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                                                         GHG Reductions*       Net
                                                           (MMtCO2e)        Present      Cost-
                                                                             Value     Effective- Level of
                   Policy Option
                                                                     Total   2008–       ness     Support
                                                         2015   2025 2008–    2025     ($/tCO2e)
                                                                      2025 (Million $)
    BT-1   Low Carbon Fuels Strategies
    1.1    Market Pull and Distribution Infrastructure                                            Pending

    1.2    Low Carbon Fuels Policy                                                                Pending

    1.3    Increase Vehicle Fuel Efficiency                                                       Pending

    BT-2   Transportation Issues
           Vehicle Miles/Demand Management
    2.1                                                                                           Pending

    2.2    Expand Travel Choices                                                                  Pending

           Transportation Infrastructure and

    2.4    Freight Transportation                                                                 Pending

    BT-3   Research and Technology
           Advanced Transportation Technology
    3.1                                                                                           Pending
           Technical Assistance to Advanced
    3.2                                                                                           Pending
           Technology Projects
           Increase Regional Research
    3.3                                                                                           Pending
    BT-4   Biobased Products
    4.1    Develop Midwestern Biobased Products                                                   Pending
           Regional Infrastructure for Biobased
    4.2                                                                                           Pending
           Product Manufacturing
    BT-5   Biomass
    5.1    Perennial Biomass Supply                                                               Pending

    5.2    Biomass Feedstock Supply Logistics                                                     Pending

    BT-6   Wealth Creation and Jobs
    6.1    Bioeconomic Wealth Creation                                                            Pending

    6.2    Bioeconomic Workforce Development                                                      Pending

GHG = greenhouse gas; MMt = million metric tons; t = metric ton; CO2e = carbon dioxide equivalent; VMT =
vehicle miles traveled; UC = unanimous consent; TBD = to be determined

Volunteers for Focused Discussion on Policy Clusters

                                                                      Volunteers for Policy
                 Policy Option                 Facilita-
                                                                         Option Focus

         Market Pull and Distribution          Brendan
         Infrastructure                         Jordan
                                                           Mary Blanchard, Charles Griffith, Mike
                                                         Doherty, Jack Huggins, Joe Shacter, Doug
BT-1.2   Regional Low Carbon Fuels Policy                 Berven, Greg Kissek, Error! Reference
                                                        source not found.Error! Reference source
                                                                        not found.
BT-1.3   Vehicular Fuel Efficiency

                                                David      Lynn Wilson, Lynne Bly, Joe Shacter, Eric
BT-2.1   Vehicle Miles/Demand Management
                                               Shelton      Sundquist, Jeff Peloske, Laura Wilkison
BT-2.2   Freight Transportation

         Conversion Technology
                                                             Mary Blanchard, Dennis Banasiak, John
BT-3.2    Advanced Tech Support                            Biondi, Hans Blaschek, Kevin Kephart, Tom

BT-3.3   Regional Research Collaboration

BT-4.1   Biobased Product Development                      Hans Blaschek, Tom Thies, Michael Bailey
         Infrastructure for Biobased Product

                                                Gloria      Charles Griffith, Bill Johnson, Steve Flick,
BT-5.1   Perennial Biomass Supply
                                                Flora             Lynn Wilson, Michael Bailey

BT-5.2   Biomass Feedstock Supply Logistics

                                                           John Biondi, Jack Huggins, Larry Leistritz,
BT-6.1   Bio-economic Wealth Creation                       Greg Krissek, Eric Sundquist, Lynne Bly,
                                                                        Mary Blanchard
BT-6.2   Bio-economic Workforce Development

OBJECTIVES (from the Platform Document)

Develop the Midwest‘s capacity for production of biofuels and other low-carbon
advanced transportation fuels to advance national energy independence, add value for
consumers, revitalize rural economies and the region‘s manufacturing base, and decrease
greenhouse gas emissions.

Accelerate strategies for improving the efficiency of biofuels production and use, reduce
fossil fuel inputs, minimize GHG emissions, decrease water use and strengthen the
existing biofuels industry.

 Develop, demonstrate and commercialize a variety of biomass-utilizing technologies and
other low-carbon advanced fuels covering a portfolio of energy products and biobased

TRANSPORTATION OBJECTIVES (added after Platform was adopted)
Provide increased access to clean travel options that include the Midwest Regional Rail
Initiative‘s designated corridor and Ohio hub for intercity passenger rail improvements,
availability of rural transit services, enhancement and maintenance of urban transit
systems, greater availability of bicycling and walking options in addition to substantial
gains in availability of regionally-produced, efficient vehicles

Prioritize highway investments to first maintain existing infrastructure; use technology
and other innovative strategies that help to optimize use of existing transportation
resources; invest in freight rail improvements to lessen region-limiting bottlenecks; and
recognize that effective land use management can lessen congestion and capitalize on and
enhance use of transit, bicycling, and walking.

          BT-1.1: Market Pull and Distribution Infrastructure

Policy Description
Recent studies (Sperling and Farrell, 2004 and 2007, and Sperling and Yeh, 2009) have
compared the relative effectiveness of ―winner-picking‖ policies that drive new
technologies (volumetric use-mandates for fuels, etc.) and technology-neutral policies
like a low carbon fuel standard (LCFS). It is clear that the policies designed to develop
particular technologies have succeeded in the development and commercialization of
those technologies; it is also clear that they have failed to develop products designed to
conform to a set of performance criteria (namely GHG reduction) or that respond to rapid
marketplace changes. What is unclear is what is to be done about either of these
problems—either the adoption of performance-based standards like a LCFS or creating
incentives for specific technologies that include both performance criteria and a sunset
provision for any technologies that don‘t meet the criteria are both possible means to the
desired end.
Because infrastructure needs to be developed for specific technologies, tying funding and
other support for technologies to the production and sale of advanced fuels and vehicles
seems like a logical way to combine market pull with infrastructure development. A fuel-
neutral technology-driving policy is the LCFS, covered under BT 1.2.
The criteria should include any fuels that meet at least a 20% reduction in GHG
emissions relative to gasoline and any vehicles that use at least 20% less gasoline than the
current vehicle fleet.
This policy supports the implementation of the 2007 Midwestern Governors Association
Energy Security and Climate Stewardship Platform Tier 2 Biobased Products and
Transportation policy option 1:
―Provide market pull and the distribution infrastructure for biofuels, advanced
transportation fuels, and lower GHG vehicles by:
      Promoting broad renewable fuels standards that include specific carve-outs for
       lower-carbon advanced biofuels;
      Expanding state government‘s use of biofuels and advanced transportation fuels;
      Developing regional performance standards for advanced transportation fuels,
       along with a sunset clause for any technology that does not meet the criteria; and
      Adopting retail tax incentives encouraging retailers to sell biofuels, advanced
       transportation fuels, lower GHG vehicles, and bio-based products.‖
The above referenced document uses these terms in reference to targeted fuels:
    Biofuels
    Advanced transportation fuels
    Lower carbon advanced biofuels
    Mid and high level ethanol blends including E85
    Hydrogen
    Electricity
    Liquefied petroleum gas
    Compressed natural gas
For the sake of clarity and continuity with existing terms and definitions of fuels provided
in the 2007 federal RFS, this policy option operates under these definitions:
―Biofuels‖ means fuels made from renewable biomass, as defined in the 2007 RFS which
provide a 20% reduction in GHG.
―Advanced transportation fuels‖ and ―lower carbon advanced biofuels‖ include fuels in
either of these three categories included in the 2007 RFS language:
        Advanced biofuels are biofuels other than ethanol made from corn starch and
         which provide a 50% reduction in GHG;
        Cellulosic biofuels made from cellulose and hemicellulose feedstocks and which
         provide a 60% reduction in GHG; and
        Biomass Based Diesel which provide a 60% reduction in GHG.
―E85‖ is an ethanol blend that contains 85% ethanol. Depending on the feedstock used to
generate the ethanol, it can be a renewable biofuel, cellulosic advanced, or non-cellulosic
advanced. Mid and high level ethanol blends range from any amount of ethanol over the
base blend limit approved by the EPA (currently E10). A range of blends will offer
consumers choice and value at the pump regardless of ethanol and petroleum supply and
demand factors. Future use of mid and high level ethanol blends must be approved by
EPA and vehicles running on these blends meet emission requirements.
The document uses these terms in reference to targeted vehicle technologies:
    HEV- hybrid electric vehicle
    PHEV- plugin hybrid electric vehicle
    FCV- fuel cell vehicle
    FFV- flex fuel vehicle
Policy Design
The following criteria are recommended for developing policy to accomplish platform
goals. Incentives should have the following characteristics:
   1. Reward the performance of low carbon fuels by being proportional to the life
      cycle greenhouse gas emissions of the low carbon fuel in question, thus leveling
      the playing field for lower carbon fuels without an undue impact on consumers.
      This also creates incentive for continuous improvement in fuel performance.
   2. Create stable market availability and pricing relative to gasoline.
By 2012: Advanced low-carbon transportation fuels should be commercially produced in
the region and be available at 1% of retail filling stations throughout the region. All new
fuels systems being installed throughout the region should be Underwriters Laboratory
(UL) certified in order to legally dispense higher blends from both conventional and
advanced feedstocks, including E85 and other low carbon fuels. This enables pump
infrastructure to stay in place while blend ratios increase, meeting renewable supply
By 2015: A mixture of biofuels and other advanced transportation fuels, including E85
and other higher blends from both conventional and advanced feedstocks, will be offered
at 15% of retail filling stations or around 4,400 stations, approximately a five-fold
increase. Currently these blends are available at 3% of filling stations regionally.
By 2020: A mixture of biofuels and other advanced transportation fuels, including E85
from both conventional and advanced feedstocks, will be offered at 20% of retail fillings
stations, or around 5,900 stations, approximately a six-fold increase.
By 2025: A mixture of biofuels and other advanced transportation fuels, including E85
from both conventional and advanced feedstocks, will be offered at 33% of retail filling
stations, or around 9,700 stations, approximately a 10 –fold increase.
Average fossil fuel inputs in the production of conventional biofuels in the region will be
reduced by at least 50%.
At least 50% of all transportation energy consumed in the region will be supplied by
regionally produced biofuels and other low-carbon advanced transportation fuels, with
the expectation that a significant and additional portion of the region‘s biofuel production
will help the U.S. meet a national 25x‘25 goal. Utilize deployment of lower carbon
vehicles, including HEVs, PHEVs, FCVs, and FFVs to be available in 25% of regional
vehicle market to help achieve this goal.
A blend of 30% biofuels will be included in every gallon of gas by 2025. An increase in
biofuels blends must receive approval by EPA and vehicles running on these blends must
meet emission requirements. An anticipated increase in the biofuels blend will allow
autos and small engine manufactures to design engines for a specific blend and optimize
Implementation Mechanisms
Create stable market pricing so renewables can more easily compete against volatile
petroleum pricing. Consider counter-cyclical retail subsidies or taxes. Design taxes to
increase taxes on gasoline and diesel when gasoline or diesel prices are low and to reduce
taxes when gasoline or diesel prices are high. This mechanism would provide both a
price floor for biofuels and offer relief to consumers.
Create a Green Fuel Retailers program (tax incentives for low carbon fuels) consisting of
several mechanisms to improve the distribution of low carbon fuels throughout the
region. Some elements of this program might include:
      Recognize retail and wholesale outlets that attain benchmarks in the sale of low
       carbon fuels as ―Green Retailers.‖
      Establish incentives to support the infrastructure development needed for low
       carbon fuels and help ensure the retailer is able to provide value-based pricing
       (based on the energy content of the fuel) for sustainable consumer use. Incentives
       might include the following elements and mechanisms:
           o Reduce payment of motor fuel tax on all fuel sold at a facility, based on
             achieving a minimum level of low-carbon fuel sales.
           o Create a fund that would provide Green Fuel Retailers with an incentive
             (rebate) for sales of low carbon fuels. One option would be an increase in
             motor fuel tax, initially starting at 0.01/gallon and increased as needed to
             achieve the program‘s goal.
           o Provide incentives for the installation of refueling infrastructure including
             E85 pumps, blender pumps, hydrogen refueling infrastructure, and electric
             vehicle recharging infrastructure. Incentives could include reimbursements
             for investments or tax rebates.
           o Fund public education efforts that include mapping low carbon fuel
             refueling stations throughout the Midwest, providing resources for
             refueling of government vehicles and university fleet vehicles, and
             providing clear definitions of what constitutes low carbon fuels and
             vehicles. A public sponsored branding effort might be used to develop a
             ―Green Fuel‖ logo that could be used by qualifying retailers and vehicles.
           o Fund research that helps bring low carbon fuels to market is a recent study
             exploring the optimal blend of ethanol for fuel economy in different
             vehicles, and studies exploring the impact of higher blends of ethanol on
           o Encourage Underwriters Laboratory (UL) to develop standards for low
             carbon fuel refueling infrastructure (such as the recent standards released
             for biodiesel blends). All new fueling systems being installed throughout
             the region should be UL certified to be able to legally dispense any fuel
             blend up to E85. This enables pump infrastructure to stay in place while
             blend ratios increase, meeting renewable supply gains.
           o Provide incentive payments for consumers, both individuals and fleet
             managers, based on the quantity of fuel sold. These financial incentives
             could be in the form of post-purchase manufacturers‘ coupons at filling
             stations or tax rebates.
           o Include a sunset provision for all incentive programs for advanced fuels
             and vehicles so that any technologies that are not achieving the required
             levels of GHG reduction by the specified target dates are phased out of
             public funding programs.
Increase the quantity of low carbon fuels used in public institution fleets. Strategies might
     Ensure public sector-owned flex-fuel vehicles are actually filled with E85.
       Possible mechanisms might include:
           o Reduce barriers such as requiring that public employees fill-up at
             commercial stations where the organization has an E85 pump, or an E85
             pump is available near-by. Typically drivers are required to fill the fuel
             tank prior to returning fleet vehicles.
           o Track E85 use through the use of government issued payment cards.
      Pool funds for increased purchasing power for flex fuel vehicles by counties,
       state, local governments, and universities across the region. Encourage or
       o Local governments purchase flex fuel vehicles, which could be accomplished
         through state revenue sharing with local governments.
       o State universities purchase flex fuel vehicles.
Expand consumer choice by encouraging blender pumps at retail outlets that allow
consumers to select a blend level other than E-85 or E10.

Explore the technology of distributed biofuels systems to increase the local (on-farm,
small community) production and use of biofuels. For example, Imerjent
Related Policies/Programs in Place
      Iowa‘s bioenergy incentives apply to biogas, hydrogen, and other low carbon
      Michigan‘s Green Retailers proposed program would provide incentives to retail
       and wholesale outlets that attain benchmarks for the sale of biofuels (E85 and
Type(s) of GHG Reductions
The target of this policy option is to reduce the emissions of CO2 by encouraging the
substitution of low-carbon intensive fuels for traditional fossil fuels in the transportation

Estimated GHG Reductions and Net Costs or Cost Savings
Quantification for this policy option will require a complete and discrete set of data for
each state. It is necessary to know the gallons of fuel used by fuel type and location of
use (on-road and off-road) as well as market data for existing retail filling stations in
terms of fuels dispensed by type and quantity.

