BACKGROUND PAPER

Exploratory Meeting on Issues Surrounding the Establishment of

Large Scale Dedicated Energy Crops* in the United States

I. INTRODUCTION

Since December 2006, Meridian Institute (Meridian) and Heissenbuttel Natural Resource Consulting (HNRC), at the request of Ceres, Inc., have been reaching out to the diverse organizations and interest groups that comprise the emerging dedicated energy crop industry,[1] including the biofuels supply chain (from germplasm developers and agricultural producers to oil companies), academia, civil society organizations, and government agencies. Stakeholders from diverse perspectives have underscored the complexity of this developing industry. They have suggested that while individual interest groups can separately address land conversion, agricultural biotechnology, water quality, and climate-related issues for dedicated energy crops, there may be benefits to comprehensively addressing the issues in a single venue. Based on initial discussions, there is strong interest in generating a focused dialogue to explore the potential development of guidelines to steer this emerging industry in the United States toward a mutually beneficial path. This concept, including the breadth of focus and key definitions, will be discussed and tested at the Exploratory Meeting, June 27, 2007, in Washington, DC.

The purpose of this paper is to offer the insights, ideas, and concerns shared with Meridian and HNRC from the 50+ stakeholders consulted for this meeting. It is our hope that by providing an overview of the issues associated with dedicated energy crops from a broad stakeholder perspective, and by highlighting initial areas of convergence and potential areas of concern, meeting participants can come to the Exploratory Meeting with a clear understanding of the issues, and more quickly proceed to an in-depth discussion.

II. ENERGY AND TECHNOLOGY BACKGROUND

Energy is often referred to as the lifeblood of a country’s economy, as it plays a significant role in any country’s welfare. Energy demand growth, the supply of traditional energy sources, the security of energy sources, and environmental concerns all drive new energy-related technologies. The recent volatility in oil prices, the political instability in oil-rich countries, the certainty of enormous demand increases for energy in emerging economies such as China and India, and concerns related to greenhouse gas (GHG) emissions are all serving to increase attention to the development of alternate sources of transportation fuels.

In the United States, the goals of increasing energy independence and reducing carbon dioxide emissions are increasingly garnering national attention in relation the development and use of biofuels. In his 2007 State of the Union address, the President called for a 20 percent reduction in U.S. gasoline usage in the next 10 years, and an increase in the supply of renewable fuels from nearly 5.5 billion gallons per year today to 35 billion gallons by 2017. Nearly 20 percent of the U.S. corn crop was used to generate 5.5 billion gallons of ethanol in 2006, making it a virtual certainty that additional feedstocks will be required to reach the 35 billion gallon goal.

National Energy Overview

The current capacity of corn starch ethanol plants in the United States is 5.5 billion gallons per year. New capacity under construction will add another 6.2 billion gallons of corn based ethanol. As a result, the acres of corn planted in the United States in 2007 will be the highest since the 1940s. Still, bioenergy comprises less than 5 percent of the U.S energy portfolio (Figure 1).

Figure 1: U.S. Energy Overview. Source: 25x25’

There is general agreement that the United States needs new energy technologies that can address concerns regarding energy security, increased energy demand globally, and environmental and climate-related impacts. There is also an appreciation that current “alternative” energy technologies, while helpful in the near-term, may not be adequate for the nation to produce the volume needed to address these concerns. Such a pending transformation of the landscape should anticipate and address the need for support for farmers transitioning to new crop production methods.

Second Generation Biofuel Technologies

Emerging enzyme, refining, and fermentation technologies are enabling the use of cellulosic biomass as an energy feedstock. Cellulosic biomass holds promise for energy production, with higher energy outputs possible per acre and better energy balance ratios (Figure 2) than traditional grain-based ethanol production. As noted in Figure 2, the fossil energy ratio for cellulosic ethanol is projected, and will depend on whether annual or perennial crops are planted, and how the feedstock is grown, transported, and processed. This information in this figure assumes fossil energy is used for current energy sources, and assumes that the feedstocks are perennial crops with deep root systems. The ten-fold improvement in cellulosic ethanol is not applicable to all types of feedstocks. For one type of refining process, anticipated feedstocks for cellulosic refineries, such as switchgrass and poplar, have higher estimates for reduction of GHG emissions than other feedstocks (Figure 3). These figures provide some estimates, and research is needed to determine the likely energy balance and GHG reductions from chosen technologies and crops.

