Post on 05-Oct-2020
AdvancingtheBioeconomy:
OverviewofMichigan’sRecentProgressSeptember2010
PreparedBy:
3820Packard,#250AnnArbor,Michigan48108
734.975.0333ShepherdAdvisors.com
MichiganStateUniversityProductCenterforAgricultureandNaturalResources82AgriculturalHall EastLansing,MI48825
MichiganStateUniversity’sProductCenterforAgricultureandNaturalResourcesisofferingaseriesentitled“StatusofMichigan’sBioeconomy:Progress&EvolvingPotential.”Thepurposeoftheseriesistobetterinformdecision‐makersandbioeconomystakeholdersaboutarangeofissuesandopportunitiesrelatedtothestillemergingbioeconomy,especiallyinMichigan.
Thepapersintheseriesinclude:
AdvancingtheBioeconomy:OverviewofMichigan’sProgress Michigan’sPositionintheU.S.BiofuelandBioenergyMarket PotentialFutureScenariosofMichigan’sBioeconomy
TheProductCenterenvisionstheseriesasanongoingopportunitytotrackMichigan’sbioeconomyprogress,identifyopportunitiesforadvancingthebioeconomy,andencouragecollaborationamongthemanyregionalbioeconomystakeholders.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
2
CONTENTS ListofTablesandFigures....................................................................................................................................................3
ExecutiveSummary................................................................................................................................................................4
Introduction...............................................................................................................................................................................4
Michigan’sBioeconomyMarket.........................................................................................................................................5
PolicySupportforMichigan’sBioeconomy................................................................................................................11
BioeconomyResearchandDevelopmentatMichiganStateUniversity.........................................................13
EconomicImplicationsandBioeconomyPotentialINMichigan.......................................................................14
Conclusions..............................................................................................................................................................................20
AppendixA–Workinglistofmichiganbioeconomy‐relatedcompanies......................................................22
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
3
LIST OF TABLES AND FIGURES Table1CurrentandUnderwayEthanolFacilitiesinMichigan...................................................................................8
Table2.StatePoliciesandIncentivesPrograms...........................................................................................................12
Table3.PotentialBiogasYieldfromMichigan’sCattleandSwineFarms...........................................................20
Figure1State‐by‐statewaterrequirementsforirrigatedcornin2003..............................................................18
Figure2IrrigatedLandintheUnitedStates....................................................................................................................19
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
4
EXECUTIVE SUMMARY Asastatethatimportsalmostallofitsenergyinputsandfuel,Michiganhasprioritizedgrowingitsbioeconomytosupportitsownenergyneedsandtobeglobalsupplier.Whilesubstantialslowdownsinthestate,national,andglobaleconomieshavelimitedthegrowthofthebioeconomyinmanypartsoftheUnitedStates,includingMichigan,progressinadvancingthebioeconomyisbeingmade,entrepreneurialismishappening,andthesupplyandproductionchainisactive.
Thethreemajorsectorsofthebioeconomy–biofuels,bioenergy,andbiomaterials–haveallseenpromisingadvancementsinMichigansinceMichiganStateUniversity(MSU)firstpublishedanevaluationofbioeconomyopportunitiesinthestate.Thestatehasfiveoperatingethanolplantsanditsfirstcommercial‐scalecellulosicethanolplantisunderway,oneofonlyseveninthecountry.Inadditiontoseveralagricultureandindustrialanaerobicdigesterfacilitiesand10current(severalmoreareplanned)wood‐firedelectricalgeneratingfacilities,thelastfewyearsalsohavebroughtanewpublic‐privatepartnershiptodevelopandoperateabiogasfacilitytoprovideheatforFlintandmethanetofuelthecity'sbusfleet.Finally,Michigan‐basedcompaniessuchasDowChemical,FordMotor,andKTMindustriesareallinvestinginandgrowingtheirbiomaterials/biochemicalbusinessesinthestate.
Michiganhasmanyassetsthatoffernationalandglobalbioeconomyleadershipopportunities:adiversefeedstockbase,includingtraditionalbiofuelcropssuchascornandsoybeans,timber,wastewood,andanimalmanure;significantR&DexpertiseandcommitmenttobioeconomyscienceswithinMichigan’suniversities;accesstolarge,high‐qualitywaterresources;andcontinuedeffortsbypolicy‐makerstocreatetheregulatoryandincentivesystemstofurtherbuildthebioeconomymarket.However,likeotherstates,Michigan’sbioeconomyisstilllimitedbycost:producingmostbiobasedfuels,energy,andmaterialsstillcostssignificantlymorethanthefossilfuelcounterparts.Consumershavenotyetbeenwillingtoadoptbiobasedproducts.Asprocessesbecomemoreefficientandpublicunderstandingabouttheavailabilityandqualityofbioproductsexpands,Michigancouldbewellpoisedtoplayastrongroleinthisgrowingsector.
INTRODUCTION “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”isthefirstintheseriesofwhitepaperreportspreparedbytheMSUProductCenterforAgricultureandNaturalResourcesonthe“StatusofMichigan’sBioeconomy:Progress&EvolvingPotential.”Itbuildsonpreviousworkdonein2006byMSUandtheCentrecConsultingGroup1toevaluatetheemergingbioeconomyinMichiganandidentifyhowMSUcouldsupporttheadvancementoftheindustry.ThisreportdiscussesMichigan’sprogressincapitalizingontheopportunitiesandaddressingtheissuesidentifiedinthe2006reportaswellasthosethathavearisenintheensuingyears.ThiswhitepaperisnotmeanttobeacomprehensiveorexhaustiveevaluationofMichigan’sbioeconomy,norajudgmentonMichigan’sprogressinadvancingitsbioeconomy.Itspurposeisto:
1CentrecConsultingGroup.“PreparingfortheFutureofMichigan’sBioeconomy:RecommendationsfortheOfficeofBiobasedTechnologies,”and“LinkingKnowledgeandResourcestoSupportMichigan’sBioeconomy.”2006.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
5
Provideamarketoverviewofthevariousbioeconomysectors.
Highlightrelevantpolicyandstateleadershipeffortsoverthelastfiveyears.
ProvideasampleofsomeofthekeybioeconomyR&DeffortsatMichiganStateUniversitysince2006.
Describesomeoftheeconomicimplicationsandcontinuingopportunitiesforathrivingbioeconomy.
Michiganhasprioritizedgrowingitsbioeconomysectorsandbecomingaleaderintheglobalbioeconomymarket.Sothekeyobjectiveofthe“AdvancingtheBioeconomy:OverviewofMichigan’sProgress”whitepaperistoprovidedecision‐makersandstakeholderswithareasonablythoroughsnapshotofMichigan’sbioeconomyin2010.Forthepurposesofthisreportseries,theProductCenterdefinesthebioeconomyasanycommercialorindustrialeffortbasedongrowingrenewablebio‐materialsandconvertingthemintoproductsthatreplacepetrochemical‐orfossilfuel‐basedproducts.Totheextentpossible,thisreportdrawsfrompubliclyavailabledatafromavarietyofgovernmentagencies,tradeassociations,andpublishedreportsandusesthemostrecentquantitativedataandinformationavailable.
MICHIGAN’S BIOECONOMY MARKET Michiganhasputahighpriorityonbuildingandadvancingitsrenewableenergymarketintermsofbothproductionandconsumption,andthebioeconomyhasbeenasignificantpartofthateffort.ThisfocusisbasedontherecognitionthatMichiganhasseveralcompetitiveadvantagesintheevolvingbioeconomy,includingitsautomotivemanufacturinghistory,accesstovastwaterresourcesforbioeconomyproductdevelopmentandtransportation,andsignificantforestryresources.
