jump starting minnesota's green economy

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					Table of ConTenTs
Executive Summary . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 2 The Development of
the Green Economy Policy Options Outline Selection Criteria Syngas and
Green Gasoline From the Farm Heating Minnesota From the Ground Up With
Heat Pumps Suburb to Suburb Bus Transport Residential Rooftop Energy
Improving the Grid, the New Network for Minnesota’s Green Economy Wind
Power for Minnesota; Utilizing Stranded Wind From Economical Plug-in
Hybrids to an Electric Car Industry Nuclear Power for Minnesota 5 8 11 13
19 24 31 36 41 44 51

Conclusion: A Call to Action   .   .   .   .   . .    .   .   .   .   .   .   .   .   .
. . . . . . . . . .            .   .   .   .   . 55

Minnesota 2020 -

Executive Summary
Minnesota is a national leader in green technology Leadership by the
state legislature has put Minnesota on the path to produce 25 percent of
its electricity by wind and other renewable sources Minnesota is also a
leader in producing and using ethanol for transportation Minnesota has
the largest network of E85 ethanol-blend fuel pumps in the United States.
Our leadership in the green technology sector has greatly benefited us;
wind and ethanol revenues put millions of dollars directly into
Minnesotans’ pockets. By getting into green technologies early, Minnesota
has gotten a head start into the new economy. But the rest of the world
is catching up Climate and economic concerns are pushing national and
local governments worldwide to attract and develop green businesses. The
Chinese leadership in particular is turning their focus toward the green
technologies The world’s fastest growing economy is starting to produce
and consume green technologies such as solar panels, electric cars and
fast trains The Scandinavian countries have already demonstrated that it
is possible to simultaneously reduce CO2 emissions and grow the economy
In the last three decades with good leadership, Norway and Denmark have
consistently reduced their energy consumption and delivered strong
economic growth These countries are well positioned for economic

With strong leadership, we are well positioned to take advantage of the
changing economic climate.

Minnesota needs to stay in the race Minnesota is a highly educated state
with a very strong university system We have all the right resources to
form a green technology industrial cluster Minnesota’s track record of
forming clusters for cutting edge technologies like supercomputers in the
past to medical devices today With strong leadership, we are well
positioned to take advantage of the changing economic climate

The objective of this report is to inject business and technical
discipline into Minnesota’s green economy policy framework Minnesota
already has had success in improving our state’s economy and environment
by developing well thought out policy such as the wind mandate This was
due to a consensus between government and industry based on sound science
and good business practices This report develops a methodology to
identify ways to develop the green economy and back it up with specific
and detailed ideas where Minnesota can and should act


Jump Starting Minnesota’s Green Economy
Key fIndIngs
The business communities, including venture capitalists, have already
turned their focus toward green technology as the next growth sector
Strong leadership in the state can provide a coherent business friendly
approach to developing Minnesota’s green economy This report reviews
seven specific opportunities for green technology growth in Minnesota.
Based on Minnesota’s current economy, knowledge base and geography, the
following projects are the best positioned to jump start Minnesota’s
green economy and stimulate job growth in the coming years Green
Fertilizer from the Wind: Minnesota has enormous wind power capacity, far
more than the grid can absorb in the foreseeable future This surplus wind
power can be used to produce ammonia for fertilizer Minnesota’s own
fertilizer needs can inject $300 million per annum in to our economy and
use up to 2000 MW of wind power Solar Powered Roofs: Minnesota has more
potential for solar power than New York and Boston due to a large number
of sunny days year round If only 25 percent of homes had solar panels
installed, they would represent 10 percent of Minnesota’s electricity
generation capacity. The benefits from the installation process, if
spread over 10 years, could easily produce over $500 million per year
Electric Cars in Minnesota: Minnesota is surprisingly well positioned to
become a leader in mass market electric cars Minnesota possesses two key
skill sets: existing car manufacturing (Ford Plant) and a broad supply of
electrical and electronic engineers from the MedTech and automation
industry clusters The mass market car industry is undergoing a disruptive
change on which Minnesota could capitalize The prize is very big Even one
percent of the US car market is $3 to $4 billion per annum in sales Heat
Pumps: Heat pumps are the most efficient way of heating homes, and they
can do it without burning anything While there is a common misconception
that heat pumps don’t work in very cold weather, a Minnesota company has
been making cold weather heat pumps for over two decades Installing heat
pumps in 25 percent of Minnesota’s homes over a 10-year period would
generate $700 million per year

Installing heat pumps in 25 percent of Minnesota’s homes over a 10-year
period would generate $700 million per year.

Smart Grid: According to the American Wind Power Association, Minnesota
has about 75,000 MW of wind, but we are currently using only 2 5 percent
of the total capacity Even after all the wind mandates have been
fulfilled, Minnesota will be using less than 10 percent of the state’s
wind capacity The remaining 90 percent is waiting for a smarter grid with
better control and energy storage.

Minnesota 2020 -

Green Gasoline from the Farm: One of Minnesota’s greatest natural
resources is agricultural waste from corn farming Most of the corn stover
is tilled back into the ground, but it is the single largest, easily
available source of biomass Corn stover can be converted to syngas, which
in turn can be converted to gasoline Minnesota’s corn stover can produce
400 to 600 million gallons of gasoline a year In the foreseeable future
this could add $2 to $3 billion annually to our economy Suburb-to-Suburb
Bus Transport: Most commuters travel solo The Twin Cities alone have an
estimated 500,000 commuters who commute alone and from suburb to suburb.
A specialized bus system would offer these commuters easy transport plus
recovery of their commute time If 25 percent of the commuters used such a
system, Minnesota would save 25 million gallons of gasoline If the
commuter bus time was put to productive use, Minnesotans would recover
$30 million in wasted labor-hours worth around $1 billion annually


Jump Starting Minnesota’s Green Economy
The Development of the Green Economy
In 2004, Vinod Khosla, a leading Silicon Valley venture capitalist,
started his own new venture capital firm called Khosla Ventures. Vinod
Khosla was a founder of Sun Microsystems, one of the giants of the IT
revolution and he was also a general partner in Kleiner Perkins, perhaps
the leading IT venture capital firm in Silicon Valley and the world. But
when Khosla started his own VC firm he decided to back green technology
companies Other VCs have Minnesota needs to actively also followed. It
was not only the finance stalwarts from the compete for jobs and new IT
revolution Elon Musk used his fortune from the sale of the industries.
Public policy leading internet payment company Paypal to found, fund and
should be developed to run an electric car company, Tesla Motors At the
same time facilitate development of Al Gore released ‘An Inconvenient
Truth’ and got his Oscar green technologies and and Nobel Prize for
focusing worldwide public opinion on then green business. global warming
Market forces driven by latent needs and public opinion have been driving
toward the green economy Minnesota with it natural resources and educated
workforce can and should lead

There are many environmental needs, from reducing pollution to protecting
habitats and endangered species However this report will focus on the
opportunities provided by the global warming challenge; reduce CO2
emissions and benefit the economy. For the purposes of this report: Green
Technology: Technology and products that reduce overall CO2 emissions
This includes the entire range from efficiency measures to energy
technology that uses renewable energy. Green Business: Business and
industries that utilize green technologies to make a profit in a
competitive market place, including both new and old companies Green
Economy: Normal market forces propelling green businesses to prosper and
grow without long-term subsidies

PolICy objeCTIves
States and governments all over the world are working to ensure that
their jurisdictions benefit from the green economy Minnesota needs to
actively compete for jobs and new industries Public policy should be
developed to facilitate development of green technologies and then green
business Finally public policies should be focused on developing
businesses that can operate without constant government attention and
especially long-term subsidies.

Minnesota 2020 -

PolICy aPProaCh
In developing an underlying policy philosophy and approach it is
instructional to consider the development of the waste and garbage
hauling industry, particularly the question of how free market giants
like Waste Management could come into being Many poor countries,
especially ones with weak governments, tend to have garbage strewn all
over, even when private spaces are immaculately clean Much of the garbage
is household garbage that gets dumped outside. Nobody wants the garbage
there, nobody benefits from the garbage, but it persists Even in these
poor countries the free market adequately serves the cleaning needs
inside middle class homes but cannot deliver clean public spaces
Economists call it the commons problem when no one wants to take care of
the common spaces But in the US the free market takes care of the garbage
and waste, and it virtually never finds its way on to the streets. In
many municipalities the household garbage pickup is done completely by
the free market The state and local governments don’t run, manage or
contract out the pickup Why does the free market overcome the commons
problem in the US but not in many poor countries? The hint for the answer
is found in certain neighborhoods in the poor countries that have much
cleaner streets These neighborhoods have strong central organizations
with the power to enforce rules But outside these neighborhoods in a poor
country, a company like Waste Management could never make money in a free
market So how did the US economy reach the point where Waste Management
could and does thrive in a free market? There were several steps to get
where we are now 1) Enforcement of Rights: People have a right to a
garbage-free environment The state decided that this is a very strongly
defined right. E.g. in a residential zone an owner is not allowed to dump
garbage on their own private property let alone elsewhere Pile garbage on
your front yard and the police will show up Enforcing the public’s right
to a garbage-free environment is the foundation of the waste hauling and
disposal industry. 2) Prototyping the Industry: State and local
government jump started the industry Industry can be jump started by
mandates, subsidies or direct activity. Population densification and
rapid industrialization led municipalities to start garbage collection
services Initially run by the government, some municipalities still run
waste services, others contract it out, while others allow the free
market companies to do everything 3) Market Definition by Regulation:
This is the most critical and sensitive piece. Too little regulation, and
the market never develops Too much and the market dies If garbage haulers
were allowed to charge for just moving the garbage and dumping it
wherever they wanted, they will appear to make more money But garbage
would not get disposed, cities would not become garbage free, and the
industry would eventually collapse because no one would pay for it But if
the state required everybody to dispose of the garbage 1000 feet deep in
the Mohave Desert the technical and financial requirements would kill the
industry. In short, the regulations must be financially and technically
feasible and need to evolve over time as technology and market evolves


Jump Starting Minnesota’s Green Economy
4) Business Needs: The most obvious but often forgotten need. An industry
created by enforcement of rights still needs everything else that other
industries need e g infrastructure, unfettered access to the market, and
freedom to innovate etc. Similar to the waste hauling industry, the
nascent green industry is based on the need to reduce and eventually
eradicate CO2 emissions State and local governments have started to
prototype the industry, e g mandating utilities to use wind power,
subsidizing solar power, or directly investing in efficient school
buildings. However, the critical step is to ensure that specific
regulations and actions are technically and financially feasible. For
example, mandating wind power to 25 percent may be reasonable but
mandating it to 50 percent may not be technically reasonable without
energy storage technology Then the decision to boost wind power to 50
percent will cascade into a decision to mandate energy storage, and that
will be based on the costs and technical readiness of the energy storage.
The regulatory framework must be based on sound financial and technical

eConomIC benefITs
The economic benefits of the right blend of regulations can be
tremendous, especially when indirect economic benefits are taken into
account. The waste hauling industry not only created jobs for garbage
men, but also in truck companies However, the The economic benefits of
the greatest economic benefits were those that came with clean right
blend of regulations cities and the improved quality of life. These
benefits sound can be tremendous, more ephemeral, but they result in
better health, higher especially when indirect property values and
increased productivity The absolute economic benefits are taken
economical value-added from them would probably dwarf into account. the
direct economic benefits of the waste hauling industry. Similar economic
benefits can be expected from the green economy. The target industries
are much bigger so even the direct economic benefits will be much bigger.
But indirect benefits will be truly enormous as economic growth will be
based less and less on fossil fuels

Minnesota 2020 -

Policy Options Outline
Countries and local government have successfully used public policy tools
to develop the green industry Minnesota’s own success story is our wind
power industry that was initiated by policies culminating in the
renewable energy standards bill Other states have built up a solar power
industry and still others are on track to create an electric car industry
Good policies work However, poorly thought out policies can have
undesirable consequences The electricity deregulation effort in
California in 2000 is often blamed for the unprecedented brownouts and
blackouts that California suffered in 2000 and 2001. Many observers have
blamed deregulation itself for California’s troubles But countries like
the UK have successfully deregulated their electric markets A careful
analysis of California’s electric supply problems shows that the policies
behind the deregulation were poorly designed The brownouts were
unintended consequences of a poorly planned set of policies Reducing the
risk of unintended consequences requires clearly defined objectives
followed by well thought out policies Policy details need to be
consistent with the objective Success of the green economic development
requires a set of objectives and a coherent set of policy tools

green eConomy PolICy objeCTIves
Creating a green economy requires the simultaneous fulfillment of two
objectives— reduction of CO2 emissions and development of self-sustaining
businesses Any policy framework should address these two important issues
Reduced CO2 Emissions: One of the ongoing challenges with green
industries is the problem of green washing, where claims of emission
reduction are exaggerated • Businesses must verify or demonstrate a
reduction of emissions. The verification requirement can be as broad as
possible, but it is necessary to prevent companies from gaming the system
• Businesses must verify or demonstrate that technology does not increase
emissions elsewhere Driving the emissions up the supply chain is self-
defeating Self-sustaining Businesses: Another point of failure is
economic policies that do not produce self sustaining businesses
Businesses have to become independent of state action and should not be
continually dependent on state action • Policy makers should plan for
businesses becoming independent of state action, e g policies providing
incentives should have sunset clauses Eventually policies need to create
self sustaining businesses that can generate profits in the market place.
• Policy makers should ensure that technology and industry are ready for
the market and meet technology selection criteria An outline of
technology selection criteria is provided elsewhere in this report


Jump Starting Minnesota’s Green Economy
TyPes of PolICy Tools
Within the policy objectives there are different policy tools that can be
used. Depending on the technology or business one or more of these tools
could be adapted to drive policy Policy tools are summarized below

Direct Action: Mandates and Tax-code Incentives
Government Mandates: Mandate are the simplest way to move the market
place They are also easily targeted toward specific industries. But they
are also easy to misuse. Before implementing mandates it is important to
identify costs and possible unintended consequences Tax Credits: Tax
credits are a simple way to incentivize a particular industry Tax credits
for consumers work better than those for businesses. Startup businesses
are not profitable and tax incentives are not relevant in the short run
End-user tax credits provide new businesses with an effectively lower
price for the end-user. However tax credits can be costly to the state
and businesses can become too dependent on them Grant: Grants are
difficult for state government to provide because the state budgets are
more constrained than the federal budget However, the state and local
governments can set up processes to help businesses and communities get
federal monies Financing and Loan Guarantees: While it is difficult for
states to provide traditional financing for new businesses, there are
ways to create new frameworks in law to leverage market financing. One
such way is to authorize local governments to issue PACE bonds PACE bonds
are debt-instruments that are linked to property, and the payments are
collected through property taxes PACE bonds are a way to leverage market
financing by mitigating risk for the lender. There could be other ways.

