1. 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

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

3. 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,…

4. 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?

5. 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 ???

6. 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

7. 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

8. 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:

9. 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.

10. 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

13. 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

14. 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

15. 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

16. 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:
????

17. 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

18. 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

19. 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

20. 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

21. 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

22. Your vision…
Your participation