Michiganisalsoanetimporterofenergy,includingtransportationfuelsandelectricity/heatinginputssuchascoalandnaturalgas.Michiganproducesapproximately30,000MWofelectricityandconsumesmorethan300millionBTUspercapita(ranking35thintheUnitedStates).Thestateimports97percentofitspetroleum,80percentofitsnaturalgas,and100percentofcoalandnuclearfuelfromotherstatesandnations.Theseimportsaccountforabout70centsofeverydollarspentonenergybyMichigan'scitizensandbusinesses.Michiganspentatotalof$37billiononallformsofenergyin2007;ofthatamount$26billionwasforenergyresourcesimportedfromotherstatesandnations2.AdvancingthebioeconomyinMichigannotonlyincreasesthestate’sshareoftheglobalbioeconomymarket,itaddressestheneedforcost‐competitive,Michigan‐basedenergyfeedstockssothepercentageofgrossstateproductspentonimportedenergycanbereduced.Thestate’seffortshaveincludedpolicysupports;investmentsinbioeconomy‐relatedresearchanddevelopment;investmentinprivatesectoreffortstoconstructbiofuel,bioenergy,andbiomaterialsfacilities;partnershipswithmajorbioeconomycompanies;supportofentrepreneurialandpilot‐scaleefforts;andsupportfortechnologycommercialization.
2MichiganPublicServiceCommission.MichiganEnergyOverview.September2008.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
6
LikemostsectorsoftheU.S.andglobaleconomies,thebioeconomymarkethasbeenhardhitinthelastseveralyearsbythesubstantialeconomicdownturn,tighteningcreditmarkets,andloweroilprices.However,inmanypartsoftheU.S.,includingMichigan,progressinadvancingthebioeconomyisbeingmade,entrepreneurialismishappening,andsupplyandproductionchainsareactive.
Thestatehasmorethan100companiesoperatingdirectlyinthebioeconomy(seeAppendixA),withdozensmore(engineering,research,andconsultingfirms)supportingthebioeconomy.Thesecompaniesrangeinsizefromentrepreneurialstartupstobillion‐dollarcorporationssuchasDowChemicalandDowCorning.Mostofthecompaniesareinvolvedinbiofuelsinsomeway,buttherearemanybioenergycompanies,includinganaerobicdigesters,woodorwoodproductssuppliers,andbiomasscombustionfacilities,aswellasbioplasticandbiobasedproductcompanies.
Mostmarketanalysesbreakthebioeconomydownintothreesectors:
biofuels:replacementforgasolineanddieselfuel;generallyusedastransportationenergy
bioenergy:replacementforcoal,naturalgas,and(possibly)nuclearenergy;generallyusedtocreateelectricity
biomaterials:replacementforpetroleumandsyntheticinputsinproductsThebiofuelsandbioenergymarketshavedominatedmuchoftheinvestmentin,publicdialogueabout,andconsumerawarenessofthebioeconomy.Still,asthefuelssectorinparticularhasstruggledinthelastfewyears,thereisgrowingawarenessandinvestmentinthebiomaterialssector.
MichiganBiofuelsSector
Biofuelstendtobethemostrecognizedsectorofthebioeconomybythegeneralpublic,particularlyasgaspriceshavefluctuated.Forthispaper,biofuelsaredefinedas:
grainethanol:madefromcornandsugarcane,itisblendedwithpetroleumandmostcommonlysoldasanoxygenateblendedwithgasoline(10%ethanolbycontent)
cellulosicethanol:madefromagriculturalcellulosefeedstockssuchascornstover,wheatstraw,switchgrass,andwoodybiomass
biodiesel:madefromvegetableoilssuchassoyorpalm,wastegreases/oils/fats,orfromalgae;commerciallyitalsocanbeblendedwithpetroleumdieselincombinationsof5to100percent
TheU.S.biofuelsmarketsectorhasseengrowthoverthelastdecade,despitethedropoffinbiofuelproductionfacilityinvestmentinthelastthreeyearsbecauseoflowoilpricesandthesubstantialeconomicdownturn.U.S.biofuelproductioncapacitywasupto13.9billiongallons/year(BGY)ofethanolin2009(up688percentfrom20013)and2.6BGYofbiodieselbytheendof2009(upmore
3U.S.EnergyInformationAssociation(EIA).Short‐TermEnergyOutlook.December9,2008.http://www.eia.doe.gov/emeu/aer/txt/ptb1003.html
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
7
than4000percentfrom2001)4.However,actualproductionislower―muchlowerinthecaseofbiodiesel.
GrowingthebiofuelmarkethasbeenapriorityforMichiganandsignificantresourceshavebeenfocusedonattractingthebiofuelindustrytolocateorexpandwithinthestate.In2006,thestatecreatedtheMichiganBiofuelsCommission.Itschargewastomakerecommendationstoallowthestatetobecomealeaderinalternativefuelproductionanduse.Thegovernorsetaninitialtargetofhaving1,000ethanolorbiodieselpumpsacrossthestateby2008.ThestatealsopassedaRenewablePortfolioStandardin2008,whichincludeselectricitygeneratedfrombiomassresources.Michigancurrentlyhasabout30operationalbiofuel‐relatedcompanies.
Between2005and2010,Michigan,likemostofthecountry,experiencedmixedmarketsuccessinthebiofuelsindustry.Through2008,thehighpriceofcrudeoilwasstimulatingmoredemandforbiofuelsandthestatesawthecontinuedoperation,expansionand/orconstructionofbothethanolandbiodieselproductionfacilitiesduringthattime.Asoilpricesdroppedandtheeconomyandcreditmarketswentintocrisisin2008and2009,biofuelproductionfacilitygrowthinMichigansubstantiallyslowedandtheinvestmentenvironmentforbioeconomyandotherventuresbecameincreasinglytight.OneofthelargestethanolproducersinMichiganandthenation,VeraSun,filedforChapter11bankruptcyandcloseditsWoodburyfacility.Biodieselproducerswereequallyhardhitfrom2007to2009asthepriceofsoybeans,theprimaryfeedstockforbiodiesel,soaredto$7to$15/bushelcomparedtopricesof$4.50to$8.70/bushelduringthepreviousdecade.Thisincreaseinsoybeanpricesdrasticallyreducedprofitmarginsandmarketstability.5ManyofMichigan’sbiodieselplantsarecurrentlyoutofproductionoronlyoperatingatpartialcapacity.
4U.S.EIA.Short‐TermEnergyOutlookSupplement:BiodieselSupplyandConsumption.April,2009.www.eia.doe.gov/emeu/steo/pub/special/2009_sp_01.pdf5IndexMundi.http://www.indexmundi.com/commodities/?commodity=soybeans&months=180
FrontierRenewableEnergy
FrontierRenewableEnergyisapartnershipbetweentheMascomaCorporationandJ.M.Longyeartodevelopacommercial‐scalecellulosicethanolplantinKinrossintheEasternUpperPeninsula.Whencompletedin2013,thefacilitywillproduceupto40milliongallonsoflow‐cost,low‐carboncellulosicethanol.Itwillemploymorethan150peopleduringconstructionand50full‐timeemployeeswhenoperational.TheFrontierprojectwasoneoftheinitialCentersofEnergyExcellenceawardsmadebythestate.AdditionalpartnersincludetheU.S.DepartmentofEnergy,MichiganStateUniversity,andMichiganTechnologicalUniversity.Fundingfortheprojectincludes:
$23millionfromthestate
$26millionfromtheU.S.DepartmentofEnergy
$300millionfromFrontier
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
8
However,progresscontinuedinotherareasofthebiofuelssector.EthanolproducerssuchasPOET,whichoperatesa53‐million‐gallon‐per‐yearethanolplantinCaro,havebeensuccessfulbymakingtechnologicalimprovementsinproductionprocessesandincreasingsalesofbyproductssuchasdistillersgrain.Currentlythestatehasfiveoperatingethanol‐plants,allusingcornastheprimaryfeedstock(seeTable1fordetails).Inmid‐2008,thestatesignedanagreementwithMascomaCorporation,inpartnershipwithMichiganTechnologicalUniversityandMichiganStateUniversity,toprovidemorethan$23millioninCentersofEnergyExcellencefundingforthedevelopmentofthestate’sfirstproduction‐scalecellulosicethanolplantinKinross(FrontierRenewableResourcesProject).Theplantisexpectedtobeoperationalby2013.