State Participation: Market Development
The state can also directly participate in the market place, either with
purchases or with marketing assistance Direct Participation: Market
participation is great for new businesses because it gives them revenue
and validates the product for the market • Create a public infrastructure
for the new technology E g a simple recharging infrastructure could
stimulate electric car production in Minnesota • Seed the market with
purchases for government use E g local governments that purchased hybrid
cars for their fleet of cars as hybrids were just becoming more popular.

Minnesota 2020 -

Validation and Market Development: New technology is always challenged to
find customer and capital Marketing the idea is perhaps the cheapest way
for the state or government to help a new industry • Validation: State or
local government validates a new technology or business model Creating
code, specifications and requirements for new technologies such as heat
pumps will validate them with consumers who have not heard of them before
• Leadership: The bully pulpit of the governor and other elected
officials can have a huge impact. Public leaders can effectively replace
millions of dollars worth of advertising for a new industry as well as
coordinate deals that can land jobs for the state or community

State Support: Education & Service
The state and local governments can also use state educational
institutions and government departments to promote a policy Education and
Training: Availability of a trained workforce is key to developing any
industry • Community colleges developing rapid training for new
technologies • DEED training, programs and centers directing job seekers
• Collaboration with NGOs that train and assist the unemployed “Good
Customer Service” to Businesses: Regulatory uncertainty and friction
often turns off businesses more than cost alone • Clear and fair
regulations • Assisting businesses to navigate laws, especially federal
law • Ensuring interdepartmental cooperation • Single points of contact
for regulatory purposes, especially at the local level Technology
Development: State institutions like the University of Minnesota are
already leaders in basic research but have the ability to do more •
Higher Education institutes producing public domain technology that can
seed startup businesses Public domain information in the information
technology sector has been a tremendous help for new businesses


Jump Starting Minnesota’s Green Economy
Selection Criteria
During heady days of the internet bubble a lot of private capital was
invested in very questionable business models. Hundreds of millions of
dollars were lost in attempts to sell heavy bags of pet food over the web
or home-delivery for weekly groceries For a variety of reasons that
included a ‘gold rush’ mentality, many of these business plans were
poorly thought out When a new business initiative omits the key step of
validating the technology and marketplace, the business will fail No
amount of investment money or management talent can overcome this
fundamental flaw. The green technologies revolution is also susceptible
to an economic bubble and the gold rush mentality Even though the state
will not directly invest large amounts of capital, it still has a huge
impact on the green economy development When the state promotes a
particular green technology or business, it creates a critical mind share
within that industry, and private capital follows Promotion of the
‘hydrogen’ economy by President Bush and other state actors drove a lot
of private capital into fuel cells and ancillary technologies In the
green economy area, the state and government need to be very careful
about directing private capital While investors and boards will manage
individual business plans, the state has to be careful about selecting
the technologies and industries to back Good selection criteria are a
combination of societal benefits and business and technical readiness. A
disciplined approach to selecting industries and technologies to back is
critical to jumpstarting Minnesota’s Green Economy A summary of selection
criteria follows

soCIeTal benefITs
• Environmental Benefits ◦ Clear and proven long-term CO2 emission
reduction. Merely shifting CO2 will cause the industry to collapse in a
few years This will be especially true as either cap and trade or direct
carbon taxes get implemented ◦ No other negative environmental impact,
even legal ones Disrupting the environment will reduce political support
in the short run and drive up long- term costs • Importance for Minnesota
◦ Clear economic benefits to Minnesota. The state institutions should not
be spending time on benefits that do not help Minnesotans. ◦ State and
local control of policies possible Technologies and business where
federal law or policies are paramount should be left to the federal

Minnesota 2020 -

TeChnICal faCTors
• Technology Readiness ◦ Core technology is manufacturing ready
Technologies in a pure research state are too risky to be identified as a
basis for economic development. ◦ Ancillary technologies already in
market Any other technology that is critical to bring the product to
market should also be in market Bringing multiple new technologies to
market simultaneously in one new product is often too risky. •
Manufacturing Readiness & Scalability ◦ Supply chain ready and can scale
up easily If the manufacturing or delivery supply chain cannot scale up,
the product will remain a niche product not worth the effort. ◦ Key
skills widely available or can be developed rapidly Critical for both
growing the industry and reaping the economic benefits. ◦ Raw materials
widely available otherwise it would become a bottleneck for growth. This
is point relevant even if raw material is otherwise considered ‘waste’ ◦
Scaling up should not impact other critical industries or the environment
Competing interests increase the risk, add cost and increase the
potential of loss of public support

eConomIC and busIness faCTors
• Market Readiness & Competitive Viability ◦ Should not require an
expensive new infrastructure for use Industries and technologies with
infrastructure needs should be considered on a separate track and should
not be considered for rapid deployment ◦ There should be no competitive
green industry with substantially better value. However, if two green
industries are roughly comparable then the market should decide ◦
Industry should be roughly price competitive with non-green competition
Early adopters are often willing to pay a premium for green products.
However, the cost differential cannot be too high and it should
eventually disappear. The cost differential can also disappear as
environmental impact costs are built into the non-green product •
Economic & Stakeholder Impact ◦ There should be no expectation of
substantial changes in consumer behavior Any product or service that
requires substantial change in consumer behavior could take up to a
generation to adopt ◦ Business should thrive and grow in Minnesota Key
parts of the business value chain should remain in Minnesota for the
foreseeable future


Jump Starting Minnesota’s Green Economy
Syngas and Green Gasoline from the Farm
Minnesota produces about one billion gallons of ethanol annually adding
approximately $2 to $3 billion dollars to our economy State and federal
mandates requiring ethanol to be blended into gasoline for cars have
benefited Minnesota. However, in addition to improving the greater
Minnesota economy, there are also global warming benefits and a reduction
in our dependence on imported oil. But ethanol blending in gasoline
started for a different reason. The use of ethanol blending started with
the need to make gasoline cleaner burning Adding ethanol to gasoline is
often called oxygenation and results in lower noxious emissions from the
tailpipe However, as the twin specters of global warming and America’s
dependence on foreign oil came into public consciousness, it also became
clear that ethanol blending addresses both concerns Ethanol is a biomass-
derived renewable fuel and thus can help reduce green house gases It
replaces some gasoline used in cars and is domestically produced so it
also reduces America’s dependence on foreign oil Ethanol has become very
popular with Congress who has increased the federal mandate to blend
ethanol The Congress has encouraged the use of ethanol both by a mandate
and by a direct subsidy to ethanol producers Nevertheless, ethanol has
fallen out of favor in environmental circles because of the challenges
that arise from using a specific ethanol production technique: corn-based
ethanol. Corn-based ethanol is the first large scale use of biomass for
energy. While using it does not release any net CO2, the production
process is energy intensive and releases CO2 Many technical studies have
shown that using corn-based ethanol does not reduce overall carbon
dioxide emissions Secondly, there are growing concerns that using corn
for fuel adversely affects the food supply. Finally corn-based ethanol
may be too expensive to be viable on a larger scale Minnesota has gone In
2008 even with record high oil prices and a substantial farther than the
subsidy, the price of corn had risen so much that corn-based federal
government in ethanol companies were not making money Given all the
problems with corn based ethanol in 2008 the EPA even considered
rescinding the federal ethanol mandate Minnesota has gone farther than
the federal government in encouraging corn-based ethanol, and our state
became the leader in ethanol use Minnesota now has the largest E85, 85
percent ethanol blend, distribution network for flex fuel cars. In the
long run we do stand to benefit from the ethanol distribution
infrastructure as new ethanol technologies e.g. more efficient corn
ethanol or cellulosic ethanol come into play It is unlikely that the need
for ethanol from the farm will go away because of the need for clean
burning gasoline But using corn, a food crop, to make transportation fuel
is not the only way to get energy from Minnesota farms

encouraging corn-based ethanol, and our state became the leader in
ethanol use.

Minnesota 2020 -

During the early 1920s, German scientists developed a way to make
gasoline and diesel fuel using the gas called syngas Syngas was then
generated from coal During WWII the Germans made large quantities of
gasoline and diesel from coal derived syngas But syngas can also be
created from biomass Replacing coal with biomass, a renewable resource,
to produce syngas would then produce renewable gasoline or diesel

TeChnology and IndusTry
Syngas is a mixture of hydrogen and carbon monoxide At the start of the
19th century, many cities were being lighted by syngas, the famous
gaslight of the Victorian era It was generated by blasting steam over hot
coal or coke. Both carbon monoxide and hydrogen are flammable, and syngas
was a very easy way to distribute heat and lighting fuel before
electricity It was also used for cooking and heating in the home However,
carbon monoxide is very poisonous, and by the early 20th century, natural
gas was replacing syngas everywhere World War I was the first major war
that required the use of gasoline. After the war it became clear that
access to transportation fuels was of critical national strategic
interest Germany was rich in coal but had limited access to oil and
became very concerned about its strategic weakness During the early 1920s
two German scientists Franz Fischer and Hans Tropsch developed a way of
converting syngas to gasoline Syngas is heated with a catalyst and is
converted to gasoline or heavier fuels like diesel The technology is
called the Fischer-Tropsch process and was easily scaled up to industrial
levels During World War II the Nazi government, using Fischer-Tropsch
process, was producing upwards of 125,000 barrels of oil per day for
their war effort. The process of producing gasoline from coal-derived
syngas is called coal gasification. After the war was over, coal
gasification lost favor as cheap Middle Eastern oil flooded the world
market. There have been recurring attempts to revive coal gasification
for other reasons. National security concerns is one reason; using coal
gasification and using American coal to fuel our cars reduces dependence
on foreign oil. Early environmentalists also advocated goal gasification
as a simple way of creating a clean burning coal process because the
gasification process removes many types of pollutants. But coal
gasification does not reduce CO2 emissions, and the environmental
movement lost interest in it But syngas to gasoline is a proven
industrial scale technology and has been improved over the years Creating
gasoline from biomass-based syngas would be ready for primetime as soon
as biomass syngas becomes commercially viable The fundamental science
behind creating syngas from biomass is quite straightforward Biomass is
heated in an atmosphere of steam and limited air, and voila, the syngas
comes out The process also produces a solid residue that contains all the
potential old fashioned pollutants such as sulfur The solid residue can
be used for other industrial purposes The syngas itself is a very clean
burning fuel and any gasoline from it will also burn cleanly A well-
designed biomass reactor will be able to accommodate a range of biomass,
from corn stover to woodchips to turkey litter. The major technical
challenge is making the process commercially feasible and being able to
control the quality of the syngas The syngas output needs to have a
controlled composition of carbon monoxide and hydrogen Additionally, the
reactor needs to handle a variety of biomass with varying levels of
moisture, particle size and composition

Jump Starting Minnesota’s Green Economy
A critical intermediary step in developing the industry is to use syngas
for combined heating and power applications Burning biomass directly
produces the old fashioned pollutants, like soot, sulfur dioxide and
nitrous oxides But syngas burns much more cleanly than biomass Converting
biomass to syngas is an excellent way to cleanly produce industrial
heating or setup combined heat and power plants Combined heat and power
plants could be Converting biomass to another way to get green heating
for greater Minnesota buildings syngas is an excellent and get renewable
electricity into the grid Work on biomass to syngas reactors is already
underway The University of Minnesota at Morris has built a biomass
reactor to create syngas for heating the campus Syngas combustion is used
to create steam in a boiler In the future, syngas combustion will also be
used for cooling However, Dr Joel Tallaksen, the project manager of the
biomass reactor project, said the reactor project is more than just
providing heating and cooling with a lower carbon footprint. A key
objective was for the university and its partners to learn about building
better biomass to syngas reactors This reactor project is an industrial
scale pilot for a biomass to syngas study There are also other fuels from
biomass syngas. Dr. Douglas Cameron, Chief Scientist at Piper Jaffrey,
says it is very easy to convert syngas into chemical called dimethyl
ether that can be used in diesel engines Dimethyl ether is a gas but has
the remarkable ability to work in today’s diesel engines with minimal
modifications, and it burns cleanly. Even older diesel engines when using
dimethyl ether do not produce any particulate pollution or sooty smoke
Dimethyl ether is the most clean burning fuel for existing diesel
technology Biomass to syngas technology is advancing fairly rapidly.
There is already a radically different type of reactor called plasma
reactor that super heats biomass to a very high temperature to produce
syngas A company in California is planning to use the plasma reactor to
produce syngas followed by a Fischer-Tropsch system to create renewable
jet fuel They are planning to set up a plant in Sacramento

way to cleanly produce industrial heating or setup combined heat and
power plants.