Key Uncertainties
The volatility of the fuels market requires flexibility in market-based incentives that
respond to changing conditions and allow retailers and consumers some degree of
certainty in pricing and availability. Other Bioeconomy and Transportation policy
options address availability of biomass for fuel and other energy uses but would need to
be implemented in tandem with market-related measures.
One formidable barrier to the introduction of advanced technology fuels (hydrogen,
liquefied petroleum gas or compressed natural gas) and vehicles (PHEV and FCV) into
new markets is a ―chicken and egg‖ problem, whereby filling stations will not add
alternative fuels to their mix where there is no existing market, particularly if doing so
would require large investments in infrastructure build-out, and vehicle dealerships are
reluctant to sell vehicles that require an advanced fuel in a market where there is no
refueling infrastructure. One possible way to overcome this barrier is by linking
infrastructure development funds to vehicle purchase—for example, by setting aside a
portion of tax revenues from advanced vehicle sales for the development of alternative
fuel infrastructure—in order to send a message to filling stations that the market for both
advanced fuels and vehicles is growing in the region.
Additional Benefits and Costs
Green Retailer Program could enhance the market viability of smaller rural stations by
allowing them to compete on a more even playing field.
Wider availability of alternative fuels will allow more people choice in selecting low-
carbon fuels and thus increase demand and create a more stable framework for producers.

This may present an opportunity to assess the overall structure of how fuel taxes are used
to fund highway maintenance. If the goal is to lower GHG emissions by reducing overall
fuel use through fewer vehicle miles driven and greater fuel efficiency, this will be a
concern to stakeholders in the highway maintenance industry. Generating highway
maintenance funds by assessing proportionately higher taxes on higher carbon fuels may
be an option in the short term.

Feasibility Issues
Any attempts to restructure fuel taxes are likely to be more successful if there is sufficient
buy in from the retailers. As mentioned above, stakeholders in highway maintenance and
infrastructure also need to be brought to the table to address their concerns and gather
their input regarding how changes in fuel taxes may change fuel tax revenue targeted for
highway maintenance.
Status of Group Approval

                      BT-1.2: Low Carbon Fuels Policy

See attached Midwestern Low Carbon Fuel Policy recommendations

                     BT-1.3: Increase Vehicle Fuel Efficiency

Policy Description
The policy is designed to reduce GHG emissions from on-road vehicles and off-road
engine vehicles (including marine, rail and other off-road engines and vehicles such as
construction equipment) through technology deployment designed to cut GHG emission
rates per unit of travel or use. This policy provides one of the three essential components
of reducing GHG emissions related to the transportation sector, namely vehicle efficiency
(this policy), GHG intensity of fuels (BT1.2), and vehicle miles traveled (BT 2.1,2.2 and

This goal can be accomplished by a combination of the following means:

   1. Increase the vehicle fuel efficiency standards for the existing fleet of vehicles
      available in the region;

   2. Increase financial incentives for consumers to purchase HEV and PHEV vehicles
      that reduce the amount of fossil fuels used per mile of travel; and

   3. Increase the availability of more efficient and affordable vehicles by permitting
      the sale of highly efficient vehicles made by both American auto companies (i.e.
      the Ford Fiesta) and non-American companies (i.e. Citroen, Fiat) that are not
      currently allowed to be sold in the region.

Policy Design
In designing incentives for low carbon or energy efficient vehicles, a regional body
should develop criteria for what constitutes a low carbon or energy-efficient vehicle or
engine. The most reliable measures are performance-based quantitative criteria, either
meeting a carbon footprint criteria (GHG-per-mile) or a miles per gallon criteria.

In general, the types of vehicles likely to be included under a ―low carbon vehicles‖
program would include: flex fuel vehicles, hydrogen fuel cell vehicles, and hybrids that
achieve exceptional fuel efficiency. These are vehicles that currently have limited
availability in the region or are out of the price range for the majority of consumers or

Greenhouse gas reductions from vehicles can also be achieved by increasing the baseline
fuel efficiency of the existing regional vehicle fleet through higher efficiency standards.
Other incentives can be provided as well to reduce the cost burden on manufacturers and
consumers and make the production and sale of more efficient vehicles more attractive to
both. Rising fuel price is a powerful incentive for consumers to purchase more efficient
vehicles and, combined with pricing incentives that reduce the overhead cost to the
consumer without reducing profits for the manufacturers, could lead to widespread
acceptance of higher fuel efficiency standards.

Rising fuel prices have also created a renewed interest in certain markets for highly
efficient vehicles that are currently only available outside of the United States. Some of
these vehicles, such as the Ford Fiesta, are made by American auto companies. There is
ample reason from a fuel economy standpoint to allow these highly efficient vehicles to
be available for American consumers.

In addition to setting criteria for manufacturers and consumers to earn incentives,
education plays a key role in reducing overall fuel efficiency. Education is the first step to
successful implementation. Drivers will voluntarily reduce fuel use and GHG emissions
from their activities when they have the information necessary to make proper decisions;
promoting more informed choices in the marketplace, helping consumers understand
simple techniques for incremental reductions and greater efficiency in their fuel use,
education can actively engage consumers in helping to achieve regional goals.

        Reduce transportation GHG emissions by 10% through education to promote
         intelligent transportation purchasing choices and vehicle operation. Begin
         consumer information program in 2010, with program expansion, as resources are
         made available.
        Ensure training is delivered for all state, university and municipal fleet operators
         for States and appropriate agencies by 2011.

        X% of fuel efficient vehicles should be purchased by 20XX.

        Procurement guidelines should be modified by 20XX to allow the purchase of
         advanced technology and fuel efficient vehicles.

Parties Involved: Vehicle manufacturers, consumers, state agencies, regional advisory
and regulatory agencies, consumer education organizations, media, academia, advanced
technology think-tanks, legislators, and elected officials.

Other: None cited.

Implementation Mechanisms
Implementation mechanisms for reducing GHG emissions from vehicles could include:

Financial incentives:
    Provide tax incentives for higher efficiency vehicles and engines;
    Provide incentives for retooling manufacturing facilities to advanced vehicle
    Establish an innovative gas tax approach such as a ―floating tax‖ based on fuel
       price (see counter-cyclical retail subsidies or taxes in BT 1.1);
    Provide incentives to increase purchases of fuel-efficient or low carbon vehicles;
    Design a policy neutral feebate structure where owners of vehicles below a certain
       threshold of fuel efficiency would pay a fee, and those above a certain fuel
       efficiency would receive a rebate;

      Provide production tax credits to bring more value-added production of plug-in
       hybrid electric vehicles to our region;
      Establish an ―end of life‖ assistance/buyback program for electric car batteries to
       help with both waste recovery and financial incentives for consumers; and
      Promote and fund EV demonstration projects among Midwestern auto

Regulations and Guidelines:
    Adopt state contracting and fleet standards for low GHG equipment
    Require fleet replacement to use low carbon vehicles;
    Establish incentives or requirements for low resistance tires;
    Reduce idling time in locomotive and construction equipment;
    Permit the sale of highly efficient vehicles manufactured by US and non-US
       automakers that are not currently available in American markets; and
    Work with utilities to add an EV component to ―smart grid‖ plans.

Facilities improvements to promote efficiency:
    Develop HOV lane access for low carbon vehicles.
    Adopt ―Green Port Strategy‖ for port facilities.

    Implement Clean Car Programs and new policies to spur development and use of
       Plug-in Hybrids;
    Increase the efficiency of vehicles manufactured and sold in the region while
       providing price support/cost recovery for automakers to assist in the transition to
       more efficient vehicles; and
    Support federal fleet modernization (also known as ―cash for clunkers‖)
       legislation. Legislation should include all types and sizes of older models,
       structure incentives to be greater than the value of the vehicle being scrapped and
       allow cash incentives to apply towards an inclusive set of domestic and foreign
       vehicles fleets.
    Initiate marketing and education campaigns to operators of off-road vehicles;
    Model a region wide Eco-Driver program after the proposed Michigan Eco-Driver
       program to be implemented in all MGA states; and
    Design consumer education campaign for tire inflation, vehicle maintenance for
       maximum performance and driving habits that reduce fuel consumption.

Related Policies/Programs in Place
There are a few precedents for evaluating vehicles based on GHG emissions that could be
The Michigan Eco-driver program recommends implementing four program initiatives to
achieve a fuel-economy increase (and corresponding GHG reduction) of at least 10% in
the mid-term with a long-term benefit potential of up to 20%. The implementation
process should consider the Michigan Eco-Driver Program‘s fleet programs, financial
incentives, and low-idling programs that relate to the policy implementation mechanisms
above, including advanced vehicle technology incentives for fleets, and a truck idling
reduction program in the MI climate plan recommendations.

Any potential plans for increasing vehicle fuel efficiency should take into consideration
the NHTSA federal fuel economy standards, and the recent Executive Orders and EPA
actions to review the proposed federal standards and the CA waiver.

Type(s) of GHG Reductions
Primarily CO2 reductions from fossil fuel use and greater efficiency in fossil fuels

Estimated GHG Reductions and Net Costs or Cost Savings
Estimated reductions are problematic as application of efficiency measures are not
expected to be uniform across or within jurisdictions. Certain individual implementation
may be able to be quantified.

Key Uncertainties
   1. Any barriers to introducing very efficient US and non-US vehicles to Midwestern

   2. Ways fuel efficiency programs can solve rather than exacerbate job-loss problems
      in Midwestern Rust Belt states:

           a. Quantify relationship between fuel price and demand for more efficient
              vehicles and

           b. Look at issues surrounding federal retooling loans for auto manufacturers.

Additional Benefits and Costs
       1. Benefit of more prudent speeds and more attentive driving which are
          components of more fuel efficient driving, could improve traffic safety.
       2. Benefit of cleaner air from more widespread adoption of electric and fuel
          efficient vehicles.
   Development costs of and feasibility issues associated with building out refueling
   infrastructure for EVs.
Feasibility Issues
Regional policy development process of MOU development process

Status of Group Approval

Level of Group Support

Barriers to Consensus
None identified

                       +BT-2.1 Vehicle Miles/Demand Management

Policy Description
This policy recommends that the Midwestern Governors support their states‘ institution
of requirements and policies ensuring that drivers more fully pay the total costs of
driving. This policy would encourage drivers to choose transportation alternatives,
purchase more efficient vehicles, drive less, and/or drive more efficiently (combining
trips). This option generally reduces VMT and GHG emissions. These policy options
range from direct user fees to mileage-adjusted costs for related expenses such as
insurance. Pay-as-you-drive (PAYD) insurance varies the cost of coverage based on
miles travelled. Instead of facing a single, flat insurance fee, a family under a PAYD
insurance policy has the ability to control the cost of insurance by traveling fewer vehicle
miles. Moreover, policy approaches that reduce VMT translate to societal savings
through less need to spend tax dollars on expanded highway capacity. VMT reduction is
a way to save money.

Policy Design
The University of Minnesota‘s Full Costs of Transportation in the Twin Cities Region
report concluded in 2000 that the total cost of a mile of automobile travel in the region
was between $0.84 and $1.62, with a mid-range estimate of $1.14. Drivers do not see all
of those costs, for three general reasons:

   1. A substantial portion of the costs is not variable, meaning that driving less does
      not save the person money. A good example of this is insurance, paid every 3 or 6
      months. One goal of this policy is to increase the proportion of that cost that
      drivers and society can save by driving less.
   2. A substantial portion is paid for by revenue streams that are not necessarily
      directly related to automobile use. For example, property taxes pay for a large
      portion of the costs of local roads. That nexus may be appropriate for various
      reasons, but one result is that the cost of vehicle mobility (of all kinds) is not
      borne by those vehicles.
   3. Driving (of all kinds) produces substantial externalities, both positive and
      negative. Drivers do not see all of them. The impacts of the emitted CO2 are the
      externality most central to this climate change policy process.

As a result, this set of policies recommends that MGA states take action in four areas:

   1. Implement systems to encourage the purchase and operation of low-GHG-
      emitting passenger vehicles.
   2. Provide incentives for auto insurance companies to institute a ―pay-as-you-drive‖
      (PAYD) system for policyholders.
   3. Implement policies and strategies that make more of the fixed costs of driving
      into variable costs related to VMT and emissions. Possibilities include CO2-based
      registration fees, a VMT tax, congestion pricing, and a fuel tax.
   4.    Use new revenue streams for less GHG-intensive travel options (e.g., public
         transit, vanpooling, commuter benefits, and commuter options).

   In all cases, the states should design and implement policies with an explicit
   consideration of equity impacts on both low-income and rural drivers.

Goals from MGA Platform that may be relevant to this policy area:
Develop incentives for increasing vehicle fuel efficiency and reducing greenhouse
gas emissions.

Assume market penetration of PAYD insurance of 15% in 2015 and 75% in 2025

Adoption without delay. At the latest, MGA policy recommendations 2009; followed by
inclusion in legislative proposals 2010.

Parties Involved:

Highway and transit users; automobile manufacturers and retailers; insurance
companies, state Departments of Transportation, Commerce, Public Safety, Revenue,
Finance, Pollution Control/Natural Resources; metropolitan planning organizations.


Increasing the price of driving reduces the number of miles driven and can be
accomplished in a variety of ways. Since the early 1900s, state and federal gas taxes have
been a ―pay as you drive‖ tool to fund transportation. So, among the possible strategies is
increasing the gas tax, which is likely to both reduce the number of miles driven and
provide additional transportation revenue to the states. Tolling is another pricing strategy
that has been applied in many areas.

There are various concerns with a gas tax including the economic and personal impact of
higher taxes and the constitutional issues that exist around the use of gas tax revenues.
Implementing PAYD policies would make the full (including environmental) cost of
driving more apparent to drivers, without creating a new tax.

Significant policy innovation and development are occurring in this area. In the future,
additional options may exist that would accomplish the goals of reducing VMT and
provide additional revenues to support lower GHG transportation options, including

Examples of this approach that have been implemented in recent years include variable
congestion pricing (LA, Minneapolis) and cordon-based pricing (London). Since 2005, a
largely-automated mileage-based toll has been applied on Germany‘s autobahn on heavy
commercial vehicles; the toll is graduated to reflect magnitude of GHG emissions. In its
first years of operation, the system is credited with a 15% reduction in high-emission
vehicles, a 20% reduction in ―deadheading‖ trips, and a 7% shift to rail.

Implementation Mechanisms
Support PAYD Automobile Insurance
   1. States should ensure that PAYD is legally permissible and that odometer readings
      are considered adequate measures of miles driven. Insurance commissioners or
      other regulatory agencies should provide guidance to carriers showing how
      PAYD could be implemented in their states, and encourage them to offer such
      policies. For state vehicle fleets, states should pursue PAYD contracts with their
      own insurance carriers.

   2. Conduct a survey of insurance commissioners in MGA states to determine
      regulations that would prohibit PAYD insurance options from being implemented.
      Once prohibitive regulations are identified, determine mechanisms for
      implementing a properly structured PAYD program.

   3. Establish a one-time tax incentive for insurers to implement PAYD programs.
      The revenue to pay for the tax incentive could be derived from the taxes levied
      against insurance companies for providing motor vehicles insurance policies. The
      incentive could be $100 for each vehicle insured with a PAYD policy and should
      not exceed $300 for each policy. Adding a sunset provision to the incentive
      should also be considered.
Related Policies/Programs in Place
MnDOT pilot underway to test VMT fees (no results are yet available), and PAYD

GMAC and OnStar Low-Mileage Discount Rates
Since mid-2004, the General Motors Acceptance Corporation Insurance has offered
mileage based discounts to OnStar subscribers located in certain states. The system
automatically reports vehicle odometer readings at the beginning and end of the policy
term to verify vehicle mileage. Motorist who drive less than the specified annual mileage
receive insurance premium discounts of up to 40%:

       1–2,500 miles: 40% discount
       2,501–5,000 miles: 33% discount
       5,001–7,500 miles: 28% discount
       7,501–10,000 miles: 20% discount
       10,001–12,500 miles: 11% discount
       12,501–15,000 miles: 5% discount
       15,001–99,999 miles: 0% discount

The Federal Highway Administration‘s Value Pricing Pilot Program is now providing
funding for PAYD insurance simulation projects in Georgia and Massachusetts.

