SF 2074

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; promoting use of hydrogen as energy resource using an
innovative commercial demonstration of integrated biorefinery system for
production of liquid transportation biofuels, biobased chemicals, and substitutes
for petroleum-based feedstocks and products that will cause a net reduction of
emissions of greenhouse gases; appropriating money; proposing coding for new
law in Minnesota Statutes, chapter 216B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [216B.8182] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin The terms used in sections 216B.8182 to 216B.8188 have
the meanings given them in this section.
new text end

new text begin Subd. 2. new text end

new text begin Biomass. new text end

new text begin "Biomass" means:
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new text begin (1) any organic by-product of agriculture including waste from food production and
processing that can be converted to energy;
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new text begin (2) any organic material grown for the purpose of being converted to energy; and
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new text begin (3) any waste material that can be converted to energy, is segregated from other
waste materials, and is derived from:
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new text begin (i) any forest-related resources, mill residues, trimmings, slash, brush, or otherwise
nonmerchantable material; or
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new text begin (ii) wood waste materials, including waste pellets, crates, damaged wood,
manufacturing and construction wood wastes (not including pressure-treated,
chemical-treated, or painted wood wastes), but not including municipal solid waste, or
paper that is commonly recycled.
new text end

new text begin Subd. 3. new text end

new text begin Carbon reduction. new text end

new text begin "Carbon reduction" refers to the use of the materials
producing carbon dioxide before they become emissions.
new text end

new text begin Subd. 4. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of agriculture.
new text end

new text begin Subd. 5. new text end

new text begin Countercyclical payment. new text end

new text begin "Countercyclical payment" means a payment
made for protection against low biofuels prices and inconsistent yield during startup, as
determined by the commissioner.
new text end

new text begin Subd. 6. new text end

new text begin Hydrogen. new text end

new text begin "Hydrogen" refers to hydrogen produced using native energy
sources and methods that are renewable or carbon reducing.
new text end

new text begin Subd. 7. new text end

new text begin Innovative commercial demonstration or project. new text end

new text begin "Innovative
commercial demonstration" or "project" means an activity that uses biomass
lignocellulosic feedstock or water, or both, for the production of hydrogen or carbon
monoxide, or both, to be reacted into transportation fuels, heating fuels, and chemicals.
new text end

new text begin Subd. 8. new text end

new text begin Lignocellulosic feedstock. new text end

new text begin "Lignocellulosic feedstock" means any portion
of a plant or coproduct from conversion, including crops, trees, forest residues, and
agricultural residues not specifically grown for food.
new text end

Sec. 2.

new text begin [216B.8184] FOSTERING TRANSITION AWAY FROM FOSSIL FUELS.
new text end

new text begin To meet the goal of section 216B.8109, this project has the following objectives
for the state of Minnesota:
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new text begin (a) Make the state the nation's leader in thermochemical conversion technologies
capable of making fuels from lignocellulosic feedstocks that are price-competitive with
gasoline or diesel in either internal combustion engines or fuel-cell-powered vehicles.
new text end

new text begin (b) Advance thermochemical processes capable of increasing energy production
form lignocellulosic feedstocks, with emphasis on reducing the dependence of the industry
on fossil fuels in energy manufacturing facilities.
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new text begin (c) Advance other processes that will enable the development of cost-effective
bioproducts including biofuels.
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new text begin (d) Foster economic development and job creation in the state.
new text end

new text begin (e) Accelerate the commercialization of hydrogen using the present infrastructure
of fuel distribution.
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new text begin (f) Give the on-board fuel cell technology and the biofuels industry the choice of
using ethanol, methanol, propanol, or butanol.
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new text begin (g) Reduce emissions of carbon dioxide and other pollutants during the process.
new text end

new text begin (h) Reduce the cost and improve the efficiency of hydrogen from renewable energy
sources.
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new text begin (i) Advance energy security.
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new text begin (j) Capitalize on the state's native resources for carbon reduction.
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new text begin (k) Use the funded project as a teaching and research facility for future plants using
the technology.
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new text begin (l) Allow scalability for response to changing circumstances and market demands.
new text end

new text begin (m) Be economically, environmentally, and socially acceptable for the state.
new text end

new text begin (n) Draw on firms and expertise within the state when possible.
new text end

Sec. 3.

new text begin [216B.8186] PROJECT ELIGIBILITY REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Selection. new text end

new text begin In selecting a project under the program, the commissioner
shall require projects that:
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new text begin (1) have 51 percent Minnesota ownership for a duration of at least ten years after the
last payment is received;
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new text begin (2) demonstrate outstanding potential for local economic development;
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new text begin (3) include agricultural producers or cooperatives of agricultural producers as equity
partners in the venture;
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new text begin (4) have a strategic agreement in place to fairly reward feedstock suppliers;
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new text begin (5) ensure that small biomass feedstock producers and small rural businesses are full
participants in the development of projects; and
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new text begin (6) give feedstock providers the first opportunity to be investors in projects.
new text end

new text begin Subd. 2. new text end

new text begin Restrictions. new text end

new text begin (a) If a project's majority ownership changes to other than 51
percent ownership by Minnesota residents, the project must refund the grant amount and
the refund must be returned to the general fund.
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new text begin (b) The project must have a proportion of biomass feedstock suppliers practicing
carbon sequestration on some of the land on which the biomass will be removed resulting
in carbon reduction.
new text end