AvailabilityofbiofuelsandconsumerdemandalsocontinuedtoshowincreasesinMichiganinthelastdecade.Totalethanolconsumedincludesethanolusedasanoxygenate(ablendofupto10percentethanolwithgasoline)andE85(85percentethanolbyvolume).Thevastmajorityofethanoliscurrentlyusedasanoxygenate.Michiganranksseventhinthenationintotalethanolconsumed:morethan300milliongallonsofethanolconsumedin2007.Inaddition,Michiganhasmorethan90E85stations,withagoalofincreasingthatnumberto1,000.
Michigan’sBioenergySector
Theterm“bioenergy”generallyreferstotheuseofbiomassforenergysystemsthatproduceheatand/orelectricity(versustransportationfuels).Thebioenergysectorincludes:
biogasrecovery:anaerobicdigestionofavarietyofwaste(animalmanure,municipal,andindustrialwastewater)tocreatebiogasthatpowerselectricity‐producingturbinesorcombinedheatandpower(CHP)units
landfillgasrecovery:decompositionofsolidwasteinlandfillscreatesgasthatisusedtofuelboilers,turbines,orCHPunits
TABLE1CURRENTANDUNDERDEVELOPMENT ETHANOLFACILITIESINMICHIGAN
FacilityName LocationCapacity(mgy)
Feedstock OperationalStatus
TheAndersonsAlbionEthanol Albion 55 corn operating
MarysvilleEthanol Marysville 50 corn operating
GlobalEthanol/MidwestGrain Riga 57 corn operating
POETEthanol Caro 53 corn operating
CarbonGreenBioenergy Woodbury 50 corn operating
Mascoma‐FrontierRenewable Kinross 40 cellulose,wood underdevelopment
AmericanProcessInc.Biorefinery Alpena unknown celluloseunderdevelopment‐
pilotscale
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
9
biomassgasification:useofwoodorotherorganicwastetocreatesynthesisgas(syngas)thatcanbecombustedinturbinesorusedtocreatemethanolandhydrogen
biomasscombustion:directcombustionofbiomass(woodchips,pellets,blackliquor–aliquidbyproductofpulpandpapermanufacturing)intraditionalboilers
ThebioenergymarkethascontinuedtomakeheadwayinMichiganacrossallthreetypesofbioenergygeneratingfacilities.Therearecurrentlymorethan35bioenergy‐relatedfirmsoperatinginthestate(seeAppendixA).In2008,thestatesignedanagreementwithandprovided$4millioninCentersofEnergyExcellencefundingtoSwedishBiogasInternationaltodevelopabiogasplantinFlint,usingthecity’swastewaterasafeedstocksource(seeinsetforprojectdetails).Thebiogaswillbeusedtogenerateelectricityandcreatebiomethanetofuelthecity’sbusfleet.
Michiganisoneofthetop10U.S.statesintermsofmegawatthoursproducedfrombiomasssuchasbiogenicmunicipalsolidwaste,landfillgas,sludgewaste,agriculturalbyproducts,andotherbiomassgases(includingdigestergasesandmethane)6.Thestate’ssixfarm‐basedanaerobicdigestersgeneratemorethan18,600megawatthourequivalentsofenergyannually7.
AccordingtotheU.S.DepartmentofEnergy,Michiganranksninthinthecountryforpowerproductionfromwoodorwoodderivedproducts.Thestategeneratesmorethan1.7millionmegawatthoursfromcombustionofwoodybiomassat10facilities8.ThiscapacityisexpectedtosignificantlyincreaseinthecomingyearsasMichigan’sutilitiespursueadditionalrenewablegenerationopportunitiestomeetRenewableEnergyStandardsmandatedthroughPublicAct295,passedin2009.
Michiganhasmorethan19millionacresofforests,65percentofwhichareownedprivately.Giventhegrowinginterestinwoodandwoodwasteasfeedstocksforbothbioenergygenerationandcellulosicbiofuelproduction,thestatehaspartneredwithseveralMichiganuniversitiesandotherbioeconomypartnerstoevaluatetheextentofexistingaswellaspotentiallyavailablewoodresourcesin
6EIA,“StateDataforReservesandSupply,”2008.
7U.S.EPA.AgStarProgramAccomplishments.April,2010.http://www.epa.gov/agstar/accomplish.html.
8EIA,“StateDataforReservesandSupply,”2008.
SwedishBiogasInternational
SwedishBiogasInternationalisconstructingan$8‐$10millionbiogasfacilityinFlintinpartnershipwithKetteringUniversityandthecity.Theprojectwill:
usethecity’swastewatersludgetoproducebiogasfueltoheatcitybuildingsandpossiblycreatebiomethaneforthecity’svehiclefleet
receive$4millioninMichiganCentersofEnergyExcellencefunding
employ25to45people
beoperationalinfall2010
saveFlintanestimated$3.5millionwithinsevenyears
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
10
thestate.In2009,theMichiganClimateActionCouncillookedatavailablebiomassresourcesinthestateundera“businessasusual”scenarioandfoundthatthepotentiallyavailableresourcesinclude9:
morethan20milliondrytonsofunharvestedbiomassgrowthontimberlandacres morethan6milliondrytonsofenergycrops approximately870,000drytonsofunusedloggingresiduefromcurrenttimberlandharvests approximately1.5milliondrytonsofmillandotherresidueandurbanwoodwaste justunder4milliondrytonsofagricultureresidue 1.7milliondrytonsofmunicipalsolidwastefiber
TheseresourceswillincreasinglybelookedatforuseinthebioenergysectorinMichigan.
MichiganBiomaterialsSector
Thebiomaterialssectorislargelymadeupofbiochemicals,biobasedplastics,polymers(e.g.,polylacticacid),solvents(e.g.,ethyllactate),biodegradableproducts,biobasedpackagingmaterials,andotherplatformchemicalssuchassuccinicacidandbutanol.
Theglobalpolymermarketisestimatedat$250billionandispredictedtoexceed$450billionby2025.Biobasedpolymersareexpectedtoincreaseinmarketsharefromthecurrent0.1percentto10to20percentby2025.Thechemicalindustryisprojectedtogrowtomorethan$2trillionayear,withbiobasedchemicalsrepresentingmorethan$500billionby202510.
Thestatehasmorethan30biomaterialsfirms(seeAppendixA),includinglargemultinationalcompaniessuchasDowChemicalaswellassmallerandstartupcompaniessuchasDrathsCorporation.Thesecompaniesmakeavarietyofproductsincludingbiobasedplastics,biochemicals,biodegradableproducts,biobasedhealthandbeautyitems,biosolventsandcleaningproducts,biobasedpackagingmaterials,biobasedautomotivematerials,beneficialbacteria,andgreenbuildingsupplies.ThesectorhasseenincreasedactivitybothinMichiganandnationwideasbiofuelproducersinparticularlookforwaystodevelopintegratedbiorefineriestocreatebiobasedmaterialsasbyproductsofbiofueldevelopment.Someexistingbiofuelproducersarealsobeginningtoshiftcurrentfeedstocks(soybeansforexample)tobiochemicalproductionbecauseitoffersmoreopportunityforeconomicviability.WhiletheMichiganmarketaswholehasnotseensubstantialgrowthincommercialoperationsoverthepastfiveyears,therehavebeenseveralkeyadvancementsduringthistime.