Distance-Based Program
Progressive Insurance offers distance-based insurance in Oregon, Michigan, and
The program uses Global Positioning System technology to track vehicle location and

Farmers Insurance is reported to also be considering a similar program.

In August 2004, the Progressive Direct Group of Insurance Companies introduced
TripSense, a usage-based auto insurance discount. The group notes:
       ―Safer drivers and people who drive less than average should pay less for auto insurance. That‘s
       why we created the revolutionary TripSense(SM) discount program, which measures your actual
       driving habits and allows you to earn discounts on your insurance by showing us how much, how
       fast and what times of day you drive. TripSense gives you more control over what you pay for
       insurance, as your driving habits determine your discount.‖

Type(s) of GHG Reductions
Primarily CO2.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
The Arizona Public Research Interest Group (PIRG) Education Fund analyzed the
potential GHG savings from a PAYD automobile insurance policy. The strategy for a
PAYD policy assumes that insurers are required to offer mileage-based insurance for
certain elements of vehicle insurance, including collision and liability. The Arizona PIRG
Education Fund assumes the PAYD policy is required and phased in over time, and that
all drivers in Arizona are eventually covered.

To calculate GHG savings, the Arizona PIRG Education Fund converted Arizona state
automobile collision and liability insurance expenditures to an insurance cost per mile
($.064/mile). If insurance consumers pay 80% of their collision and liability insurance on
a per mile basis, then drivers would be assessed about a $.051/per mile. This per-mile
insurance charge would reduce VMT by about 8%.24 (To put this charge in context, at 20
mpg, $.051/mile = ~$1/gallon of gasoline.)

The MCCAG review compared the Arizona PIRG Education Fund results for estimated
reductions in VMT with other studies of PAYD policies, including those produced by the
Economic Policy Institute and Resources for the Future. The MCCAG effort found that
the Arizona PIRG estimates were comparable with other estimates, which ranged from
8% to 20%, and used the 8% estimate for its analysis.

A review of PAYD insurance completed by the Brooking Institute‘s Hamilton Project
also estimated, if comprehensively available, PAYD would result in VMT reduction of
approximately eight percent. The study also estimated a net benefit of $58.9 billion (in
2007 dollars), resulting from reduced accidents, congestion, and local air pollution in
addition to reductions in carbon emissions and reduced costs for fuel. The study
estimated that about two thirds of households would save money under a PAYD program.
From an equity perspective, the study concluded that lower income households would
tend to benefit from such a program. The study also noted that rural areas would not be
adversely affected, in part because PAYD premiums will vary depending on other risk
factors such as lower accident incidence in rural areas. Also, rates would be based
relative to the average driving pattern for each local area (generally at a zipcode level).

Quantification Methods:
Pilot studies and empirical experience with other marginal costs of use find that PAYD
can reduce VMT by between 8% and 20%. If phase in/ramp up, then:
        Apply reductions to light-duty vehicle (LDV) VMT only:
        • 2015 reduction = statewide LDV × 4% reduction.
        • 2015–2025 reduction = statewide LDV × 8% reduction.
        • Convert to CO2.

Net Present Value/Cost-Effectiveness
The success of the Progressive Insurance pilot in Texas suggests that there is an unmet
demand for more choice in auto insurance. If PAYD improves and increases consumer
choice, and also allows insurance providers to more efficiently align risks and premiums,
economic efficiency will increase.

The University of Minnesota‘s Center for Transportation Studies report Reducing
Greenhouse Gas Emissions from Transportation Sources in MN included pay-as-you-
drive (PAYD) insurance among its travel reduction strategies. The report found a
potential for a 1 percent reduction in vehicle miles driven based on the following
             The number of vehicles statewide was estimated using the LEAP model for the year
                 2025. The Mn/DOT growth factor of 0.9% was applied to the 2004 VMT and A-8
                 projected for the year 2025. These values were used as inputs for the CCAP Emissions
                A 10% penetration rate was used

Key Assumptions: List/describe

For the MCCAG evaluation, the analysis assumed that State regulation automobile
insurance industry requires insurance companies to offer PAYD insurance, and eventual
application of PAYD insurance to 50% of the LDV fleet.
Key Uncertainties
The specifics of the PAYD insurance programs are to be determined.

Until there is broader implementation beyond the current pilot programs, the effects of
PAYD insurance on driver behavior are subject to significant uncertainty.

Until there is broader implementation beyond the current pilot programs, the economic
impacts on insurance companies are unclear. A common question is, ―If distance-based
pricing is better, why do insurance companies not offer it without a mandate?‖

In general, as has been demonstrated repeatedly in other consumer sectors, individual
firms may innovate and not be followed by other firms for a wide variety of reasons, but
when the market is transformed through policy changes, the industry adapts and remains
healthy. Specifically regarding vehicle insurance, the Victoria Transport Policy Institute
has noted:
        ―Individual insurers face several barriers to implementing distance-based pricing. An individual
        company faces relatively high administration costs to establish an odometer auditing system.
        Insurance regulators are often unsupportive of pricing innovations. An individual insurance
        company only captures a small portion of the total benefits, since most financial savings are
        passed back to customers or accrue to competitors. Insurers do not profit from reductions in
       uncompensated crash costs, congestion, infrastructure costs, or pollution, or benefit directly from
       increased equity. Insurance companies currently maximize profits by maximizing their gross
       revenue, because they are dependent on investment income. A pricing strategy that reduces total
       crashes could reduce profits if regulators or market competition required a comparable reduction
       in premiums. Although there are potential financial and marketing benefits, these longer-term
       savings would have to offset an individual insurer‘s short-term revenue losses and risks. It is
       therefore not surprising that few insurers have implemented distance-based pricing.‖

Additional Benefits and Costs
Equity Impacts
Proponents, including Todd Litman of the Victoria Transport Policy Institute argue that
PAYD improves equity and fairness:
       ―Current vehicle insurance pricing significantly overcharges motorists who drive their vehicles
       less than average each year, and undercharges those who drive more than average within each
       price class. Since lower-income motorists drive their vehicles significantly less on average than
       higher-income motorists, this is regressive. Distance-based insurance is fairer than current pricing
       because prices more accurately reflect insurance costs…Distance-based pricing benefits lower-
       income drivers who otherwise might be unable to afford vehicle insurance, and who place a high
       value on the opportunity to save money by reducing vehicle mileage. It benefits lower-income
       communities that currently have high, unaffordable insurance rates…. Distance based insurance
       would provide significant savings to workers during periods of unemployment, when they no
       longer need to commute.‖

Other equity issues may be addressed through policy design.

Feasibility Issues
None cited.

Status of Group Approval

Level of Group Support

Barriers to Consensus

                               BT-2.2: Expand travel choices

Policy Description
One way to reduce GHG emissions from transportation is to provide people with access
to transportation modes with low carbon intensity. This policy addresses four such
modes: intercity passenger rail, local transit, walking, and bicycling.

Policy Design
Goal: Increase transit ridership per capita 2% annually from 2010 to 2025.

Passenger rail

In the late 1990s, and continuing through 2004, nine state departments of transportation
joined forces to envision a hub-and-spoke rail network serving the Midwest, with
Chicago at its hub. The states were Illinois, Indiana, Iowa, Michigan, Minnesota,
Missouri, Nebraska, Ohio, and Wisconsin. The $7.7 billion plan (in 2002 dollars) is
called the Midwest Regional Rail Initiative (MWRRI), and is based on two critical

       Service upgraded to permit maximum speeds of 110 mph, in comparison to 79
        mph today
       Existing infrastructure upgraded; no new rail rights-of-way constructed

Midwestern state DOTs today are awaiting the opportunity to compete for new federal
funding made available by the American Reinvestment and Recovery Act. Depending on
their success, ARRA may provide a sizable down payment on building the system.

Critics of the MWRRI plan correctly note that 110 mph service is nowhere near the
maximum speeds of intercity trains around the world. MWRRI, however, tries to balance
the need for improved rail transportation—in particular, beating the automobile—with
costs. Federal Railroad Administration requirements state that for speeds higher than 110
mph, such major improvements would be required in existing rights of way as to
essentially mandate the construction of all new track. This would result in a price tag
much higher than the $7.7 billion estimated for MWRRI.

The recently released MGA ―Surface Transportation Recommendations‖ includes a
commitment to passenger rail in the region, focusing largely on targeting federal funds.1

 The document recommends:
    Encouraging Congress to support the goals of the Midwest Regional Rail Initiative and Ohio Hub,
       continue its support of Amtrak‘s Empire Builder route, and support ways to increase accessibility
       in states where passenger rail service is lacking.
    Having an interconnected national passenger rail network that is integrated into the nation‘s air,
       highway and local transit network.
    Continuing a national passenger rail program with its own source of funding.
    Improving the process for reserving and establishing passenger and commuter rail access on
       private railroads.
The states should go further and commit to implementing the MWRRI, cooperatively
applying for and pooling federal funding, and providing a pool of state support as well if

Local transit

Cities large and small around the country have expanded rail transit or built new systems
from scratch in the last 20 years. Nationally, transit ridership in 2008 was at a 52-year
high. The Midwest, however, has fallen behind, leaving billions of dollars in federal
construction aid for rail transit on the table, and relying on an increasingly outmoded car-
bound transportation system that is vulnerable to fuel price spikes and cannot meet the
needs of an aging cohort of baby boomers. Even existing bus service is under pressure
and subject to route cuts.

In the handful of Midwestern places to embrace rail, such as Cleveland and Minneapolis,
it has been successful. Minneapolis‘s Metropolitan Council reports that the Hiawatha
Light Rail Transit line provided 9.1 million rides in 2006, reaching levels not predicted
for the system until 2020. Even better, transit oriented development has taken place along
the line, with 7,700 housing units built along it as of March 2007, with another 8,000+
estimated to be built there by 2010.

Now many areas have plans for rail transit, including:

      Minnesota: The Northstar commuter line is scheduled to open 2009. The Twin
       Cities plan to expand light rail service, extending the Hiawatha and adding a link
       between the two major downtowns.
      Michigan: The state envisions a commuter rail between Ann Arbor and Detroit,
       with stops at Metro Airport and Dearborn.
      Wisconsin: Two light rail New Starts are planned: the Kenosha-Racine-
       Milwaukee line, and a system running east and west through metropolitan
      Illinois: The Regional Transportation Authority, the umbrella body over
       Northeastern Illinois‘ transit systems, has released a capital budget calling for $10
       billion to be spent over the next five years.

Buses will remain an important backbone of transit systems with or without rail.
Unfortunately, even with increased ridership in recent years, bus systems in the Midwest
are straining under inadequate budgets and governance structures, often forced to cut
service. New diesel-electric hybrid buses, built in the Midwest, offer long-term savings

      Improving cross-modal connectivity to provide greater efficiency of goods movement from one
       mode to another—such as barge to truck or truck to rail.
      Encouraging the federal government to be partially responsible for promoting the continuity of the
       rail network between states and regions, and to provide a framework for preserving, maintaining,
       improving and expanding the nation‘s passenger and freight rail system.
      Developing technology through the efforts of the Federal Railroad Administration and the railroad
       industry to provide safe, cost-effective, higher-speed passenger and freight train operations on
       shared-use rail corridors.
      Continuing funding for a variety of advanced safety devices to improve safety at highway-rail

and manufacturing jobs for the region, but require upfront investments that often aren‘t

In some states, local transit authorities have limited ability to work across municipal lines
and must compete every year for property tax revenues. Such arrangements make it
nearly impossible to attract federal construction aid, since they cannot demonstrate
ongoing support for operations, and they result in second-rate systems. More generally,
transit needs more state and federal support, especially for operating costs. Some states
have counterproductive constitutional bans on using gas tax revenues for transit, even
where transit would save money by reducing road infrastructure costs; these bans should
be revisited. The MGA‘s Surface Transportation Recommendations express support for
transit,2 but a more pointed policy is needed.

Bicycle and pedestrian facilities
Most transit trips require a walk or bike ride at the beginning or end, so the success of
transit is heavily dependent on people‘s ability to use these modes. Even where transit is
not used, walking and biking can reduce the need for car trips, saving money and
reducing emissions. Yet even though walking and biking facilities cost a small fraction of
car facilities, this essential link is often overlooked. Federal Surface Transportation
Program funding may be used for bike and ped facilities, but typically states and local
governments only use the small portion set aside for ―Enhancements‖ for that work.
Consequently, much of the Midwest‘s road and street network is inhospitable to walking
and biking. A few places have made a concerted effort to provide ped-bike facilities, and
these have paid off. In Minneapolis, 10 percent of commuters get to work by walking or
biking; in Madison, 14 percent. Non-work bike and walking trips are more difficult to
measure but anecdotally are substantial in these cities as well.

One way to permit better access to walking and biking is to enact ―complete streets‖
policies. These policies require state and local governments to ensure that streets are
suitably designed for pedestrian and bicycle traffic, and for transit where appropriate.

The 2001 National Household Travel Survey found that 48% of all trips Americans take
are less than three miles – a 15 minute bike ride in good conditions – while 24% are less
than one mile – a 15 minute walk in good conditions. Meanwhile, the report says federal
appropriations provided only $453 million annually in 2005-07 for bicycle and pedestrian
systems. Compare the $453 million nationwide to Chicago‘s recent Dan Ryan
Expressway reconstruction project, which cost $1 billion.

The MGA‘s Surface Transportation Recommendations acknowledge the importance of
complete streets.3 Illinois‘ Public Act 095-0665, enacted in 2008, is a model for the

  The Midwestern Governors Association Surface Transportation Recommendations support:
     Continuing a strong federal commitment to public transit in both urban and rural areas and
        providing funding for needed programs that make essential transportation services available to
        urban and rural residents.
     Providing additional regulatory flexibility so transit agencies can provide enhanced public
        transportation services that allows more individuals to enjoy services.
     Providing more federal transit options for residents in rural areas.
     Encouraging and supporting the expansion of intercity and intracity public transportation services
        provided by commuter, intracity, and intercity vans and buses.
  The document recommends:
region. However, it should be broadened to explicitly include local projects funded with
state aid.

Even with complete streets, walking and cycling may remain impractical. If distances
between destinations are great, these modes will be too time-consuming. BT 2.3 provides
policy guidance in the area of transportation infrastructure and planning.

Timing: Policy reforms should begin as soon as possible. Progress will be incremental,
as the task is large, but measures of access to these modes should improve annually as
should mode shares.
Parties Involved: State DOTs, legislatures, members of Congress, local transit providers,
local transportation engineers.


Implementation Mechanisms
States should adopt measures for access to passenger rail, transit, walking, and bicycling.
Measures should be tracked annually. Mode shares should also be tracked through the
Census Bureau‘s journey-to-work or other, more robust measures; shares for each of
these modes should increase annually as people‘s options improve.

