As Snow White grew older, she had more difficulty using all those new fangled labor saving and communications devices around the cottage. She began to give her seven renewable energy dwarfs helpful little hints and gifts so they could grow up and help her with them. Some like Windy and Shiny responded very well. However, one in particular, "Greenstuff," went around shaking its head saying, "I'd like to help you, Snow White but I don't know where to start." Snow White asked Dopey, who was usually very smart, what was going on. He just muttered something about the "volatile green energy spread" and "conflicting objectives of the stockholders" and told Snow White he'd send her a background white paper. Reprinted below is that informative white paper: "The Greenstuff File." Snow White did not know what to do with the Greenstuff File so she sent copies to USDA, DOE, DOC, EPA and Disney. The rest remains to be history.
The Text of the Greenstuff File.
From the standpoint of governmental policy makers--and to the consternation of many biofuels and biomass project developers--the development of biomass as a major contributor for improvement of the national energy situation sits at the junction of intersecting policies regarding natural resources, energy, and environmental objectives (including now carbon reduction). The result is that the prospects for one of the least expensive baseload renewable fuels, currently still a major source of baseload renewable energy, is trapped in a maze of legislative and regulatory requirements which may inhibit project development, and certainly challenges developer and lender ingenuity.
The effective application of the responsive targeted policies of several different government agencies is further complicated by the fact that biomass energy production is clearly one of separate, linked but not necessarily integrated, activities: feedstock, type of refining or processing, and utilization in different end use markets. In each of theses areas there may well be a tension between the commercial interests of the parties currently more heavily engaged in certain aspects of these activities (and the administrative agencies with differing interests in each).
First, feedstock varies among different companies in the bioenergy industry. It encompasses the feedstocks with potential alternative uses, including: wood, pulp, pellet, and agricultural products of various types. Several different Federal agencies have overlapping policies and programs with respect to these feedstocks.
Second, the types of bioenergy outputs being produced by different bioenergy processing sectors: electricity, biogas, thermal energy, as well as different types of biofuels, have not only varying feedstock inputs and customer-marketed outputs, they may be subject to different sources and focuses of regulation.
Third, the interests of end users of these types of energy may vary (based not only on shortrun competitive cost/price considerations, but also on particular value of availability of bioenergy (or its non energy alternative) to different sectors, e.g., manufacturers, utilities, and farms). All of this is played out, among other places, in the interfuel competition of biomass energy with alternative, conventional, and renewable sources.
Moreover, the biomass processes in question are subject both to different regulatory perception and treatment in terms of environmental impact, e.g., carbon balance, relationship to enhanced waste disposal, and air and watershed protections.
One overall consequence of these multiple dimensions of bioenergy is that Congress has seen fit to enact a variety of partial incentives, designed to encourage or palliate different parties affected by biomass and biofuel developments.
An important further dimension is added when the requirements of financing commercial bioenergy development, particularly in some form of non-recourse project financing, is proposed to be used for that purpose.
It is in the finance setting that some formulaic predictability needs to obtain between the sources of feedstock (volume, cost, effect of comparative impact of regulation and incentives against more favored fuels, the spread between the biofuel market price) on the one hand, and the competitive ability of that bioenergy source to obtain long term output contracts on the other i.e., the "Green Energy Spread" analogous to the fossil fuel "spark spread." The Congress has in principle, been a fan of financeability, and has enacted numerous tax credits, loan guarantees, and production incentive supports, as well as certain direct and indirect purchase quotas. For the most part, those related to biomass--more so than biofuels--have been embedded in broader measures to assist all or most of the general class of "renewables." This presents two different problems for biomass project developers.
First, the approach effectively assumes that the requirements for each renewable industry for a particular type of incentive is the same. (This assumption is further complicated as noted above, by the multifaceted character of the genus "Bioenergy.")
Second, each incentive approach is directed at some particular facet or phase of the energy production process. For biomass, this may in fact mean it is principally useful to a particular segment of the non-integrated biomass chain, which are differently equipped to make more or less out of them, and also of different Federal agency administrators who bring to the task of implementation varying policies, execution skills, administrative rules, and even definitions (reflecting their policy bent).
These two problems can produce less than desirable residual results, when the process is reduced to the bottom line business of making the printed words of multiple statutory and regulatory pages fit the facts of specific types of project finance. Experience in dealing with such regulations have shown practical core issues to include matters such as the following:
Therefore the response (starting now) for the biomass investors must be to learn from this experience and advocate (and justify) a more unified governmental incentive approach, which contemplates involvement of all Federal agencies, focused on gaining envelopes of incentives that recognize and reward the natural resource, environmental, social and energy benefits which different types of projects can collectively provide. The Green Energy Spread is more complicated to assist than the traditional spark spread, and the bioenergy industry must undertake to help itself to overcome the inherent barriers to optimal incentive formalization.
There are conflicting reports as to what happened next in the saga The Greenstuff File: Some say it came to pass that Dopey left the cottage, became an organic farmer and was only heard from thereafter in the form of numerous "green" and "climate friendly" products he sold at or through the numerous trade association, NGO, and government study groups which he visited.
Some say it came to pass that recipients of The Greenstuff File took it to heart, and became the most useful aides not only to Snow White but to the entire valley in which she dwelled.
And some say that it came to pass that the File was farmed out to various study groups and that Snow White was left to hire lobbyists, consultants, and lawyers for the rest of her days.
Get your event listing in front of more than 100,000 industry professionals by posting on EnergyCentral's Event Center.