Minnesota has abundant forestry and agricultural biomass resources, existing ethanol and forest products industries, a world-class cluster of renewable chemical companies in the Twin Cities, and a solid innovation machine consisting of skilled workers and universities. But the state is losing out to other jurisdictions when it comes time to move from pilot and demonstration of advanced technologies to commercial scale production. Minnesota must support the development of world-class renewable chemical, advanced biofuels, and biomass thermal industries by supporting deployment of these technologies.
The global market value of biobased chemicals is projected to reach $483 to $614 billion by 2025, according to USDA. Global market for biofuels is projected to reach $185.3 billion by 2021. Minnesota does not produce oil, coal, or natural gas, but has abundant biomass resources.
Catalyzing the development of a robust renewable chemical industry in MN will have broad economic impact. By spending $50 million per year on production incentives over 11 years, the state could get:
- 12 new bioindustrial facilities, with private investment per facility ranging from $100 -500 million
- Average of 50 direct and 200 construction jobs per facility
- 600 new direct permanent jobs, 2,900 new indirect permanent jobs.
- Over $200 million annually in salaries and wages
- Up to 14,000 new direct and indirect per year jobs in early stages of program during peak of construction of new facilities.
- $500 million to $1 billion in direct investment in new capital facilities in MN
- If the economic impact is comparable to the ethanol industry, we can expect $5-10 billion in annual economic impact from these new facilities.
Next Generation Producer Payment
The Bioeconomy Coalition of Minnesota supports using a producer payment approach tailored to support actual production of biobased chemicals, advanced biofuels, and biomass thermal energy. The Coalition supports pairing this program with a revolving loan fund.
Minnesota built a strong first generation ethanol industry by implementing a combination of volumetric requirements for ethanol blending and a producer payment incentive program. The producer payment program is held up as a national model for state based incentives to build a successful industry. The state now has a similar opportunity to help usher in a new generation of advanced biofuels, bioproducts and bioenergy generation, yielding large public and private benefits. A producer payment system would improve the economics of locating production facilities within the state and ensure a market for Minnesota-grown agriculture and forestry products.
An advantage of producer payment programs is that payments are only made for actual production of eligible products. Other government incentives, like grants or loans, can be viewed as more risky forms of state support because if projects do not go forward, the state investment could be lost. A producer payment system would improve the economics of locating production facilities within the state, make Minnesota more competitive compared to other states and nations, and help the state’s agriculture and forestry sectors pivot to serve these new markets. In addition, state agencies are familiar with administering a producer payment program and would require very little in the way of new implementation structures to be successful.