1. A Case Study Journey in Cultivating Advanced Biofuel Projects Dr. Mark A. Edelman, Professor Dept of Economics and Extension Economist Community Vitality Center Director Iowa State University Biofuels Law and Regulation Conference University of Illinois Urbana-Champaign April 19, 2013

2. PC’s In Project Development Credibility Capital Pathway (Permitting) Profits

3. Table 1. Ownership Statistics for Iowa Biofuel Plants organized as Limited Liability Companies, 2005-2008. AverageMedianMinimumMaximum Owners36716731,533 % IA Owners899901100 # Individuals34616131,533 % Individual81911100 Owned # Iowa Farm 168750745 Owners % Owned by 3138062 Iowa Farmers Source: Iowa Dept of Revenue

4. Economic Impact of Owner Distributions for a Case Study 100mgy Ethanol Plant, 2006-2010. $54.6 million in Distributions to Investors Two years with no payouts Indirect & Induced Economic Effects $14.7 million New Income 431 jobs $46 million of new sales, primarily in retail trade and serves categories

5. Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010 AmountMatch 1.Poet Project Liberty $14.750 m $231.4 m 30mgy cellulosic ethanol 2.Dupont Danesco$9 m$226.1 m 30mgy cellulosic ethanol 3. Bioprocess Algae-Green$ 4.168 m$4.738 m Plains Energy R&D 4. Quad Co. Corn Processors$1.45 m$7.702 m Cellulosic DDG Process 5. Avello Bioenergy –ISU R&D$2.5 m$4.644 m Biomass to asphalt, shingles, fuel & chemicals

6. Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010 6.AmbroZea (ISU/UI) R&D$ 1.5 m $ 14.5 m Multi-tasking Yeast 7.Growth-Design Energy$ 1.5 m$ 7.805 m 2 nd Generation Biodiesel 8. Amana Renewable Energy$ 1.082 m$ 4.077 m Anaerobic Digester 9.PL Energy On-farm Poultry$ 2 m$ 3 m Litter Gasification to Power 10.Renew Energy Systems -- mobile$ 250 k$ 637 k solid biomass briquette plant 11.SynGest Menlo LLC -- FEED-1,2$2.5 m$3.5 m Bio-Ammonia Fertilizer Production

7. Iowa Power Fund Advanced Biofuel and Biomass Projects Approved, 2007-2010 By 2010, $38 m of 71 m obligated in 31 projects Leverage 10-1 Amaizing Energy MEButanol Project – IPF initially approved 2009 – $2 m with $8 m match contingent on DOE grant – Anti-corn bias: double output from same corn – Patent Applied July 2008 – Received Feb 2013

8. Iowa Innovation Demonstration Program 2007-2012 Awarded $13 m to 101 companies $140 k average – less than power fund 3 rd Party Economic Impact Study 79 companies received $8.7 million $150 m in added value Supported 1100 total jobs $49 m annual earnings $2.1 million annual tax revenue State payback on revenue—less than 5 years

9. Policy Uncertainty from Washington 1. Budget Uncertainty 2.Farm Bill Uncertainty 3.Program Uncertainty 4.RFS Uncertainty

10. What Must Project Developers Do to De-Risk Projects? 1.Off-take Agreements 2.Feedstock Agreements 3.Technology Demonstrated 4.Efficient Design & Construction Warranty 5.Operations and Maintenance Experience 6.Industry Standard Financial Projections

11. What can Universities Do to Assist Project Development Success? Recognize 3 sources of New Technology Intellectual Property IP from Academic Research (Faculty, Students, Staff) Corporate Partnership R&D Budgets Small Company Entrepreneur Patents Only 3 % of U.S. Patents come from Academy (MIT Center for Industrial Performance)

12. What can Universities Do to Assist Project Development Success? Allocate Some Outreach Resources & Technical Assistance Accordingly Recognize that not all Clients want or need university research capacity; – Retired Chemical Engineer – Small R&D Company with SBIR Project Development & Management Expertise Facilitation of Access to Capital

13. So what can Universities Do? Develop/Organize Institutional Capacity Collaborative Multi-disciplinary Teams Individuals with Experience & Track Record Facilitate Partnerships to Address Capital Gaps Ag Ventures Alliance VAAP Biz Dev Coop Rural Development Partners (NMTC) Alumni/University Foundation Role Optional Portion Pensions/Retirement Funds for Community Reinvestment Company Creation Incentives > Grants & Journals

14. What can the Private Sector Do? Change: “We are an Operating Company—Not An R & D Company” Didn’t work for Buggy Manufacturers Billions of $ Sitting on Sidelines? Expansion with existing technology no guarantee for success Strategic Partnerships in mutual Interest can generate mutual benefit Nation was built on Innovation, Capitalism & Entrepreneurial Spirit

15. Summary and Conclusions Agricultural Research U.S. Government $2 billion Private Sector $3 billion China Agricultural Research$45 billion Will we make the investments necessary to remain the world’s global innovator for the benefit of our future generations?

16. Contacts: Dr. Mark Edelman Community Vitality Center Iowa State University Phone: 515-298-1871 Email: medelman@iastate.edu