for blends above B10, consumers given a tax break.

• Barriers to consensus?• Interest in implementation:

– Yes, but there is no money right now– Must be complementary w/ LCFS – you need both– No major objections

BT 1.1 Gap Analysis & Next Steps

• Research on counter-cyclical tax/subsidy, a.k.a. “Green Fuel Retailers” program, and how such approaches (value based pricing, feebates, etc) have worked in other states– Illinois biodiesel tax structure– Iowa’s bioenergy initiatives

• Suggest potential stakeholder group• Develop a timeline with numerical targets• Propose a dollar amount and funding source

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 1.2 – LCFS

• Recommendations in progress• Slight adjustment of goals – producing

recommendations rather than a model rule– One recommendation would be a model rule as a

next step– Sets up a process for designing the mechanism,

developing LCA protocol, etc.• Indirect Land Use Issue resolved for now

– Document is silent on this issue, leaves it for a future “Regional Coordinating Body” to resolve once more information is available

• Recommendations in final draft

BT 1.2 cont…

• Goal: Reduce average GHG emissions per unit of fuel 10% in 10 years relative to a baseline (may be increased)

• Other programs:– CA– EPA– MA– EU

• Barriers to consensus?– If we go into land use, it will create a lot of challenges– Caution linking w/ CA or MA program– Sustainability remains a challenge. Refer to BT 5 - Biomass

BT 1.2 Gap Analysis & Next Steps

• Create a detailed timeline with steps between now and implementation (model rule writing, assembling regional coordinating body, etc.)

• Propose a dollar amount and suggest funding source

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 1.3: Increase Vehicle Fuel Efficiency

• “The policy is designed to reduce GHG emissions from on-road vehicles and off-road engine vehicles (including marine, rail and other off-road engine and vehicles such as construction equipment) through technology deployment designed to cut GHG emission rates per unit of travel activity.”

BT 1.3 cont..

• One leg of three legged stool (along w/ LCFS and reduced vehicle trips)

• Create incentives for vehicles based on their GHG emissions per mile.

• Mechanisms for increased vehicle fuel efficiency:– Incentives for buying low GHG vehicles– Education campaigns for low GHG vehicles– State procurement of low GHG vehicles– HOV access for low GHG vehicles– Implementation of Clean Car programs– Incentives for retooling manufacturing to produce low GHG

vehicles

BT 1.3 cont…• Goal:

– “Reduce emissions from on-road engines/vehicles by at least an additional 15% by 2020 (consistent w/ CA Clean Car) from current adopted baseline policies through more efficient technologies and operations. Reduce emissions from off-road transportation sources through use of more efficient technologies and operations by xx% by 20xx”

• Other programs:– CAFÉ– CA Clean Car (in 15 states)

• Barriers to consensus?

• Implementation likelihood:– Implementation mechanisms are currently very general. More work is needed– General interest– Ecodriver program is a good one, the incentive program is tougher because of

funding, etc, and success may be more difficult– Agree – LCFS is definitely a higher priority. – You have to have all three legs of the stool. This one stays a priority.

BT 1.3 Gap Analysis & Next Steps

• Research where the individual policies recommended in this cluster have been implemented in the past and analyze potential for application in the Midwest

• Expand on what types of incentives we could use to advance vehicle technology

• Suggest potential stakeholder group• Propose a dollar amount and funding source

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 2.1 Demand Management: “Pay-As-You-Drive”

• Provide incentives for auto insurance companies to institute a “pay-as-you-drive” (PAYD) system for policyholders.

• Implement policies and strategies that make more of the fixed costs of driving into variable costs related to VMT and emissions. Possibilities include CO2-based registration fees, a VMT tax, congestion pricing, and a fuel tax.

• Use new revenue streams for less GHG-intensive travel options (e.g., public transit, vanpooling, commuter benefits, and commuter options).

Existing Programs• MnDOT pilot underway to test VMT fees (no results are yet available), and PAYD

insurance.• GMAC and OnStar Low-Mileage Discount Rates• Since mid-2004, the General Motors Acceptance Corporation Insurance has offered

mileage based discounts to OnStar subscribers located in certain states. The system automatically reports vehicle odometer reading at the beginning and end of the policy term to verify vehicle mileage. Motorists who drive less than the specified annual mileage receive insurance premium discounts of up to 40%:

• The Federal Highway Administration’s Value Pricing Pilot Program is now providing funding for PAYD insurance simulation projects in Georgia and Massachusetts.

