Developing Extension Programs in the Economics of Energy and New Bioproducts in North Carolina Kelly Zering Dept. of Agricultural and Resource Economics North Carolina State University

Topics New Subject Economic Issues The Supply Chain Stages of Technology Development Strategies for Program Development Resources Your participation

Economics of Energy and New Bioproducts is a New Subject Lack of Research Based Information, experience, experts, training, institutions,… Opportunity for pioneering extension program development with broad participation Need for Participation by agents, clientele, specialists, researchers, leaders,…

A major structural change is underway in the economy of the country and of North Carolina. What are the issues for local government and others? What are the research, education, policy, and decision-support needs of people?

Developing Extension Programs in the Economics of Energy and New Bioproducts in North Carolina Categorize / Organize the Subject Matter by … Economic Issues Stage of the Supply Chain Stage of Technology Development Other ???

Economic Issues Investment Analysis and Finance Enterprise Budgets and Record-Keeping Market Analysis and Marketing Risk Analysis Hedging, contracts, leases Income tax and policy Subsidies and other incentives Legal and regulatory compliance

Economic Issues: Policy Goals USA NC Local Reduce dependence on imported fuel x x Limit energy costs x x x Secure energy supply for future x x Reduce pollution x x x Protect open space, recreation, and aesthetics x x Support agriculture and rural development x x Support economic development & growth x x x Increase tax base x x

Economic Issues: Policy Driver Examples 2004 Jobs Creation Act converts alternative fuels excise tax exemption (originated in 1978) to a $0.51 per gallon tax credit for fuel blenders through 2010 2005 Energy Policy Act includes Renewable Fuel Standard requires at least 4 billion gallons renewable fuel be used in gasoline in 2006, increasing to 7.5 billion by 2012 $0.54 per gallon import tariff in effect MTBE phase-out continued through 2006 Source: http://www.khoslaventures.com/presentations/Fuel_Ethanol.pdf

Economic Issues: Does Ethanol meet policy goals Reduce dependence on imported oil : Limited success: replace ??% of gasoline /crude oil with coal/natural gas Secure long term supply …limited success Reduce pollution…yes, where ethanol is burned, ?? Overall Ag and rural development: yes for corn and other crops, no for livestock, yes for plant locations Increases food costs and reduces exports/increases imports Ethanol is the least expensive renewable fuel currently Looking for better fuels/feedstocks/processes Source: e.g. http://www.card.iastate.edu/publications/synopsis.aspx?id=1050

Energy/Ethanol Costs to North Carolina in 2006/2007 : 3% of $2.55 billion tax credit = $76 million 84 million bu. of corn x $1.50 higher price = gain of $126 million 305 million bu. feed grain for livestock x $1.50 higher price = cost of $457 million NET COST $407 million per year

Economic Issues: Market and Risk Analysis Ethanol processing is a margin business Ethanol price, DDGS price, corn (feedstock) price, and subsidies and incentives have big effects on profit/loss Strong need for market analysis and forecasting, risk management, contracts, … Similar needs are implied for feedstock suppliers

Feedstock Production (e.g. crops, residue, manure) Categorize / Organize the Subject Matter by … Stage of the Supply Chain (Clientele groups) Media Education Government Processing off-farm Feedstock collection and transport Product transport and distribution and utilization Input Supply Processing on-farm Feedstock Production (e.g. crops, residue, manure) Co-product utilization Support services

Stage of Technology Development Categorize / Organize the Subject Matter by … Stage of Technology Development Commercially Available / Proven ‘Track Record’ Commercially Available / New / Unproven Prototype / Multiple Site Full-Scale Field Testing Prototype / First Full Scale Testing Pilot Scale / Proof of Concept Lab Scale Testing Concept Proposal and Development

Categorize / Organize the Subject Matter by … Other ?? Production Types: crops vs. forest vs. livestock….. Product Type: energy vs. fertilizer vs. …. Farm Size: Region of North Carolina: Environmental Criteria: Other Social Criteria: ????

Extension Programming Needs & Opportunities On-farm energy use and production Market and risk analysis…..for crops, livestock, processing Investment analysis for New crops, New processing, New energy management equipment Policy analysis and development national, state, local Environmental and aesthetic analysis Local municipal and industrial energy/ag/waste integration

Strategies for Program Development in North Carolina Build teams to address topics of immediate interest identify topics identify interested people Build one or more broad subject area planning and coordination group(s) … (e.g. biomass processing) Recruit clientele and community participation Define and conduct simple projects to build knowledge and resources Develop funding proposals for larger projects Cultivate funding from local leadership

Strategies for Program Development in North Carolina Define and fill new positions to strengthen programs Build knowledge base, reference library, and tool kit web site Encourage on-going discussion wiki ??? blog ??? news updates classical and new extension programming Define and Conduct Training and Leadership Development

Extension and Research Funding Opportunities Much money has been spent or committed Much more is likely: DOE, USDA, EPA, DOD, State, Foundations Participate in proposals and projects Participate in directing RFP development: needs, focus, North Carolina is behind in participation and in winning benefits from policy and grants

Initiatives are underway Existing Programs: Solar Center, bioprocessing, CEFS, State Energy Office … ??? Existing publications etc., in NC, elsewhere, Existing projects: crop demonstrations, processing plants (research and commercial), Regional Coordination: SERA, other NIMMS National Programs: DOE, USDA, AGSTAR, EPA

Your vision… Your participation