fInanCes and busIness develoPmenT
The key business advantage of creating renewable gasoline is that the
market and distribution network are already in place Unlike ethanol or
other non standard fuels, no changes are required in existing cars or
infrastructure As such, there is a very large, ready market The key
challenge it to produce green gasoline at market viable prices In the
next decade, cap and trade and rising demand from India and China will
drive up the price of oil A green gasoline industry will probably come to
existence in a favorable economic climate of $6 or more per gallon for
gasoline As such, it represents a tremendous opportunity While new
sources of oil are being discovered, most of the new discoveries are very
expensive to extract Newer oil shale or deep water oil fields require oil
prices to be above $100 per barrel to be truly profitable. It is very
unlikely that a green gasoline industry will be competing with cheap
middleeastern oil

Minnesota 2020 -

A critical first step in developing a green gasoline industry is to speed
up the development of biomass-derived syngas While the requirements for
syngas quality are very stringent for gasoline production, they are much
less so for syngas for heating Using biomass-based syngas to for heating
may be the first commercial breakthrough for biomass reactors. Corn-
based ethanol for fuel producers are looking to replace their natural gas
heating in their plants with renewable energy A biomass syngas reactor to
provide heating is a possible solution Renewable energy for heating is
very important because corn ethanol production requires a lot of energy
The Chippawa Valley ethanol plant in Minnesota is already planning to
roll out a syngas plant in the near future That plant will use corn cob,
and this will greatly reduce their overall carbon footprint for producing
corn ethanol, making it much ‘greener’ Ethanol plants are not the only
place to use syngas for heating Any large scale heating need in greater
Minnesota can be fulfilled by syngas heating. Additionally , Syngas can
also be used in combined heat and power plants since syngas can be used
to create electricity in highly efficient turbines The hot exhaust from
the turbines can be then be used to heat buildings, water or anything
else The electricity can be used or be pushed back into the grid, adding
to the green electricity content of the grid As the biomass to syngas
reactor technology improves, it can then easily become the basis for a
green gasoline industry

While any biomass can be used to create syngas, in Minnesota one resource
stands out, corn stover A few years ago the Xcel Renewable Fund, with the
approval of the Public Utilities Commission, funded a very comprehensive
study about the availability of biomass in Minnesota The study was
performed by the Minneapolis-based nonprofit Center for Energy and
Environment The report released last year covers the entire gamut of
biomass in Minnesota from turkey manure to softwood timber Based on the
numbers from this study, corn stalk is the one biomass resource that
stands out above others There are two reasons, a lot of corn is already
being grown in Minnesota, and there is no critical alternate use for corn
stalk Corn stalk is a strategic biomass resource for Minnesota Other
excellent biomass resources that are currently being used for
electricity, like turkey litter or forestry residue, are simply too small
to make a statewide impact. Other resources like softwood timber are
available but cannot be harvested in large enough quantities without a
careful study of the environmental impact Large-scale planting of
specialized crops for energy like switch grass or fast growing trees may
displace food crops or disrupt the environment. Corn stalk is available
now without any significant downside. We just have to figure out how to
use it.


Jump Starting Minnesota’s Green Economy
Corn stover is the residue of the plant that is left over when the grain
is harvested. Typically, most of the corn stalk is tilled back into the
land to maintain soil quality Studies done by Oak Ridge National
Laboratory have shown that about 40% to 60% of the corn stalk can be
removed from the land without long term soil degradation. The single most
important benefit from using corn stalk is that it will not affect the
food supply. And since corn is already being grown it will also not
displace any other crop or disrupt natural habitats The harvestable
stover could be used for making synthetic green fuels Studies done by
Dutch researchers have shown the biomass can be converted to fuel while
maintaining up to 51% of its energy content Using Minnesota’s supply of
harvestable biomass for transport fuel could generate 400 to 600 million
gallons of green gasoline per year replacing 15 to 20 percent of our
gasoline In the foreseeable future, when the global economy starts up, $4
to $6 per gallon gasoline is likely In this scenario, Minnesota’s green
gasoline could easily account for $2 to $3 billion in revenue If other
biomass resources, such as corn cob or even energy-rich corn itself, are
added to mix then these numbers go up Finally, biomass feedstock is heavy
and transporting will not be cost effective. Moving gasoline, the final
product, is much more cost effective. Therefore, when the biomass-based
gasoline industry develops, high tech production facilities with the high
paying jobs will develop close to the biomass resources

PolICy reCommendaTIons
The demand for corn-based ethanol is still strong, and it is unlikely
that it will diminish in the near future Some of the rhetoric against
corn-based ethanol was not accurate Many economists concur that last
year’s sharp rise in food prices were attributable to high gas prices
rather than corn demand for corn-based ethanol At the same time,
improvements in the production process will make corn-based ethanol more
‘green’ Nevertheless, the economic events of 2008; the sharp rise in
gasoline prices, the sharp rise in corn prices and the ethanol industry
losing money point to the need for Minnesota farmers to diversify out of
corn ethanol Government policies should be directed toward
diversification rather than just focusing on whether corn-based ethanol
is good or bad From a policy perspective, incentives for biofuels should
only be based on three criteria: 1) Is the fuel green? Does the carbon in
the fuel come from renewable sources? 2) Does it help the economy? Is
there any economic value and will the economic value be captured locally?
3) Is it commercially viable? Can the fuel production become independent
of federal subsidy?

Minnesota 2020 -

The key to jump starting the green fuel industry is to ensure incentives
and some directions for the intermediate steps Some challenges are
straightforward like the need to modify farm equipment for harvesting
corn and corn stover without multiple steps State educational agencies in
partnerships with large farm equipment manufacturers could easily develop
prototypes There are no fundamental engineering problems to developing
this equipment Biomass to syngas reactors represents a bigger R&D effort.
The University of Minnesota Morris’ biomass reactor project is an
excellent start It can be followed up with encouragements for combined
heating and power projects That will include incentives to electric
companies to accept power from the combined heat and power plants Farm-
based biomass provides both renewable carbon and an income stream for the
agricultural economy. And if waste biomass is used, there is very little
impact on food prices and the food industry In the long run, syngas can
also be made from special energy crops like fast growing prairie grass.
Biomass is bulky and difficult to transport. So it is likely that the
biomass-to-fuel plants will be situated in Greater Minnesota The biomass-
to-fuels revolution is already underway Biomass is one of Minnesota’s
great resources, and we cannot afford to be left behind.


Jump Starting Minnesota’s Green Economy
Heating Minnesota From the Ground Up With Heat Pumps
In high school science we learn that heat or thermal energy is everywhere
When heat energy is concentrated the temperature goes up and we feel hot
Wouldn’t it be nice if we could heat our houses in the winter just by
pumping in heat from outside, concentrating it in the home? Sounds like
science fiction but it’s not. Most homes in the US have two devices that
do just that—pump heat We call these devices air conditioners and
refrigerators The fridge pumps heat from inside the cabinet to outside
The food inside the cabinet cools down, and the back of the fridge, where
the heat is being dumped, heats up The air-conditioner works the same
way, pumping heat from inside the house to the outside The air
conditioner and refrigerator technology are over a century old But they
are complex machines and, with cheap fossil fuels furnaces, were the
simplest and most economical way to heat homes. Rising energy costs and
global warming concerns are starting to change this attitude, but there
are still ways to go In March of 2009, a new exhibit called the Smart
Home opened up in the Chicago Museum of Science and Industry. It is a
model green and energy efficient house built on the Museums grounds. It
has all the latest energy efficiency gadgets and technology except for
heat pumps. Some of the attendants at the exhibit did even know that heat
pump technology is viable in the Chicago cold, let alone Minnesota The
most common type of heat pumps available today is called air-source heat
pumps They are modified air-conditioners and most air-conditioner
manufacturers supply them. The airsource heat pumps can heat homes in the
south, but not in Minnesota The weather in Minnesota requires a special
type of heat pump called ground-source heat pumps They are also called
geo exchange systems and sometimes (inaccurately) called geothermal
heating Large manufacturers are not offering ground source heat pumps,
but a small company has been manufacturing them in Appleton, Minnesota
for the last two decades And yes, a ground source heat pump can heat a
house in Tower, Minnesota in January

TeChnology and IndusTry
Heat pumps work off two physical properties of liquids; evaporating
liquids absorb heat and condensing liquids deposit heat. Gasoline on skin
feels cold as it evaporates off. Similarly, steam burns are much worse
than water burns because the steam condensing on skin releases a lot of
heat into the skin Heat pumps leverage these physical properties to cool
and heat Heat pumps circulate a liquid, often called a refrigerant, in a
closed circuit. In the cool area, there is an evaporation chamber For the
hot area, there is a condensation chamber An electric pump called a
compressor moves the liquid In the evaporation chamber, the compressor
reduces pressure and forces the liquid to evaporate, and in the
condensation chamber, the liquid condenses The evaporation chamber sucks
up heat, and the condensation chamber pushes it out, and voila, a heat-

Minnesota 2020 -

The heat pump consumes electricity to move the heat around, that’s why
fridges and air-conditioners use electricity But when it comes to heating
the house the efficiency equation always benefits the heat pump. To
understand why the system is more efficient, a very efficient electric
heater has a coefficient of performance COP of 1 0 This means that one
unit of electrical energy will cause the heater to produce one unit of
heat But one unit of electrical energy can cause a heat pump to move more
than one unit of heat from a cooler place to a warmer place Ground source
heat pumps have a COP that is typically in the range of 3 5 to 4 0 The
same argument applies when comparing to gas furnaces So even though gas
energy is cheaper than electricity, the heat pump is still cost effective
because of its high COP The biggest challenge in designing useful heat
pumps is achieving high COP, i.e. high efficiency. There are two types of
heat pumps. The more common type, called air-source heat pumps are
essentially air-conditioners that have been modified to run in reverse In
the summer, they run to pull heat from inside the house to outside the
house In the winter, the refrigerant flow is reversed and heat is pulled
inside the house. When the outside air temperature drops lower than about
25oF, they cannot handle the heat load needed But there is a source of
constant temperature that is very close for each and every house About
eight feet below the ground, the temperature is a constant 50oF, summer
or winter Ground-source heat pumps work by exploiting the earth’s
constant temperature Ground-source heat pumps circulate the refrigerant
through piping buried eight feet or lower into the ground These
underground piping loops serve as a heat source in the winter and a heat
sink in the summer A well-designed heat pump can concentrate the ground
heat even in the middle of a Minnesota winter And yes, in the summer the
very same heat pump will cool the house, at efficiencies much higher than
a regular air-conditioner According to the Environmental Protection
Agency (EPA), geo-exchange heat pump systems are the most energy
efficient, environmentally clean and cost-effective space conditioning
systems available. Even in the coldest climates, heat pumps are still
cost effective compared to alternate systems While the initial purchase
price of a residential system is higher than that of a comparable gas-
fired furnace and central air-conditioning system, it is more efficient,
thereby saving money every month. For further benefits, in the summer
cooling period, the heat that is taken from the house can be used to heat
the water, also for free


Jump Starting Minnesota’s Green Economy
Geo-exchange systems in both new and existing homes can greatly reduce
energy consumption 50 to 75 percent compared to older or conventional
replacement systems and thus has a corresponding decrease in emissions
Annual operating costs are lowest with geothermal heat pumps Heat pumps
are a viable option for current and to-be homeowners

busIness and fInanCIals
While heat pumps are cost effective, people are scared off because the
upfront price for a heat pump appears to be steep. There are two cost
pieces to getting a heat pump installed; the costs of the heat pump and
secondly, burying a length pipe into the ground that will act as a heat
source or sink This buried length of pipe is analogous to piping that you
find on the back of refrigerators and freezers For existing homes where
there is not much open land this pipe has to be buried very deep and
usually requires a well-digging rig. The cost of laying and burying the
pipe is often larger than installing the equipment For an existing 20-
year old 2500 sq foot home in Minnesota, the following table represents a
typical cost benefit analysis for installing a heat pump versus furnace
and AC combination. This information is from a web-based calculator from
the Center for the Energy and the Environment, a Minnesota based

furnace/aC Equipment Piping Heat Pump Rebate Utility Rebate Other Fed
Rebates Total outlay Annual (Gas $1.10 therm) Annual (Gas $2.00 therm)
($1,500) $7,500 $1,350 $2,300 $9,000 $0

heat Pump $10,000 $16,000 ($7,800) ($2,500) ($1,500) $14,200 $750 $750

Minnesota 2020 -

When the time comes to replace the 20-year- old furnace, the homeowner
will spend about $7000 more to get a ground source heat pump However, he
will save about $600 per year in utility costs, giving an 11-year payback
If natural gas prices rise to $2 per therm, what they were in July 2008,
the home owner saves $1500 per year, with a payback time of less than
five years! But there is more The most expensive piece of the heat pump,
the piping, is very durable, lasting more than 50 years Studies show that
houses with renewable sources of energy or savings can sell for up to 20
times the annual energy savings Installing a heat pump could increase the
value of the house by $15,000 to $20,000. The increase in value of the
home by itself can pay for the heat pump! Of course, if heat pumps are
installed in new construction, the buried piping costs are much lower and
pay back times correspondingly shorter Heat pumps and heat pump
installation are still niche markets As the market grows, the costs will
come down

Heat pumps have traditionally been marketed for large scale projects such
as the Roseville Mall Community centers, schools, malls, even
universities like Ball State in Indiana, use heat pumps for their heating
and cooling needs The breadth of implementation speaks to its flexibility
in application and is a testament to its soundness In the past 10 years
geo-exchange heat pumps have finally started to move into private
residences But they are still quite rare in homes This is despite that
fact that an Appleton, Minnesota-based company has been making cold
climate heat pumps for the home for over 20 years

Promoting a heat pump industry would be an excellent way to push the
green economy, create jobs and develop a new industry. Retrofitting only
10 percent of the houses in Minnesota with heat pumps can generate $3
billion in direct economic activity.