Figure 2: Fossil Energy Ratios. Source: Biofuels Joint Roadmap, June 2006, DOE; data derived from Brinkman et al. 2005.

In 2007, the Department of Energy obligated $385 million to support the development of six cellulosic ethanol plants (for wood residue, vegetative wastes, landfill waste, corn stover, wheat straw, and corn cobs as feedstocks). In addition, commercial scale refineries are being developed through $4 billion in loan guarantees. Another $200 million is being invested in pilot-scale facilities. The Federal government in the United States, through a variety of supports, may be tilting the playing field for biofuels in favor of cellulosic. Many observers believe that the feedstock for the next generation of biorefineries will come from the large scale plantings of “dedicated energy crops” whose sole purpose will be the production of biofuels.

Figure 3: Potential Reductions in Greenhouse Gas Emissions Resulting from U.S. Ethanol Use, 2010. Source: Energy Information Administration.

Among the factors in determining both the economic viability and the environmental footprint of cellulosic refineries that are fed by dedicated energy crops is yield per acre (other, more inclusive metrics, also must be explored). Economic analyses demonstrate that cost per ton of feedstock is driven largely by yield density or the number of tons of feedstock that can be produced per acre (Figure 4). By some estimates, the cost of the feedstock can range from as much as $180/ton for land that produces 2 tons/acre to $20/ton for land that produces 15 tons/acre. A 300M gallon per year refinery will require 10,000 tons of feedstock per day. This would generate an environmental footprint of 1,825,000 acres annually at 2 tons per acre or 243,000 acres annually at 15 tons per acre. With limited or no inputs native prairie grass stands can only produce approximately 2 tons per acre. Miscanthus, a perennial grass native to Asia, is currently capable of biomass yields exceeding 15 tons per acre. Deployment of modern plant breeding and improvement technologies should be able to improve switchgrass yields to similar or greater levels.

Figure 4: Why Yield Matters. Source: Richard Hamilton, Ceres, Inc., 2007.

If cellulosic refineries grow at the rate experts are projecting, the 5 million acres of dedicated energy crops established by 2012 could expand to more than 25 million acres in 2025 (Figure 5).

Figure 5: Feedstocks Used to Reach 25x’25. Source: 25x’25, 2007.

Some believe dedicated energy crops will replace acres currently in corn, cotton and soy. Others are concerned that the demand for biofuels could cause Conservation Reserve Program (CRP) land to be converted to dedicated energy crops. Regardless, a land use change of this magnitude has implications for farmers and local communities, as well as national implications given the potential impacts on biodiversity, water quality and quantity, food prices, etc. The section below lays out these and other issues and concerns raised by stakeholders as a means of preparing participants for discussions at the Exploratory Meeting on June 27. The ultimate objective of the meeting and any follow-on sessions is to identify the means to achieve the greatest benefits from cellulosic ethanol and to avoid or mitigate anticipated impacts from what will be a sweeping land use change.

III. EXPLORATORY MEETING AND POTENTIAL PROCESS FOR DEVELOPING GUIDELINES

The June 27 Exploratory Meeting will include approximately 30 well-respected and knowledgeable individuals representing energy crop germplasm companies, producers that plant the improved stock, users such as biorefinery operators, farm organizations, environmental and conservation groups, academics, foundation representatives, and relevant governmental officials. Participants in the exploratory meeting include representatives from institutions and organizations with an interest in and knowledge of issues related to the production of biofuel feedstocks and the processing of feedstock into biofuel.

The goal of the Exploratory Meeting, and the subsequent dialogue process, will be to develop principles or guidelines for the sustainable deployment of dedicated energy crops in the United States. These practices likely will take the form of measurable standards, rather than policy-level recommendations. They would need to evolve as research and practice further inform the industry as it grows. The development of practices or guidelines would require in-depth industry involvement and buy-in, as well as that of the full array of interested and affected stakeholders.