Passenger rail
The MGA states commit to fully implementing the MWRRI by 2015. This will require
cooperative applications for federal funding. Once ARRA funding is available, states
should evaluate unmet resources and determine an equitable formula for state resources
to fill in the gap.

Local transit
States should provide adequate governance and taxing authority for local transit systems
to qualify for federal New Starts assistance. States should work with members of
Congress and the U.S. Department of Transportation to ensure the reauthorization of the
federal surface transportation act provides better support for transit, especially to cover
operating costs. States should review their aid formulas to better fund transit.
Constitutional bans on support for transit should be revisited.

Bicycle & Pedestrian Expansion
States should provide complete streets both through their own DOTs and via state aid to
localities, using Illinois‘ law as a guide. States should use Enhancements as a floor for
bike-ped funding and consider moving other STP money into these projects, and
encourage MPOs and local governments to do the same.
Related Policies/Programs in Place
Intercity rail:
        ARRA provides $9.3 billion in federal aid.


       Recent expansions, such as Chicago-St. Louis and Chicago-Milwaukee, have
        successfully driven increased ridership.
Local transit:
    Nationally and regionally, transit is seeing ridership higher than at any time in the
        last half-century.
    Many metro areas have pending New Starts applications or are considering the
        same. Many would like to purchase efficient hybrid buses and expand service.
    Some cities have upgraded their facilities. For example, the Twin Cities have used
        federal funding to undertake a $24 million bike-ped demonstration effort
        involving 25 separate projects. Recent counts on some routes in Minneapolis
        show a 29% increase over the past year.
    Illinois Public Act 095-0665 which gives Bicycle and pedestrian ways shall full
        consideration in the planning and development of transportation facilities.
Type(s) of GHG Reductions
For example: Primarily CO2.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Passenger rail

Table 5.13 of a study done for the nine state DOTs involved with the Midwest Regional
Rail Initiative computes total BTUs for the corridor under the build/no-build scenarios;
working with those data, we can use the emissions factors by fuel type noted above to
compute total projected CO2 emissions for Chicago-St. Louis:

Table 1. Projected Annual Carbon Dioxide Pollution from Projected Chicago-St. Louis
Trips (BTU's in Billions)
Mode                  BTUs -    CO2 Pollution        BTUs w/ 110 CO2 Pollution
                      No build (MT)                  MPH Service (MT)
Commercial airline    2,583        183,461             1,625             115,418
Amtrak                132          9,375               321               22,799
Commercial bus        43           3,054               36                2,557
Automobile            8,794        624,606             8,643             613,881
Totals                        820,497                          754,655

Thus the annual CO2 pollution savings from bringing 110 mph service between Chicago
and St. Louis is more than 65,800 metric tons. There are eight other major corridors in
MWRRI, with the number of daily round-trips and mileage of each corridor being
somewhat different. However, the Chicago-St. Louis corridor, at 285 miles and 8 daily
round-trips, is typical of the major city-pairs in the MWRRI system. While the detailed
BTU analysis shown above was not yet undertaken for these routes, a reasonable ballpark
estimate would be to take the Chicago-St. Louis savings of 65,800 metric tons and simply
multiply by the number of other corridors in the system – eight – for an annual total of
526,400 tons saved for the entire MWRRI.

Local transit
SAIC, a consulting firm based in McLean, VA, published in September 2007 a study
entitled, ―Public Transportation‘s Contribution to U.S. Greenhouse Gas Reduction.‖ The
study reports that in 2005, public transportation reduced carbon dioxide pollution
nationwide by 6.9 million metric tons, composed of two types of reductions:
     Mode switching from single-occupancy personal vehicles to transit (3.9).
     Gasoline savings from reduced congestion due to transit (3.0).

A June 2008 report written for the state of Oregon contains 2006 ridership statistics
compiled by the Federal Transit Administration‘s National Transit Database. Oregon then
combined those statistics with data from the Texas Transportation Institute to develop a
list of transit ridership in the top 39 ―large‖ (between one and three million in population)
and ―very large‖ (greater than three million) cities in the nation in 2006 that had transit
systems. The Midwest is barely represented, as shown below:

       2. Chicago                              494,129,737 passenger trips
       16. Minneapolis-St. Paul                 73,356,649
       23. Milwaukee                            48,972,262
       27. Detroit                              37,281,540

There were four non-RE-AMP Midwestern cities in the table: Indianapolis, Columbus,
Cincinnati, and Cleveland, respectively, with 10, 15, 26, and 69 million riders
respectively. If the nationwide total for public transportation was 6.9 million metric tons
saved, we can then estimate what total CO2 pollution savings were in the four cities listed
above based on the proportion of total nationwide passenger trips they represent. The top
39 cities represented 6,773,509,553 passenger trips. The four Midwestern cities totaled
653,740,188 passenger trips, or 9.65% of the total; extrapolating that proportion to the
nationwide total carbon dioxide pollution savings of 6.9 million metric tons yields
665,948 annual metric tons of reduction.

One caveat, of course, is that this estimate does not account for different lengths of
passenger trips among the 39 cities studied, nor does it account for the reduced amount of
sprawl—and concomitant reductions in carbon dioxide pollution—that new mass transit
may induce. Another is that this does not reflect the addition of mass transit in rural areas.
But given urban vs. rural populations, a safe assumption is that the 665,948 tons
estimated above would represent the vast majority of potential reductions from transit.

Walking and bicycling
Again quoting from the Rails-to-Trails Conservancy report mentioned above, two levels
of annual investment are described: $330 million and $3 billion. These numbers are
chosen to match assumed, eventual carbon dioxide per-ton prices of $10 and $30. At this
level of spending, as mentioned above, the report suggests vehicle miles driven
reductions of 70 billion and 200 billion, respectively.

It is important to note that these reductions are based on several key, aggressive
assumptions that would require a wholesale change in how Americans choose to get from
place to place (the report‘s source for many of the current statistics is the 2001 National
Household Travel Survey conducted by the Federal Highway Administration :

      Currently, we walk or bike for 31% of our trips of one mile or less; the ―modest‖
       and ―substantial‖ scenarios mentioned above assume 40% and 70% usage of bikes

       and human power for trips less than a mile
      Today, we bike/walk for 4% of our 1-3 mile trips; the report assumes ―modest‖
       and ―substantial‖ percentages of 10% and 25%
      The report assumes greatly improved ―synergy‖ between biking/walking and
       access to public transportation; to wit:
          o the report assumes ―modest‖ and ―substantial‖ proportions of 5% and 15%
               public transit use for trips between 1-15 miles in length (compared to 2%
          o suggested improvements in bike/pedestrian access to public transit will
               increase ridership by 10% (modest) and 30% (substantial)

With these assumptions clearly stated, we can now compute potential GHG reductions
based on the report‘s VMD reductions in the modest and substantial scenarios. The
Midwest states of Illinois, Indiana, Ohio, Michigan, Minnesota, Wisconsin, Iowa, and the
Dakotas together constitute about 19% of the U.S. population, so we can extrapolate
potential GHG savings based on reductions in national VMD for the two scenarios: 13.3
billion, and 38 billion. Using 22 mpg for the average personal vehicle, and 19.6 pounds
of CO2 emitted, this translates into regionwide GHG reductions of 5.9 million and 16.2
million tons, respectively. An important caution here is that some of these reductions are
clearly due to public transit ridership increases, not necessarily ―pure‖ bicycle and
pedestrian mode growth.

To date, no Midwestern state has specifically addressed bicycle & pedestrian options in
its climate change task force report. Notably, Minnesota, Illinois, Wisconsin, and Iowa
have lumped such strategies in with other policies. In Minnesota, the expansion of
bicycle & pedestrian choice is combined with that of transit, and only the latter‘s GHG
reduction is estimated in the report.

Wisconsin Gov. Doyle‘s Climate Change Task Force included bicycle & pedestrian
expansion in its final report, but as with Illinois, combined such policies in with its
―energy efficient communities‖ agenda. This entire package of policies was calculated to
have an annual CO2 reduction of several million tons, but again includes much more than
bicycle & pedestrian actions.

An excerpt from Illinois‘ yet-to-be-published climate change advisory group report
illustrates how this state calculated potential reductions for its ―transit oriented
development‖ umbrella. Quoting directly from that report:

―According to the Northeastern Illinois Planning Commission, 521,000 people with an
average density of about 22 persons per acre could live in 40,000 acres of transit oriented
developments (TODs) in Metro Chicago by 2020. The average density in Metro Chicago
is currently about 11 persons per acre.

Therefore, the TOD adds roughly 11 people per acre on top of the 11 that would be
expected. Out of the 521,000 people NIPC estimates could be in the TODs, half (11 out
of 22) or 260,000 would live in the TODs who would not under a BAU scenario.

Illinois – people per household: 2.63

According to the Denver Regional Council of Governments, TODs can reduce rates of
greenhouse gas emissions by 2.5 to 3.7 short tons per year for each household.

260,000/2.63= 98,859 households X 2.5 short tons GHGs reduce per
household/year=247,148 short tons per year
260,000/2.63= 98,859 households X 3.7 short tons GHGs reduce per
household/year=365,778 short tons per year

Although rail transit is virtually non-existent anywhere else in Illinois, it could be added
in the future, and TODs can happen around bus transit hubs. Metro Chicago comprised
roughly ¾ of the state‘s population. Assume another 15% of the population could take
advantage of TODs. Using the same assumptions for metro Chicago = 52,000 people =
49,494 to 73,155 short tons per year.

Illinois statewide totals: 296,642 - 438,993 short tons per year

Short tons are then converted to metric tons by dividing the totals by 1.102 presenting a
range for state wide total reductions in 2020 of 269,185 to 398,360 metric tons.‖

Quantification Methods and Key Assumptions:
Methods are described above, as are key assumptions.

Key Assumptions: List/describe

Key Uncertainties
Provision of transportation choices requires sound development policy (BT 2.3) for
success. If government continues to mandate car-based development patterns through lot
size, parking requirements, and other means, then provision of transit may have little
effect on GHG emissions.

Additional Benefits and Costs
   1. Lowered criteria pollutants
   2. Lowered land consumption
   3. Lowered costs to households and businesses
   4. Better access to jobs, especially for those unable to drive
   5. Economic resilience to fuel price shocks
Feasibility Issues
None cited.

Status of Group Approval

Level of Group Support

Barriers to Consensus

               BT-2.3 Transportation Infrastructure and Planning

Policy Description
Even if carbon content of fuels and vehicle efficiency improve, high and increasing
transportation demand could negate any climate benefit and make it impossible to reach
the MGA‘s reduction goals. BT-2.1 addresses mechanisms to rein in single occupancy
vehicle (SOV) VMT through fair pricing, and BT-2.2 addresses mode options. Here we
address a root cause of VMT growth – transportation infrastructure and related elements
of the built environment.

Over the course of a generation, per capita vehicle-miles traveled have nearly doubled,
from 5,500 miles a year to about 10,000 (Fig. 1). Little of this growth has resulted from
the shift from transit to cars, as that shift occurred in the immediate post-World War II
era. Rather, often due to government policy, people have made more and/or longer trips
to get to work, school, shopping, and other destinations.

                 Figure 1. VMT per capita, U.S., 1970-2008 (FHWA, Census Bureau).

The deployment of mono-modal transportation infrastructure has spurred this growth, in
part through ―induced travel.‖ As new and wider highways reduced the time cost of
travel, people consumed more of it, by moving farther from work and other common
destinations or by locating their businesses further from customers‘ or employees‘ homes
or from suppliers‘ warehouses. Exacerbating the trend, government enacted a host of
rules that spurred even more travel – rules that moved schools from population centers to
the distant greenfields, for example, and those that banned stores and workplaces from
locating near customers‘ homes, and those that required more parking than the market
required, thus spreading out buildings so that the landscape became unwalkable and
difficult to serve with transit.

These practices are costly not only in terms of CO2 emissions but also in economic terms.
A population and an economy dependent on long car trips is hostage to disruption and
lowered living standards from rising fuel prices. The massive roadway infrastructure that
supports so much driving requires ever-more money for upkeep. Gas tax revenue is
falling compared with the need, and in many states, roads have become a major drain on
property tax revenues. Practices that can reduce the disutility of travel, by lowering the
frequency and length of trips, will benefit both private and public budgets.

The first state to mandate VMT reduction is Washington, whose H.B. 2815 was enacted
in 2008, and the goals described here are based on that legislation.

Policy Design
Goals: Reduce the number, frequency, and distance of trips made by driving, with the
goal of a return to the per capita rate of driving of the early 1980‘s. Progress to be
measured as a reduction of VMT per capita by 40% from a 2005 baseline by 2050, with
incremental goals for intervening years. States‘ transportation funding formulas, home
rule, and other legal and policy traditions vary, so implementation mechanisms will vary
as well, and this policy is purposefully general to allow for local adaptation and
innovation. But the goal, which represents a return to traffic levels of the 1980s, is
reachable. At the individual project level, research shows drastic reductions in
transportation demand by allowing the market to provide compact, mixed use
development, and by turning from highway building to provision of complete streets
suitable for driving, walking, biking, and transit. As an example of the effects of one
particular strategy, Table 1 shows VMT reductions from infill development projects as
opposed to BAU.

Table 1. VMT reductions from various infill projects (CCAP).

Timing: The policy has the following incremental benchmarks for VMT reduction: 15
percent reduction in per capita VMT by 2020, 28 percent by 2035, and 40 percent by

Parties Involved: State and local government, primarily DOTs, Metropolitan Planning
Organizations (MPO), and local transportation agencies, and commissions with oversight
of development.


Implementation Mechanisms
States should adopt VMT reduction goals described above. They should strive to reach
the goals by exerting their own authority over major transportation infrastructure
decisions, and by providing incentives and technical assistance to MPOs and local
governments. They should make VMT reduction an explicit purpose and goal of the state
DOT, and require the DOT to make annual reports on progress toward the goal, with
recommendations for needed policy changes.

Specifically, states should choose implementation strategies from a menu that includes:
   1. Adopt strong statewide ―complete streets‖ policies, such as the one laid out in
       Illinois‘ Public Act 095-0665, adopted in 2008.
   2. Reform state transportation aid formulas and other types of state assistance to
       provide higher levels of support for areas covered by exemplary local land use
       ordinances that permit well-designed, compact, mixed-use development, with low
       on-site parking requirements.
   3. Reform state economic development programs, including tax increment financing,
       to reward projects that create relatively little new VMT per job and to discourage
       those with high VMT per job.
   4. Update transportation demand planning so that area-wide access to destinations,
       rather than level of service on particular road segments, is optimized.
   5. Prioritize roadway maintenance and repair projects over those for new capacity.
       States should require all projects providing new highway capacity, including
       improvements that will facilitate new highway capacity, to be programmed for six
       years in state and local transportation improvement programs (TIPs) before
       construction begins; projects inserted into TIPs or moved ahead of schedule must
       be publicly noticed and approved by the governor.
   6. Require state and local transportation agencies spend Surface Transportation
       Program (STP) funds, provided via the American Reinvestment and Recovery Act
       or in regular appropriations, consider the full range of allowed investments before
       allocating such funds to roadways. Consider requiring that a portion of STP
       funding, beyond funding dedicated by law to Enhancements or CMAQ, go to non-
       roadway projects.
   7. Work with members of Congress and officials at the U.S. Department of
       Transportation to reauthorize the federal surface transportation bill so more
       funding is available to projects that hold down VMT, including transit, complete
       streets, and roadway maintenance. For rural areas with less ability to use such
       funding, consider a federal funding formula that would allow transportation
       dollars for electrical transmission for wind-based energy (transportation for
       energy), intercity passenger and freight rail (transportation for people and freight
       without the need for new highways), and broadband Internet (transportation of
   8. Require GHG impacts be analyzed in any EIS or other environmental review of
       transportation projects.
   9. Analyze emerging proposals for VMT taxes, tolls and other mileage-based
       revenue schemes for their effect on GHG emissions.