• Distance-Based Program– Progressive Insurance offers distance-based insurance in Oregon, Michigan, and

Minnesota.– The program uses Global Positioning System technology to track vehicle location and use.– Farmers Insurance is reported to also be considering a similar program.

• TripSense(SM)– In August 2004, the Progressive Direct Group of Insurance Companies introduced

TripSense, a usage-based auto insurance discount.

BT 2.1 cont…• Goals:

– For PAYD insurance–assume market penetration of 25% in 2015 and 50% in 2025• Barriers to consensus:

– Impact on rural groups who have no other choice than to drive long distances, there are some reservations

• Separating into commercial and non-commercial may solve this problem• Also looking at per-GHG fees rather than per-VMT fees so that users can get around the fee

• Implementation likelihood– Barriers to adoption are different in various states– This is a direction the market is going– Rural social justice issues are a barrier – need to have a transition to ease the transition to

more efficient vehicles.• Other questions:

– Will rural groups (such as northern Manitobans) be penalized when they have no other travel options?

• A per-VMT fee may have that impact (maybe per-GHG fees would be better)

BT 2.1 Gap Analysis & Next Steps

• Examine feasibility of Midwest-wide distance-based insurance

• Assemble stakeholders from the sectors listed under the “Parties Involved” subheading and get input on implementing such a program that combines public and sector entities

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 2.2: Transportation Choice

• Support the Midwest Regional Rail Initiative (complementary w/ CREATE)

• Mass Transit

• Bike infrastructure

BT 2.2 cont…• Goal: Expand travel choices to reduce vehicle miles driven and flown (%)

– Intercity passenger rail– Mass transit– Non-motorized transportation, including:

• Biking• Walking

– Water transportation (water taxis, etc)• Other programs:

– Many• Barriers to consensus:

• Implementation liklihood• Other:

– MI has non-motorized trails (walk, bike, etc); Use the non-motorized term to be more inclusive– This is being debated now as part of the stimulus package – is there an opportunity for us to play a role. Timeline

– many groups are now sending recommendations to the cmte. The stimulus bill will probably pass in January.• Options – vehicle stuff, infrastructure• Asks of Green Groups:

– New start– Transit rehabilitation– Amtrak– Bike/ped– Anti-idling– Habitat connectivity– Highway stormwater– Fuels loan guarantees– SWOT team – Eric Sundquist

• What should we work on:– Water transportation and ports– Rail transit– Biofuels possibly– Auto industry?? – focus may be on battery technology

BT 2.2 Gap Analysis & Next Steps

• For the Midwest Regional Rail Initiative (MWRRI): – Talk to principles involved in early stage of this process to get a

sense of where it stands now and what needs to be done to get momentum behind it again

– Specify potential funding source• For mass transit and cycling/pedestrian oriented development:

– Develop a timeline with numerical targets– Research Gov. Doyle’s Climate Change Task Force section on

bicycle and pedestrian expansion for specifics as a starting point– Research state or other regional initiatives for passenger rail and

mass transit development and use as templates to draft a Midwestern policy or initiative

– Determine stakeholders and assemble a stakeholder group• For both: Propose a dollar amount and funding sources

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT2.3: Transportation Planning and VMT reduction

• Elements:– Resources for local governments,

metropolitan planning association, municipal planning associations, state agencies,etc to change development patterns to explicitly reduce VMT

– Change in strategy for state DOTs

BT 2.3 cont…

• Some sample mechanisms:– Move spending from new highway capacity to

“fix it first” approach– Stop creating incentives for high-VMT projects

through TIF funding– Remove minimum parking requirements– Encourage more compact development– Fund “complete streets”

BT 2.3 cont…

• Goal: VMT per capita reduction of 50% relative to a 2005 baseline by 2050

• Other programs:

• Barriers to consensus:

BT 2.3 Gap Analysis & Next Steps

• Assemble a stakeholder group• Draft a Midwestern policy based on Washington state’s

H.B. 2815 as precedent for:– Establishing an official body to oversee VMT

reductions, made up of members from Midwestern state government entities complementary to the ones in the Washington program

– Making periodic reports about VMT based on relationships between a series of benchmarks

– Estimating costs for a Midwest-wide program and determining a funding source

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 2.4: Freight GHG Reduction

• Under development• Likely modeled after the CREATE project• CREATE background:

– Freight and passenger rail improvement program– Centered on Chicago right now– Designated by Congress– Variety of benefits– Links with passenger rail– Move truck freight to rail – calculate pollution

reduction– Various

BT 2.4

• Barriers:

• Other programs:– MI has a similar proposal in climate process, it

was supported. Can find it on CCS website for MI.

BT 2.4 Gap Analysis & Next Steps

• Assemble a stakeholder group complementary to CREATE’s membership ( the State of Illinois, City of Chicago, Metra, Amtrak, Association of American Railroads, and the U.S. Department of Transportation) to:– identify specific areas where infrastructure investment

is needed– use CREATE’s budget as a starting point to estimate

funding needs for– use the Chicago Regional Environmental and

Transportation Efficiency (CREATE) program as precedent to draft a Midwestern freight rail investment program

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 3.1: Advanced Technology Commercialization

• Existing language focuses on commercialization of advanced biofuels– Prior discussion about broadening the focus to

include a variety of low carbon fuels (H2, electricity, batteries, etc)

• Select projects for support based on a competitive process

• Supply grants for scale-up of projects• Develop funding mechanisms to support groups

of producers in developing projects using advanced technologies

BT 3.1

• Quantitative goals:

• Other programs:

• Barriers to consensus?

• Comments:– You need to involve people involved in tech

transfer

BT 3.1 Gap Analysis & Next Steps

• Decide whether or not to roll these recommendations into a cross-cutting Advanced Technology Commercialization cluster across all MGA work groups

• Assemble a stakeholder group• Determine funding sources and amounts• Assign what government bodies would administer which

programs• Use Future Gen and other advanced technology

commercialization programs as a template• Move workforce development suggestions under the

appropriate heading

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 3.2: Technical Assistance

• Provide technical assistance to projects based on their potential to reduce GHG emissions, and improve economic development and energy security

• Sample mechanisms:– Fund FEED studies– University consortium should offer technical

assistance to projects

BT 3.2 Gap Analysis & Next Steps

• Assemble a stakeholder group• Draft a set of potential policies designed to meet the

needs stated in the current draft• Research of similar policies or initiatives that can be

used as a guideline or template and use existing policies as a template for a Midwest-wide version

• Conduct funding analysis– Sources– Amounts

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 3.3: Regional research collaboration

• Leverage the Region’s exceptional research and intellectual property generation capabilities in order to better bring them to bear on low carbon transportation technologies (biofuels, batteries, fuel cells, etc).

BT 3.3 cont…

• Mechanisms:– Bring together university leaders from around

the region, agree on areas for collaboration– Develop an information clearinghouse on

conversion technologies– Develop working relationships with risk capital

sources to secure funding– Fund development of 3 projects to bring to

commercialization

BT 3.3 cont…

• Goals (listed in document)

• Other programs

• Barriers to consensus– Avoid duplication – there are a lot of efforts

underway.– The word “leverage” – we should be more

specific about what this means

BT 3.3 Gap Analysis & Next Steps

• Assemble a stakeholder group• Draft a set of potential policies designed to meet the

needs stated in the current draft• Research of similar policies or initiatives that can be

used as a guideline or template and use existing policies as a template for a Midwest-wide version

• Conduct funding analysis– Sources– Amounts

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 4.1: Develop Biobased Products

Mechanisms:– Catalog biobased products– Create a certification scheme for biobased

products, w/ logo and branding– Base certification on economic, social, and

environmental factors, with GHG impact based on life cycle assessment

– Promote through education and incentives

BT 4.1 cont…

• Goals

• Other programs– OH report on biobased products– Should build on existing biobased product

procurement partnership through MGA

• Other:– Integrate w/ OH report

BT 4.1 Gap Analysis & Next Steps

• Assemble a stakeholder group• Continue dialogue with USDA Biopreferred staff to

determine where the Midwestern regional group could add additional value

• Draft a set of potential policies based around conversation with the Biopreferred group designed to meet the needs stated in the current draft

• Conduct funding analysis– Sources– Amounts

Implementation

• What should happen next?– Who– What– When

• What can governors do?