But the heat pumps have a lot going for them Residential heat pumps are a
green industry where the core skills and technology are already in the
market place The technology has been around for many years and can be
retrofitted in most existing homes. Diverse skills such as HVAC
technicians and well diggers can be leveraged for this industry The
federal government is already providing financial incentives. Promoting a
heat pump industry would be an excellent way to push the green economy,
create jobs and develop a new industry. Retrofitting only 10 percent of
the houses in Minnesota with heat pumps can generate $3 billion in direct
economic activity This does not include the new housing As housing starts
improve, popularizing heat pumps in new homes can jump start the industry


Jump Starting Minnesota’s Green Economy
PolICy reCommendaTIons
So what’s stopping Minnesota from enjoying the benefits of a tried and
tested technology in their homes? Our own personal experience shows that
the primary issue is lack of awareness Most consumers are not aware of
the value of heat pumps But perhaps even more important, the heating and
cooling contractors are not aware, not trained, or interested in
installing heat pumps Part the problems is a very legitimate fear of
installing something new and then finding out that it does not work Also,
heat pump installation bring groups of contractors together who never
worked together, HVAC contractors and well diggers Like any nascent
industry, inertia and lack of knowledge can stall growth The key to
developing a residential heat pump industry is disseminating knowledge
The state and local government organizations can do just that very cost
effectively. 3) Community Colleges: Installing heat pumps does not
require fundamentally new training Custom-designed short courses could
rapidly bring HVAC technicians, general contractors and well diggers up
to speed 4) State Government: The state through DEED Workforce Centers
and county resources is already helping people find work by leveraging
their existing skills. In difficult economic times the state can follow
the federal government’s lead and try to direct people in the housing and
related industries towards the growing renewable industries like heat
pumps 5) Public Officials: Legislators and state’s constitutional
officials have a powerful bully pulpit that can effectively legitimize
this new industry. 6) Local Government: Installing new green technologies
can often get caught up in a code ambiguity zone and slow the process
down. Sometime all that is needed is clarification of the code Minnesota
should also strongly encourage all new homes built in Minnesota to use
heat pumps Minnesota can lead in heating homes from the ground up using
heat pumps!

Minnesota 2020 -

Suburb-to-Suburb Bus Transport
A family moves to Minneapolis from Houston. They find a nice house in
Plymouth where they like the school district and they’re near one
spouse’s job in NW Minneapolis But the other’s job is in Eagan The
commuting spouse has steeled herself for the 40-minute stressful commute
and after living in Houston she is ready for it. But this is Minnesota
and there is a TCRCD or Twin Cities Rapid Commute District The commuter
just has to sign up on the TCRCD website and is then directed to park at
a nearby church to start her commute There, a bus with assigned seating
and Wi-Fi internet picks her up and drops her at her office complex. The
commuter spends the 40-minute commute getting work done. After moving to
Minnesota, the commuter suddenly recovers an extra hour per day of time.
That’s Minnesota nice! Unfortunately, this scenario is still hypothetical
The Twin Cities Metro area, like most metro areas in the United States,
has become poly-centric with jobs being distributed all over the suburban
regions Many commutes originate from one suburb to another suburb And for
the typical twoincome families, there is no option of moving close to
both their jobs Ring routes like I-494/I-694 have become critical
commuter thoroughfares These long commute times have become the bane of
modern times. That’s why, whenever viable public transport is offered,
commuters flock to it. One of the best ways to get commuters out of their
cars is to develop transportation options from suburb to suburb Custom
point-to-point bus routes can be economically set up In addition to being
better for the environment, the bus system can be made One of the best
ways very desirable for commuters However, the buses would need to get
commuters out of to pick up people from parking lots near their homes and
drop their cars is to develop them off very close to their work. The
buses would need to transportation options be equipped with internet and
enough seating to ensure that from suburb to suburb. commuters could use
their commute time efficiently. Dedicated bus commute systems can be done
for as little as $40 million upfront costs and $10 million a year
operating costs for a 5000 commuter system. Since the system will start
after individual commuters have signed up, initial ridership figures will
be very high. There is also a high likelihood that the private sector
and/or individuals will contribute to costs With the right financing
model, the fiscal impact on the public purse could be non-existent to
very low. The suburb-to-suburb bus transport is not an alternate for
traditional public transport, bus or light rail systems The traditional
public transport systems deliver complete transportation functionality in
high density population areas or highly traveled corridors worldwide The
suburb-to-suburb bus idea is a narrowly focused approach to replace
single occupancy cars going from suburb to suburb twice a day during the
weekdays It is a new approach that is geared toward a typically American
commute in a typically American city


Jump Starting Minnesota’s Green Economy
Effective public transport usually results in a virtuous cycle improving
the economy, house prices etc Public transport also reduces gasoline
consumption and America’s dependency on foreign oil Releasing millions of
wasted man hours on labor cost will be another benefit. This system has
the benefit of being both green and cost effective.

ProduCT and servICe
Public transportation systems in most cities are the hub and spoke routes
that are geared to bringing commuters from the suburbs to dense
downtowns. Routes are based on aggregated traffic flow patterns and
change only very slowly. The routes are decided and then commuters follow
the routes This approach does not work for commutes between lower density
suburbs It is not financially prudent to put in the minimum density of
routes between suburbs that would make daily commutes feasible However it
should be possible to design suburb-to-suburb bus commutes based on the
following ideas • Identify and target specific employment areas e.g.
office park complexes. • Design bus routes based on individual commuter
needs • Focus on longer commutes • Limit the number of pickup / drop-off
points. • Design routes that are point to point and without transfers
What we get will be the 21st century version of the company bus, an open
service provided for the decentralized employment that is today’s America
This idea for a suburb-to-suburb bus commute is based on the Google Bus
service, an employment perk that Google initiated to keep its workforce
happy Google has a well-deserved reputation for being one of the best
companies to work for Many of its employees put a high premium on a
comfortable commute Google developed bus routes that would pick up daily
commuters in comfortable and green buses This is the old company bus idea
brought up to date Google developed customized bus routes for its widely
distributed work force that opted into the program With 32 buses, Google
was able to serve 1200 employees The buses have comfortable seating
equipped with Internet connections The bus allows many of the employees
to get up to 1 ½ hours per day back into their lives and has received
rave reviews from its employees The Google bus idea can be modified for a
public system. The key is in developing a system that identifies specific
commutes and then designs the routes for them. For the idea to be
successful, the routes have to be like express bus lines with a limited
number of stops That means both pick up and drop off points have to be
clustered close together. Most workplaces are part of large office parks.
The morning drop off points can easily be clustered together in office
parks and complexes. For example, there could be several drop-off points
in Eden Prairie office complexes near the Vikings offices.

Minnesota 2020 -

The challenge is morning pick up points Suburban housing does not have
enough density to have a few pick up points that are within walking
distance from each commuter’s residence Therefore, street corner pickup
points will not work, it will require too many of them Some of the
commuters could get dropped off, but many will need to park their cars.
However, there is another under-used physical resource found in most
suburbs that can be leveraged for this system; a very large number of
empty parking spots found in churches and in strip malls These spots
normally sit empty for most of the week and are only used on the weekends
These spots can be used during the week and can help in avoiding large
park and ride building structures By repurposing existing infrastructure,
commuters can enjoy convenient public transportation with minimal capital
costs Already existing Park and Ride ramps, like the one in Eden Prairie,
use local church parking for overflow parking. To be cost effective the
routes will have to be highly targeted. Most suburban commuters are
getting onto the freeway and then getting off the freeway in a different
suburb. No public transport system duplicates this behavior but it is
possible to automatically design such routes from commuter data These
routes will have to be designed like the express bus routes, picking up
commuters from a group of close pick up points and dropping them off at
another close set of points. See attached diagram. The drop-off points
are the various office complexes that the commuters are headed toward

potential bus routes


Jump Starting Minnesota’s Green Economy
The key technology enabler for suburb-to-suburb bus comes from advances
in the software industry The main technical hurdle is developing bus
routes from individual commuter data This would have been a major
technical hurdle even a decade ago but is quite feasible now It will
require two systems: 1) A system for collecting and collating commute
data from thousands of commuters spread all over the city Today’s web
based systems can easily handle this type of activity A system can easily
be constructed from off-the-shelf software. 2) A system for designing
custom routes from very large data sets Advances in logistics algorithms
for delivery companies and routing software found in GPS systems can be
modified for this purpose. This approach produces a new approach to
public transport. Routes are designed after ridership has been confirmed
by identifying specific named individual commuters. The system is highly
focused and only geared toward commuters. Because of its personalized
nature, there are better opportunities to get private partnerships for
financing the system. The buses themselves would have to be comfortable
and green To entice professional commuters out of their cars, the buses
should allow them to work, that means Wi-Fi access and proper seating
Most professional commuters have experience working in airplanes GPS
locating of buses with web-based and cell-phone notifications of bus
arrivals will deliver the customer service aspect of the system expected
by professional commuters The buses acquired for the system can be the
greenest feasible The system can use plug-in hybrids with the latest
efficiency features such as bio-diesel capability or even the higher
efficiency gas turbine and electric motor hybrids Since the system is
using the existing infrastructure of roads, freeways and parking spaces,
startup capital needs are drastically reduced, and bus costs are the only
upfront capital costs The objective of the system is to move single
occupant commuters out of their cars by providing them with a better

busIness and fInanCIal Case
Over 70 million people drive alone to work each day in the US Based on
national trends, the Twin Cities metro area has an estimated half a
million commuters who drive alone each day The key reason for driving
alone is convenience and flexibility. There is plenty of evidence that
many commuters would leave their cars if they can get a fast, reliable
and comfortable public transport The ridership of the Hiawatha filled up
very fast. In the Twin Cities even a 20 percent market penetration for
single occupancy cars would get 100,000 cars off the freeways every day
during commute hours

Minnesota 2020 -

Consider a simple costing model using the following assumptions • Bus
cost: $250,000 • Maintenance cost: $0 55 per mile Typical industry
standard • Diesel costs: $3 per gallon • Bus mileage: 4 mpg: Will be
better for greener buses. • Bus driver pay: $25 per hour • Commuters per
bus: About 60 to 80 for 3 to 5 trips one-way • Software development: $15
million. • Parking spot rental: $300 per annum Assuming reasonable
administrative and other overhead gives: • Initial outlays: $6,000 -
$8,000 per commuter • Operating costs: $2,000 - $3,000 per commuter per
year A pilot system for 5000 commuters can be initiated for as little as
$40 million dollars and $10 million a year Compare this to $700 million
to start the Hiawatha line This simple cost model does not include any
revenue; it is only intended to legitimize the need for a full-scale
feasibility study It is important to recall that this idea is inspired by
a private system, the Google bus There are short term direct reductions
of costs to the commuter Each commuter will probably save easily $1200
per year in fuel costs And the one hour to one and a half hour time
recovery easily translates into $6000 to $10,000 of labor savings in the
target commuter market In designing the finances for the system, the cost
savings for the commuters should be leveraged. The system should be a
public-private partnership Individual commuters will contribute because
they find the system very convenient and low cost. That includes reducing
the wear and tear on their cars and gas savings Many employers will
consider contributing because, like Google, they will be providing a
fairly desirable perk


Jump Starting Minnesota’s Green Economy
benefITs from The busIness and IndusTry
Well-designed public transport systems usually have a positive economic
impact, benefit the environment, and improve the quality of life for the
community There is tremendous pent up demand for public transport systems
as is evidenced by the fact that new commuter light rail lines such as
the Hiawatha tend to fill up very fast. This has been true nationwide. A
bus system has several unique benefits: • For Society: ◦ Saving gas
(National Security and Global Warming benefits) ◦ Reducing impact on
infrastructure • For the State: A Low Cost System ◦ Can start on a small
scale • For Businesses: Employee productivity improvement • For
Commuters: Easy stress-free commute Gas Savings: Like all public
transport systems, the suburb-to-suburb bus system will reduce gas
consumption For each commuter signing up, gas consumption will be reduced
by about 250 gallons per year And if the buses are running on fully
renewable sources, then each commuter being signed up will result in a
savings of 500 gallons of gas a year Gas consumption reduction will
reduce global warming as well as reducing America’s dependence on foreign
oil Infrastructure Expenditures: Reducing the number of cars on the road
will reduce wear and tear on the road and mitigate the need to expand
roads The savings in road maintenance and expansion by itself could be
substantial Cost Effective: This system has a very narrow purpose and can
be built very cost effectively. And just as important for getting the
project launched, this system can be piloted on a very small scale. The
system co-exists very easily with the cars The system also does not
require major upfront costs Time Savings: The single biggest benefit is
recovery of time for individual commuters. Commuters can save 250 to 400
hours per year It is important that this value be captured and one way to
do that is to ensure that it is possible to work on the bus, like
airplanes However, some commuters may choose the commute time as their
stress free down-time in which case it is a high value fringe benefit for
them. Once people start using public transport, the support for other
more expensive but better systems like light rail line also increases The
network of buses does not compete with light rail lines or traditional
rail but once a system is setup, commuter corridors would emerge. After
the commuter corridors are identified, it is more likely that that there
will be support for expensive but dedicated better public transport
options like light rail.

