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This article addresses the barriers facing successful deployment of new biomass technologies that developers may encounter throughout the stages of technology development. These barriers include technical issues, obtaining financing, forming strategic partnerships, market concerns and policy problems. Also discussed are possible solutions to address these barriers.

One of the U.S. government's main objectives in fostering new energy technologies is to ensure a diversified energy supply and to reduce dependence on foreign imports of oil. To meet these objectives, the government conducts extensive research and development in energy technologies including renewable energy sources such as biomass. However, even the most innovative and break-through research and development in biomass technologies is ineffective unless it eventually leads to the successful commercialization of new biomass technologies. It is this successful commercialization that will help diversify U.S. energy supply and reduce dependence on foreign oil.

After emerging biomass technologies have been developed and tested, they must be commercially deployed to the public and in real-world markets. However, certain types of barriers make deployment of new biomass technologies more difficult than others. Barriers include technical, financial, and regulatory obstacles as well as the difficulty of forming strategic partnerships. These barriers can lead to the unwillingness or inability of industry and financial institutions to accept the risks associated with new technology deployment, thereby slowing or stifling the commercialization process. Although technical barriers are the biggest impediment to successful commercialization, they are an inherent part of technology development and are usually identified early on. Government and Industry are also heavily involved in the R&D phase and are focused on technical problems related specifically to the new technology or product. However, federal assistance is not often available after the new technology reaches a certain point in development, usually after it has been demonstrated at a certain scale. Unfortunately, this may not be the point at which industry is able and willing to bear the full financial burden and, in addition, address other non-technical barriers to get the new technology commercialized. Since non-technical barriers, such as financing, regulatory, and policy issues are generally encountered by all new technologies on the path toward deployment, they may be able to be addressed in relatively the same manner - either by industry or government or through both. The following describes activities being implemented by the U.S. Department of Energy and the U.S. Department of Agriculture to help remove barriers to the deployment of biomass technologies.

Current DOE Efforts

In July 2004, the U.S. Department of Energy (DOE) Office of the Biomass Program (OBP) held a meeting with representatives from the public and private sectors in finance, policy, manufacturing, and engineering in an attempt to address non-technical barriers to biomass technology deployment. This meeting was instrumental in identifying critical barriers to deployment as well as possible solicitations that address these problems. The participants identified the stages that exist between new technology R&D and deployment in additional to generating a list of non-technical barriers to deployment that exist at each stage. Participants proceeded to rank each of the barriers in order to identify which ones were the most critical. They also identified potential solutions to the most critical barriers. Participants were asked to focus on the various ways government and industry could cooperate on implementing these solutions. It was generally agreed that solutions should be a developed through public-private partnerships, be reasonably straightforward to implement, and require little or no legislative changes.

There are a variety of barriers to successful deployment of new biomass technologies that must be addressed. Aside from technical barriers, the non-technical barrier of financing was considered by the group to be the most challenging. Other non-technical barriers identified by the group included understanding regional regulations, competition, market penetration, and strategic equity development. The following is a synopses of each of the issues surrounding these non-technical barriers.

Primary Barrier – Financing

Investors tend to be adverse to high-risk projects. Therefore, obtaining financing poses the most obvious and difficult barrier due to the huge risk associated with new technology. Raising capital is critical at almost every stage of the deployment process from basic R&D to full commercial operation. Levels of funding vary throughout the stages. Although its critically important to the development of new technology, the level of capital required at the R&D stage is relatively small when compared to the level of capital investment necessary at the testing and construction phases. The point at which capital demands are typically highest is when developers need to secure an investment-grade EPC (Engineering, Procurement and Construction) contractor, and finance construction (assuming non-recourse financing). By the construction stage, it is assumed that financing has already been secured through an investor or private bank.

Another stage at which financing can be critical is during demonstration because successful and commercially viable demonstrations are important in proving the technical and more importantly, the economic feasibility of your product or technology. The testing stage that occurs before demonstrations is typically aimed at addressing specific technical concerns of the new technology and identifying methods to overcome them. During the demonstration phase, economic concerns become a greater priority. If developers fail to prove the sensibility of this technology in real-market terms, investors will be hesitant to invest. That's why conducting several successful large-scale demonstrations in realistic settings and time frames is key. However, conducting large-scale demonstrations is capital intensive for industry (which usually does not have the "deep pockets", to go it alone) and also requires multiple "trial and error" runs (requiring lost resources and time). Plus, securing financial backing required for large-scale demonstration is extremely difficult.

Regulatory Concerns

When developing any new technology, particularly a biorefinery, it is important to understand the regulatory policies specific to the technology. However, the variability in regulatory policies across the U.S. makes this step time consuming and costly. Prior to deployment, developers must address a myriad of new regulations that local, state, and federal agencies often require when implementing new technology. Due to the uniqueness of new technologies and local regulatory bodies, it is difficult for the government or industry to develop a generalized method to address this issue.

Forming Strategic Partnerships

Another non-technical barrier for biobased industries is the ability to identify and develop strategic partnerships with critical parties throughout the deployment process. Such parties include vendors/suppliers, marketing/sales, investors, and engineers. Due to the relative newness of advanced biomass technology it may be difficult for developers to identify and secure these key partnerships. However, it is important throughout the deployment process for developers to collaborate with these parties that may have a stake in the new technology.