4.2: Regional Infrastructure for Biobased Product Manufacturing

• GoalThe efficiency of the regional infrastructure will be improved to support the

development of the region’s biobased products industry

• Mechanisms– Convene biobased products supply chain parties to determine

transportation modes for current and future product distribution– Regional study to determine deficiencies and efficiency loss in

the supply chain• Identify supply chain enhancements

BT 4.2 cont….

– Feasibility study on proposed supply chain enhancements

– Develop and carry out implementation plan of identified feasible supply chain enhancements

• Other programs:

• Other:

BT 4.2 Gap Analysis & Next Steps

• Assemble a stakeholder group• Identify group(s) to conduct the recommended series of

studies and develop white papers• Draft policy recommendations, if any are needed, that

pertain to infrastructure specifically needed for biobased products

• Research of similar policies or initiatives that can be used as a guideline or template and use existing policies as a template for a Midwest-wide version

• Conduct funding analysis– Sources– Amounts

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 5.1: Perennial Biomass Supply

Mechanisms:– Map available biomass, improve regional biomass inventories– Promote regional feedstock demonstrations, with the goal of

demonstrating a variety of feedstocks in areas most appropriate for them (prairie grass in the plains states, forestry in the forestry states, residues in the cornbelt, etc)

– Use biomass for ecological restoration– Implement voluntary land use tools and incentives– Biomass harvesting on CRP– Form biomass commodity groups– Target incentives for perennial crops based on ecosystem

services– Develop technological innovations in equipment

BT 5.1 cont…

• Related policies:– RIM-CE– BCAP in Farm Bill

• Goals:• Barriers to consensus:

– It’s a good idea, it should be consistent with the Farm Bill. It’s a 50/50 match, so coming up w/ the other half is the tough part.

– Funding is a challenge for everything.– Sustainability essential component/requirment– Not “especially” for sustainable projects – they have to be

sustainable all the time– Need language for how we will deal with the sustainability issue

starting next year.

BT 5.1 Gap Analysis & Next Steps

• Suggest potential stakeholder group

• Use the best parts of existing programs as a template for:-- Regional policy goals– Any known federal and state funding

sources?

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 5.2: Feedstock Logistics

• Develop feedstock systems for production, harvest, transport, densification, and storage of biomass

• Research need: Identify, by product, the potential feedstock contribution to reducing GHG through displacing use of fossil fuels and carbon sequestration to determine the most effective feedstocks.

• Mechanisms cover:– Equipment and storage for biomass feedstock production.– Allow short-rotation fiber production under traditional private

forestry land programs and associated tax programs.– Produce improved maps of forestry biomass resources– Evaluate use of rail for transporting biomass– Evaluate development of nodes for densifying and transporting

biomass

5.2 cont…

• Existing programs:– 1515 in North Dakota, plethora of others

under USDA Farm Bill, Energy Bill

• Goals: mapping production nodes and travel ways.

• Other:– Need to talk about water transportation as

well as rail – don’t overlook barges down the Mississippi, etc.

BT 5.2 Gap Analysis & Next Steps

• Suggest potential stakeholder group

• Research precedent and rulemaking process

• Create a body made up of transportation department staff and stakeholders in the biomass energy industry in order to set up a common set of biomass transportation regulations for the region by 2011

• Specify funding sources and amounts

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 6.1: Wealth Creation

• This policy option will work in conjunction with other proposed options to encourage and facilitate the deployment in the Midwest of technologies developed here and to accrue to the region and its local communities the value-added margins available from these new technologies.