Minnesota 2020 -

PolICy reCommendaTIons
Suburb-to-suburb transport is a case where the greatest barrier for a
private or public entity to setup a pilot project is lack of information.
Traditional traffic patterns studies will not help in designing the types
of routes that are described in this report. The first step is to
commission a pilot study. The study should partner with companies to
promote people to signup The target would be to get enough people to sign
up so that profitable routes could be constructed for a pilot program of
1000 or 5000 commuters After the study, the state can facilitate the
project: 1) Minimize conflict with existing transportation
infrastructure. 2) Ensure that there are no problems with churches or
shopping malls participating in the parking program 3) Identify ways for
employers to subsidize the program Finally, it should be remembered that
the system was inspired by a business trying to provide fringe benefit to
its employees in a competitive employment. It should be possible to
create publicprivate partnerships where there is good potential for
demand for the service


Jump Starting Minnesota’s Green Economy
Residential Rooftop Energy
What is one of the easiest ways for an average US consumer to get carbon-
free green electricity? Purchase rooftop solar panels of course, even in
a cold northern place like Minnesota Many Minnesotans are not aware of
our state’s high potential for solar energy using rooftop solar power
Calculations done by the National Renewable Energy Laboratory show that
Minneapolis has more available rooftop solar energy potential than New
York, Seattle, Portland and even Houston Despite our cold winters, we
have many sunny days, and our summer days are very long
annual Power (kWh) City
Typical 4kW PV Array

Phoenix Miami San Francisco Minneapolis Boston Duluth Houston New York
Chicago Portland Seattle

6462 5951 5778 5375 5138 4970 4884 4874 4869 4701 4067

TeChnology and IndusTry
Residential scale solar electric power is generated by photovoltaic (PV)
cells, commonly known as solar cells Solar cells are electronic devices
that convert the sunlight into electricity The light particles from sun,
called photons, move the electrons in the material The moving stream of
electrons is what we call an electric current In short, a solar cell is a
device that produces an electric current when light falls on it While
solar cells have been around for over a 150 years the modern solar cell
was developed at Bell Labs in 1954 By 1958, solar cells were being used
to power satellites in space The most widely available solar cells are
made from silicon semiconductor They are manufactured using the same
basic semiconductor technology that is used in the manufacturing of
electronics and computer chips Advances in the computer industry have
also advanced the solar cell industry Silicon-based solar cells are
commercially available for residential rooftop implementations and are
the most common type However, there are several other types of solar
cells with different materials that are also being introduced into the
mass market. They often are called thin-film cells, but this is an
umbrella term for many different materials. Thin film solar cells include
amorphous silicon (a-Si), Cadmium Telluride (CdTe), and even a material
called Copper Indium Gallium Selenide (CIGS) They are just starting to
hit the mass market

Minnesota 2020 -

The other major innovation in the industry is called concentrators The
idea behind concentrators is that since solar cells are expensive, it may
be cheaper to concentrate the sunlight and use less of the expensive
solar cell material For example, using a magnifying glass to concentrate
the sunlight by 10 times requires one tenth the solar cell material Solar
concentrators have proved to be problematic in the residential market The
current solar concentrator technology is only good for utility sized
arrays However, there are companies that are planning to bring it to the
home market shortly From the customer perspective, there is only one
property of solar cell that really matters—the price The electricity is
the same from any type of solar cell and all types of solar power are
inherently green. Therefore, all the different companies and competing
technologies are all focusing on bringing the costs down The advantage of
multiple solar cell technologies is that there is internal competition
that will drive down cost to reach grid cost parity The energy industry
has recognized the potential market for home-based solar power
Manufacturers are making specialized solar cell panels that are designed
for residential rooftops. These come with all the electrical
paraphernalia that connect the system to the state’s power grid These
grid-connected systems allow the homeowner to use whatever electricity
they need, and the surplus is distributed into the electric grid system
Residential systems are also sturdy enough to withstand high winds short
of a tornado and up to one inch hail As the underlying technology costs
come down, aesthetics and looks will become important Most home owners
will pay a premium to have their homes look good Companies are already
making solar cells that mimic roof tiles and blend into the roof. Other
companies are incorporating thin film solar cells into windows. These
will be very thin films that look like one-way films found on many
automobile windows but generate electricity in addition to keeping the
glare of the sun out Many companies all over the US and Minnesota provide
turnkey services to install and setup a residential rooftop solar
electric power system. In short, residential solar power is rapidly
becoming mature technology that is backed by a full-service industry

fInanCIals and busIness Case
Residential electric power in Minnesota costs about 8 cents per kWh hour
The national average is about 10 cents per kWh, with the highest being in
Hawaii at 18 cents per kWh The cost of sunlight is free Inherently, it is
the upfront cost of solar cells that makes solar electricity expensive
For a well designed system, there are virtually no running costs
Unfortunately, solar cells are very expensive, and solar energy has
historically been one of the more expensive ways to generate electricity
But the good news is that the costs have come down and are expected to
continue going down The industry is just about to hit the tipping point


Jump Starting Minnesota’s Green Economy
Like other renewable energy sources, there are rebates and credits
available for solar rooftop systems The basic regulatory framework is
already in place in Minnesota The State runs a rebate program for
residential solar power Some of the utilities provide additional rebates
There are also federal and state tax credits, reinforced by the Stimulus
Package Another critical piece is the energy buy-back provision The State
requires that all utilities operating in Minnesota must buy-back any
surplus residential power at retail rates In practice, the electric meter
runs backwards when the house is generating more power than it is
consuming This means that all the power generated by the system counts
toward the homeowner’s bottom line, not just the amount they use The
final key piece of the financial component is the increase in the home’s
value. An empirical study done in California in 2004 found that home
values increase by 20 times the annual energy savings So for every $100
per annum reduction in electric bills, the home value will increase by
$2000 A typical four-bedroom house would probably install a 4kW (4000 W)
panel In Minnesota, a 4kW panel would produce about 5200 kWh of
electricity At 8 cents per kWh, this would save the homeowner $416
annually or about 30 to 50 percent of their electricity bill There is
virtually no running cost for the solar array The biggest expense of
solar panels is the upfront cost This includes the solar panels and
installation. Installation includes attaching the panels to the roof and
connecting it to the household electric circuits and the grid In the
later half of 2009, the price of installed residential solar panels was
running at $8 per W While the base cost is very high, state and federal
incentives make it financially viable.

Cost per W installed (2009) Array Size (W) Cost of Array MN Rebate ($2
per Watt) Fed Tax Credit (30%) Cost to homeowner

$8 4000 $32,000 ($8,000) ($7,200) $16,800

Less Home value Increase (est.) 20 times annual energy savings effective

($8,320) $8,480

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At today’s prices, installed solar panels will pay for them selves in
about 40 years on a cash basis or in about 20 years if house appreciation
is taken into account. While these financial benefits seem small, they
are perfectly in line for early adopters of the green revolution For
comparison, sales of hybrid cars have taken off despite there being no
purely financial benefits or payback unless gas prices went over $6-$7 a
gallon Over the next two to three years the financials are expected to
continue to improve. Silicon Valley startups are now creating prototypes
of solar cells with substantially lower costs An existing silicon
shortage is also starting to ease up The market expects solar cell costs
to go down by around 30 to 40 percent within three years If installed
solar panel prices reach $6 per W and electricity prices reach US average
of 10 cents per kWh, the payback period becomes only two years if house
appreciation is taken into account. And when solar panels reach $4 per
watt, with California like electric rates of 12 cents, the payback period
becomes six years without any state of federal incentive Nevertheless,
the high upfront cost of solar panels is sparking a new approach to
financing the panels. There are companies in California and a startup in
Minnesota that will install a rooftop solar panel and charge a fixed
monthly lease amount for it. As these companies install more and more
panels and the prices come down, they will be able to pass off the cost
reduction to the early adopters This approach allows homeowners a hedge
against the expected falling price of solar panels

Widespread adoption of solar power will greatly benefit the people of
Minnesota in achieving their targets for renewable electricity. If 25
percent of Minnesota’s single family houses get rooftop solar power, it
would represent 10 percent of Minnesota’s installed electric power
generation capacity In particular, this power will be available when
people need it If 25 percent of Minnesota’s the most, running air
conditioning during the day during single family houses get the summer
There are other advantages of residential solar power as opposed to large
centralized power stations Distributed power generated close to
consumption saves transmission costs and reduces the load on the
transmission infrastructure. The economic benefits are also distributed
widely as contractors, small businesses and homeowners directly see the
benefit of the economic activity. Twenty-five percent of Minnesota homes
getting rooftop solar panes represents over $5 billion of economic
activity. Finally, tapping the financial resources of individuals to
deploy a new technology has many advantages. Individual early adopters
will not to be as fiscally conservative as utility executives. Like all
technology product purchasers, these early adopters help seed and refine
the market. These retail-sized power stations also allow the market to
grow organically rather than justifying the need for millions of dollars
of investment at a time. The homeowner is also working off the retail
electric price and not the wholesale price and will see value even with a
higher cost structure

rooftop solar power, it would represent 10 percent of Minnesota’s
installed electric power generation capacity.

Jump Starting Minnesota’s Green Economy
PolICy reCommendaTIons There are many people who place a very high value
in going green The rising sales of hybrids are proof that people put a
premium on going green State and local government should support this
enormous reservoir of political will in the public for going green.
Residential rooftop solar energy represents another way to channel this
political will toward the greening of the economy Minnesota already has
the basic regulatory framework and incentive packages in place As the
solar energy industry grows, Minnesota has the potential to become a
leader in rooftop solar power generation. The residential rooftop solar
panel industry is a particularly good option since it is unlikely to need
any incentives in a few years Financial Incentives: As the industry
grows, the state needs to ensure that the current rebate program is
capable of handling the growth while remaining fiscally responsible. The
state also should ensure the rebate and tax credits are consistent
throughout Minnesota and easily accessible to all One key point is to
ensure that incentives remain in place if the homeowner chooses to use
alternative financing or rental type agreements to pay for the systems.
There are companies in California that provide co-ownership or rental
arrangements to provide homeowners with solar panels without any up-front
cash Regulatory Framework: Minnesota should be ready for newer solar cell
technologies and different types of solar panels as they come into the
market place The rebate structure and energy buy-back provisions need to
be flexible and technology agnostic. The requisite monitoring of the
system should be simplified and automated. Finally, state and local
government should clarify the sun access rights in residential
neighborhoods Once a $20,000 solar array is in place, a new tree by a
neighbor can be much more than a nuisance Solar power has many advantages
and it should be part of the repertoire that society uses to combat
global warming Many states and local governments are taking the lead The
Governor of California, Arnold Schwarzenegger, announced California’s
Million Solar Roofs initiative in 2006 Recently, the City of San
Francisco developed its own rebate program for rooftop solar panels. In
its most recent budget, the State of Pennsylvania also introduced rebates
for rooftop solar panels. The State of Minnesota should continue to be a
leader as the rooftop solar revolution truly gets under way

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Improving the Grid, the New Network for Minnesota’s Green Economy
In 2000 and 2001, California suffered brownouts and blackouts. The
wholesale electricity price fluctuated wildly, utilities went bankrupt,
and businesses and residents were very angry with the state The spectacle
of Silicon Valley, the global leader in technology, being beset by third-
world-like rolling brownouts became a national embarrassment The electric
crisis was probably the single most important issue that brought down
California Governor Gray Davis who became the 2nd governor in the history
of the US to be recalled by a public vote. After the debacle there was
plenty of blame going around. Some blamed the deregulation effort, others
blamed the regulators for botching the effort, and yet others pointed the
fingers at the energy traders for manipulating the market. But everybody
from Governor Gray Davis to President George Bush wanted California grid
improved as a part of the fix-it effort. It should not be surprising that
failing electric supply can bring down a governor The US economy went
from a 20 percent reliance on electricity in the 1940s to 60 percent in
the 1980s placing the electric grid at the center of economic activity
But America’s electric grid has been falling behind the 21st century
needs and is in no shape to support the new green economy The Obama
Administration has been promoting a new Smart Grid. Our current grid,
often called “the most complex machine in the world,” was developed over
the past century without any coherent planning. It now stands fragmented
with distributed ownership that often necessitates management by
nonprofit intermediaries. Despite the problems, the grid runs 24/7
because it has to run 24/7. When it stops running, a huge number of
people and businesses are affected. The grid was originally designed for
simple load patterns with large power plants constructed close to cities
The large coal, gas and nuclear power plants were a stable and
predictable supply of power Large cities with businesses and homes with
traditional appliances had a predictable demand for power However,
today’s rapidly growing demand and the explosion of electronic gadgets
creates new demands and stresses on the grid The new renewable sources of
power, the wind and sun, are neither stable nor predicable and are
usually far from major demand centers The creation of a ‘smarter’ grid
means at least three things: 1) Manage the complex demand to control peak
demand 2) Transmit large amounts of power over long distances
efficiently. 3) Manage supply distributed and variable sources such as
solar panels and wind turbines To become smart the grid will have to meet
all these needs while remaining in balance 24/7 And the key to doing that
is requiring that automation can deal with a lot of the issues That’s the
term Smart Grid, i e a grid that will use modern electronics to balance
complex supply and demand


