1. Federal Environmental Symposium East June 18, 2009 Ed Gee, Chair, Interagency Woody Biomass Utilization Group, USDA Forest Service, Washington, DC

2. Development of a Federal Bioenergy Facility in Using Woody Biomass Overview Overview Background Background Barriers & Challenges Barriers & Challenges Criteria for success Criteria for success The next steps involved in successfully implementing a federal bioenergy facility. The next steps involved in successfully implementing a federal bioenergy facility.

3. ... to sustain the health, diversity, and productivity of the nation’s forests and grasslands to meet the needs of present and future generations...

4. Shift from commodity production to restoration of ecosystem function and resiliency while at the same time A decade long drought in the West A decade long drought in the West A multi-decade increase in the forest density and increased incidents of fire, insects and disease A multi-decade increase in the forest density and increased incidents of fire, insects and disease An expansion of residential developments into forests An expansion of residential developments into forests Growing concern over the effects of climate change on forests Growing concern over the effects of climate change on forests

5. National Fire Plan

6. Putting towns at risk and damaging watersheds

7. Buffalo Creek Fire - 1996 In 1996, the Buffalo Creek Fire in Colorado did major damage to Denver’s water supply, with one storm dumping more than 300,000 cubic yards of soil into the Strontia Springs Reservoir, causing millions of dollars of damage. (And killing two people)

8. Forest growth greatly exceeds removals on NFS lands in the Interior West When net forest growth exceeds removals, live biomass is increasing

9. Western Pine Bark Beetle Damage -- Prescott National Forest, Arizona When dense forests combine with extended drought, the ecological stress sets the stage for increased insect epidemics and wildfire

10. Strategically placing these bioenergy facilities in areas close to the raw material Strategically placing these bioenergy facilities in areas close to the raw material Decrease the many large fires that are in diseased and drought- stressed forests. Decrease the many large fires that are in diseased and drought- stressed forests. We can decrease the effect of drought, pests, and wildfires

11. For most of human history, renewables were predominant energy sources. Biomass, Water, Wind, Solar, Geothermal Biomass, Water, Wind, Solar, Geothermal

12. Energy market shares of renewables declined sharply during 19 th and 20 th centuries while total energy production grew rapidly.

14. The Role of Renewable Energy Consumption in the Nation’s Energy Supply, 2008

15. National Renewable Energy Goals Goal Areas ApproachOutcomes National Biomass Initiative Biofuels – 68 billion gallons by 2030 Biopower – 10 quads by 2030 Bioproducts – 55 billion pounds by 2030 Vision workshop to update goals; followed by peer review. (final: Sept. ’06) Three Region-specific Roadmap workshops Roadmap of R&D and policy strategies and timelines (regional and national perspective) Roadmap of R&D and policy strategies and timelines (regional and national perspective) Guidance to R&D Board Guidance to R&D Board Guidance for annual joint USDA/DOE solicitation Guidance for annual joint USDA/DOE solicitation Used to monitor progress by agencies Used to monitor progress by agencies President’s Biofuels Initiative 30 x ‘30 Cellulosic ethanol – 30% gasoline displaced by 2030 – 60 billion gallons Convened 30x’30 industrial workshop Convened government biofuels implementation planning workshop R&D & policy strategies to provide basis for DOE R&D planning R&D & policy strategies to provide basis for DOE R&D planning Federal Implementation Plan to map agency roles Federal Implementation Plan to map agency roles 20 in ‘10 Reduce U.S. gas use by 20% in 10 years (2017) RFS for 35 billion gallons of renewable and alternative fuels Facilitated growth in short time frame with expanded scope of fuel sources Facilitated growth in short time frame with expanded scope of fuel sources Energy Act 2007 Advanced Biofuels – 36 billion gallons per year by 2022 RFS – Renewable Fuel Standard 21 billion by 2022 from non-starch 21 billion by 2022 from non-starch Must have 50% GHG reduction Must have 50% GHG reduction 25 x ‘25 Wind, Solar, Biofuels – 25% energy displaced by 2025 – 32 quads Holding planning meetings and established workgroups** Roadmap of R&D and policy recommendations, (draft: Oct. ‘06) Adapted from BR&Di – Biomass Research & Development Initiative

16. Key Recent Development Growing concern about unintended consequences of using food crops to produce biofuels. Growing concern about unintended consequences of using food crops to produce biofuels. Focus of US biomass energy policy has started to shift away from corn-ethanol toward “ligno-cellulosic” feedstocks. Focus of US biomass energy policy has started to shift away from corn-ethanol toward “ligno-cellulosic” feedstocks.