BT 6.1 cont…• assure that cooperatives, municipal authorities, other local and community-

owned entities, and small investors are not excluded from government incentive programs

• give bonding authority or access to bonding funds to co-ops, municipal utilities, and other local and community-owned entities

• State and regional programs will be established to underwrite loans to existing biofuel facilities to purchase fixed cost technology that will accomplish one or more of the following:

– Reduce GHG emissions– Improve the energy balance of the facility– Improve the productivity of the facility (defined as an increase in the value of total

products produced vs. the cost of the inputs of production)• Fund the upgrading (or expansion to add cellulosic) of corn ethanol plants to

cellulosic ethanol plants (don’t use the term “upgrade”, this won’t necessarily happen this way, assume its new cellulosic plants)

– Funding should include improved efficiency– Funding should include add-in cellulosic like Poet’s project– Should also include entirely new cellulosic ethanol plants

6.1 cont…

• Goals

• Existing programs

• Barriers to consensus– No barrier

BT 6.1 Gap Analysis & Next Steps

• Suggest potentail stakeholder group from sectors suggested in this section

• Research other industries that have utilized state/federal funding pools for startup and capital improvement projects and where those funds came from as well as how effective this was in building out the industry

• Research ways to leverage Midwestern intellectual capital based on intellectual property issues in other industries

• Conduct funding analysis– Sources– Amounts

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 6.2: Workforce Development

• Create collaborative workforce development programs between industry, state governments and educational institutions that will staff and drive the development of bioeconomy and clean energy jobs

6.2 cont…Develop a focused approach by building on a solid foundation of labor

market data and analysis:• Target specific sectors within the ‘green jobs’ area• Use good labor market data to drive initiatives• Measure and evaluate new jobs programs as they are createdBuild good jobs through partnerships, linking economic development

and job creation:• Employ energy standards as green job creation tools• Promote bioeconomy and green energy clusters• Link economic development in the sector to workforce development• Develop coalitions and partnerships• Integrate green jobs initiatives into existing workforce systemsFocus attention on job quality, access for all, and upward mobility in the

green economy

6.2 cont…

• Establish coordinators in each states dept. of workforce development

• State funds for creation of new curriculum

• Fund better analysis of labor market trends

6.2 cont…

• This has morphed into a cross-cutting issue. Other groups will be contributing ideas and implementation mechanisms

• Of growing significance to governors in the region

BT 6.2 Gap Analysis & Next Steps

• Research need: Using the list of sources currently in the document, research how to improve curriculum and other training resources needed to build out regional expertise

• Use cited funding for similar programs at the state level to determine amount and source(s) of funding needed to meet program needs at the regional level

Implementation

• What should happen next?– Who– What– When

• What can governors do?

BT 7 Bioenergy Incentives

• Very little content developed for this option

• Assemble a stakeholder group

• No potential policies identified, gather from other policy option

• Determine specifics in terms of: – a timeline with numerical targets– policy precedent– potential funding sources and amounts

BT 8 Next-Generation Regulation

• This section is blank, except for an introductory paragraph about regulation and permitting processes for new technologies.

• No potential policies identified, borrow from others

• Determine specifics in terms of: – a timeline with numerical targets– policy precedent– potential funding sources and amounts

LCFS

General updates:– Consensus reached in the working group– Next step: advance to MGA steering cmte

• Any feedback on the process?

• Modeling:– We are pursuing funding for a study– Any input on what should be in it?– Seeking general approval to move forward.

LCFS

• Next steps:– Figure out who should be on RCB– Begin filling out the STC– Develop a 2009 work plan

Implementation Discussion

• LCFS is already in place

• NCBC may volunteer to take on Extension functions in several areas:– Biomass supply logistics– Perennial biomass supply– Advanced technology commercialization– Technical Assistance– Research Collaboration

Some policies become “Cross-cutting”

• Workforce development

• Wealth creation

• Advanced technology commercialization

New policies

• Batteries – we inherited from cross-cutting discussion

Are there policies that seem lower value?

• Lack of immediate need?

• More of a legislative rather than regional/governors priority?

• Lack of logical implementation steps?

What implementation priorities do you prefer?

• Can governors do something about it, with your support (no legislative priorities)?

• Does it require immediate action?

• Are there obvious steps we can take soon to move this forward?

• What are the chances of success?

Model discussion

• LCFS questions:– Address key questions from document for

how to model an LCFS.