Jump Starting Minnesota’s Green Economy
TeChnology and busIness
Today’s electric grid is powered by large centralized power plants,
designed to maximize economies of scale. When electricity is transmitted
over long distances, it needs to be transmitted at very high voltages, at
hundreds of thousands of volts As the electricity gest closer to the
customer, the grid branches out, and the voltage is reduced The change
over happens at electric substations by devices called transformers. The
electricity is shunted off to different secondary substations where
transformers push it down to household voltages of 110V or maybe 220V The
electric grid consists of the wires, poles, substations, transformers and
shunts In essence, it is the network that moves electricity from the
producers (power stations) to the consumers As such it is similar to a
network of pipes that move water from reservoirs to your home or like the
internet that moves information from servers to your computer However, in
some ways the electric grid is more fragile than the other two In the
water system a large supply of water is available ready for use, allowing
operators to turn up supply when demand goes up On the internet,
information only gets pulled from the server when the consumer needs it
The water supply and the internet become unbalanced in very extreme
circumstances The electric grid on the power must be consumed the moment
it is produced Excess supply or excess demand can cause the grid to fail
The need for instantaneous balance in the electric grid is the key to its
fragility. It is truly remarkable that the US electric grid—run by many
operators and managed by different state regulators—runs 24/7 virtually
all the time. The grid is kept in balance by a process where all new
power is allowed into the grid only after a careful engineering study In
Minnesota, this process is controlled by an independent organization
operated jointly by the power producers in the industry This
organization, the Midwest ISO, carefully controls the influx of new power
into the grid. It ensures that the new power or new consumption will not
destabilize the grid Therefore, it sometimes takes up to six months for
new wind power sources to be approved

Minnesota 2020 -

For most people the Smart Grid means demand management Instead of having
to build new plants to manage the few days of peak demand in the summer,
utilities can save money and pass the benefits on to the consumer for
only a slight inconvenience . The idea is to spread the demand out so
that peak power needs are controlled For example, instead of running your
dryer during the day when demand and cost are highest, the system would
encourage you to do your drying in the evening when demand is low, giving
the consumer a price break Many utilities are already doing demand
management to shut down air conditioners on peak demand days, which
allows customers to get a break on their bills This is a very rudimentary
piece of the smart grid The idea is to allow the utility to manage and
monitor many electrical devices in the home to better control and predict
demand Xcel Energy has a large scale Smart Grid pilot currently running
in Boulder, Colorado The project went live in September 2009 and steadily
incorporating more features such as adding smart meters and incorporating
plug-in-hybrids into grid management The Obama Administration is also
pushing another key piece of the new grid—long distance power
transmission Utilities have to locate power production wherever the wind
blows and the sun shines Wind power is available in the Midwest,
especially the upper Midwest Solar power is primarily available in the
southwest However most of the demand is on the coasts In other words, a
large quantity of power will have to be transmitted over very long
distances. This is something the grid was not designed to do The grid is
more like a network of single lane highways with short and local multi-
lane freeways What are needed are long distance multi-lane freeways A
second component to the smart grid is a new type of electric
transmission, called DC High Voltage transmission that can transmit power
efficiently over very long distances. DC High Voltage has been around
since the time of Edison, but in the last two decades, it has become
technically feasible on a commercial scale


Jump Starting Minnesota’s Green Economy
The third challenge, and perhaps the most important piece of the Smart
Grid, is managing green power. Wind and solar electricity place new
demands on the grid because they are intermittent power sources Current
green contributions to the grid are about 2 percent and do not have an
impact, but if the 20 to 30 percent goals are reached, utility companies
may have difficulty regulating power since the grid needs to be balanced
all the time But perhaps the most exciting piece is energy storage If
part of solar power could be stored during the day and released during
the night, solar power becomes a stable base- load power like coal or
nuclear The same argument is applicable for wind power. Utilities are
starting to work on large batteries and other energy storage ideas In
poor countries where electric supply is unreliable, most middle class
households have some kind of UPS system for electricity storage They are
not very expensive Local distributed storage can buffer demand or supply
fluctuations. These three issues are tied to keeping the grid balanced
all the current grid is the the time One of the most critical
developments taking place industry’s key strategy is putting
sophisticated automation at the various choke for cost effectively points
of the grid The grid has the ability to shunt power modernizing the grid.
from one section of the grid to others. But putting more automation in
this process has the option of making existing infrastructure far more
robust and flexible. Putting automation into the current grid is the
industry’s key strategy for cost effectively modernizing the grid
benefITs President Obama’s economic strategy is riding on a market wave
that has already started; green business One of the key tenets of this
administration’s strategy is to invest in alternative sources of energy
and to upgrade the grid to a ‘smart’ status Even before the election of
2008, conservative oil businessman T Boone Pickens invested $5 billion in
green technology last year He may not be an environmentalist, but there
are sound economics behind greening the economy And one of the key
talking points in both the McCain and Obama campaigns was about building
a better grid. Upgrading the grid is central to all the renewable energy
plans For example, Google recently chose to develop a large server farm
in rural Washington State to be close to a hydroelectric plant and avoid
reliance on the grid. Google is a world class company and is not
satisfied by the current state of the electrical grid The US economy
prides itself on its capacity for innovation, but it must have a
progressive infrastructure upon which its businesses can innovate The
funding and political momentum is there, and Minnesota needs to be at the
forefront Minnesota growth opportunities lie in harnessing wind and solar
power Both green electricity sources are distributed as intermittent. If
Minnesota can improve the grid, the free market will find it much easier
to develop wind and solar power, as it will provide access to the

Putting automation into

Minnesota 2020 -

WhaT Can mInnesoTa do?
There are ample opportunities for Minnesota to develop all three parts of
the Smart Grid Western Minnesota is home to many wind farms The people in
western Minnesota would be very interested in participating in programs
that could grow the local economy Developing a safe load management
component of the Smart Grid requires pilot programs that encompass entire
communities Xcel Energy has a pilot program in Boulder, Colorado Western
Minnesota is home to many small communities that could be used to develop
a rural and multi-community pilot program for Xcel Minnesota is between
the wind resource-rich Dakotas and the load centers of Chicago and the
east coast Any transmission lines to utilize wind power from the upper
Midwest will have to go through Minnesota There is also opportunity for
greater utilization of Minnesota’s own wind resources if efficient and
modern transmission lines are built. While this is in part a national
issue, Minnesota is uniquely positioned to be a leading state for
development and subsequent benefits. Finally, Minnesota should also lead
in developing technology and techniques to manage production fluctuation.
This piece probably has the best short-term opportunity for Minnesota.
With great wind and roof top solar power potential, Minnesota stands to
benefit greatly from energy storage solutions In the past Minnesota has
led in renewable energy, from wind power to ethanol In the short run
there are two key developments that can help Minnesota 1) Open Model of
Grid: While MISO is doing an excellent job of managing the grid, it is
sometimes difficult to identify opportunities for putting power into the
grid. A study commissioned by the state, Minnesota Grid Study for CBED
legislation, found some interesting opportunities If the grid is modeled
in a computer system and is made widely available, entrepreneurs could
explore and validate their new ideas easily 2) Distributed Power Storage:
Large power storage systems are still being developed However, small
scale energy storage systems are already available Deploying distributed
storage close to consumption (i.e. close to homes) may be the most
economical way to get intermittent power into the system


Jump Starting Minnesota’s Green Economy
Wind Power for Minnesota: Utilizing Stranded Wind
Wind power is a very old technology Mankind has been using windmills to
pump water and mill grain for centuries In the 21st century, the
windmill, now called a wind turbine, powers electric generators to make
electricity for the grid Wind-based electricity is clean and green, but
the supply is intermittent and is only available where the wind blows,
not where the power is needed Wind-powered electricity is already an
established industry worldwide, and Minnesota is one of the leaders in
wind power Minnesota currently has about 1800 MW of installed wind power
capacity The state has passed a law where by 2021 Minnesota utilities
must generate between 20 and 25 percent of power using the wind But
Minnesota’s wind potential is much more than that Estimates by the
American Wind Power Association show that Minnesota has about 75,000 MW
of potential wind power capacity That means that Minnesota is currently
using only 2½ percent of its capacity Under the current mandates, even by
2021, Minnesota will be using at most 10 percent of its potential wind
capacity Tapping into more of Minnesota’s wind power to generate more
electricity runs into two problems • The grid cannot reach many sites
where wind farms can be built New power lines need to be built to access
the wind power • The grid will not be able to handle additional wind
power due to its intermittent nature. Some type of energy storage
technology or other means will have to be used to create controlled power
output from wind-based generation Both these challenges are expected to
be ultimately met, but will require millions and maybe billions of
dollars of investment and perhaps a few decades of time In the meantime,
the wind continues to blow The wind power industry has a term for it:
stranded wind Approximately 90 percent of Minnesota’s wind resources are
stranded wind, i e there are no plans to use it either because there are
no grid connections or it is not possible to accept any more wind power
into the grid While waiting for grid and energy storage to mature,
perhaps it is time to go back to the roots of wind power and use it where
it is generated

Minnesota 2020 -

loCalIzed use of WInd PoWer
The localized use of wind power is well suited for creating a product
that meets three criteria: 1) Energy intensive process 2) Easily
transported or locally available raw material 3) High value and easily
transported final product. The approach is to mimic the windmill-based
grain milling process where wind mills were located in the farmlands
During historical times, grain milling was a relatively energy intensive
process and used local raw material to produce flour. While flour
manufacturing would not meet these criteria today, there are other
products that do

WInd To ferTIlIzer
Commercial farm fertilizer is typically made from a gas called ammonia
This is a very large and very energy intensive business By some estimates
up to 1 percent of the worldwide energy consumption is used for
manufacturing ammonia Most of the commercially used ammonia is
manufactured from natural gas and thus releases CO2 emissions Using a
green source of energy will cut the emissions from ammonia Minnesota uses
about $300 manufacturing Minnesota uses about $300 million million worth
of ammonia for worth of ammonia for farming each year The state farming
each year. The state has more than enough wind resources to make all this
has more than enough wind ammonia and then some Today most of the ammonia
is made using natural ammonia and then some. gas Natural gas is heated
with steam to produce hydrogen The hydrogen is then mixed with nitrogen
from the air and using a century old technique called the Haber-Bosch
process, ammonia is manufactured When German chemist Fritz Haber was
developing the process, he used hydrogen that he made by splitting water
molecules with electricity Later on when the process was industrialized,
hydrogen from natural gas replaced hydrogen from water But now it is
possible for industry to come back full circle by creating hydrogen from
water using green electricity from the wind Since water and air are
widely available, this process would essentially be converting wind to
fertilizer The University of Minnesota’s West Central Research and
Outreach center has already initiated a pilot project for wind to
fertilizer. They have attached a small ammonia plant to a wind turbine
and produced green ammonia Researchers at the U believe that a green
fertilizer industry can easily use up to 2000 MW of wind No grid
investment or energy storage technology is needed for this work Minnesota
and other farm states already have infrastructure to manage ammonia

resources to make all this


Jump Starting Minnesota’s Green Economy
WInd To green fuel
Minnesota has the unusual good fortune of having two green resources,
wind and agricultural waste biomass, close by This provides an
opportunity for simultaneous use of corn-based agricultural waste and
wind power Any biomass can be converted to syngas, gas that is the basis
for green fuels (See Syngas section) Converting biomass usually requires
heat, typically done by burning some of the biomass or syngas But the
best type of heating is by using electricity and using a process called
electric plasma heating Plasma heating makes the biomass very hot, and
this ensures a good quality of clean syngas Since plasma heating requires
electricity, it can be expensive At this time plasma heating is currently
only being used to incinerate household waste But a company in California
is using plasma heating to convert biomass to jet fuel But if the same
technology is used to create electricity from windmills and biomass from
agricultural waste, the resulting fuel would be green and efficient.