Solutions

Identifying specific solutions to each barrier can be daunting because the barriers tend to be unique to each technology and developer. However, many solutions were discussed by the group which address multiple concerns. For example, one idea discussed was a tool to help developers to better prepare themselves for various stages of technology deployment. This could be in the form of a "deployment primer" aimed at providing information to developers to help them address possible obstacles to deployment. The primer would base its advice on success stories and lessons learned from failures. It would also contain advice from experts in key areas (i.e. finance, engineering, policy, etc.) pertinent to each of the stages of deployment.

Providing projects with government subsidies, loans, or other avenues of financial assistance throughout the course of technology development would be vital to its successful commercialization. Various forms of financial aid were considered by the group during the July 2004 meeting. One idea proposed by the group involved the government fully financing a few select projects from R&D to full scale deployment. Another idea included creating an insurance pool of reserve capital accessible to projects that have encountered a financial barrier near full scale deployment. This pool would be accessed only in case of emergencies and only after the project had been fully reviewed and proven acceptable by a team of engineers. Yet another suggestion was for goverment to provide financing at specific stages in the deployment process (i.e. pilot-tests, demonstrations, etc.)

Evaluation of opportunities to remove barriers to deployment is ongoing. For more information on DOE’s deployment efforts, please see http://www.eere.energy.gov/biomass/deployment.html

Current USDA Efforts

The U.S. Department of Agriculture's (USDA) deployment efforts are addressed mainly through their website located at: http://www.ars.usda.gov/bbcc/. The Biobased Products and Bioenergy Coordination Council (BBCC) consists of twelve USDA agencies and works to coordinate, facilitate, and promote research, development, transfer of technology, commercialization, and marketing of biobased products and bioenergy. This includes promoting information sharing, strategic planning and providing policy advice to the Secretary. However, not all twelve agencies are involved in deployment efforts; some focus solely on R&D.

Market barriers are addressed primarily by the following USDA Agencies: the Agricultural Marketing Service (AMS), the Cooperative State Research, Education and Extension Service (CSREES), the Foreign Agricultural Service (FAS), and the Rural Utilities Service (RUS). AMS provides standardization, grading and market news services for various commodity groups. The AMS commodity programs also oversee marketing agreements and orders, administer research and promotion programs, and purchase commodities for Federal food programs. CSREES' mission emphasizes partnerships with the public and private sectors to maximize the effectiveness of limited resources and promotes informed decision making by producers, families, communities, and other customers. FAS has 80 overseas posts with the overall goal of expanding U.S. exports of agricultural, forest, and fish products. This goal is accomplished by reducing trade barriers and collecting and disseminating global trade and market information. In the area of bio-based industrial products, FAS works through private industries to identify overseas market opportunities for new products. RUS focuses on rural infrastructure assistance in electricity, water, and telecommunications. RUS makes low cost loans and grants in an effort to provide these services to rural communities.

Regulatory barriers are addressed primarily through the following USDA agencies: the Office of Budget and Program Analysis (OBPA) and the Office of Energy Policy and New Uses (OPENU). OBPA's major activities consist of coordinating the preparation of the Department's budget estimates, legislative reports and regulations. OBPA ensures that the Department's budget and regulations do not hinder the deployment of new biomass technologies. OPENU analyzes existing and proposed energy policies, strategies, and regulations concerning or potentially affecting agriculture. It also evaluates the feasibility of new uses for agricultural products.

For more information on USDA’s deployment efforts, please see http://www.ars.usda.gov/bbcc/.

In closing, there are many barriers facing the successful deployment of biomass technologies. The continuation of the efforts made by both the US Government and private industry will help to achieve commercial realization of biomass technologies in the future.

The State of Connecticut used 752 trillion Btus of energy in 2000. Five percent of the total energy consumption came from Coal, while 17 percent came from Natural Gas. Petroleum accounted for 48 percent of the consumed energy in 2000, while Hydroelectric and Biomass consumed 2 percent and 6 percent. Nuclear accounted for almost 22 of the total energy consumed or 170.7 trillion Btu¹.

At present, biomass for energy is not economically viable in Connecticut but with the right economic incentives there is significant potential. An estimated 1.3 billion kWh of electricity could be generated using renewable biomass fuels in Connecticut. This would be enough electricity to fully supply the annual needs of 132,000 average homes, or 13 percent of the residential electricity use in Connecticut. The following biomass resource supply figures are based on estimates for five general categories of biomass: urban residues, mill residues, forest residues, agricultural residues, and energy crops². The amount of urban residue available for energy use is 412,000 dry tons per year and consists mainly of chips and grindings of clean non-hazardous wood. Mill residue available for energy is 91,000 dry tons per year and is primarily composed of sawdust, bark, and wood scraps from manufacturing operations. The estimated supply of forest residues which consist of imperfect trees, and dead wood is 204,000 dry tons per year. Finally energy crops have the potential to produce an additional 200,000 dry tons per year available for energy³.

Private companies and State agencies are offering several incentives to encourage biomass use. Mainstay Energy is a private company offering customers who install or have installed renewable energy systems the opportunity to sell the green tags associated with the energy generated by these systems. Through the Mainstay Energy Rewards Program, participating customers in New England receive either quarterly production-based payments, or an up-front payment⁴. The state of Connecticut has created the New Energy Technology (NET) program to encourage development of innovative renewable energy technologies. Up to five $10,000 grants will be awarded to any Connecticut individual or Connecticut small company (less than 30 employees) that has or develops a technology which saves energy or facilitates the use of a renewable energy resource and has not been commercialized⁵.