Related Policies/Programs in Place
Many states and local governments have enacted policies that directly or indirectly
attempt to mitigate the growing demand for motor vehicle travel. It is likely such policies
will be part of the debate over reauthorization of the federal surface transportation act as
well. Some examples of policies and programs in place:

      Washington State has set statewide targets for VMT reduction and are reviewing a
       host of implementation strategies produced by a stakeholder commission.
      California has adopted rules that set VMT targets at the local level and give a
       state agency the power to review plans for conformity to those goals.
      Many states have adopted forms of complete streets and fix-it-first rules, though
       they vary in effectiveness. Illinois‘ recently enacted a complete streets law that is
       considered a model for the region.
      Many local governments and MPOs are pursuing demand-reduction policies by
       allowing for compact, mixed-use development, reducing parking requirements,
       prioritizing non-auto projects, and expanding transit options. Some of these
       initiatives resulted from state requirements or incentives, such as Wisconsin‘s
       traditional neighborhood design requirement.
Type(s) of GHG Reductions
Primarily CO2.

Estimated GHG Reductions and Net Costs or Cost Savings
The GHG reduction from this policy will depend on the progress of parallel polices, such
as those aimed at reducing the carbon content of fuels and rationalizing the cost of
driving. Absent these policies, a 50 percent reduction in VMT would mean a 50 percent
reduction in emissions from motor vehicle use, or more than 10 percent of the region‘s
total GHG emissions from all sources. If LCFS and pricing mechanisms are successful,
the effects of this policy will be less but still extremely significant.

Two state climate task forces, Minnesota and Wisconsin, have evaluated policies similar
to those described here and have found that the net costs would be negative, due to lower
household cost of driving and lower social costs of providing and maintaining roadway
Data Sources:
    Federal Highway Administration.
    U.S. Census Bureau.
    U.S. Energy Information Administration
    Governor‘s Task Force on Global Warming, ―Wisconsin‘s Strategy for Reducing
      Global Warming: Final report to Governor Jim Doyle‖
    ―Minnesota Climate Change Advisory Group Final Report: A report to the
      Minnesota Legislature‖
Quantification Methods and Key Assumptions:
Reducing VMT by 50 percent would reduce emissions from the affected fleet by 50
percent, absent other changes (described above). Costs will vary by implementation
strategy but will net as negative, as incentives would be created by redirecting exiting
funding, and the lower need for highway capacity would create major savings.

Key Uncertainties
While it is clear that policy can have an important effect, VMT is a determined by many
factors, so it is difficult to ascribe precise effects to individual strategies, which
themselves may vary in terms of stringency. For this reason, states should set ambitious
but achievable goals, along with a suite of policies such as those listed above, and
perform annual reviews to ensure they are making adequate progress.

Additional Benefits and Costs
   1. Reduced cost of construction and maintenance of highways.

   2. Reduced criteria air pollutants, non-point-source water pollutants, heat island
      effects, and other environmental effects.

   3. Reduced danger and cost from highway crashes.

   4. Better access to jobs and other destinations for those who cannot or choose not to

   5. Reduced cost of travel to households and businesses.

   6. Roadways that are better maintained and safer.

Feasibility Issues
None cited.

Status of Group Approval

Level of Group Support

Barriers to Consensus

                           BT-2.4: Freight Transportation

Policy Description
The freight sector is at or near capacity for every mode of transportation. Better truck
technology, electrification of truck stops, vehicle efficiency improvements to trucks,
mode switches, rail technology upgrades, elimination of chokepoints, and rail
infrastructure improvements, and shift freight movements from truck to rail wherever
possible, are all needed to address the capacity constraints in the freight transportation

This policy prioritizes infrastructure improvements to be made in the near-term while
suggesting longer-term strategies to improve the freight transportation sector. Near-term
infrastructure improvements will provide support in the long-term for the freight and
passenger rail transportation sectors.
Policy Design
        Reduce the GHG intensity per ton mile by 20% by 2025.
        Remove bottlenecks that impede mode-shifting such as the CREATE project,
         shortages of dock space, and technological improvement to increase
The use of rail to move freight is a much more efficient method from an energy
consumption and greenhouse gas emission perspective. According to the Chicago Region
Environmental and Transportation Efficiency (CREATE) Program:
    Moving freight by rail is four times more fuel efficient than other over-the-road
    One gallon of fuel moves one ton of freight 436 miles by rail;
    Hauling one ton of freight coast to coast consumes 7 gallons of fuel by train
       versus 27 gallons of fuel by truck;
    A single intermodal train can take 280 trucks off the highways, the equivalent of
       1,100 cars; and
    500 trucks would be required to move as much freight as a single bulk commodity
Reduce rail congestion and delays in freight transportation throughout the Midwest
region by securing funding necessary to make infrastructure improvements to current
regional rail infrastructure by 2012.
            o Reducing rail congestion and delays in the freight sector will directly
              improve passenger rail movements and encourage passenger rail travel
              in the long-term. A major barrier to increased passenger rail travel
              currently is lack of reliability in passenger rail schedules. Once
              necessary rail infrastructure improvements are made allowing freight
              and passenger trains to move more seamlessly throughout the region,
              reliability will improve, encouraging the use of passenger rail travel.
           o National freight forecasts by the U.S. Department of Transportation
             estimate an 89% increase in tons of freight by 2035. Infrastructure
             improvements are required to increase the amount of freight that can
             be hauled by rail and to drastically improve congestion and reduce
             locomotive idling.
           o Work has been done in the region to determine the most efficient
             methods for improving the freight transportation system, most notably
             the CREATE Program. The following freight rail policy
             recommendations build upon the work already underway by state and
             regional freight improvement initiatives.
Supply Chain Efficiencies
      There are several opportunities all along the supply chain of shipped goods in
       the region that offer opportunity to implement efficiencies, reduce fuel use
       and reduce greenhouse gas emissions. State and local units of government
       should strive to identify efficiency opportunities and emission reduction
       strategies for government goods and services purchased by 2013.
Longer-term strategies for the region
      Implement intermodal infrastructure efficiencies to improve the speed of freight
       shipping across the region, thus reducing greenhouse gas emissions from the
       freight transportation sector by 2020.
      Improvements in freight transportation need to be considered against
       improvements in all modes of transportation to determine the most efficient
       method for transporting goods across the region. Create more effective freight
       transition between modes at intermodal yards, ports, and airports by 2020.
      Strategic improvements in freight rail transportation can improve passenger rail
       efficiencies thus reducing emissions from freight rail while decreasing passenger


Parties Involved: U.S. Department of Transportation, MGA State Department‘s of
Transportation, Association of American Railroads, AMTRAK, regional/metropolitan
planning organizations, shippers, developers, regional rail associations, and local units of

Other: None cited.

Implementation Mechanisms
      The CREATE program has an unfunded need of $2.56 billion and to date almost
       $200 million has been obligated to implement a three-year plan (2007-2009)
       to advance 32 projects into final design or construction.
              MGA states and relevant agencies should support the CREATE
               program to secure the additional necessary funding from regional,
               state, and federal agencies to implement the remaining rail
               improvement projects by CREATE. These rail improvement projects
                    Increase rail capacity by addressing rail system bottlenecks and
                    Remove, through regional, statewide and national planning
                       activities, bottlenecks (both physical and operational) for the
                       efficient movement of freight by all modes of transportation.

State and Local Government
    State and local governments should perform an audit of emissions from
       shipping goods that will identify fuel use and energy costs, reduce fuel-related
       transportation costs, manage fuel price and supply volatility, develop
       strategies to reduce emissions in supply chain, and leverage knowledge,
       information and benchmarks to improve decision-making processes.
    Establish criteria for state and local governments to factor greenhouse gas
       emissions created from transporting shipped goods. Established criteria should
       be a factor in bidding processes for shipped goods.

Freight Electrification Infrastructure
    Maximize funding to the region recently made available in the American
       Recovery and Reinvestment Act of 2009 for competitive grants to states, local
       units of government, and metropolitan transportation authorities to implement
       transportation projects that reduce emissions, including shipside electrification of
       vehicles, truck stop electrification, airport ground support equipment and cargo
       handling equipment. A total of $400 million was authorized and the U.S
       Department of Energy, Office of Energy Efficiency and Renewable Energy will
       be administering the funds.

Long-term Implementation Priorities
    Begin regional planning processes to identify efficiency opportunities in the
      Midwest freight transportation sector focused on identifying intermodal
      infrastructure efficiencies to improve the speed of freight shipping across the
    Develop model freight-related planning approaches such as multi-state, multi-
      modal plan and incorporating best practices that respond to freight system trends.
    Support river and lake lock improvements to improve the efficiency, capacity, and
      navigability of waterway systems while mitigating environmental impacts.
      Improvements are necessary for intermodal shifts that would ultimately reduce the
      greatest amount of greenhouse gas emissions.
    Establish tax credits for rail expansion/preservation;
    Support initiatives to encourage railroad capital investment to increase
      capacity (e.g. tax credits);
    Identify opportunities for increased intermodal freight movement;
    Utilize federal Congestion Mitigation and Air Quality (CMAQ) funding to
      support rail freight improvements.
    Develop additional trucking lanes where needed to integrate with intermodal
      changes and upgrades;
      Move freight from interstates to alternative modes;
      Improve freight logistics to help with load matching, route, and schedule
      Develop and enhance feeder barge container shipping;
      Integrate aviation, rail, and interstate networks to support connectivity; and
      Support a federally dedicated funding mechanism for rail improvements,
       upgrades, new projects or other necessary projects to improve the Midwest rail

Related Policies/Programs in Place
Michigan has a similar proposal to the CREATE program in climate process. It was
supported by participants.
The Chicago Region Environmental and Transportation Efficiency Program
(CREATE) is a partnership between the State of Illinois, City of Chicago, Metra,
Amtrak, Association of American Railroads, and the U.S. Department of
Transportation. Chicago is the nation‘s rail hub and the rail improvements proposed
to be made by CREATE will increase the efficiency of the region‘s rail infrastructure.
CREATE includes 78 critically needed rail and highway infrastructure improvements
in Northeast Illinois. Projects include:
      25 Road/Rail grade separations to eliminate grade crossings, route roadway
       over or under rail line at crucial locations throughout the region;
      6 rail/rail grade separations, which will reduce chronic delays with bridges at
       key points where passenger and freight lines cross each other;
      47 railroad projects to reduce chokepoints and increase capacity;
      Grade crossing safety enhancements; and
      Viaduct improvements to upgrade safety and appearance of rail bridges over
In Illinois, class I railroads defer the right of way to Amtrak and Metra, so when
passenger trains move, freight must stand aside. When freight trains are moving,
passengers must stand aside in many locations, due to capacity issues and
Type(s) of GHG Reductions
For example: Primarily CO2.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
List, if possible provide URL..

Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied

Key Assumptions: List/describe

Key Uncertainties
Describe or say None cited.

Additional Benefits and Costs
   1. Use numerical listing.
   2. Keep the items brief – 1 or 2 sentences.
   3. Include social /non-quantifiable and indirect benefits
[Okay to say if these will be analyzed at a later date.]

Feasibility Issues
Describe or say if none cited.

Status of Group Approval

Level of Group Support

Barriers to Consensus

         BT-3.1: Advanced Transportation Technology Commercialization

Policy Description
Advanced transportation technologies
The Midwest has many advantages in pursuing a low carbon transportation system,
including a rich agricultural land base for producing biofuels and a large existing biofuels
industry, a large automotive manufacturing industry, a network of elite research
universities, and a variety of other manufacturers. This policy option is designed to
promote commercialization of advanced transportation technologies by taking advantage
of these regional strengths.
For the purposes of this policy option, an advanced transportation technology is one that
enables lower greenhouse gas emissions per mile traveled than current practice in the
region, and that is not currently available due to scientific, technical, or cost hurdles. This
policy option may support commercialization of low carbon fuels (e.g. advanced biofuels,
electricity, hydrogen), advanced energy storage technologies suitable for transportation
vehicles (e.g. batteries), advanced drivetrains (e.g. electric and fuel cell), and other
vehicle technologies enabling decreased fuel consumption or adoption of lower carbon

This policy option should be designed to complement other policies supported by the
MGA Bioeconomy and Transportation Advisory Group. Specifically, decisions on
whether to support commercialization of specific low carbon fuels should be based on the
same life cycle GHG criteria developed as part of implementing the regional Low Carbon
Fuel Standard, and support should be offered to those fuels offering the greatest GHG
reduction. The same should be true for advanced vehicle technologies, with policy
support being given to those technologies offering the greatest GHG reduction potential.
Policy Design
This policy option promotes the development of advanced transportation technology
facilities throughout the Midwest region by providing, incentives, financial support,
technological support, and training of the workforce.
The Advanced Conversion Technology Policy will support technology development in
the following areas:
        Commercialization of advanced biofuels including;
                o Feedstock characteristics more favorable to conversion of cellulosic
                  biomass to fuels, with a focus on feedstocks common to the region.
                o Pre-treatment to enhance yields of sugars and other chemical
                  intermediates from biomass.
                o Advanced biofuel conversion technologies with life cycle energy and
                  GHG benefits.
        Commercialization of battery technologies suitable for improving battery life and
         vehicle range in electric and hybrid-electric vehicles;
              o Commercialization of hydrogen fuel cell vehicles, hydrogen
                production technologies, and hydrogen storage technologies.
              o Any other advanced transportation technologies.
      The Advanced Conversion Technology Policy will focus development of
       conversion technologies through the following stages:
           o Larger scale pilot facilities.
           o Commercial demonstration plants approximate 10 percent of the size of
             full scale commercial production.
           o Full scale commercial production.

    Training and education should begin as soon as possible
January 1, 2010

      Funding should be made available.

      Incentives should be in place.

      Grants, debt financing guarantees, and tax credits should all be available.

      Intellectual Property policies and regional regulatory policies should be in place
       to allow for faster tech transfer and faster project development.