PolICy reCommendaTIons
Minnesota has been focused on using wind to power our grid And it should
continue to do that Using wind to power the general purpose grid is
probably the best use of the grid However, Minnesota’s wind resources are
much greater than can be absorbed into the grid in the foreseeable future
Therefore policymakers should also look at other options There are
probably many ideas for using stranded wind; only two were presented in
this section The key policy objective of using stranded wind should be to
create incentives that are functionally equivalent to those for existing
wind to grid incentives Awareness that such incentives could materialize
will spur entrepreneurs to bring their ideas to the table and encourage

Minnesota 2020 -

From Economical Plug-in Hybrids to an Electric Car Industry
Imagine a car, a silent smooth car, a powerful fast car and one that
refuels right in your garage This is the promise of an electric car The
quest for the electric car was originally driven by the need for zero
emissions vehicles But electric cars also have another advantage that
will endear them to American drivers; efficiency that does not come at
the expense of engine power. It will be possible to get muscle cars,
light trucks and mini vans that have Prius-like efficiency and whisper-
quiet smoothness of a Roll Royce with no emissions However, all of this
promise is being held back by the limitations of the current battery
technology. Nevertheless, due to the tremendous advantages of electric
cars, key players are jumping into the electric car race. There are many
different approaches to developing the electric car industry. Launch with
pure electric cars into niche markets, use plug-in hybrids as a stepping
stone, or develop rapid recharging infrastructure everywhere When the
California startup Tesla Motors announced its high performance all-
electric sports car, GM followed suit with their mass market plug-in
sedan the GM Volt. Yet another California startup Better Place is
partnering with national governments and car companies to create a rapid
recharging infrastructure The nascent electric car industry is focusing
on upper end and niche markets Tesla spent hundreds of millions of
dollars to produce $110,000 all-electric sports car GM is spending about
a $1 billion to get a $40,000 plug-in hybrid compact sedan launched The
average price for a new car in the US is $27,000 And building a new rapid
recharging infrastructure will probably cost billions of dollars The
traditional view is the electric car industry will have to spend billions
of dollars and produce very expensive cars before they get to the mass
market Both the Tesla Roadster and the Volt are excellent cars, but they
are quite expensive for their class It will be a many years before either
company produces a truly mass market car But it does not have to be that
way That is the lesson from the curious tale of White Zombie, an all-
electric street legal dragster In the early nineties, John Wayland of
Oregon was tired of all the problems with imported oil and decided to go
oil free He acquired a white 1972 Datsun 1200, gutted its innards and put
in an all-electric drive-train. Thus was born the White Zombie. The car
was created in his garage with a big helping of American ingenuity but
without a multi-million dollar budget John Wayland liked speed so he
built the White Zombie to go fast, very fast He started taking his car to
the drag races and easily defeated cars like Corvettes, Masaratis and BMW
sports cars. YouTube videos of an ancient white Datsun zooming past a
shiny new Corvette are quite amusing


Jump Starting Minnesota’s Green Economy
The White Zombie will not win against specially constructed and expensive
professional drag racers But that’s actually its strength What John
Wayland accomplished is the key to driving the electric car revolution,
accomplishing good enough performance economically Clayton Christianson
of Harvard Business School has studied business innovation and written a
very influential book called the white zombie the “Innovators Dilemma ”
He shows that disruptive innovation, the kind of innovation that
overturns industries, usually comes with good enough products that are
economical and start by taking over the low end of the market And the
companies that generate the disruptive innovation are usually outsiders
As the technology stands today, the high tech battery is the only
bottleneck to an electric car industry. New battery technology is needed
to give electric cars a long gasoline-free range, but it also makes the
cars expensive. Using today’s battery technology will still give about
five to 10 miles of battery range. A study by Carnegie Melon scientists
has show that the most cost effective strategy is plug-in hybrids with a
range of just seven miles A system with economical cars and a lightweight
network of simple charging stations at workplaces can be built on today’s
technology The simple network of recharging stations could be just
outlets at commuter and company parking lots Such a network would not
suffice high tech batteries but would double the gas free range for low
tech battery cars up to 10 to 20 miles for daily commutes. This is the
fastest way to get a large number of electric cars out in the market
place From an environmental perspective, it is better to get a million
cars that have 20 percent reduction in CO2 emission than to have 10,000
cars that are truly zero emission. And widespread economic benefits only
come from mass market products From both economic and environmental
perspectives, wide scale deployment of incrementally green cars would be
much better than waiting for the best battery technology. But from a
marketing perspective incremental improvements are difficult to sell.
Both environmental and business interests tend toward wanting dramatic
improvements in technology The paradox of commercializing an emerging
technology is that getting to market fast is the critical factor in
minimizing costs. A good enough product that gets to the market faster is
better than getting a better product later. The key is identifying the
minimum threshold that can get the product out into a mass market.
Electric cars with simple battery technology are at that point. The key
is to legitimize this approach

Minnesota 2020 -

ProduCT and TeChnology
Electric cars have been around for a long time Jay Leno’s garage full of
antique cars includes a 100-year-old production electric car Electric
cars lost out to gasoline cars very early on because of limited battery
capacity Nevertheless, the electric motor is inherently superior to the
gasoline engine for automobiles • Efficiency: The electric motor is very
efficient and its efficiency does not depend on speed or motor size This
means that the electric motor gets the same high efficiency at city
driving and freeway driving, in large cars or small cars

100 year old electric car

• Power or Torque: The electric motor produces very high torque, and the
torque is available at all speeds That means that the car can accelerate
fast from a standing start and does not need to shift to higher gears. No
transmission needed. • Zero emissions: The electric motor does not
produce any pollution If the electricity is from renewable sources like
wind, then the car is truly zero emissions to run The hybrid cars like
the Prius are the first attempt to take advantage if the electric motors
inherent superiority In today’s hybrids both the gasoline engine and
electric motor can drive the cars The gasoline motor can also recharge
the battery. Complex mechanics and software ensure that both are used to
maximize efficiency. In the electric car an electric motor exclusively
drives the car’s wheels, referred to as an all-electric drive train
Electric cars come in two types: • Pure Electric: These cars only have an
electric motor and battery. They need recharging stations and usually
require several hours to recharge The only fast way to ‘refueling’ them
would be a network of battery-swap stations. • Plug-in Hybrid: Also
called series hybrid or extended range electric vehicle These cars have
an on-board gasoline or diesel generator to recharge the battery when it
runs out.

hybrid car drive train

electric car drive train


Jump Starting Minnesota’s Green Economy
The electric car is inherently simpler The electric motor has fewer
parts, e g does not require oil changes and other maintenance Most
electric cars will probably not need a transmission since there will be
no need to shift gears. The White Zombie is such a direct drive, and it
reverses by reversing the electric motor The overall simplicity will lead
to lower manufacturing costs once the economies of scale start to apply
The battery remains the Achilles heel for the electric car. Despite vast
improvements in battery technology, there is still no available battery
technology that can power a typical car for 300 miles and recharge in 10
minutes. And even if such a battery technology were available, recharging
the cars would severely overstress the electric grid Companies are
approaching the problem in three ways • Niche Market Cars: Tesla has
opted to start with a high-cost battery-only car. Even though this is a
battery only car, it is a niche market sports car and will not stress the
grid too much. They are hoping that the utilities or the government will
have improved the grid by the time they bring out mass market cars •
Electric Cars and a Recharging Network: Nissan and Better Place are
teaming up with Denmark and Israel to create a rapid recharging network
for battery-only cars. Nissan sells cars, Better Place builds
infrastructure with the help of national governments. • Plug-in Hybrids
with Built in Gasoline Generator: GM is basing its Volt strategy on this
approach The Volt can recharge on a garage overnight and go 40 miles
without recharging Once the batteries deplete, the on-board generator
recharges them. Many industry insiders think that plug-in hybrids are the
safest choice since they won’t need any new infrastructure The car
depends on the existing grid and existing gasoline supply chain
Nevertheless, GM still managed to spend over a billion dollars and came
out with a $40,000 car The reason for that is that GM went for longest
possible electric-only range GM developed and commercialized bleeding
edge battery technology and wrung out the most efficiency by designing a
new chassis and body GM could have greatly reduced the cost by reducing
electric-only range Researchers in Carnegie Melon found that plug-in
hybrids are more efficient than plain hybrids. But trying to increase the
battery-only range dramatically increases the price and weight of the car
since the battery is both expensive and heavy. The economical sweet spot
for battery-range in a plug-in hybrid is seven miles. The 40-mile range
of the Volt is overkill. Low battery range cars could be built on
existing chassis and bodies with economical battery packs. They could
easily be charged at home. They could also be easily charged in garages
and with simple network electrical outlets in parking lots, not unlike
the engine block heater outlets found in Northern Minnesota No billion
dollar development cost or billion dollar infrastructure upgrade needed

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busIness and fInanCIals
Market demand for cars is assured for the foreseeable future, but it is a
saturated market with well-defined price points. Any new entrant will
require competitive advantage and must fall within existing pricing
structure Electric cars will start having one key advantage, more green
than the primary competition The electric engine can also give cars a
performance edge for a cost However, the flip of the argument is to
provide good enough performance for lower cost. The average price of a
new car in the US is $27,000 This price includes the upper end cars To be
a truly disruptive technology for the mass market, the electric will have
to penetrate the entry level market, e g a four door sedan/hatchback
priced at $20,000, preferably $10,000 To keep the car economical, the
business model needs to focus on cost as a key competitive advantage
However, the automobile market is a mature market, and there is a certain
threshold of performance and reliability that must be met. Otherwise, the
economical electric car will suffer the fate of the Yugo, where poor
reliability killed the brand completely Lowering costs should be achieved
by minimizing development and launch costs and minimizing the bill of
materials The experience of the White Zombie is that existing
commercially available technology can go very far when it is stitched
together intelligently Costs need to be controlled by keeping both
development costs and the bill of materials costs low Development Costs:
The cars should be built on existing platforms—body and chassis—as much
as possible to minimize developmental costs Unit Costs: Key to limiting
unit cost is minimizing battery costs and keeping performance to good
enough for its class Like the computer industry, the supply chain for
electric cars will have independent sectors, the battery and electric
generator being separate. In the computer industry, separate hard disk,
graphic cards sector’s internal competition drove the technology. Hard
disks kept on getting better. Similarly, battery technology will improve,
and the battery range will go up until finally, the gasoline generator
will no longer be needed Already researchers in Stanford University have
developed a material that can create long range batteries that also can
recharge very fast. The electric car promises to be a major disruptive
technology in the automobile business Finally, it should be noted that
this type of hybrid design, where a gasoline generator is driving an
electrical drive train is neither fundamentally new nor risky Most people
don’t realize that ‘diesel’ locomotives are diesel powered electrics and
have all-electric drive trains The diesel engine just runs the generator
to make electricity and the electric motor drives the wheels The rail
industry has been successfully running them for decades


Jump Starting Minnesota’s Green Economy
benefITs from The IndusTry
An electric car industry can be a source of global warming control and
economic development at the same time The fastest way to get a large
number of electric cars out in the market place is to target the mass
market. From an environmental perspective, it is better to get a million
cars that have 20 percent reduction in CO2 emission than have 10,000 cars
that are truly zero emission And widespread economic benefits only come
from mass market products. From both economic and environmental
perspectives, wide scale deployment of incrementally green cars would be
much better than using the best battery technology for expensive cars.
Cars that have five to 10 mile of battery range can log 3000 to 5000
miles per year of electric-only travel That could save up to 120 to 200
gallons of gas per car And when these cars run out of battery range, they
will have the fuel efficiency of a hybrid, e.g. 50 to 60 mpg for a small
sedan. In short, these cars could reduce gas consumption by 60 to 70
percent as compared to a regular gasoline car The US car market is about
17 millions cars per annum Even a 1/10th of one percent is more than
10,000 cars Even the 10,000 cars seed market represents approximately
$100 million of revenue The automobile market is so large that even a
small piece is a huge incentive But real incentive is a real chance that
Minnesota could become the center of excellence for new electric car
industry These are times of turmoil, and older companies are contracting
Minnesota has two key sets of skills that can be leveraged, a small
nucleus of automobile industry experts from the Ford plant and an
electrical engineering base from medical technologies and the sensors,
automation and control industry Minnesotans have the skills needed to
launch the electric car industry

PolICy reCommendaTIons
In 2008 Ford was persuaded to keep their light truck plant open in St
Paul While it is very important to keep today’s automobile manufacturing
in Minnesota, we should also be looking towards future Where will
automobile manufacturing be in the next 10 years? Gov Schwarzenegger
convinced Tesla to setup their new manufacturing plant in California
instead of New Mexico What can Minnesota do to compete in the Great
Electric Car race? The worsening economy is slowing down the nascent
electric car industry Tesla has already announced a delay in starting
their new factory Cash strapped GM may not be able to sell the Volts at
as low a price as it wants In this climate, any state or region that can
legitimize and facilitate a lower cost approach can attract the industry.
Minnesota can take five concrete steps. 1) Legitimize the low tech
battery approach. The state can use its bully pulpit and partner with
advocacy groups to popularize this approach The very act of the state
pushing the solution can create a seed market of early adopters

Minnesota 2020 -

2) Ensure that incentives are properly targeted The state should ensure
that the incentives do not discriminate against electric cars with lower
tech batteries. 3) Help with the regulatory framework The nascent
electric car industry will need help dealing with state and federal
regulations. Sometimes the regulations may need to be simplified. And
sometimes the only requirement is help to navigate complex regulations 4)
Develop a network of simple charging stations The simple charging
stations will typically be standard outlet not unlike the engine block
heater outlets common in northern Minnesota The state can partner with
electric utilities and employers to create a network 5) Create a seed
market by purchasing some electric cars for state projects and state
fleets. Minnesota has all it needs for a disruptive electric car industry
to form here—automotive experience and electrical engineering talent The
Twin Cities Ford Motor plant that is slated for closure makes Ford
Rangers The Ranger body style, a basic light truck, is an excellent
candidate for electrification. Whether or not the plant has any value
depends on what it will cost to reconfigure it? Nevertheless, a key
resource is the skilled workers. Leveraging the skills of the workers—
people who have years of experience in the business— is important. In
2009, Fisker Automotive, an electric car startup, acquired a GM
manufacturing plant in Delaware Fisker is also planning to utilize the
services of GM workers that were made redundant with plant closings And
these are unionized workers. Fisker management understands that trained
staff is central to the success of any company. Minnesota has a highly
educated workforce and a state government with a history of supporting
environmental businesses like wind power By providing the right
incentives, we have a great chance of becoming an electric car industry
cluster and a leader in the Great Electric Car Race


Jump Starting Minnesota’s Green Economy
Nuclear Power for Minnesota
A few years ago Dr Patrick Moore, a one-time founding member of
Greenpeace, came out in favor of civilian nuclear power Since then it has
become clear that due to global warming concerns, support for nuclear
power does not follow the traditional left-right divide. There are many
younger progressives who feel that nuclear energy should be part of the
mix used combat global warming while keeping the electric supply secure
At the same time, many people feel strongly that nuclear power too
dangerous to be viable for large scale and long-term civilian use,
especially when other alternatives are available Nuclear energy has come
a long way from the very first reactor built underneath a basketball
court at the University of Chicago during World War II Today no one would
advocate building an experimental reactor in the middle of a large city
But even during the 1950s there was widespread optimism that nuclear
power would change the way society works The Chairman of the Atomic
Energy Commission foresaw a time when electricity from nuclear power
would be too cheap to meter But Hiroshima brought home the dangers of
radioactivity and nuclear pollution Nuclear bomb testing and the close
call at the Three Mile Island reactor turned public opinion away from
nuclear power Only a handful of reactors came online in the US for almost
30 years However, the US is still the largest generator of nuclear-based
electricity with 104 active reactor generators producing 101 GW of
electricity We have almost twice the number of reactors as France, the
next largest nuclear power producer With 20 percent of US and 25 percent
of Minnesota’s electric power coming from nuclear plants, nuclear power
is here to stay for the foreseeable future But should we increase the
number of reactors? The difficulty with deciding on nuclear power is
because when it is good, it is very very good and when it is bad, it is
very very bad When a nuclear plant is working as designed, there is no
pollution, no CO2 emissions, and the volume of waste is so small that
decades worth of waste can be stored on-site. But when something goes
wrong, it’s Chernobyl! Even a few pounds of misplaced nuclear waste can
become a major national security concern