17. Today, there is a resurgence of interest in renewables.  Oil Prices  National Security  Climate Change  Agriculture Policy

18. Wood is an obvious feedstock choice for biomass energy in some regions.

19. Federal agencies purchase the green energy RTOs manage dedicated green energy markets for federal agencies Private sector firms 16 Energy Savings Contractors- design, construct, and operate power plants Federal, State, Tribal and private- owned forests provide wood residues Concept GovernmentPrivate SectorGovernment

20. Design Development StageFinancing FeasibilityStudy PPASite Staffing FuelO&M Close Negotiations 2 -3 Years 1 Year Establish agreement with RTO RTO to create dedicated wholesale green energy market for the government Engineering review of developer’s plans Negotiate PPAs with federal agencies Government Private Sector Developer

21. Construction Phase Commercial Operations Shakedown Site Work Fabrication, erection, etc Start-up, testing Provisional Acceptance Punch List Final Acceptance 2 – 3 Years10 – 30 Years < 1 Year Government Continued development of PPAs with federal agencies Private Sector Developer

22. Strategic Planning Strategic Planning Establish MOUs with federal agencies as needed Establish MOUs with federal agencies as needed Identify new projects Identify new projects Project Management and Facilitation Project Management and Facilitation Identify biomass resources and broker their acquisition Identify biomass resources and broker their acquisition Provide list of potential federal green energy buyers Provide list of potential federal green energy buyers Conduct independent Power Plant design engineering review Conduct independent Power Plant design engineering review Conduct System analysis and modeling, i.e. Supply- Generation-Transmission-Sale Conduct System analysis and modeling, i.e. Supply- Generation-Transmission-Sale Government Sector Functions

23. Design/Construction Firm Design/Construction Firm Overall Project Owner Overall Project Owner Feasibility Study Feasibility Study Legal Review Legal Review Project Risk Management Project Risk Management Permitting Permitting Land acquisition Land acquisition Site analysis/planning/development Site analysis/planning/development Plant design Plant design Construction Construction Operation Operation Private Sector Functions

24. Barriers Supply Chain – Feedstock Supply Chain – Feedstock Fear of over-scale and non-sustainability Fear of over-scale and non-sustainability Transportation costs Transportation costs Economic resources for start-up Economic resources for start-up Lifecycle analysis vs capitalization costs Lifecycle analysis vs capitalization costs Mixed support from legislative branch Mixed support from legislative branch

25. Challenges Competing priorities of appropriated funds Competing priorities of appropriated funds Climate change Climate change Wildfire suppression Wildfire suppression Forest health restoration Forest health restoration Providing green jobs Providing green jobs Economic resources Economic resources Socio-political support Socio-political support

26. Criteria for Success Social licensing Social licensing Reliable and predictable supply of woody biomass Reliable and predictable supply of woody biomass Transportation network Transportation network Close proximity to transmission lines/substations Close proximity to transmission lines/substations Financial support Financial support Power purchase agreement Power purchase agreement

27. The Next Steps Involved in Successfully Implementing a Federal Bioenergy Facility Developing a strong federal partnership with DOE- Federal Energy Mgmt Program – 16 ESCO’s Developing a strong federal partnership with DOE- Federal Energy Mgmt Program – 16 ESCO’s Secure the geographical location – vertical alignment Secure the geographical location – vertical alignment Use ESCO/traditional financial venture Use ESCO/traditional financial venture Pre-feasibility study Pre-feasibility study Assurance of feedstock supply – stewardship contracting Assurance of feedstock supply – stewardship contracting Construction of bioenergy facility-thermal and CHP Construction of bioenergy facility-thermal and CHP Power Purchase Agreement Power Purchase Agreement Monitor pilot bioenergy projects Monitor pilot bioenergy projects

28. Cost efficiency and potential savings of various sources to generate thermal energy. Source Price Unit MMBtu/unit $/MMBtu Commerical Residential Source Price Unit MMBtu/unit $/MMBtu Commerical Residential Wood Chips $ 40 grn ton 10.1 $6.09 $27,525 n/a Wood Chips $ 40 grn ton 10.1 $6.09 $27,525 n/a Wood Pellets$ 160 ton 16.4 $12.20 $67,805 $1,153 Wood Pellets$ 160 ton 16.4 $12.20 $67,805 $1,153 Cordwood $ 175 cord 19.5 $12.82 $62,372 $1,060 Cordwood $ 175 cord 19.5 $12.82 $62,372 $1,060 Natural Gas $ 1.05 therm 0.1 $13.13 $72,975 $1,241 Natural Gas $ 1.05 therm 0.1 $13.13 $72,975 $1,241 Heating Oil $ 2.95 gallon 0.139 $28.30 $147,500 $2,508 Heating Oil $ 2.95 gallon 0.139 $28.30 $147,500 $2,508 Propane $ 2.10 gallon 0.0905 $29.01 $161,271 $2,742 Propane $ 2.10 gallon 0.0905 $29.01 $161,271 $2,742

29. Key Concepts to Advocate: The government doesn't just dictate to the public but leads by example. The government doesn't just dictate to the public but leads by example. The 'example' includes demonstrating how to advance 2 important sustainability principals, i.e.residual/waste minimization and generation of green energy. The 'example' includes demonstrating how to advance 2 important sustainability principals, i.e.residual/waste minimization and generation of green energy. It also includes use of the latest and cleanest resource- to-energy technologies - many of which were developed with government funds. It also includes use of the latest and cleanest resource- to-energy technologies - many of which were developed with government funds.

30. Accomplishment’s with Bioenergy Facilities Meeting Executive Order 13423 Meeting Executive Order 13423 Decreasing fossil fuel dependency Decreasing fossil fuel dependency Decreasing wildfires through hazardous fuel reduction Decreasing wildfires through hazardous fuel reduction Decreasing thermal and CHP costs Decreasing thermal and CHP costs Decreasing GHG through wood substitution Decreasing GHG through wood substitution Decreasing our CO2 emissions - climate change Decreasing our CO2 emissions - climate change Increasing Forest Health Restoration Increasing Forest Health Restoration Increasing National Security Increasing National Security

31. Thank You Q&A’s