Parties Involved:
The success of this policy option will depend upon a partnership between government
and private industries. State and local governments will be looked upon to provide the
necessary incentives, funding, and support for the development of these new technologies
up to the point of commercialization. Private industry will provide additional investment
and the advancements in technology necessary for the development and operation of the

Other: None cited.
Implementation Mechanisms
A funding mechanism will need to be created to foster the development of advanced
transportation technology up to the point of commercialization. Regional partnerships
must be developed between state and local governments, universities, and private
industry. These partnerships should focus on:
      Creating a cooperative environment where intellectual property is developed in
       the region andremains in the region for the benefit of the region.
      Making guaranteed loans readily available to industries developing advanced
       conversion technology.
      Creating an environment where industry feels secure in making capital

Select through a regional competitive proposal process up to six technologies that harness
regional advantages and are likely to develop the economy in the region. To ensure full
value change integration the process should:
      Implement a competitive proposal process as funding becomes available, funding
       will be derived from the public and private funding mechanism detailed below.
      Set criteria for selection carefully to enable the selection of technologies with
       benefits to the region in the development and utilization of regional feedstock,
       enhancement of the conversion technology process, and in the end product. These
       criteria will be developed through a public-private partnership of those in the
       industry to determine where enhancements that can most benefit the
       commercialization of these technologies can have the most impact.
      Select across the three technology research areas (feedstock characteristics, pre-
       treatment, advanced biofuel conversion technologies).
Establish a public and private funding mechanism to take the targeted advanced
conversion technologies from pilot plant through demonstration stage. Important
elements of this mechanism include:
      Use public funds to seed and leverage additional private capital resources;
      Make the process ongoing;
      Make grants available for up to 25% of the costs to move the project from a pilot
       plant through a demonstration stage;
      Provide debt financing guarantees for first commercial projects to prove the
       technology at commercial scale;
      Establish incentives such as tax credits (25%) for equity investments in high risk
       projects ;
      Provide lease / purchase agreements that may result in certain zero emission
       vehicle (ZEV) manufacturing projects to be exempt from sales and use taxes,
       modeled after California CAEATFA incentives program;
      Develop financial support mechanisms for clusters of farmers and conversion
       technology plants in the form of grants, low interest loan guarantees, tax
       incentives, or other forms of incentives; and
       Create multi-year agreements to allow for appropriate feedstocks to develop and
       fuel production plants.
Form strategic partnerships with industry, the federal government, and investors to
leverage additional sources of funding to build regional innovation clusters that take
advantage of expertise in multiple locations and sectors to speed commercialization of
key technologies.
Fund the development of regionally focused programs to enhance and improve targeted
advanced transportation technologies.
Develop regional training programs to develop a skilled workforce capable of operating
and maintaining advanced technology facilities.
Establish Intellectual Property policies which will encourage entrepreneurial activities
and capital influx to targeted technologies at regional universities.
Adopt regional regulatory policies to streamline the permitting approval process for
advanced conversion projects to allow for faster development of these plants
Leverage funding, as a region, made available in the American Recovery and
Reinvestment Act of 2008. Specifically the $2 billion dedicated for Advanced Battery
Manufacturing grants to support the manufacturing of advanced batteries and
Parties Involved
        -    Relevant state agencies
        -    Regional universities w/ relevant expertise
        -    Leaders of private industry located within the Midwest
        -    Investors
        -    Federal agencies
Related Policies/Programs in Place
        -    CALSTART – non-profit that works with the public and private sectors to
             develop advanced transportation technologies.4
        -    CAEATFA – The California Alternative Energy and Advanced Transportation
             Financing Authority provides financing for facilities that use alternative
             energy sources and technologies. It also provides financing for facilities
             needed to develop and commercialize advanced transportation technologies
             that conserve energy, reduce air pollution, and promote economic
             development and jobs. 5
        -    Energy title of 2008 Farm Bill6
        -    WI Act 255 for angel investment7
Type(s) of GHG Reductions
This policy option is qualitative only and GHG emissions resulting from this policy
option will not be quantified.

Estimated GHG Reductions and Net Costs or Cost Savings
This policy option is qualitative only and GHG emissions resulting from this policy
option will not be quantified.

Key Uncertainties
The GHG emissions released from the advanced conversion technology plants that this
policy option promotes are uncertain at this point. It is the hope that any proposal for the

  USDA 2008 Farm Bill Renewable Energy Provisions
 Qualified new business ventures may be eligible to claim an income tax credit on that investment, equal to
12.5% in each of two years. ( Bill
Summary available at:
development of these plants will take their emissions into consideration and employ the
best management practices for limiting plant emissions

Additional Benefits and Costs
-   It is anticipated that the use of advanced transportation technologies will result in
    overall reduced GHG emissions
-   Lower GHG emissions have been linked to less air pollution and therefore health
-   Increasing the use of advanced transportation technologies in the region will create
    employment and economic benefits
-   Challenging universities, government, and private industry to develop the best
    available technology for improving the efficiencies at commercial plants should spur
    development and create partnerships and opportunities for all parties that extend
    beyond this policy option.
Feasibility Issues
The feasibility of this policy option is dependent upon (1) locating the initial capital
investment for the development of this technology and (2) securing the intellectual
property as it is developed.

Status of Group Approval

Level of Group Support

Barriers to Consensus

         BT-3.2 Technical Assistance to Advanced Technology Projects

Policy Description
Proving production at commercial scale is a technology‘s seminal achievement. Once
achieved, new production facilities can proliferate as fast as capital and feedstock
contracts allow. Mechanisms should be in place to support that proliferation and aid in
the development and proliferation of incremental improvements across all production
facilities and corresponding feedstock and distribution infrastructures.

This policy option focuses on providing technical assistance to advanced technology
projects once they reach the point of commercialization.

Policy Design
This policy option provides mechanisms whereby technical assistance promoting the
development of commercial scale, production facilities within the Midwest region can be
both developed and shared with other facilities located in the region. Additionally, this
policy option will provide technical assistance to aid in improving alternative fuel
production efficiency, to aid in feedstock development, and to aid in improved
distribution infrastructure of operating facilities.

Alternative fuels as defined in this policy option include all biofuels as well as any
advanced technology projects which would operate in a similar manner to fuels such as
supporting the technological development of batteries, fuel cells, and solar technology for
use within the transportation sector. Projects should be selected to receive technical
assistance based on life cycle greenhouse gas emissions guidelines developed to
implement a regional Low Carbon Fuel Standard.

Technical assistance to assist in efficient operation of alternative fuels production will
include the sharing of best management practices, ideas and theories, data to identify
successful solutions, and patents and other intellectual property

This policy option is intended to be broad in scope and to encompass the full lifecycle of
biofuels from the engineering of crops / feedstock and transporting the crops / feedstock
to make production facilities more efficient.

The sharing of technological advancements among participants in this program will be a
key to the success of this policy option, including what is developed at universities,
through government, and through private industry. The sharing of these new
technologies must flow in both directions.


To promote the development of technological advancements which allow for more
efficient operation of commercial advanced technology projects within the transportation
sector. This increased efficiency should result in the reduction of GHG emissions from
these commercial plants and should stimulate growth and development of the facility,
create more jobs, and a larger tax base for the community.

June 1, 2009: Partnership committee between universities, government, and private
industry will be formed. This committee will have the following six months to meet and
discuss what technologies are available, what is being developed, and what commercial
facilities in the Midwest can best utilize these technologies as they are made available.

March 1, 2010: Technological advancements should begin implementation at
commercial plants.

Ongoing : The development of advanced technologies and improved efficiencies should
continue to be promoted, developed, and shared across the region, among the partners
involved with this policy option including universities, local and state government, and
private industry.

Parties Involved:

Universities, state and local governments including departments of agriculture,
transportation, and development, and private industry located or looking to locate in the
region, interested in developing clean technology solutions to the transportation industry.

Other: None cited.
Implementation Mechanisms
The key to the successful implementation of this policy option will be the open sharing of
advanced technology, improvements to efficiency, and intellectual property between
universities, state and local government, and private industry, including commercial
facilities and their partners who are directly involved in the development of these new
technologies and improvements in efficiency.

To effectively realize this ambitious goal a partnering agreement must be developed, be
agreed upon, and signed off on by all parties that will be directly involved with this
policy option. The issue of sharing intellectual property will be difficult to get buy-in
from all parties, particularly as the advanced technology associated with intellectual
property will give the private sector companies an advantage in the marketplace, which
they will not likely be ready to share without a partnering agreement that provides
advantages for being a partner.

Funding for this policy option will come from public private partnerships, as well as the
pooling of funds between states. Having this policy option regionally applied opposed to
being implemented on a state by state basis should save states on the costs of developing
and implementing the policy and should provide greater dividends for all parties
involved. Additionally the research conducted at universities will provide students with
knowledge and hands on experience that will easily be transferred directly into the
marketplace. This will also provide the commercial facilities in the region with a talent
pool from which to recruit to their expanding workforce.

   1. States will support advanced technologies by providing funding for Front End
      Engineering and Design studies.

    2. A regional group of cooperative extension leaders should make recommendations
       on how extension can aid in providing technical assistance in development of
       advanced technology facilities in rural areas.
    3. The technology to be utilized and shared will first need to be developed by
       universities, government, and/or private industry.
          Partnerships between universities, government, and private industry will be
           created for the seamless sharing of this information. This partnership should
           include faculty and students from universities in areas where technology
           development would be applicable to commercial scale alternative fuel plants,
           industry leaders and plant managers from the private industry who can
           implement these new technologies, and government officials from
           departments focused on development and the facilitation of new technologies
           throughout private industry.
    4. The intellectual property (IP) rights for this technology will need to be acquired
       by facilities intending to use this new technology to develop or enhance their
           A mechanism for distributing new IP rights for new technologies as they are
            created will need to be developed. As part of distributing these IP rights,
            commercial facilities will need to demonstrate need and implementation plans
            for the new technologies. Additionally, a partnering agreement will be
            developed between the commercial facilities and parties responsible for
            developing the new technologies to ensure that the utilization of new
            technologies remains in the Midwest region.
           Funding will be made available for development of these new technologies by
            establishing a public and private partnership funding mechanism. Elements of
            this funding mechanism will include:
           Use public funds to seed and leverage additional private capital resource;
           Make the process ongoing;
           Make grants available for up to 25% of the costs for implementing the new
            technology; and
           Develop financial support mechanisms for clusters of farmers and conversion
            technology plants in the form of grants, low interest loan guarantees, tax
            incentives, or other forms of incentives. The goal is to have multi-year
            agreements to allow for appropriate feedstocks to develop fuel production
Related Policies/Programs in Place
-   Iowa Biotechnology Business Support8
-   New Jersey R&D Technology Programs9 - This is a more general program but could
    be useful in providing guidance

 Iowa Biotechnology Business Support
 New Jersey Research and Development Technology Programs
-    Texas State Strategy on Advanced Technology10 - Another general program but
     contains the element of biotechnology
-    University of Wisconsin Biotechnology Center11 - Great point of reference for
     advancements in biotechnology

Type(s) of GHG Reductions
This policy option is qualitative only and GHG emissions resulting from this policy
option will not be quantified.

Estimated GHG Reductions and Net Costs or Cost Savings
This policy option is qualitative only and GHG emissions resulting from this policy
option will not be quantified.

 Note: While the technical assistance provided to advanced technology projects is not
directly quantifiable, the end result will provide for reduced GHG emissions as facilities
operate more efficiently, infrastructure for these facilities operates more efficiently,
feedstocks develop higher yields, and the utilization of lower carbon fuels and other
alternative fuels becomes more prevalent.

Key Uncertainties
The key uncertainty to the successful implementation of this policy option will be the
cooperative sharing, implementation, and feedback between all parties throughout the
region. To have this policy option operate as seamlessly as possible, a partnering
agreement must be developed which outlines the roles and responsibilities of each of the
parties involved.

Additional Benefits and Costs
-    It is anticipated that the use of biofuels and other advanced technology within the
     transportation sector developed as a result of this policy option will have a lower
     carbon content than gasoline and will therefore result in overall reduced GHG
-    Lower GHG emissions have been linked to less air pollution and therefore health
-    Increasing the use of biofuels in the region will create employment and economic
-    Challenging universities, government, and private industry to develop the best
     available technology for improving the efficiencies at commercial plants should spur
     development and create partnerships and opportunities for all parties that extend
     beyond this policy option.

   Article on Texas‘ State Strategy on Advanced Technology
   University of Wisconsin Biotechnology Center
Feasibility Issues
The feasibility of this policy option will depend in large part upon the ability to develop a
partnering agreement between the universities, government, and private industry

Status of Group Approval

Level of Group Support

Barriers to Consensus

               BT-3.3: Increase Regional Research Collaboration

Policy Description
The Midwest lags the coasts in the number and scale of new company formations in
biofuels, bio-agriculture, bio-forestry , biorefining, battery technology, hydrogen and fuel
cells, and other advanced transportation technologies. This is primarily due to the coastal
concentration of the risk capital community, the biotech community, and large
pharmaceutical, chemical, and energy industries. The Midwest must aggressively
develop policy alternatives that will capture the companies and technologies that can add
high value in the emerging transportation fuel and vehicle markets. The Midwest must
leverage its existing natural, people, and intellectual assets so it does not become
relegated to providing low-value commodity inputs for conversion to higher value
products by companies located in or controlled from other parts of the country.

This policy option should leverage the Region‘s exceptional research and intellectual
property generation capabilities in order to better bring them to bear on transportation
fuels, vehicles, and related technologies. This policy option should increase the
commercial results of cross-institutional collaboration at the Region‘s colleges,
universities and research institutions which should increase the number, size, complexity
and survivability of projects created with intellectual property generated within the

As part of this regional research collaboration, centers that bring together producers, the
research community, economic developers, and end users could be created to help build
collaboration between universities, government, and private industry, and to help develop
new technologies and launch projects.

Policy Design
By 2009: Appoint a group comprised of leaders from research institutions across the
Midwest to identify barriers to commercialization resulting from energy collaborations
among institutions and to recommend policies and programs to further collaborations
and more specifically, the commercialization resulting from collaborations, among these

By 2010: Develop and staff an information clearinghouse on advanced bioenergy
technology among institutions doing research on the topic in the Midwest.

By 2010: Develop working relationships and agreements with risk capital sources in the
Midwest to help secure funding for projects resulting from this collaboration.

By 2010: Identify and catalog both commercial and academic sources of advanced
cellulosic and other low-carbon transportation fuel technology within the region.

By 2012: Provide the funding necessary to provide grants needed to pilot three projects
resulting from technology developed by aggregating multiple technology sources from
Midwestern colleges, universities, and commercial companies.

By 2025: Average fossil fuel inputs in the production of conventional biofuels in the
region will be reduced by at least 50 percent.

BY 2025: At least 50 percent of all transportation energy consumed in the region will be
supplied by regionally produced biofuels and other low-carbon advanced transportation
fuels, with the expectation that a significant and additional portion of the region‘s biofuel
production will help the U.S. meet a national 25 x' 25 goal.

Timing: As described above

Parties Involved:
        All research institutions in the Midwest doing research on topics related to energy
         crops; biomass to energy conversions; and bioenergy process technology.
        University technology transfer institutions in the Midwest.
        Midwestern venture capital funds and their managers.
     Midwestern college and university retirement and endowment funds and their
Other: None cited.

Implementation Mechanisms
Implementation of this policy option will primarily be done by bringing research
collaboration groups together, comprised of universities, government, and private
industry to share ideas and new technologies.
    Promote ―innovation corridors‖ that connect multiple clusters of university and
     private sector expertise around specific issues. Corridors could be connected by high
     speed rail to improve the flow of people and ideas and improve the prospects for
     collaboration. The high speed rail investments proposed in another policy could be
     leveraged to create one element in these innovation corridors.

Related Policies/Programs in Place
-    The Madison Entrepreneur Resource, Learning and Innovation Network (MERLIN12)
     is comprised on experienced business leaders who volunteer their time, knowledge
     and experience to help convert entrepreneurs‘ ideas into developing companies.
-    The Council of State Governments has established through its Midwestern Legislative
     Conference on Agriculture and Natural Resources Committee a forum of state

  MERLIN Network at University of Wisconsin Madison
     legislators to exchange information and ideas on key agricultural and natural resource
-    The Midwest Consortium for Biobased Products and Bioenergy, a group of four
     universities and three federal laboratories that work together to expand and improve
     the technologies for the conversion of plant material to industrial products.14
-    The Midwest Alliance for Renewable Energy15 Encourages the development of
     workable and renewable sources of energy to responsibly meet the demands of a
     growing Midwest economy.
-    The North Central Bioeconomy Consortium16 is a partnership between land grant
     universities and state departments of agriculture in twelve Midwestern states.
Type(s) of GHG Reductions
This policy option is qualitative only and GHG emissions resulting from this policy
option will not be quantified.