Tohelpsupportthebiomaterialsmarket,thestategrantedoneofsixPhaseICentersofEnergyExcellenceawardstoWorkingBugsLLCtoestablishabiorefinerythatwillproducehigh‐valuespecialtyandfinebiochemicalsandbiofuelsfromnaturalfeedstocks.Technologydevelopedatthis
9MichiganClimateActionCouncil.ClimateActionPlan.March,2009.Definedas:“theamountavailableiftheresourceweremanagedaccordingtoitscurrentdemonstratedproductivecapacity,andifsocial,ecological,administrative,andtechnicalconstraintsweremanagedtominimizetheirimpactonutilization.”P.J‐3.10U.S.DepartmentofAgriculture(USDA).USBiobasedProducts.2008.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
11
centercanbeappliedtoexistingbiomaterialprocessingfacilitiesacrossthestate,includingcornethanolplants,beetsugarrefineries,andpulpmills,toproducenew,highervaluebioproducts.
SeveralotherMichiganbiomaterialscompanieshaveseennotablegrowthandexpansioninrecentyears,including:
DowChemical:industry‐leadingmanufacturerofspecialtychemicals,advancedmaterials,agrosciencesandplasticsproducts.
KTMIndustries:developerandmanufacturerofGreenCellbiodegradableengineeredfoamforcushioningandinsulationapplications.ThecompanyislocatedinLansingandhasmorethan$2.5millioninannualsales.
FordMotorCompany:leadingU.S.automanufacturerworkingtodevelopadvanced,low‐temperaturecombustiondieselenginesthatusebiofuelblendsoptimizedforengineperformance.FordhasbeenpartneringwithMSUresearchersona$4.7millionU.S.DepartmentofEnergygranttointegratethedevelopmentofadvancedengineswiththedevelopmentofnextgenerationbiofuels.Additionally,Fordcurrentlyusesbiobasedmaterialsinsomevehicles,includingawheatstraw‐reinforcedplasticandsoy‐basedpolyurethaneseatcushions,seatbacksandheadrests.
DrathsCorporation:nextgenerationchemicalcompanythatcombinesmicrobiologicalandchemicalprocessestoproducechemicalintermediatessuchasnylonprecursorsfrombiobasedmaterials.Drathsrecentlyreceivedmorethan$5millioninMichiganstatetaxcreditstoconstructheadquarters,research,andmultiplepilotfacilitiesinDelhiTownship.
Bio‐Kleen:manufacturerofhighperformance,biodegradablecleaningproductsforthemarine,RV,snowmobile,motorcycle,automotive,household,andcommercialindustries.
POLICY SUPPORT FOR MICHIGAN’S BIOECONOMY Twopiecesoffederallegislation,the2005EnergyPolicyActandthe2007EnergyIndependenceandSecurityAct,createdrenewablefuelstandardsfortheUnitedStatesthatmandatedproductionanduseof36billiongallonsofbiofuelsbytheyear2022.Thestandardrequiresthatthismustbemadeupof21billiongallonsofadvancedbiofuels(renewablefuelsotherthanethanolderivedfromcornstarch)andspecifiedthatatleast16billiongallonsbefromcellulosicbiofuelandatleast1billiongallonsmustbedieselmadefrombiomass.Theremaining15billiongallonsmaybeeitheradvancedbiofuelsorconventionalbiofuelssuchascornethanol.Therenewablefuelstandardshavebeendrivinggrowthinthebiofuelssectoracrossthecountry,includingMichigan.
KTMIndustries
KTMIndustrieswasfoundedin1997byfourMichiganStateUniversityresearcherswhowantedtomakeproductsfrombiomaterials.Itstartedoutasasmallhomeofficeandnowisamultimilliondollarcompanythatoccupiesa42,000‐square‐footbuildinginLansing.Thecompanymanufacturesandsellsbiobased:
greencellfoamusedforcushioningandshockabsorption
compostable/recyclablethermalcooler
MagicNoodlesbiodegradeablebuildingblocksforkids
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
12
Inadditiontothefederalrenewablefuelstandards,Michiganhasimplementednumerousotherpolicies,incentiveprograms,andregulatoryrequirementstoadvanceitsgrowingbioeconomy.Theseeffortshavebeenparticularlyfocusedonattractingnewbioeconomy‐relatedbusinessestothestate,creatingpublic‐privatepartnerships,andhelpingexistingMichigancompaniesdiversifyintoandexpandbioenergyandotherrenewableenergymanufacturingandproductionfacilities.Table2highlightssomeofthestate’skeypolicysupporteffortsforthebioeconomy.
TABLE2.STATEPOLICIESANDINCENTIVESPROGRAMS
IncentivePrograms ProgramDescriptionCentersofEnergyExcellence
TheCentersofEnergyExcellence(COEE)programwascreatedtopromotethedevelopment,accelerationandsustainabilityofenergyexcellencesectorsinthisstate.In2008,theMichiganStrategicFundBoardawarded$43milliontosixCentersofEnergyExcellenceinthefirstphaseoftheprogram(fourofwhicharebioeconomyprojects).The2009PhaseIIoftheprogramauthorizedanadditional$30million.Theinitiativeprovidesgrantstofor‐profitcompaniesthatarecommercializinginnovativeenergytechnologieswithsupportfromauniversity.
RenewableEnergyRenaissanceZones
Allowscompaniesoperatingwithinthezonetooperatefreeofvirtuallyallstateandlocaltaxesfor15years.FacilitieswithinarenaissancezonedonotpaytheMichiganBusinessTax,stateeducationtax,personalandrealpropertytaxes,orlocalincometaxes(whereapplicable).Theprogramallowsfor15RERZs,witharequirementthatatleastfivebefocusedontheproductionofcellulosicbiofuels
NonrefundableBusinessActivityTaxCredit
Businessesengagedinalternativeenergyresearch,development,andmanufacturingmayclaimanonrefundablecreditfromtheMichiganbusinesstax.Qualifiedbusinessactivityisdefinedbroadlytoincluderesearch,development,ormanufacturingofanalternativeenergymarinepropulsionsystem,analternativeenergysystem,analternativeenergyvehicle,alternativeenergytechnology,orrenewablefuel.
BiomassGasificationandMethaneDigesterPropertyTaxDigester
Provides100percentexemptionfromrealandpersonalpropertytaxesforcertainmethanedigesters,biomassgasificationequipment,andequipmentusedtoharvestcropresiduesordedicatedcropspercentusedforenergyproduction.
BiomassEnergyGrantProgram
Providesfundingforstatebioenergyandbiofuelsprojectsonaregularbasis.Fundingcategoriestypicallyincludebiofuelsandbioenergyeducation,biofuelsinfrastructure,andbiomasstechnologydevelopmentanddemonstrations.
RefundablePayrollTaxCredit
BusinessescertifiedbytheNextEnergyAuthoritythatlocateintheNextEnergyZonetoresearch,develop,ormanufacture"alternativeenergytechnologies,"asdefinedbytheMichiganNextEnergyAuthorityAct,mayclaimacreditequaltotheirqualifiedpayrollamountmultipliedbytheirincometaxrateforthatyear.