Sec. 4.

new text begin [216B.8188] CELLULOSE BIOFUEL AND CHEMICAL
DEVELOPMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin A sum sufficient to make the payments required by
this section is annually appropriated from the general fund to the commissioner, and all
money appropriated is available until expended.
new text end

new text begin Subd. 2. new text end

new text begin Renewable energy project loans. new text end

new text begin The Rural Finance Authority (RFA)
shall partner with lenders to provide a 20 percent loan guarantee for projects. The project
must use biomass or wind, or both, as feedstock to produce biofuels, heating fuels, and
chemicals. The limit of the exposure to the state is $5,000,000 per project.
new text end

new text begin Subd. 3. new text end

new text begin Capitalization. new text end

new text begin (a) Subject to subdivision 2, financing for any single
project may not exceed $10,000,000, which becomes available when the project begins
construction.
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new text begin (b) For full funding, the project must produce 10,000,000 gallons per year of
biofuels or chemicals derived from on-site production of hydrogen or, if not, funding
must be prorated.
new text end

new text begin (c) The state shall fund one grant per year over the next ten years for ten different
projects.
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new text begin (d) The commissioner shall determine the amount of the countercyclical payment on
a per-gallon basis to sustain the project's interest payments, payment needed on principal
payments, and a fair return to investors.
new text end

new text begin (e) The countercyclical payments per project must range from $0 to 30 cents per
gallon, as determined on a quarterly basis, with no quarterly payment exceeding $300,000
with a maximum of $10,000,000 per project over the ten-year duration.
new text end

new text begin (f) Payments under paragraphs (a) and (e) to eligible biofuel producers may not
exceed $20,000,000 in a fiscal year. Total payments under paragraph (e) to an eligible
biofuel producer in a fiscal year may not exceed the amount necessary for 10,000,000
gallons of biofuel production, or the production of the equivalent in heating fuels, or
chemicals.
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new text begin (g) By the last day of October, January, April, and July, each eligible biofuel producer
shall file a claim for payment for cellulosic biofuel production during the preceding three
calendar months. An eligible biofuel producer that files a claim under this paragraph shall
include a statement of the eligible biofuel producer's total cellulosic biofuel production in
Minnesota during the quarter covered by the claim. For each claim and statement of total
cellulosic biofuel production filed under this paragraph, the volume of cellulosic biofuel
production must be examined by an independent certified public accountant in accordance
with standards established by the American Institute of Certified Public Accountants.
new text end

new text begin (h) Payments must be made by the 15th of the month following the date the claim
is due under paragraph (g). A separate payment must be made for each claim filed. The
total quarterly payment to an eligible producer under this paragraph may not exceed the
amount necessary for 2,500,000 gallons of biofuel production.
new text end

new text begin (i) If an eligible biofuel producer becomes ineligible within ten years after the last
payment has been received under this section, all payments received for biofuel production
must be refunded to the commissioner. Refunded payments received under this paragraph
must be deposited in the general fund.
new text end

new text begin (j) Annually by October 1, a cellulosic biofuel producer receiving payments under
this subdivision must file a disclosure statement on a form provided by the commissioner.
The initial disclosure statement must include a summary description of the organization
of the business structure of the claimant, a listing of the percentages of ownership and
governance by any person or other entity with an ownership interest or governance rights
of five percent or greater, and a copy of the person's or entity's annual audited financial
statements, including the auditor's report and footnotes. The disclosure statement must
include information demonstrating what percentage of the entity receiving payments
under this section is owned and governed by farmers or other entities that reside within the
county where the cellulosic biofuel facility is located. Subsequent annual reports must
reflect noncumulative changes in ownership of ten percent or more of the entity. The
report need not disclose the identity of the persons or entities, but the claimant shall retain
information within the claimant's files confirming the accuracy of the data provided. This
data must be made available to the commissioner upon request. Not later than February
15, annually, the commissioner shall deliver to the chairs of the legislative committees
for agricultural policy and agricultural finance an annual report summarizing aggregated
data from plants receiving payments under this section during the preceding calendar
year. Audited financial statements and notes and disclosure statements submitted to the
commissioner are nonpublic data under section 13.02, subdivision 9. Notwithstanding the
provisions of chapter 13 relating to nonpublic data, summaries of the submitted audited
financial reports and notes and disclosure statements must be contained in the report to the
committee chairs and are considered public data.
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