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					                   Biomass Industry Development Working Group
                                   July 14, 2003


Introductions:

Included a review of previous meeting notes to determine what might be missing.
[Rene: Maybe we need a representative from PNM, Electrical Cooperatives and PRC?
How about the Attorney General’s specialist on electrical generation. How about tax and
revenue department?]


Legislation:

       The committee was asked to bring in any new legislation that is pending.

       Richard brought in a copy of a new senate bill that would impact biomass
       generation.

       There was a need to explore more about how power generation rate structures
       might serve as a hindrance to

       There is a need to explore biomass transportation issues.

       The time in sub-committee was not sufficient to complete discussions started.

       The Attorney General has made a decision on rate cases that will delay long-
       distance power line generation until 2008.

       Legislative incentives for kilowatt-hour subsidies could be made more useable if a
       “net btu guide” is developed for translation when the use will not be electrical.


Inventory (feedstock availability assessment):

       There needs to be more discussion about heat instead of electricity.

       The gross numbers need to be converted into site-specific economically viable
       contextual information. Gross numbers need to be converted into opportunity-
       based values. Feedstock characteristic variances cause problems. For example,
       some processes need feedstock that is 40% moisture while others have to pay for
       drying.

       Feedstock logistic costs are a big part of the equation.

       Refinement of the inventory will include the development of the
Market Assessment:

       There was a comment that there needs to be additional focus on other biomass
       uses besides electrical generation.

       State Economic Development Council needs to be looked at for “power parks”

       The best place to site a facility is near places where the generators are having
       difficulty in meeting base load needs.

       There must be an aggregated load.

Breakout into sub-groups

       ___________________________________________________________


Legislation Sub-Committee
       One of the issues would be to be able to explain the net revenue effect to the state.
       This is a Senate Finance Committee / House Appropriation and Finance
       Committee approach.

       Another impact would be rural economic development. Is it jobs, is it income?
       Total payroll would also help but is less important at the federal level.

       Is it more jobs or solving environmental problems like forest fires and dairy
       manure waste utilization? Is it clean air?

       Number of jobs created/100,000 btu utilized.
       [This might not work for specialized

       We need to establish an amount for the incentive that needs to be included in the
       legislation. Right now it’s a $0.01 per kwh incentive.

       The Biomass bill was specific to electrical generation. A new bill for alternatives
       for biomass might help.

       We are interested in lowering the minimum credit to 10kwh to 1 kwh. The size
       should be based on sustainability, fuel transportation and institutional
       management of tracking the credit.

       Converting to btu would make a majority of the non-electricity biomass projects
       creditable. Contracts would be approvable by ECMD.
        Some of the non-energy uses like acetic acid and other valuable bio-chemicals
        could be tracked back to the biomass put into the process and may still be
        attributed to btu value. (assay value = net btu/ton)

        Or a bill might be considered for incentives where value added, job development
        and problem aversion. Mandate that the state agencies utilize some percent of
        alternative energy. The McGinnis HR 1904 does this.

        Maybe we would be better talking to the interim taxation and revenue
        stabilization committee (blue ribbon tax commission) and the energy interim
        committee.

        Exemptions on gross receipts for processing/generating equipment might work.
        Some states exempt gross receipts on fuels and transportation.

Bill Idea

        Whereas the state of New Mexico recognizes the importance of encouraging the
        development of viable alternative energy industries.

        Now therefore the legislature declares the following:

        -There is a credit of 0.5% purchaser credit for each dollar spent on feedstock.
        -There is a gross receipts exemption of 3% investment in industrial development.
        -There is a $1.00 per btu tax credit (assay value net btu/ton) for products
        purchased.
        -The minimum threshold is 1 mwh for energy generation. You can aggregate
        with neighbors for mutual domestic systems.
        -There is a producer credit $1.00/ ton. for materials sold for energy, production,
        heat generation or alternative fuel generation or biochemical creation.

For supportive testimony:

        -Need to know how many industries and taxpayers could use this act
        -What are the impact in terms of tax credits
        -How complicated would it be to track for tax and revenue
        -What kind of jobs might be created
        -How much salary would be created
        -How many acres would be treated
        -How many tons of manure and crop residues would be used
        -How much energy would be created.
Market Assessment Sub-Committee

Report back from Frank Burcham regarding the availability of transmission plans.

Report back from Andrea Delling regarding the economics of biomass project using dairy
waste and a primer on landfill methane.

Refocus of group on current and developing markets.

The group discussed the fact that New Mexico market for biomass is not sustainable and
should be focusing on the export of biomass products to Arizona and Texas. There was a
need expressed within the group to identify intermediate set of products. Also to look at
primary (biomass feedstock) and secondary (end product) markets.

Decision was made to canvass the Biomass Industry Working Group with following two
questions:

   1. Please provide cost and volume of raw material required to allow for your
      business to be sustainable?
   2. What is the market value you are trying to beat?

The decision was made to send the questions out to the sub-committee first and then to
the larger group.

There was a lot of discussion about electrical generation from biomass and the general
consensus was that this is very difficult without buy-in from utilities to purchase the
power.

The group has requested that Rene Parker check with the Economic Development
Department about incentives for “Power Parks.”


Biomass feedstock assessment sub-committee
Committee members present: George Mulholland, Donn Duncan, Colin Messer, John
Harrington, Dave Delling, Jim Norwick, Kim Paul and Kim Kostelnik.

The sub-committee began with a review of the previous meeting's identified feedstock,
consolidated some of the identified feedstock, and reviewed feedstock assessments that
were already in existence and decided which assessments needed more research.
Identified feedstock
   Feedstock                    Status of assessment           Assigned to who

1. Animal waste                 More research required         George Mulholland
2. Crop residue                 More research required         John Harrington
3. Sewage waste                 More research required         Colin Messer
4. Municipal solid waste        More research required         Dave Delling
   - green waste
5. Forest products              Assessment available           Kim Kostelnik
    - thinning slash            More research required
    - by-products               More research required
6. Waste grease                 More research required         Jack Whittier
7. Tires                        More research required         Donn Duncan
8. Industrial waste             More research required




The following assessment is already in existence:

    Forestry Division submitted an assessment on available timber on private and
     state lands.

Information was gathered on the following feedstocks

    Jack Whittier submitted information on grease waste in New Mexico.

    George Mulholland submitted approximate number of dairy cattle in New Mexico
     by county.

The Committee members will work on gathering more information on their assigned
feedstock and Kim Paul will create a page on NM Forestry’s web site for all electronic
assessments. The Biomass group and anyone who requires the information will be able to
access when needed. The address will be www.nmforestry.com. Look for the word
biomas

				
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