Estimated GHG Reductions and Net Costs or Cost Savings
This policy option is qualitative only and GHG emissions resulting from this policy
option will not be quantified.

Note: While this policy option is not quantified, it is anticipated that the implementation
of this policy option will result in a reduction in GHG emissions through the
collaboration of research between universities, state government, and private industry.

Key Uncertainties
The greatest obstacle to successfully implementing this policy option is to not overlap,
duplicate efforts, or compete with other policies and programs which are already in place,
focusing on regional collaboration of research and technology. This can be overcome by
getting active participation by key members of the midwestern bioeconomy.

Additional Benefits and Costs
-    It is anticipated that the technological advancements shared throughout the region
     will result in the more efficient operation of alternative fuel plants and the extended
     availability of lower carbon fuels for use in the transportation sector, resulting in a net
     decrease in GHG emissions.
-    Lower GHG emissions have been linked to less air pollution and therefore health
-    Increasing research collaboration throughout the region will create new employment
     opportunities and economic benefits resulting from both increased efficiency and the
     further development of a burgeoning industry.
   Council of State Governments, Midwest Office
   Midwest Consortium for Biobased Products and Bioenergy
   Midwest Alliance for Renewable Energy
   North Central Bioenergy Consortium
-   Challenging universities, government, and private industry to develop the best
    available technology for improving the efficiencies at commercial plants should spur
    development and create partnerships and opportunities for all parties that extend
    beyond this policy option.
Feasibility Issues
The feasibility of this policy option will be largely dependent upon the willingness of
member of these groups to openly collaborate with one another. Incentives, mutual
benefits, and other ways in which to foster a collaborative environment may be necessary
to achieve full and open collaboration.

Moving beyond the intellectual property rights associated with technological
development and allowing it to be shared throughout the region by universities,
government, and private industry, while keeping this development within the region will
present a difficult challenge.

Status of Group Approval

Level of Group Support

Barriers to Consensus

                 BT-4.1: Develop Midwestern Biobased Products

Policy Description
The Federal Government has established the USDA Biopreferred Program. Some states
have initiated similar programs at the state level but this development has been scattered
across the region. Given the top notch research institutions in the Midwest and the need
for industry development, it is imperative that policies be developed that foster and grow
the Midwest biobased products industry.

Policy Design
The goal of this policy is to promote the sale, distribution, and use of biobased products
which are manufactured in the Midwest region. This can be done by developing
biobased product procurement rules at the state level, participating in a regional biobased
product procurement program with a common list of products, and expanding the
program further by creating a regional certification program and promoting it through
education and incentives for business participation as a means to foster biobased product

The policy should be implemented immediately upon approval.
The education and incentive programs should continue until biobased products have
achieved relative parity with competing products which are not biobased.

Parties Involved:
State universities and departments of agriculture as well as suppliers, manufacturers,
transporters, distributors, and retailers of biobased products should all be involved to
ensure that this policy is widely understood, accepted, and followed.

The Midwest Consortium for Biobased Products and Bioenergy17 will be a great source
for input on developing this list of regionally manufactured biobased products. This
group currently consists of the universities of Purdue, Illinois, Iowa State, and Michigan,
and the government laboratories of the United States Department of Agriculture (USDA)
National Center of Agricultural Research Utilization, Ames Laboratory, and Argonne
Laboratory. Other regional laboratories and universities should examine the possibility
of joining the consortium.

This policy will be aimed at the retail markets for consumers, businesses, and
government. The biobased products being promoted through this policy will be very
wide ranging from fuels and biomass, to standard household cleaning products,

  The Midwest Consortium for Biobased Products and Bioenergy
fertilizers, and building materials to name just a few of the markets that are anticipated to
be accessed through this policy.

Implementation Mechanisms

          Develop a common list of all regionally manufactured biobased products. This list
           would include all manufacturers, suppliers, distributors, and retailers of regionally
           developed and manufactured biobased products. This list would be made publicly
           available through a website, other published materials, and advertising to promote
           these companies and make the public and other businesses, which are a part of the
           biobased product supply chain, aware of the biobased products offered throughout
           the region and where these products are available.

          Develop a regional certification program to put forth criteria that manufacturers,
           suppliers, distributors, and retailers would have to meet to become certified. This
           could mimic what has been done at the federal level by the USDA‘s Biopreferred
              o Develop criteria for certification based on environmental, economic, and
                  social factors, and incorporate life cycle methods for comparative
                  evaluation of biobased vs non-biobased products for given uses;
              o Develop a logo as part of this certification program and use logo to
                  identify, manufacturers, suppliers, distributors, and retailers that have
                  become certified; and

               o   Inform and educate consumers about bioproducts, and test for consumer
                   acceptance of certified products.

          Conduct analysis of State purchasing data from the Midwestern states to identify
           those products that the states purchase that should be most readily be targeted for
           bioproduct substitution.      Specifically, those ―low hanging fruit‖ product
           categories that will be first evaluated include plastics, ink, toner, oils, and

          Develop an education and incentives program to promote the procurement of
           regional biobased products
               o Education: Develop marketing materials and a marketing program which
                  could help to inform both the public as well as other businesses interested
                  in participating in the program, what the certification program is about,
                  what the logo means, identify the criteria that a business must meet to
                  receive this logo, and identify the steps a business must take to be a part of
                  this program. This could include the development of a website, on-line
                  advertising, advertising through state sites, through businesses that have
                  been certified, as well as through informational booths to be set up at
                  conferences, summits, government events or other appropriate venues.
           Businesses Incentives:

     USDA‘s Biopreferred Labeling Program
        Market these additional benefits to eligible businesses to incentivize participation
         in the program:
             o Participate in regional educational and marketing program.
            o Create process to place a certification logo upon products, identifying
              product as a biobased product manufactured in the region.
            o Access to the programs associated with the Biobased Products and
              Transportation policies being developed as part of the Midwest
              Governor‘s Platform. Including, but not limited to:
                                          Access to the materials and technologies developed
                                           as part of the regional research collaboration;
                                          Provide technological assistance in the initial
                                           commercialization of their product;
                                          Continue technological assistance in further
                                           enhancing the efficiency of their processes;
                                          Continue technological assistance to ensure
                                           sustainable practices are utilized in the manufacture
                                           of the biobased product;
                                          Identify primary barriers, through a survey of firms,
                                           to participation in the program (in both production
                                           and use of bioproducts); and
                                          Consider offering tax credits which would incent
                                           manufacturers to transition to biobased products.
Related Policies/Programs in Place
        All Midwest Procurement has committee looking at product conversion
        USDA‘s Biopreferred Program19
        The USDA‘s Biopreferred Program contains a catalog of biobased products which
         would also be an excellent reference for further developing the list of biobased
         products from the Midwest region.20
        North Central Bioeconomy Consortium21
        Biomass Research and Development program, reauthorized in the 2008 Farm Bill
         to direct Secretaries of Agriculture and Energy to coordinate policies promoting
         biobased industrial products. Funds competitive grants for research, development
         and demonstration projects for biofuels and biobased chemicals. Provides $20
         million in funds in FY 2009; $28 million in FY 2010; $30 million in FY 2011 and
         $40 million in FY 2012.
Type(s) of GHG Reductions
This policy options is qualitative only and will not be quantified.

   USDA‘s Biopreferred Program
   USDA‘s Biopreferred Program‘s Catalog of biobased products certified through this program
   North Central Bioeconomy Consortium
Estimated GHG Reductions and Net Costs or Cost Savings
This policy options is qualitative only and will not be quantified.

Key Uncertainties
It is important that this policy coordinate with other efforts taking place at the federal,
regional, and state level to ensure that efforts are not being duplicated, and more
importantly that efforts are not competing with one another.

Additional Benefits and Costs
   1. Further development of the Midwest Bioeconomy
   2. The development of more sustainable products with less use of chemical and less
   greenhouse gas emissions.
   3. Health benefits associated with less pollution and less use of chemicals.
Feasibility Issues
None Cited

Status of Group Approval

Level of Group Support

Barriers to Consensus

    BT- 4.2: Regional Infrastructure for Biobased Product Manufacturing

Policy Description
According to the 2007 Midwestern Governors Association Energy Security and Climate
Stewardship Platform:

        ―A key to the advanced bioenergy complex will be the profitability of the
        manufacturing of biobased materials that are co-products of biobased fuels. This
        materials industry is in its infancy. Support research determining how the
        biomaterials supply chain can mature in conjunction with the biofuels sector and
        how new products can achieve economic viability.‖

Policy Description:
A key to the success of any product is the efficient movement of product to market. The
existing regional infrastructure must be enhanced, further developed, and/or utilized as
efficiently as possible to support integration of biobased products into the region‘s system
of moving goods. The entire supply chain, from the raw material stage through
manufacturing, distribution, and on to the retailers, must be re-examined, options for
improvements developed, and a plan for implementation be designed and executed.

Policy Design

The efficiency of the regional infrastructure will be improved to support the development
of the region‘s biobased products industry.

This policy should be implemented as soon as approved. For infrastructure options
deemed feasible a separate implementation plan should be developed based upon the
priority of improvement and available funding.

Parties Involved:
All parties throughout the biobased product supply chain within the Midwest should be
involved in this policy option to identify current transportation policies, future
transportation needs, and how to more efficiently distribute their products. Additionally,
state departments of transportation should be directly involved, along with the Federal
Highway Administration, Federal Railroad Administration, and the Federal Maritime

This policy should be initiated by the state departments of transportation, focused on
brining companies throughout the bioproducts supply chain together to begin the
discussion on how best to streamline and enhance the transportation of biobased products
throughout the Midwest region and to market.

Implementation Mechanisms
  1. Formalized regional coordination. Develop a comprehensive listing of key players
     in the regional bioproducts supply chain, including suppliers, manufacturers,
     distributors, and retailers. The formal establishment of a midwestern
     Agbioscience Technology Center dedicated to bio-based products and associated
     bio-based energy activities at a regional level would assist in this effort through
     several functions, including:
      Facilitating the coordination and interaction of industry, academia, and the
         public sectors to foster knowledge, research, and the commercialization of
         technologies to advance the industry cluster;
      Coordinating pilot development, capital investment and matching technology
         with industry capabilities; and
      Attracting technologies and companies to the region.
  2. Bring together parties from the entire supply chain of biobased products to
     determine transportation modes, routes, and timing and begin the discussion on
     the manners through which the transportation of their goods can be conducted
     more efficiently.

  3. Initiate a regional study to determine where the supply chain is losing efficiency
     (bottlenecks, inefficient routes, inadequate infrastructure, inefficient modal
     utilization) and determine what the primary problems are with connecting
     suppliers, manufacturers, distributors, and retailers.

  4. Assist the industry in identifying regional opportunities. Conduct a material flow
     analysis of the basic chemicals, specialty chemicals, polymers, and additives
     currently being used by the region‘s polymer and manufacturing industry. Based
     upon the emerging opportunities identified by this regional material flow analysis,
     conduct a follow-on techno/economic analysis of potential biobased materials to
     better inform the industry about opportunities to develop new materials.

  5. Study how the supply chain could be made to operate more efficiently, including
     additional infrastructure enhancements, developments, and utilization of more
     closely located suppliers, manufacturers, distributors, and retailers. A list of
     potential infrastructure enhancements and/or developments to the supply chain
     would be developed identifying how each enhancement and/or development will
     improve the overall efficiency of the supply chain. For policy option details see
     BT 2.

  6. Conduct a feasibility study on proposed enhancements/developments to the
     supply chain. The feasibility study should take into consideration:
      Transportation time (gained or lost);
      Cost of implementation;
        Fuel savings or increases;
        GHG emission reductions or increases; and
        Any other relevant factors to be considered as part of the implementation of
         the proposed transportation improvements.

    7. Develop, submit and carry out an implementation plan consisting of identified
       feasible options.

    8. Expand the Midwest‘s agbiorefining capacity in order to meet the need for
       innovators to make large samples of new materials for pilot and pre-production
       scale runs of candidate agbiobased products. Consideration should be given to
       the strategic utilization of both existing and additional infrastructure assets in the

Related Policies/Programs in Place
These could include Recent Actions in XX Jurisdiction:
 Use brief paragraphs.
   Or one or 2 lines.
   Add bullets as needed.
Type(s) of GHG Reductions
This policy option is qualitative only and will not be quantified, however this policy may
result in GHG reductions through various GHG reduction opportunities.

Greenhouse Gas Emissions Reductions Opportunities
The enhancement and / or further development of the Midwestern infrastructure will also
provide a prime opportunity to implement greenhouse gas (GHG) emission reduction
policies such as:
         Moving freight from highways / interstates to rail would assist in reducing the
            GHG emissions associated with transporting biobased products;
         Providing tax credits for the purchase of fuel-efficient / low-GHG
            transportation vehicles;
         Developing emission-based tolling which would provide a tolling discount for
            clean vehicles;
         Facilitate adoption of new clean technologies based upon newly proposed
            EPA criteria air pollutant emission standards for locomotive engines and
            commercial marine vessel diesel engines;
         Provide for pre-clearance at scale houses to reduce truck idling time;
         Develop and enforce anti-idling ordinances and encourage the use of
            alternatives such as truck stop electrification;
         Implement regular maintenance plans;
         Provide driver / operator training on how to drive more efficiently; and
         Adopt green port strategies to reduce emissions for both vessel dwelling and
            for land-side cargo handling.
Estimated GHG Reductions and Net Costs or Cost Savings
This policy options is qualitative only and will not be quantified.

Key Uncertainties
Weight limitations must be taken into consideration, particularly for trucking across
interstates as heavier loads take a greater toll on the roadways and increase the cost of
roadway maintenance.

Local governments must be directly involved to insure that local zoning policies do not
negatively impact the infrastructure improvements identified as part of this policy.

Additional Benefits and Costs
   1. Further development of the Midwest Bioeconomy
   2. The development of more sustainable products with less use of chemical and less
   greenhouse gas emissions.
   3. Health benefits associated with less pollution and less use of chemicals.
Feasibility Issues
None Cited

Status of Group Approval

Level of Group Support

Barriers to Consensus

                         BT-5.1: Perennial Biomass Supply

Policy Description
 According to the 2007 Midwestern Governors Association Energy Security and Climate
Stewardship Platform one of the key policy options to achieve the biobased products and
transportation objectives is to:
       ―Promote a perennial biomass supply. Because of the synergies between farm
       economics, biofuel production and environmental objectives, support the
       development of a perennial biomass supply. Develop and expand programs and
       incentives that encourage landowners to grow perennial crops and supply
       products to a bioenergy plant in a way that targets improvements in soil and water
       quality, wildlife habitat, soil erosion, and carbon sequestration.‖
The Midwest leads the nation in biomass production potential. A major challenge in the
effort to build a cellulosic biofuels industry is to establish a consistent, reliable feedstock
supply. The purpose of this policy option is to support the development of a perennial
biomass supply that enhances the synergies between farm economics, biofuels production
and environmental objectives, and to reduce greenhouse gas emissions.
Policy Design
The elements of this policy option include:
1. Develop and expand state programs and leverage federal programs and
incentives that encourage landowners to grow perennial crops and supply products
to bioenergy plants in ways that target improvements in soil and water quality, wildlife
habitat, soil erosion, and carbon sequestration. Biomass should be sustainably harvested
without depriving soils of important organic components but maintain soil nutrients and
do not deplete wildlife habitat or jeopardize future feedstocks in quantity or quality.
Develop, adopt existing, or leverage federal funding for voluntary land conservation
programs such as conservation easements, open space programs, conservation reserve, or
working lands programs.