Splitting the atom, called atomic fission, creates lots of energy. One
pound of uranium undergoing fission produces as much energy as burning 32
million pounds of coal. However, nuclear reactions are very choosy and
only work with particular types of atoms. Atoms come in different types
called isotopes. The re is only one naturally available material that can
undergo fission, the isotope of Uranium called U-235 Natural uranium
consists of very low concentrations of U-235, only 07% of that is mixed
in with another isotope of uranium called U-238 For nuclear power the U-
235 needs to be concentrated before it can be used and this process is
called ‘Enrichment’

Minnesota 2020 -

All the civilian nuclear reactors in the US use enriched uranium as their
fuel The uranium is fabricated into fuel rods The rods are then inserted
into a nuclear reactor Inside there is material called moderator At its
basics, the nuclear reactor is quite simple If enough fuel rods are put
in close together, the nuclear reactions start naturally The moderator
allows the operators to control the rate of the reaction As nuclear
reaction proceeds, an enormous amount of heat is used to run a steam
turbine that runs an electric generator A typical reactor provides 1 GW
of electricity, dayin and day-out The waste from a nuclear reaction is
highly radioactive material The amount is quite small, but the material
is exceedingly dangerous Normally the waste would have lost most of its
radioactivity in a few decades except for one curious twist of nature The
enriched uranium still has U-238 By itself U-238 cannot undergo fission,
i.e. not useful for nuclear power. But inside a reactor something strange
happens to U-238, it becomes another element called Plutonium—in
particular the isotope Pt-239. And Pt-239 is can undergo fission. In fact
Pt-239 is the major component of nuclear bombs. While Pt-239 can be used
in civilian reactors, due to nuclear weapons proliferation risk, the US
decided that it will not be used on civilian reactors Pt-239 remains
radioactive for thousands of year, is very dangerous, and is present in
nuclear waste Separating Pt-239 from the spent fuel rods is called
nuclear ‘reprocessing’ Reprocessing tends to quite expensive since it
requires handling very dangerous materials. There are two benefits to
reprocessing • Reprocessing simplifies the nuclear waste problem. The
waste in the US contains Pt-239 increasing waste volumes and requiring
safe storage for thousands of years • Reprocessing greatly increases the
nuclear fuel supply The Pt-239 that was waste now becomes fuel The US
civilian reactors do not reprocess the fuel French civilian reactors do
At the current rate of use, the global supply of U-235 will last about
200 years If use of nuclear power expands without reprocessing, U-235
could easily run out in 50 to 70 years However the supply of U-238 is 150
times that of U-235. There is another material called Thorium that can be
made fissile like U-238. Supply of Thorium is 600 times that of U-235
Therefore, it is unlikely that there will be a major global or US
expansion of nuclear power without some kind of reprocessing


Jump Starting Minnesota’s Green Economy
But the need for reprocessing does not reduce its dangers With the
current nuclear technology, reprocessing requires that the material be
taken out of the reactor, transported to another site and reprocessed The
fuel needs to then be fabricated and put back into the reactor All these
steps involve risk There are experimental reactor designs that accomplish
reprocessing within the reactor itself But these are still on the drawing
board While in the long run, nuclear reactors designs will evolve and
perhaps improve enough that critics will be satisfied. But R&D (research
and development) and design certification cycles for nuclear power plants
are decades long For the next 10 to 15 years, it is extremely unlikely
that there will be any commercial reactor that is significantly different
from the ones that are currently coming online. In the US these reactors
do not reprocess and only use enriched uranium as fuel

advanTages vs. dIsadvanTages
The debate over civilian nuclear power for the next decade has to be
focused on reactor designs that are already in the market place The
Nuclear Regulatory Commission will not and should not approve new designs
in a hurry The debate then comes down to the cost of adequate safety
Nuclear reactors can work safely and fuel can be stored in casks for
decades, if not longer And nuclear power does not produce global warming
gases nor increase dependence on foreign oil But what are the risks and
the true costs? Nuclear reactors need to be designed with very high
safety margins since the risk tolerance for a nuclear accident is
effectively zero. The cost of safety, from huge reactor containment
vessels to redundant systems, drives the construction costs of reactors
up to $5 to $6 billion And then there are other operating costs, waste
disposal cost, insurance and decommissioning costs In the US, Japan and
Western Europe, nuclear power plants have an adequate safety record There
have been no serious accidents but there have been a couple of near
misses. In the final analysis the question for nuclear power is simply,
is it cost effective?

PolICy reCommendaTIons
In 2009 the Minnesota Legislature debated whether or not to remove the
moratorium on new nuclear power plants. Ultimately, the debate over
whether the moratorium gets lifted or not is a distraction What is
important is that the legislature gets consistent cost numbers from the
nuclear proponents A comprehensive MIT study from 2002 assumed that
upfront costs for 1000 MW reactor would be about $2 billion But market
price for 1000 MW reactors that includes construction and deployment is
closer to $5 billion In addition to construction costs, there are other
costs that also need to be accounted for

Minnesota 2020 -

Secondly, policy makers should determine if the money can be better spent
elsewhere. Minnesota has a competitive advantage in wind and biomass.
While intermittency of wind power is a problem, investing a few billion
dollars in a smarter grid with better storage technology may produce much
better economic benefits for Minnesota. Both wind turbine and energy
storage technologies have much shorter R&D cycles Finally, nuclear plants
are such big ticket items that it is better to spread the risk. For short
term it may be better for large states like Illinois or California that
have huge energy needs but limited renewable resources to try out the
first few new reactors. In the longer term, the Federal Government and
the National Labs need to get back into nuclear reactor research At this
time, the only fundamentally revolutionary reactors that are being built
are being built in China and India, albeit on an experimental scale Both
these reactors are based on ideas developed in the US The US should not
fall behind on nuclear power technology


Jump Starting Minnesota’s Green Economy
Conclusion: A Call to Action
The recommendations in this report are ready for implementation The time
to act is now There is much work to be done in developing policy details
for each of the technologies or industries There are also great
opportunities to identify new technologies and businesses This report
provides a roadmap for both, but success will depend on getting the
details right. The details of any public policy initiatives have to be
grounded in sound science and market realities Otherwise, policies with
the best of intentions will fail as history has shown in the past
California’s attempt to start an electric car industry is a cautionary
tale of what happen when scientific and business principles are ignored.
In early 1990, California’s Air Resources Board (ARB) passed mandates
that required manufacturers to start producing zero emission vehicles
(ZEV) The objective was to reduce the overall automobile emissions in
California and develop a new industry, both very laudable goals GM took
up the challenge and produced their first mass market electric car the
EV1. The car was leased to selected customers from 1996 till 2003. The
project was effectively a pilot program to field test production electric
cars About 1,200 cars were built and were put into the hands of customers
for their daily use But the program did not grow and was cancelled in
2003 The EV1 program is generally regarded as a failure GM spent one
billion dollars on the project with very little to show for it. And
California had to back down from its green mandates. The program’s
termination generated strong feelings on all sides of the issue There
were probably many reasons why the program failed But one of the reasons
was a critical point of failure Given the state of battery technology at
in the 1990s it was impossible to make a battery-only car for the US mass
market. However, had the mandate been written differently, California
could have gotten its reduced emissions and the US could have had a
thriving electric car industry The EV1 program was a debacle that should
not have been There are two concrete steps that Minnesota can take to
catalyze the green technology economy and implement the recommendations
of this report 1) Encourage good leadership 2) Develop widely available
public domain information

The ImPorTanCe of leadershIP
The failure of the EV1 electric car initiative was clearly a failure of
leadership The facts about the electric car were well known to many
experts in the early 1990s But lack of leadership allowed the policy
makers to flounder, and California ended up with a self-defeating policy
framework. Strong leadership in the early 1990s could have gotten the US
an electric car industry.

Minnesota 2020 -

Good leaders do not have all the answers but should be able to articulate
a vision and get others to follow The good leader will get all the
stakeholders together to develop a coherent and viable approach A good
leader will bring the public and private sector together A good leader
will ensure that competing interests all work towards a common goal In
Minnesota, a good leader will ensure that DEED has the tools and
resources necessary to provide support and assistance to organizations
and individuals interested in pursuing green technology and businesses As
this report has shown, Minnesota is ripe for the green economy, but
entrepreneurs need a public entity to help them navigate the necessary
state rules, regulations and programs along the way With the right
resources and infrastructure, DEED can provide these tools and support

As this report has shown, Minnesota is ripe for the green economy, but
entrepreneurs need a public entity to help them navigate the necessary
state rules, regulations and programs along the way.

There is a tendency to ignore the importance of leadership in the public
sector development The private sector has always understood importance of
leadership in developing new businesses and new industries Successful
senior managers in technology companies are expected to provide good
leadership for all stakeholders. Minnesotans should expect no less from
their elected officials. Minnesotans need to ensure that as we ramp up
our green economy there is strong leadership in place to deliver success

hoW PublIC domaIn InformaTIon Can helP
During the development of EV1, many experts had the knowledge that could
have prevented failure of the project Nevertheless, the decision makers
both in the public and business sector failed to understand the
implications The paradox was that information was available, but it was
not in a form that was useful for political leaders or the business
community The underlying information was spread between different
experts, and it was not organized around a product or market. In a normal
product development cycle, key decision makers are working off existing
product design and market place information This existing body of work
greatly reduces the risk in new product development When technology
companies produce entirely new products, the risk of failure is very high
For every new innovative winner, there are hundreds of losers But
innovation does not have to be so risky The software industry has evolved
an approach to reducing risk in innovation. It is known as Open Source
Software. The term refers to public domain software products, technology
and information. Many companies use open source software in their
products and services. Using open source software reduces the product
development costs, time and risk. Even technology giants, such as IBM,
Apple and Google either have open-source software in their products or
use it to provide service. Open-source software has clearly benefitted
development of the software industry.


Jump Starting Minnesota’s Green Economy
A program of open source green technology products and services can
similarly benefit green economy development. Setting up such a program
and effectively disseminating the information could catalyze a green
technology industrial cluster in Minnesota. This report represents a
first step in creating a pool of public domain information on green

Call To aCTIon
Minnesota is well positioned to take advantage of all the technologies
and industries described in this report Minnesota has a highly educated
workforce, a history of high technology clusters, and political
leadership with a long-term view

Minnesota has a highly educated workforce, a history of high technology
clusters, and political leadership with a long-term view.

This report provides a framework to identify the right approach Strong
leadership can get both the public and private sector moving toward the
future And a green technology open-source initiative can catalyze the
movement Let’s get moving Minnesota Our state has a history of
innovation, and the green economy provides new opportunities to jump
start our state’s economy

The author would like to thank the following people for their assistance:
Dr. Doug Cameron of Piper Jaffrey Emmett Costel, student at Macalester
College, Minnestota 2020 Undergraduate Research Fellow

Minnesota 2020 -

Selected Sources for the Green Economy Report

The markets sizing calculations were done by the author. The opinions rep
resented in the report are based on the author’s
judgment. A selection of the key sources is listed below.
Exec Summary, Dev of Green Econ and Selection Criteria
Vinod Khosla is a green VC.
  Garbage problems in poor countries: Authors personal observation.
California electricity deregulation
Book: Power to the People. Vijay V. Vaitheeswaran    Syngas
Biomass Resource Sizing Basics
MNCEE Report:
EIA Report:
Availability of Corn Stover:
Ethanol Production Est.
Efficiency Issues:
pdf    Heat Pumps
Heat Pump Company: in Minnesota
Heating and cooling calculator from Center for the Energy and Environment
Heat Pump pricing from the authors based on bids for the authors house fr
om two contractors. Suburb to Suburb Bus Transport
Idea based on the Google Bus:
Driving Solo:‐ussc.html
Bus Pricing Information from
Payscale pricing info,_School/Hourly_Rate
Home Solar Solar energy potential calculator from NREL
Array pricing estimated using info from http://www.ips‐ a local
 solar power company     Minnesota Electricity
.pdf     Info about Minnesota’s solar program
2104053212_Solar%20Primer.pdf     Ammonia from Wind
Information about wind to Ammonia‐from‐wind‐likely‐to‐happen‐in.h
tml     Electric Cars General information about Chevy Volt‐     White Zombie information     100 year old electric car‐leno/vintage/4215940
Carnegie Mellon study for optimal battery capacity‐EP‐Shiau‐Samaras‐Hauffe‐Michale
k‐PHEV‐Weight‐Charging.pdf    Nuclear Power Costs of Nuclear Power
Market costs of Nuclear Power as reported in the Media      MIT Nuclear Power Report
Minnesota 2020 is a progressive, non-partisan think tank, focused on what
really matters.

2324 University Avenue West, Suite 204, Saint Paul, MN 55114 www mn2020

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