Policies/Mandates PolicyDescriptionRenewableEnergyStandard PublicAct295,requiringthestate'sinvestor‐ownedutilities,alternativeretail
suppliers,electriccooperativesandmunicipalelectricutilitiestogenerate10percentoftheirretailelectricitysalesfromrenewableenergyresourcesby2015.Underthestandard,eligiblerenewablesincludebiomass,solarandsolarthermal,wind,geothermal,municipalsolidwaste(MSW)*,landfillgas,existingtraditionalhydroelectric(i.e.,waterpassedthroughadam),tidal,wave,andwatercurrent(e.g.,runofriverhydroelectric)resources.Biomassisbroadlydefinedasorganicmatterthatisnotderivedfromfossilfuelsandwhichreplenishesoverahumantimeframe
RenewableFuelsCommission
In2006thestatecreatedtheRFC,madeupofstakeholdersfromacrossMichigan'sbioeconomysectors,tomakerecommendationsabouthowthestatecouldencourageandacceleratethetheproductionanddeploymentofbiodieselandethanol.TheRFCissueditsreportin2007,whichincludedmorethan40recommendations.Severalofthekeyrecommendationshavebeenimplementedalready,includingthedesignationofRenewableEnergyRenaissanceZonesforcellulosicethanolmaterials.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
13
TheMichiganEconomicDevelopmentCorporationalsoofferstechnicalandmarketassistancetobioeconomycompaniesandhasincludedbioenergyasoneofitsfourkeygrowthareasforthestate.
BIOECONOMY RESEARCH AND DEVELOPMENT AT MICHIGAN STATE UNIVERSITY Michigan’spublicuniversities,likemostacrosstheUnitedStates,areincreasinglyfacingreducedstateandfederalfundingforresearchacrossdisciplines.Michigan’sinvestmentinitshighereducationinstitutions(two‐andfour‐year)droppedbyabout6percentfrom2005to200911.FederalR&Dfundingduringthedecadewasalsovolatile,butsawsomepositiveopportunities.ResearchfundingbytheNationalScienceFoundation’s(NSF)DirectoratesforBiologicalSciences,MathandPhysicalSciencesandEngineering,increasedoverallbymorethan50percentfrom2000to200912.U.S.DepartmentofEnergy(DOE)fundingfortheEnergyEfficiencyandRenewableEnergy(EERE)Program(whichincludesbioeconomy‐relatedresearch)wasupanddownduringthisperiod,rangingfromahighof$851milliontoalowof$456million13.ThestateofMichiganhasbeenabeneficiaryoffundingfrombothagencies.InFY2007,Michiganinstitutionsreceivedmorethan$125millioninNSFfundingandmorethan$31millioninDOER&Dfunding.14Whilethisistotalagencyfunding,notspecifictothebioeconomy,itdoesgiveapictureoftheoverallfederalR&Dfundingforscienceandtechnology.InFY2008,MichiganreceivedaDOEawardofmorethan$50millioninpartnershipwiththeUniversityofWisconsin‐MadisontoformtheGreatLakesBioenergyResearchCenter,oneofthreeDOEbioenergyresearchcenters.
MostofMichigan’smajorresearchinstitutionsaredoingatleastsomebioeconomyresearchandseveralhavebecomenationalleadersintermsofexpertise,fundingreceived,patentsand/orcommercialventurespin‐offs.Whilethefullscopeofalltheuniversityresearchcannotbecapturedinthisbriefingpaper,somenotableexamplesofresearchandinitiativesatMSUthathavehelpedadvancethebioeconomyinMichiganandgloballyarehighlightedbelow.Laterpapersinthisserieswillprovidemorein‐depthcasestudiesonbioeconomyresearchatMSUandotherMichiganuniversities.
GreatLakesBioenergyResearchCenter:afive‐year,$250millionpartnershipwiththeUniversityofWisconsin‐Madisontoresearchanddeveloptechnologiesandprocessestoproducebiofuels,bioenergy,andhighvaluebiobasedproducts.
11StateHigherEducationExecutiveOfficers.2009.StateHigherEducationFinanceFY2009.“GrapevineTable2.”(twoandfour‐yearinstitutionsincluded)http://www.sheeo.org/finance/shef/SHEF_FY_2009.pdf
12AmericanAssociationfortheAdvancementofSciences.AAASAnalysisofR&DintheFY2009Budget.March,2008(revised)http://www.aaas.org/spp/rd/prev09p.htm.
13AAAS.AAASReportXXXIV:ResearchandDevelopmentFY2010http://www.aaas.org/spp/rd/rdreport2010/tblii11.pdf
14NationalScienceFoundation,DivisionofScienceResourcesStatistics.2010.FederalFundsforResearchandDevelopment:FiscalYears2007–2009.DetailedStatisticalTablesNSF10‐305.Arlington,VA.Availableathttp://www.nsf.gov/statistics/nsf10305/.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
14
MSUBioEconomyNetwork:universitywideorganizationdesignedtomarshalMSUresearchandresourcestohelpfosterconnectionswithpublicandprivatesectorinitiativesaimedatexpandingMichigan'sbioeconomicsector,aswellasidentify,encourageandsupportresearchprogramsthatpositionMSUasaworldleaderindevelopingthebioeconomy.
BiomassConversionLab:focusedondevelopingpretreatment,enzymaticandfermentationtechnologiestobreakdowncelluloseandhemicellulosemoreeconomicallyandefficiently.
MSU‐DOEPlantResearchLab:researchfocusesonmanipulatingplantsatthemolecularleveltocreatemoreefficientandeconomicalbiofuelsandbiochemicals.
WorkingBugsLLC:inpartnershipwithLuleåUniversityofTechnologyinSweden,WorkingBugsisidentifyingpotentiallyusefulmicrobesthatcouldbeusedinfermentationprocessestomakeproductsfromrenewableresources,aswellasintermediatechemicalsthatarethenusedtomakeotherbiobasedproducts.
Biostarch:usingbiomassfromsoybeansandcorn,researchersarecreatingbioplasticbagsandbiofoamsheetstoprotectcargoduringshippingandforuseasinsulation.
MSUBioeconomyInstitute:openedinspring2009attheformerPfizerfacilityinHolland,the138,000‐square‐footfacilitycomplementsandextendscampusresearchsupportingthebioeconomy,includingresearchonbiofuels,biobasedchemicalsandbiomaterials.
MBI:awholly‐ownedsubsidiaryoftheMSUFoundation,MBI'smissionistodevelopandcommercializesustainablebiobasedtechnologies.MBIpartnerswithbioeconomyinventorsandstartupstode‐risk,develop,andscaleupdiscoveriesintocommerciallyviabletechnologypackages.
ECONOMIC IMPLICATIONS AND BIOECONOMY POTENTIAL IN MICHIGAN ThebioeconomyofferssubstantialopportunitiesforMichigantoimprovethestate’seconomybyreducingrelianceonimportedenergy,creatinglocalandregionaljobs,helpingcreatemarketsforadvancedautomobiles,andexpandingtheglobalexportofagriculture‐andforestry‐basedproducts.Thesupplyandbuychainsforthebioeconomyincludesignificantopportunitiesforenergyconsumers,componentsuppliers,energyservicesuppliers,manufacturersanddistributors,serviceproviders,developers,fuelretailers,fueldistributors,blenders,biofuelrefiners,andfeedstocksuppliers.
