slide 1 Tim Stearns- Washington CTED Energy Policy Division Policy puzzle for oil usage Plan better –live/work Mass transit - integrate Infrastructure – multimodal seemless Transportation choices – walk, bike, drive, transit Improve vehicles Better fuels Pricing – send clear signals

slide 2 Tim Stearns- Washington CTED Energy Policy Division context 1.2 billion gallons distillate fuels use in WA 1.2 billion gallons distillate fuels use in WA 4b gallon of gasoline per year 4b gallon of gasoline per year Growing world demand for oil – 70 mbd Growing world demand for oil – 70 mbd 3 gallons per day per person US – 20 mbd 3 gallons per day per person US – 20 mbd Oil Supply peaking – new price level Oil Supply peaking – new price level Demand will double in 50 years Demand will double in 50 years Large pollution challenge – air & water Large pollution challenge – air & water Diversify rural economies Diversify rural economies All imported to state All imported to state

slide 3 Tim Stearns- Washington CTED Energy Policy Division Washington State Policy Lead with government usage Lead with government usage Clear permitting path Clear permitting path Coordinate agencies Coordinate agencies Improve financing climate – public/private Improve financing climate – public/private Can’t control markets for ag or oil Can’t control markets for ag or oil Can’t control farmers or entrepreneurs or feds Can’t control farmers or entrepreneurs or feds Work with existing infrastructure Work with existing infrastructure Structure market to expand production Structure market to expand production Quality – quality – quality Quality – quality – quality

slide 4 Tim Stearns- Washington CTED Energy Policy Division Keys to success solid business plan solid business plan –Buyers –Manufacturing –Service –Management –marketing –Distribution channels –financing – equity – debt – grants – partners

slide 5 Tim Stearns- Washington CTED Energy Policy Division

slide 6 Tim Stearns- Washington CTED Energy Policy Division Federal help Federal blenders tax credit Federal blenders tax credit EPA support for regulatory framework EPA support for regulatory framework USDA guaranteed loans USDA guaranteed loans USDA crop research USDA crop research Navy & GSA approval of pumps & storage Navy & GSA approval of pumps & storage Usage Usage Challenge – decentralize – support diverse activities Challenge – decentralize – support diverse activities

slide 7 Tim Stearns- Washington CTED Energy Policy Division Why biodiesel? Can grow feed stocks – canola & mustard Can grow feed stocks – canola & mustard Canola – feed cattle Canola – feed cattle Mustard – biofumigate potatoes Mustard – biofumigate potatoes Modular size better fit for northwest Modular size better fit for northwest Midwest better for corn & soybeans Midwest better for corn & soybeans Midwest way ahead on ethanol Midwest way ahead on ethanol Cellulosic ethanol still a work in progress Cellulosic ethanol still a work in progress

slide 8 Tim Stearns- Washington CTED Energy Policy Division Private - government vision vision risks risks control control Investment Investment Innovate Innovate manage manage Clear framework Prevent problems –Safety - environmental Create markets Cajole & assist Research quality

slide 9 Tim Stearns- Washington CTED Energy Policy Division Pithy observations Recognize oil addiction duh Recognize oil addiction duh Can’t wait for feds - might be good Can’t wait for feds - might be good Avoid harm - provoke change Avoid harm - provoke change Action - alternatives don’t just happen Action - alternatives don’t just happen Diversify rural Diversify rural Free market is not free - $ without morals Free market is not free - $ without morals High prices irrelevant without substitutes High prices irrelevant without substitutes R&D is step 1 R&D is step 1

slide 10 Tim Stearns- Washington CTED Energy Policy Division Biofuels action Renewable fuel standard 2% in 2008 Renewable fuel standard 2% in 2008 –Market - buyers/framers/referees State $ to attract private State $ to attract private Quality Quality Near term research Near term research Lead - follow - get out of the way Lead - follow - get out of the way Plug in hybrid cars & buses Plug in hybrid cars & buses Converting 9,000 school buses Converting 9,000 school buses 3 freedom highways 3 freedom highways

slide 11 Tim Stearns- Washington CTED Energy Policy Division Policy puzzle for oil usage Plan better –live/work Mass transit - integrate Infrastructure – multimodal seemless Transportation choices – walk, bike, drive, transit Improve vehicles Better fuels Pricing – send clear signals

slide 12 Tim Stearns- Washington CTED Energy Policy Division The end We can do it – Be creative - innovate We can do it – Be creative - innovate Have fun doing it – work together Have fun doing it – work together Make money doing it – Make money doing it – –must invest – take risks Just do it Just do it

Washington State Biofuels Tim Stearns Energy Policy Division WA Department of Community, Trade & Economic Development