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Bioenergy Action Plan

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DEDICATION Loyd Henry Forrest Jr. 1940–2006 The Interagency Bioenergy Working Group dedicates this report to Loyd Forrest — the quintessential public servant. We gratefully recognize his contribution to California, as a state government executive, and as an early pioneer and advocate of biomass energy technology, and a successful and talented bioenergy consultant and entrepreneur. Over the course of his long and successful career, governors, legislators, state executives and staff called upon Loyd for his guidance and expertise. He was a person who stood for honesty, integrity and hard work — a man whose word could be trusted. Loyd was dedicated to issues and programs that mutually improved California’s environment and economy. This report honors his commitment and legacy to making California the best that it could be. Prepared By: Navigant Consulting, Inc. One Market St, Spear Tower 1200 San Francisco, CA Richard Germain Ryan Katofsky Contract No. 700-02-004 Prepared For: The Bioenergy Interagency Working Group James D. Boyd, Commissioner and Working Group Chair, California Energy Commission Air Resources Board California Environmental Protection Agency California Public Utilities Commission California Resources Agency Department of Food and Agriculture Department of Forestry and Fire Protection Department of General Services Integrated Waste Management Board State Water Resources Control Board Susan J. Brown Project Manager Pat Perez Manager SPECIAL PROJECTS OFFICE Rosella Shapiro Deputy Director FUELS AND TRANSPORTATION DIVISION B. B. Blevins EXECUTIVE DIRECTOR Joseph F. Desmond CHAIRMAN DISCLAIMER This report was prepared as the result of work sponsored by the California Energy Commission and prepared by Navigant Consulting, Inc. on behalf of the Bioenergy Interagency Working Group, composed of state agencies. It does not necessarily represent the views of the Energy Commission, the State of California or the members of the Interagency Working Group. The Working Group, the State of California, its employees, contractors and subcontractors make no warrant, express or implied, and assume no legal liability for the information in this report; nor does any party represent that the uses of this information will not infringe upon privately owned rights. This report has not been approved or disapproved by the California Energy Commission or the Members of the Working Group nor has the Working Group passed upon the accuracy or adequacy of the information in this report. TABLE OF CONTENTS Executive Summary ...................................................................................................1 Summary of Recommendations .............................................................................2 Section 1: Introduction ...............................................................................................6 Overview.................................................................................................................6 Project Approach....................................................................................................7 What is Bioenergy? ................................................................................................8 The Benefits of Bioenergy and the Need for State Action ......................................9 Section 2: Current Profile and Future Bioenergy Potential in California...................10 Overview of Bioenergy Resources .......................................................................10 Electric Power and Heat from Biomass in California ............................................13 Developments in Electricity Generation from Biomass.........................................14 Biomass Power Potential......................................................................................14 Biofuels for Transportation....................................................................................16 Biofuel Potential....................................................................................................18 Key Initiatives Underway in California and Elsewhere in the United States..........19 Section 3: The Benefits of Bioenergy.......................................................................20 Section 4: Impediments and Challenges..................................................................23 Policy/Regulatory Impediments ............................................................................23 Market Barriers.....................................................................................................26 Technical Barriers.................................................................................................28 Section 5: The Role of the State in Bioenergy..........................................................30 Background ..........................................................................................................30 Statewide Biomass Power and Biofuels Targets ..................................................31 Guiding Principles for State Involvement..............................................................32 Section 6: Recommendations for the California Bioenergy Action Plan...................36 Tier 1: High-Priority 2006 Actions.........................................................................36 Tier 2: Actions for 2006 and Beyond ....................................................................41 Bibliography .............................................................................................................44 Appendix A: Summary of Key U.S. Federal Bioenergy Incentives and Programs....48 i EXECUTIVE SUMMARY Biomass – biologically-derived renewable materials that can be used to produce heat, electric power, transportation fuels, and other value-added products and chemicals – is found in abundance in California and represents a significant renewable energy resource. As California pursues increases in the use of renewable energy, bioenergy in the form of biomass power (biopower), and biomass-based fuels (biofuels) will be important contributors. Bioenergy provides a range of strategic energy, economic, and environmental benefits to the people of California. Not only is greater use of bioenergy critical to the state’s energy supply and vital to its waste and resource management efforts, it can help achieve the state’s petroleum reduction, renewable electricity generation, and climate protection goals. Its use also provides unique state and local economic development benefits. More importantly, biofuels represent one of the only practical near-term renewable energy alternatives to petroleum transportation fuels. The California Energy Commission retained Navigant Consulting, Inc. (NCI) to review the research and policy developments in biopower and biofuels and assemble a comprehensive set of recommendations for a Bioenergy Action Plan for California. This project leverages the large body of work conducted to date on bioenergy in California and represents a synthesis of ideas from numerous state agencies and other stakeholders. In developing this proposed Action Plan, NCI reviewed more than 40 research and policy documents1 and held discussions with representatives of several state agencies, the Bioenergy Interagency Working Group, the California Bioenergy Producers Association, the California Biomass Energy Alliance, and the California Biomass Collaborative. A public workshop was held in Sacramento on March 9, 2006, to solicit input from interested parties, and this input has been taken into consideration in this final document.2 California is a national leader in the production of biomass power. In 2005, more than 4 million dry tons (MDT) of solid biomass was used by 28 biomass power plants to generate more than 600 megawatts (MW) of baseload renewable energy. Another 360 MW was generated using landfill gas and biogas from sewage treatment, food processing waste, and animal waste digestion. Combined, these resources meet 2 percent of present total electric demand in the state and can produce as much electricity per year as about 2,500 MW of wind power. California also leads the nation in the consumption of ethanol, a plant-based renewable transportation fuel, consuming more than 900 million gallons in 2004. This accounted for almost 25 percent of all ethanol produced in the United States in 1 See the References section for a complete listing. 2 The workshop was held under CEC docket # 06-BAP-1. 1 2004. However, California produces less than 5 percent of the ethanol it consumes. California also consumed approximately 5 million gallons of biodiesel, a renewable, clean diesel substitute made from vegetable oils or animal fat in 2004. California’s current use of bioenergy represents a small fraction of what is technically feasible. It is estimated that California has approximately 30 MDT of technically recoverable solid biomass resources each year – enough to power more than 3 million homes or produce enough biofuel to run more than 2 million automobiles at today’s efficiencies. These resources are derived mainly from residues associated with agriculture, forestry, and municipal waste, representing a value-added use of materials that would otherwise be considered waste or that pose a significant threat to the California environment, such as the substantial deadfall and fuel overloadings that constitute extreme fire hazards in California’s forests and shrub lands. Despite the many benefits of bioenergy, which are further described in Section 3, California’s existing
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