Inadditiontothebioeconomyprogresshighlightedabove,Michiganhasnumerousplannedeffortsorprogramsandprojectsthatareunderway,butnotfully‐realized.ThereareseveralfactorsthatcouldshapeMichigan’sabilitytocontinuebuildingitsbioeconomyandbecomeamarketleader,including:
Continuedpolicysupport,suchasrenewableenergystandards,taxcredits,andgrantprograms
MichigancontinuestoimplementandpossiblyaugmentPublicAct295thatcreatedthestate'srenewableenergystandards.Thestatealsoisworkingwithinvestor‐,municipal‐,andcooperative‐ownedutilitiestodevelopprogramstomeettheirrenewableenergytargets.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
15
MichiganisinthesecondphaseofCentersofEnergyExcellencefunding,aprogramthathassignificantlyattractedglobalbioeconomycompaniestothestatetodevelopandcommercializebiobasedfuels,energy,andproducts.
Thestatealsoisconsideringseveralotherpiecesoflegislationspecificallyaimedatadvancingthebioeconomyincluding:15
o HouseBill4137thatwouldoffer20‐yearbiofuelcontractsatfeedintariffratesof$0.105to$0.145/kWh(comparedtonewcoalpriceestimatesof$0.133/kWh)
o HouseBill4107toprovidetaxcreditsforthepurchaseofbiomassstoves
o HouseBill4170toprovidetaxcreditsforbiomassgatheringandhandling
o HouseBill4241toprovidetaxcreditsforamountsexpendedonbiomassfuel
AsofJuly1,2010therehasbeennoactiononthesebills.
However,untilthedevelopmentandproductionofbiofuels,bioenergy,andbiomaterialsaremoreefficient,therewillcontinuetobeasignificantcostdifferentialbetweenbioproductstheirfossil‐fuelcounterparts.Michigan’spolicy‐makersmusthavethepoliticalwilltosupportthenecessarysystemsthatwillspeedadoptionandhelpincreaseconsumeracceptanceoftheseproducts.
InvestmentinresearchandproductdevelopmentatMichigan’suniversitiesandfacilitationofthecommercializationprocess
Michigan’spublicuniversities,likemostacrosstheUnitedStates,arefacinglong‐termreductionsinresearchfundingacrossdisciplines.ForMichigantoadvanceitsgrowingbioeconomy,thestatemustcontinuetopartnerwithitsresearchinstitutestoprovidefundingandfacilitateindustrycollaboration.TheMichiganCentersofEnergyExcellenceprogramhasbeenavaluabletoolforcreatingopportunitiesforthestate’suniversitiestocollaboratewithindustryonthedevelopmentandcommercializationofcleanenergytechnologies.PhaseIIofthateffort(targetedat$30million)willcontinuethatinvestment.
Asindicatedinthe“BioeconomyResearchandDevelopmentatMichiganStateUniversity”sectionabove,Michigan’sfundingforitshighereducationinstitutionshasdeclinedinrecentyears.Infiscalyear2008,Michigan’spercapitainvestmentinhighereducationwas$258,approximately88percentoftheU.S.average.Thisfundingrepresentedjustlessthan7percentofthestate’staxandlotteryrevenuesandincludedallhighereducationfunding,notjustresearch.16
Statesupportforresearchfundingathighereducationinstitutionslikelywillcontinuetodeclineinthecomingyears,asthestatestrugglestoboostitssaggingeconomy.Michiganhasbeenparticularlyhardhitbytheglobaleconomiccrisisandcontinuedeffortstobalancecompetingbudgetprioritiesmeans
15MichiganPublicServiceCommission.GrowingGreenEnergyinMichigan.PresentationbyTomStanton,February,2010.
16StateHigherEducationExecutiveOfficers.StateHigherEducationFinanceFY2009.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
16
highereducationfundinghassuffered.Stateinvestment,however,isacriticalcomponentfordevelopingthetechnologies,processes,andfeedstocksforthenextgenerationofthebioeconomy.Theinnovationtomakebiofuels,bioenergy,andbiomaterialsmoreefficientandcostcomparabletotheirfossil‐fuelcounterpartscomesfrombasicandapplieduniversityresearch;ifMichiganhopestobeabioeconomyleader,asitsprioritiessuggest,supportforthisresearchatthestate'suniversitiesmusttakeprecedence.
Investmentinbiomassavailabilityandbiomasstransportationinfrastructure
Michiganhasmorethan19millionacresofforestlandandforestlandhasincreasedmorethan6percentsince1980.Thestate’sforestresourcescurrentlyarebeingunderutilizedandthisisasignificantareaofbioeconomygrowthpotential.In2009,theMichiganClimateActionCouncilreleasedareportmakingseveralrecommendationsforadvancingenergyandbiofuelsproductioninthestateincluding:
Expandeduseofbiomassfeedstocksforelectricity,heat,orsteamproduction:produce10percentoftotalin‐stateelectricgenerationfromsustainablebiomassfeedstockby2025.
In‐stateliquidbiofuelsproduction:achieve10percentuseofrenewablefuelsby2012and25percentby2025.
Methanecaptureandutilizationfrommanureandotherbiologicalwaste:reducegreenhousegasemissionsfromhanding,treating,andstoringlivestockmanureandorganicwasteby15percentby2015and25percentby2025throughimprovedmanuremanagementpracticesandmethaneuse.
Expandeduseofbiobasedmaterials:use100,000metrictonsofbiobasedproductsannuallyby2025andreclaim150,000metrictonsofsolidwoodresiduesfrommanufacturingprocesses,deconstructionsites,andurban/suburbantreesannuallyby2025.
Thecouncilevaluatedthepotentialavailabilityofbiomassfeedstockstomeettheaboverecommendations(basedlargelyona“businessasusual”scenario)andestimatedthat8.4milliondrytons/yearareavailableforcellulosicbiofuelproductionand14.1milliondrytons/yearareavailableforuseinelectricityorheat/steamproduction.Theoverallbiomassdemandofthecouncil'srecommendationsisestimatedtobeabout78percentoftheavailablesustainablesupplyforthestate17.Thecouncil'srecommendationsarebeingconsideredbythestateandmanyhavebeenadoptedinMichigan’srecentenergylegislation,PublicAct295.ImplementingtheClimateActionCouncil'srecommendedgoalsnotonlyachievesclimatereductiongoals,itfacilitatesthedevelopmentofathrivingbioeconomybypromotinginvestmentinbiomassfeedstockproductionandinfrastructuretoimproveitsaccessibility.Therearenumerouschallengestoaddressingsomeoftheserecommendationsandincreasingtheavailabilityofbiomass,including:
17MichiganClimateActionCouncil.ClimateActionPlan.March,2009.AppendixJ‐3.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
17
politicalleadershipandstatebudgetsupportisneededtocreaterequirementsandincentivesforproducingenergyfromrenewablesourcessuchasbiomass
developingwaystoaccessthesubstantialamountofforestresourcesonwidelydistributedprivatelands
ensuringthatincreaseduseofbiomassresourcesisdonesustainably
privatesectorinvestmentintechnologyandinfrastructureisneeded
identifyingandevaluatingavailablelandsforenergycropplantations
prioritizingandinvestinginbiomass/biofueltransportationinfrastructure(rail,road/highwayupgrades,truckingefficiencies)
CapitalizingonMichigan’saccesstosubstantialwaterresourcesforbothbiofuelandbiomaterialsproductionprocessesandtransportofbiomaterialsviaGreatLakesshipping
Allagriculturalcrops,includingbiomassfeedstocks,arewateredbyeitherrainfalland/orirrigation(whichuseseithergroundorsurfacewater).Waterandirrigationneedsvarysignificantlybetweencropsandregions.Ingeneral,commonbiomasscropssuchascorn,soybeans,andwheatneedmorewaterthancellulosicbiomasscropssuchasswitchgrass,butthereisalackofhistoricaldataandknowledgeaboutthewaterimplicationsofgrowingmorecellulosiccrops.Figure1showsthestate‐by‐statewaterrequirementsin2003ofirrigatedcorn(gallonsofirrigationwaterperbushel)18asaproxyvariableofsomeoftheregionaldifferencesinwaterneedsforbiofuel/bioenergycrops.Therewillobviouslybegeographiclimitationsonthetypesofbiomassfeedstocksthatcanbegrown.Ifbiofuels,bioenergy,andbiomaterialsfeedstockmarketsexpandbeyondcurrentirrigatedcropland,therecouldbesignificantpressureonwaterresourcesinsomeareasofthecountry,especiallydrywesternareas.