A specific purpose of the exploratory meeting is to proactively identify potential issue areas, as well as whether it is appropriate and timely to develop sustainability guidelines in advance of large scale dedicated energy crop plantings. The outcomes from the Exploratory Meeting will inform the dialogue that would be initiated soon after the meeting.

Several complementary processes are underway in the United States, other parts of the world, and globally. For example, the “Swiss Process” is undertaking a significant effort that addresses similar concerns more globally. The intention of this effort would be to complement, and not duplicate, this or other efforts.


Meeting Objectives

A detailed agenda has been developed, based on addressing the following meeting objectives:

1.  Begin initial exploration of the range of environmental, economic, and social issues raised by large-scale plantings of dedicated energy crops in the United States, and determine the issues that might be best addressed as part of a sustainability guidelines development process.

2.  Discuss activities already underway to develop crucial information, research results, guidelines or operating principles for biofuels (internationally and domestically), and consider how this effort might build upon or support what is already occurring.

3.  Consider the need for and potential obstacles to sustainability guidelines for dedicated energy crops in the United States. Is the need sufficient? Is the timing right? How can the obstacles be overcome?

4.  Determine next steps for developing guidelines, as appropriate.

Potential Outcomes, if Dialogue Moves Forward

If participants in the exploratory meeting believe it is useful to continue a multi-stakeholder dialogue on issues and opportunities surrounding large scale dedicated energy crop production, a range of outcomes could be considered, including:

·  Recommended sustainable practices that individual producers could voluntarily draw from.

·  Recommended sustainable practices that farm organizations and their members could promote and voluntarily comply with (e.g. Pork Quality Assurance).

·  Sustainability standards that farm organizations could require their members to adhere to (e.g. Responsible Care).

·  Sustainability standards that individual producers could be certified to (e.g. Sustainable Forestry Initiative and Forest Stewardship Council).

·  Sustainability standards that could be codified in legislation at the state or national level.

Participants would likely draw from the lessons other organizations and sectors have learned in developing similar practices and standards. In all cases the practices or standards could be one-time recommendations or a living document that changes over time through the guidance of a multi-stakeholder group.

Potential Structure, if Dialogue Moves Forward

The types of outcomes listed above could be achieved through a series of highly structured, facilitated sessions. The dialogue process would be carefully developed in consultation with participants, and presumably would include activities such as: identifying issues, gathering more information on the role and impact of increased scale of production of dedicated energy crops (building on this background paper), sharing perspectives on issues and impacts, and developing and agreeing on areas for potential sustainable practices and/or standards. We would expect to meet face-to-face on a quarterly basis and to utilize task groups to efficiently make progress on issues, develop recommended language, and develop consensus agreements. In addition to structure and operating procedures, participants would also need to consider funding mechanisms for the proposed dialogue that will ensure achievement of the desired outcomes.

IV.  ISSUES FOR EXPLORATION AND DISCUSSION

Common Themes

The themes listed below were developed based on in-depth discussions with over 50 stakeholders representing diverse perspectives on dedicated energy crops. From these discussions, there emerged the following common themes.

1. Land type is critical for ecological, social, and economic reasons. Diverse stakeholders generally agreed that it will be important to discuss what types of land will be most suitable for biofuels production. Some have concerns about the impacts that conversion could have on landscapes in terms of loss of biodiversity, carbon release, and increased soil erosion, and how to protect environmentally sensitive areas including native grasslands and maintain productive forests. In addition, with the wastes available from working lands, such as actively managed timberlands, there undoubtedly will be usable feedstocks to consider. However, the efficacy of such biomass as a sustainable feedstock would depend on a number of factors, including harvesting impacts, distance to processing facilities, etc. One suggestion offered was to limit dedicated energy crop production to existing crop land, which will be a topic of discussion.

There was general agreement that the dialogue process will need to address the issue of dedicated energy crops and the need to maintain fertile land suitable for food production in the United States. There is significant acreage currently used for food production that yields marginal returns, and a dialogue needs to explore the benefits and costs of land conversion to dedicated energy crops. This issue also appears under “Food versus fuel production” below.