18NationalAcademyofSciences.WaterImplicationsofBiofuelsProductionintheUnitedStates.2008.(NAScitedsource:N.Gollehon,USDAERS,writtencommun.,July12,2007.Basedondatafrom2003FarmandRanchIrrigationSurvey(USDA,2003).
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
18
FIGURE1STATE‐BY‐STATEWATERREQUIREMENTSFORIRRIGATEDCORNIN2003
Inadditiontothewaterrequiredtogrowbiofuel,bioenergy,andbiomaterialscrops,processingthesegoodsrequireswater.Theprocessofcreatingethanol,forexample,issimilartobrewingprocessesanduseswaterforconversionandforheatingandcoolingtheproducts.Currentestimatesofconsumptivewateruseatcornethanolfacilitiesareabout4gallonsofwaterpergallonofethanolproduced.Soanethanolplantthatproduces100milliongallonsperyearwouldwithdrawslightlymorethan400milliongallonsofwaterperyearfromeithergroundwaterorsurfacewatersources.Whiletherearenotalotofcommercialcellulosicethanolplants,theirwateruseisestimatedtoabout9gallonsofwaterpergallonofethanolproduced,thoughthisisprojectedtodecreasetoabout2to6gallonsofwaterpergallonofethanolproducedasefficienciesimprove.Theseethanolproductionwaterrequirementscomparetoabout1.5gallonsofwaterusedpergallonofpetroleumrefined.19
ComparedtomostoftheWest,HighPlains,andSouth,Michiganhasarelativelylargeamountofaccessiblewater.Thestate'sclimateprovidessignificantprecipitation,whichreducestheoverallneedforirrigatingcrops,asFigure2demonstrates.Asaresult,growingbiomasscropsinMichiganwillnot
19NAS,2008.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
19
putasmuchpressureongroundwatersuppliescomparedtootherstates.Whileprotectionofwaterresourcesfromoveruseorcontaminationisaveryhighpriorityforthestate,Michiganisblessedwithsubstantialgroundwaterresources,36,000milesofstreams,11,000inlandlakesandponds,andisalmostcompletelysurroundedbytheGreatLakes.TheseresourcesprovidevastsuppliesofcleanandaffordablewaterforMichigan’sresidential,commercial,andindustrialsectors.
FIGURE2IRRIGATEDLANDINTHEUNITEDSTATES20
Inaddition,Michigan’spositionatthecenteroftheGreatLakesofferssignificantopportunitiestoshipbiomassfeedstocks,biofuels,andotherbiobasedproductstootherregionsofthecountryandworldviatheAtlanticOcean.Combinedwiththestate'sotherproductshippinginfrastructure,thisaccessdiversifiesMichigan’sabilitytohaveastrongsupplychainandbeanexporterofbiobasedproducts.
20NAS,2008.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
20
IncreasingtheuseofMichigan’sagriculturalandmunicipalwastestocreatebioenergy
Inadditiontothosefacilitiesalreadyoperating,theMichiganDepartmentofAgriculturehasbeenworkingwithseveralotherfarmsandindustrialagricultureproducerstodevelopandreceivepermitsforanaerobicdigestionfacilities.
TheProductCenterandShepherdAdvisorsalsoevaluatedMichigan’soverallpotentialforenergygenerationfromanaerobicdigestion.Michiganhasmorethan175largeconfinedanimalfeedingoperations(CAFOs),21andmorethan200foodprocessingcompanies.22Thispresentsasignificantopportunitytoconvertanimalmanureandfoodprocessingwastetoenergyusinganaerobicdigestion.Animalwasteinthestate,forexample,offerstheopportunityforasmuchas493,037kWh/dayor2.2millionMJ/dayasTable3demonstrates.
AnimalType
NumberofAnimalsinEntireState
ManureProduction(lbsmanure/animal*day)
TonsofManure
(perday)inMichigan
BiogasYield
(m^3/ton)
BiogasYield
(m^3perday)
ElectricalYield
(kWh/day)HeatYield(MJ/day)
DairyCattle 150,928 115 8,678 25 216,959 368,830 1,670,584
BeefCattle 34,341 92 1,580 25 39,492 67,137 304,090
Swine 186,505 10 933 36 33,571 57,071 258,496
Total 371,774 ‐ 11,191 86 290,022 493,037 2,233,170 CONCLUSIONS Asastatethatimportsalmostallofitsenergyinputsandfuel,Michiganhasputapriorityongrowingitsbioeconomytosupportitsownenergyneedsandtobeglobalsupplier.Whilesubstantialslowdownsinthestate,national,andglobaleconomieshavelimitedthegrowthofthebioeconomy,inmanypartsoftheUnitedStates,includingMichigan,progressinadvancingthebioeconomyisbeingmade,entrepreneurialismishappening,andthesupplyandproductionchainisactive.
Incultivatingitsbioeconomy,Michiganhasavoidedsomeofthepitfallsthathaveplaguedotherstatesbynotoverinvestingintraditionalcorn‐basedethanolandbiodieselplants.Asaresult,whileourbioeconomyhasstruggledduringtheeconomicdownturnofthelastfewyears,thestateisnothurtinginthissectorasmuchasotherregions.
Theongoingandpotentialbioeconomyeffortsdescribedinthispaper,combinedwiththestate’sgeographicadvantagesintermsofdiversefeedstocks,underutilizedforestryresources,andvastwater
21MichiganDepartmentofAgriculture.TheEPAdefinesalargeCAFOasanoperationwith1,000ormorecattleorcow/calfpairs,or700maturedairycattle,or2,500swineweighingmorethan55pounds.TheanalysisusesCAFOsbecausetheyarelargeroperations,generallymakingbioenergyproductionmorecosteffective.
22U.S.Census,2007.FoodProcessorswithover20employees.
TABLE3.POTENTIALBIOGASYIELDFROMMICHIGAN’SCATTLEANDSWINEFARMS
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
21
resources,offersignificantopportunitiesforMichigantoexpanditsbioeconomyandadvanceitspositionintheglobalbioeconomymarketgoingforward.Indoingso,thestatecan:
continuetodiversifyitseconomyandcreatemorelocaljobsandwealthacrossthebroadspectrumofthebioeconomysupplychain,positioningMichigancompaniestobemorecompetitiveinaworldthatincreasinglyvaluessustainability
gaingreaterfuelsecurity
contributetoglobalreductionsinclimatechangeemissions
Achievingtheseobjectiveswillrequirecommitmentonthepartofdecision‐makersandindustrytomakekeyinvestmentsandaddresssomeoftheremainingbutsignificantbarriersincluding:
sustainablyincreasingtheuseofstateforestryresourcestoboostavailabilityofbiomassfeedstocks
improvingtheinfrastructuretoaccess,harvest,andtransportbiomassresources
continuingexistingpublic‐private‐universitypartnershipsandincreasinginvestmentinbioeconomyresearchtodevelopthetechnologies,processes,andfeedstocksforthenextgenerationbioeconomy
providingcontinuedpolicysupportforgrowingthestate'srenewableenergysectorbyimplementingexistingandcreatingnewlegislationthatrequiresrenewableenergytargets,providesinvestmentandresearchincentives,andfacilitatesthesitinganddevelopmentofbioeconomyfacilities
educatingconsumersaboutthevalueandqualityofbiobasedenergyandproducts
AsMichiganaddressestheseremaininghurdles,itcouldbewellpoisedtoplayastrongroleinthegrowing,globalbioeconomysector.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
22
APPENDIX A – WORKING LIST OF MICHIGAN BIOECONOMY‐RELATED COMPANIES Thefollowingisalistofmostthebioeconomy‐relatedcompaniesoperatinginthestate,drawnfrompubliclyavailableinformation,suchasnewsarticlesandpressreleases.Withtwoexceptions,thesefirmsareheadquarteredinMichigan.TheProductCenterandShepherdAdvisorsrecognizethatitisnotacomprehensivelistandthatthebioeconomyisconstantlyevolving.TheProductCenterwelcomesinformationonanyotherfirmsoperatinginthebioeconomybutnotrepresentedhere.
Thesecompaniesareinvariousstagesofcommercialoperations.Inadditiontothese,therearedozensofotheremergingandstart‐upcompaniesthatarecontributingtothegrowthofthisindustry.
Company CityTypeofBioeconomy
Company
CarlMeyerFarms23 AnaerobicDigester
DenDulkDairyFarm24 Ravenna AnaerobicDigester
GeerlingsHillsideFarm25 Overisel AnaerobicDigester
GreenMeadowFarms,Inc.26 Elsie AnaerobicDigester
MeadowbrookFarms27 Hamilton AnaerobicDigester
ScenicViewDairy28 Freeport AnaerobicDigester
ScenicViewDairy29 Fennville AnaerobicDigester
SietsemaFarms30 Allendale AnaerobicDigester
ConsumersEnergyGreenGeneration Jackson Bioenergy
DTEEnergyGreenCurrents Detroit Bioenergy
FiberBy‐Products WhitePigeon Bioenergy
Granger Lansing BioenergyHeatTransferInternational Caledonia Bioenergy
HESCOSustainableEnergy Warren BioenergyHogquest,LLC Hamilton Bioenergy
KirtlandProducts,LLC BoyneCity Bioenergy
LandfillEnergySystems Wixom Bioenergy
LansingBoardofWaterandLightGreenWise Lansing Bioenergy
MaederBrothersQualityWoodPellets,Inc. Weidman Bioenergy
MichiganBiomass Ithaca Bioenergy
MichiganWoodPelletFuel,LLC Holland,Grayling Bioenergy
Mid‐MichiganLiquidators Ithaca Bioenergy
Morbark Winn Bioenergy
MSRSales Brighton Bioenergy
23,24,25,26,27,28,29,30Thesefarmsarealloperatinganaerobicdigestionbio‐energyequipmentforself‐containedheatingandpoweruse,butarenotoperatinginthewiderbioeconomymarket.Asnetmeteringbecomesmoreprevalent,thesefarmsmaybecomeenergyproviderstothegrid.
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
23
Company CityTypeofBioeconomy
Company
PelletSales.com Manchester Bioenergy
Phase3Development&Investments,LLC Fennville Bioenergy
ReGenBioFuels WhitmoreLake Bioenergy
RenewaFuel Kalamazoo Bioenergy
RenovareEnergyInc. FarmingtonHills Bioenergy
UpperPeninsulaPowerCompanyNatureWise GreenBay,Wisconsin Bioenergy
VulcanWoodProducts,Inc. Kingsford Bioenergy
WeEnergies‐EnergyforTomorrow Milwaukee,Wisconsin Bioenergy
AdvancedBiodieselPartners AnnArbor Biofuels
AgSolutions,Inc. Gladstone Biofuels
AlbionEthanol‐TheAndersons Albion Biofuels
AlternativeFuelTechnology RedfordTownship Biofuels
AmericanProcess,Inc. Alpena Biofuels
BiodieselIndustries Detroit Biofuels
BlueGreenEnergy,LLC AnnArbor BiofuelsCenterforAlternativeFuels‐MacombCommunityCollege Warren Biofuels
CornEnergyProducts Newaygo Biofuels
CroreyBiomassGasifierSystemsLLC BeverlyHills Biofuels
eFarms Holland Biofuels
EnderLLC,Inc. Detroit Biofuels
GraylingGeneratingStation Grayling Biofuels
GreatLakesEthanol‐GlobalEthanol Riga Biofuels
LibertyRenewableFuelsLLC Owosso Biofuels
MarysvilleEthanol,LLC Marysville Biofuels
MichiganBiodiesel Bangor Biofuels
MichiganEthanol‐PoetBiorefining Caro Biofuels
MidlandEnergyLLC Midland Biofuels
MilanBiodiesel,LLC Milan Biofuels
NextDiesel Adrian Biofuels
NextGenEnergyLLC Livonia Biofuels
NextGenEnergyEthanolPlants McBain,Watervliet Biofuels
NorthwestMichiganBiofuelsLLC SouthBoardman Biofuels
RKAPetroleumCompanies Romulus Biofuels
TheAndersons‐EthanolDivision Albion Biofuels
USBioWoodbury‐Verasun Woodbury Biofuels
A.R.B.Distributing,LLC GrandRapids Biomaterial
StatusofMichigan’sBioeconomy:ProgressandEvolvingPotential “AdvancingtheBioeconomy:OverviewofMichigan’sProgress”
24
Company CityTypeofBioeconomy
Company
AdvancedAdvertisingProducts Jackson Biomaterial
AlinesSoyCandles&Products Burton Biomaterial
BGreenToday.com AnnArbor Biomaterial
Bio‐Kleen Kalamazoo Biomaterial
BioPlasticPolymers&Composites,LLC Okemos Biomaterial
BiosolutionsLLC GrandHaven Biomaterial
BlissSoybeanCandlesandGifts GrandHaven Biomaterial
CandlesMadefromSoy Westland Biomaterial
ChangingPoses BloomfieldHills Biomaterial
DiversifiedNaturalProducts,Inc. Scottsville Biomaterial
DowChemical Midland Biomaterial
DrathsCorporation EastLansing Biomaterial
EcoRoofsLLC BerrienSprings Biomaterial
Eco‐LogicLawnandLandscape GrossPointePark Biomaterial
GlobalGreenRoofs GrandRapids Biomaterial
HydroSafeOil DeWitt Biomaterial
KelseyPromo,LLC Livonia Biomaterial
KTMIndustries Lansing Biomaterial
L&LPackaging Livonia Biomaterial
LiveRoof SpringLake Biomaterial
MichiganGreenSafeProducts Detroit Biomaterial
MysticFlames,LLC Redford Biomaterial
OmniTechInternational,Ltd. Midland Biomaterial
OrganicPonds SterlingHeights Biomaterial
PermalocCorporation Holland Biomaterial
PineRidgeSoyCandles Norway Biomaterial
RoyalRoofingCompany,Inc. Orion Biomaterial
SchenaRoofing NewBaltimore Biomaterial
SelestialSoap TraverseCity Biomaterial
SouthernScentsations FlatRock Biomaterial
StrongProductsLLC BattleCreek Biomaterial
SuperiorGroundCoverInc. Hudsonville Biomaterial
TheGreenerCleanerCarpetandUpholstery Detroit Biomaterial
TrueArtesian Alanson Biomaterial
WorkingBugs,LLC EastLansing BiomaterialXeroflora East Lansing Biomaterial