Corn and soy will continue to be extremely valuable crops throughout the Midwest. A
portion of these crops has recently been diverted into biofuels production. Emphasizing
cellulosic ethanol over starch based ethanol will allow added value for farmers and
minimize unintended consequences in food and feed supplies.

To ensure the highest level of effectiveness and participation in a sustainable biomass
development program, care must be taken to recognize the concerns and goals of
agricultural producers. Change, new technologies, and budding markets are a few of the
concerns from producers that will need to be addressed. Absentee landowners may have
very different long-term objectives and concerns than farmers who own their own land.
Absentee landowners hold almost 50% of arable lands in a number of states in the

Education programs that demonstrate long-term benefits and a steady or growing product
demand can alleviate concern and facilitate acceptance of biomass feedstock

development. Education and outreach, especially for citizens, land owners and land
managers, will be important both to underscore the importance of biomass and to teach
best management practices (BMPs) for forest and biomass production on agricultural
lands. Each state should develop model curriculum for education.

2. Identify appropriate locations for specific crops through the use of mapping,
modeling and research. Some states are laying important groundwork by using modeling
and research to determine the types of perennial crops that would be profitable, efficient
and effective to grow and/or harvest for biomass-to-energy use. Identifying forests where
thinning and biomass removal would be beneficial, and geographically efficient for
transport, is also an important modeling requirement. Gather existing research and
engage universities. (See also BT-3.3: Increase Regional Research Collaboration)

Locating biomass production appropriately can have significant benefits for the
environment, producers and markets. Focusing on plantings in flood plains, riparian
buffer zones, highly erodible areas and land that would benefit significantly from a
perennial cover crop will reduce, nutrient runoff, soil erosion and improve watersheds.
Restoring wetlands can not only become a source for biomass but also a sink for nutrient
run-off and a way to sequester carbon.

3. Ensure a balance between land conservation, biomass production and
food/animal feed production including lands in conservation reserve type programs or
under conservation easements. These uses are not mutually exclusive. Traditional row
crops can be inter-planted with perennials that not only help with weed control but also
can be harvested for biomass. Lands under conservation easements may need to allow
some biomass removed regularly while maintaining conservation benefits.
Evaluate the life cycle energy costs and carbon emissions for each feedstock. Each
product needs to be evaluated in terms of its contribution to reducing GHG through
displacing use of fossil fuels, carbon sequestration, reduction of fertilizer use (N20), and
reduction of water use. Feedstocks which do not demonstrate a positive life-cycle energy
cost and sustainable production should be phased out in favor of sources that do meet
those criteria.

4. Implement voluntary land use tools and incentives that minimize the land use
conversion of suitable farmlands to non-agricultural uses and prevent the loss of forests
and wetlands to development. Conversion of these lands decreases the opportunities for a
diverse and geographically efficient supply of biomass. Agricultural land provides
economic, social and environmental benefits to the Midwest, including carbon
sequestration in the soil. Among agricultural best practices, no-till farming, residue
mulching, cover cropping, and crop rotations enhance carbon sequestration in soil and
allow for sustainable production of biomass.

5. Support the formation of biomass commodity groups similar to corn and soybean
commodity groups, which appropriately, form a strong constituency. Through
appropriate state programs and agencies, assist in the formation of biomass commodity
groups either by sub-region or by specific type of biomass, i.e., a Midwest Forest
Biomass Producers. The formation of biomass commodity groups functioning regionally
could significantly enlarge the sphere of influence and the ability to draw incentives and

financing for biomass projects. Other organizations that unite growers, energy producers
and end users are encouraged.

6. Develop quality controls for biomass to ensure that pests or invasive species are not
introduced or promoted. Provide a framework for standards, such as pricing structures,
as well as quality standards. Not all biomass is equal; specifications by type of biomass
or end-use could define quality parameters (such as Btu content, size, moisture content).
Producers need to be able to select biomass based on its energy potential and applicability
for its intended end product.

7. Develop incentives, technological innovation in equipment and a regulatory
structure to ensure necessary and consistent standards and pricing. Promoting new
markets that require new kinds of feedstocks simultaneously can be problematic. (See
BT-1.1, BT 4.2, BT-6.1) Explore new opportunities and technologies, such as: employing
biochar for reducing CO2 emissions; sequestering carbon and improving soil
productivity; and developing environmentally benign methods of stimulating growth of
Develop the Midwest‘s full potential appropriate sources of biomass and production
facilities by 2025, to enhance the economic vitality of our region.

Parties Involved: Farmers; co-ops (Cenex/farm members); academia; environmental
groups; energy companies; government agencies; farm organizations; forest land owners;
timber and agriculture companies; polymer, chemical, power industries; external
agencies; partners in demonstration projects

Implementation Mechanisms
      Increase the amount of funding available in the region by leveraging funding
       available through federal programs that are targeted to create and/or increase
       perennial biomass feedstock supply. Given the current budget constraints of states
       in the Midwestern region to create newly funded programs to develop perennial
       biomass supply, interested parties in the Midwest should work together to ensure
       successful implementation of federal programs that could be leveraged to
       accomplish policy goals. Two specific programs from the 2008 Federal Farm Bill
       that hold tremendous potential to provide resources to Midwestern producers to
       create a perennial biomass supply are the Biomass Crop Assistance Program
       (BCAP) and Conservation Stewardship Program (CSP). Both of these programs
       are waiting for USDA to issue draft program rules. The Midwest should focus on
       gathering input to influence federal rulemaking for both programs to leverage the
       largest amount of dollars possible. Program descriptions can be found under the
       ―related policies/program in place‖ section of this document.The American
       Recovery and Reinvestment Act of 2009 created an $800 million competitive
       grant program dedicated to the research, development, and demonstration of
       converting biomass resources to biofuels.
      Inventory biomass resources. Conduct an assessment and develop a credible
       database as a region or as a state to determine how much land is suitable for
       biomass development and what mechanisms are available to develop the supply.
    Regional assessments ensure consistent criteria for collection. Use consistent
    methodologies so data can be compared across state lines.
    When developing models and mapping and evaluating the results, criteria should
    include, but not be limited to:
       o Availability of suitable land;
       o Conversion rate of lands;
       o Effect on existing uses;
       o Range of products;
       o Production and storage equipment;
       o Geographic range to production facilities and point of use;
       o Transportation and harvest logistics;
       o Change in environmental services of land in context of production
       o Habitat enhancement;
       o Income; and
       o Carbon sequestration potentials.
   Identify clear sustainability guidelines and best management practices for biomass
    production and harvest.
       o Apply best management practices to current row cropping systems that
            could include inter-planting of perennial crops. Increase the use of
            perennial crops in riparian buffers.
       o Develop quality control standards that include sustainable harvesting
         guidelines and could lead to a certification system.
   Identify regional demonstration project opportunities. Potential biomass
    feedstocks may be grouped for analyses such as food/organic wastes; forest/wood
    chips; switchgrass/perennial grass; industrial residue; crops (oil seeds and grains)
    or other crops (corn, soy, sorghum, sugar beet).
        o Develop regulations for payment protection for producers and some form
            of pricing mechanisms.
   Fund research development at land grant colleges (in collaboration with
    producers) to identify most effective biomass feedstocks.
        o Incentivize conservation and production of biomass on appropriate lands.
            Create programs to provide financial payments to land owners by
            providing direct assistance to farmers to convert select crop lands and
            adjacent buffer lands to perennial biomass production. Incentivize
            production facilities to create a local market for biomass producers. A
            two-pronged approach is required to coordinate and connect supply and
            demand. Methodologies for connecting producers to markets on a local
            basis would be highly beneficial.
        o Use biomass production as a means of land restoration. Identify and
            characterize options, opportunities, and guidelines using modeling to
            identify areas of highest priority that can be protected by planting of
            perennial biomass crops.
           o Encourage conservation easements on lands that do not preclude biomass
             production. Adjust Conservation Reserve Programs (CRP) to allow for
             biomass production that does not compromise the original purpose of the

Related Policies/Programs in Place
There are a plethora of federal, regional and state programs and policies that
complement this policy option. The following are examples, not an inclusive list.

   1. 2008 Farm Bill includes energy crop incentives for growers and new funding for
       converting fossil fuel power to biomass.

       Biomass Crop Assistance Program (BCAP). This new program directs USDA
       to establish project areas in which potential biomass producers and a biorefinery
       or another facility agree to produce and use biomass crops for conversion to
       advanced biofuels or bioenergy. The program excludes commodity crops, food,
       wastes, and algae.
                 o Pays producers up to up to 75% of costs for establishing and planting
                     crops, plus annual payments to help compensate for lost opportunity
                     costs until crops are established.
                 o Provides cost-share payments for collection, harvesting, storage, and
                     transportation costs at a rate to match the biomass sale price, up to
                     $45 per dry ton.
                 o Requires that all projects follow conservation or forest stewardship
                 o BCAP selection criteria includes environmental, community
                     ownership and other desirable conditions, and expresses a preference
                     for perennial crops, highly energy efficient annual crops, and
                     preserving natural resources.
                 o Funded with uncapped mandatory funding; at approximately $70
                     million over five years.
             Conservation Stewardship Program (CSP)
                o CSP is a voluntary conservation program that encourages producers
                  to address resources concerns comprehensively by undertaking
                  additional conservation activities and improving, maintaining, and
                  managing existing conservation activities.
                o CSP payments will compensate producers for:
                           Installing and adopting additional conservation activities;
                           Improving, maintaining, and managing conservation
                            activities in place at time of contract approval;
                           Adopting resource-conserving crop rotations to achieve
                            beneficial crop rotations; and
                            Engaging in activities related to on-farm conservation
                            research and demonstration activities, and pilot testing of
                            new technologies or innovation conservation practices.

             o CSP received mandatory funding in the Farm Bill over the next
               decade and when combined with existing budget carried over from
               the 2002 Farm Bill, Congressional Budget Office estimates that 13
               million acres will be eligible for enrollment nationally on an annual
             o The USDA will be conducting a rulemaking process for this
               program. A proposed rule is expected to be issued in June of 2009.

2. Reinvest in Minnesota-Clean Energy (RIM-CE) is an innovative model policy to
   incentivize feedstock supply. It is structured similar to a conservation reserve
   program but focused on producing biomass with payments based on tiers of
   sustainable practices that needed to be met. The types and number of practices
   implemented would affect price. The policy has been passed in Minnesota, but
   the legislature has waited on full funding to see how the Farm Bill 2008‘s
   Biomass Crop Assistance Program (BCAP) would be addressed. MN may have
   more fully developed guidelines and be more useful in using as a model for the
3. Michigan, Minnesota and Wisconsin already have specific statutes and
   regulations that stipulate best management practices (BMP‘s) for water, soils, and
   wildlife during forest management activities because forest biomass harvest will
   take place in conjunction with logging. Minnesota has additional biomass harvest
   BMP‘s in place for both forests and brushlands, with Wisconsin and Michigan
   following suit. Biomass harvest needs to be done in conjunction with logging and
   pulp because of the need to capture the whole value chain.
4. Each state has a conservationist (IA, WI, MN gives this role high priority). Water
   protection using cover crops is an indentified priority but still trying to create a
   market, especially for cellulosic ethanol and CHP.
5. State outreach and education programs to private landowners such as those found
   in Minnesota, Wisconsin and Michigan.
6. Wisconsin has The Buffer Initiative to identify size and types of biomass that can
   be grown in buffer areas.
7. Cooperative Conservation Partnership Initiative: Upper Midwest should
   participate as a region.
8. POET, which recently brought its 20,000 gallon-per-year pilot cellulosic ethanol
   plant online in Scotland, S.D. plans to commercialize cellulosic ethanol by using
   corn cobs as feedstock in Emmetsburg, Iowa through Project LIBERTY. From
   there, POET anticipates installing the technology at other POET plants across
   Iowa and the Midwest. For more information, go to For
   information about Project LIBERTY, visit
9. The Private Landowner‘s Network provides a list of resources that includes
   federal, regional and state programs, including funding opportunities, to assist
   private landowners in sustainable land management including biomass

   10. North Dakota 2002 HB 1515 creates a biomass demonstration project and
       incentives for biomass development.
   11. A budding organization in Wisconsin is connecting utilities with cellulosic
       experts but is in need of growers to include in the network.
   12. Missouri Agricultural and Small Business Development Authority, created in
       1999. Seven commissioners, appointed by the governor, make capital available
       through grants, loan, loan guarantees, and tax credits to Missouri farmers,
       particularly independent projects, agribusiness and small business at competitive
       interest rates on a scale to make a major impact.

Type(s) of GHG Reductions
Primarily CO2 from replacing fossil fuel based sources of energy with biomass.

Estimated GHG Reductions and Net Costs or Cost Savings
This policy option is too broad at this time to accurately predict specific costs, savings or
greenhouse gas reductions.

Key Uncertainties
The effects of the economic downturn on the ability of states to provide incentives and to
initiate programs related to biomass. Private investors will likely remain fairly inactive in
the marketplace until the effects and recovery trend from this economic crisis are clearer.

Additional Benefits and Costs
      Biomass converted to energy or transportation fuels develops a new revenue
       stream for private landowners where a material that was thought of as low value
       or a waste now can provide income.

      Planting flood prone areas, riparian areas and buffer areas for biomass production
       increases wildlife habitat, modifies run-off events, captures heavy metals, reduces
       nitrogen contributions to water ways and reduces dependence on food-producing
       lands for the production of biomass.

Feasibility Issues
      Research gaps
      Determining driving forces and responding in a timely manner to market forces,
      Quantifying realistic, reliable supply or demand volumes.

Status of Group Approval

Level of Group Support

Barriers to Consensus

                 BT-5.2: Biomass Feedstock Supply Logistics

Policy Description
Effective logistics for production, harvest, transportation and storage are keys to any
successful biomass to energy program. The policy options focus on providing technical
assistance and incentives to projects seeking to develop and maintain a supply of
cellulosic biomass for bioenergy projects.
Policy Design
   1. Define and support planting and crop rotation systems that allow for biomass
      production and harvest over the widest range of time possible to minimize
      handling and storage needs.
           o Use USDA Forest Service Inventory data (FIA) and resource mapping to
             help identify the largest zones where biomass is available to aid in plant
             and infrastructure location decisions.
           o Identify, by product, the potential feedstock contribution to GHG
             reductions through fossil fuel use displacement and carbon sequestration.
             Preference should be given to the feedstocks that reduce the most GHG
             and sequester the most carbon.
           o Adjust current policy to allow short-rotation fiber production under
             traditional private forestry land programs and associated tax programs.
   2. Develop processes and programs that support the densification of fuels to increase
      the relative energy intensity by volume of biomass feedstock being stored and
      transported. This includes pelletizing and compressing materials as well as
      providing the equipment and infrastructure to handle, sort, store and transport new
      forms of feedstocks.
           o Develop key gathering, densification and storage (concentration) sites
             where the distance is too great between individual production sites and
             processing facilities for more economical transport.
           o Define the connections and pathways between land and market: look
             sequentially from farm/forest (source) to market (geographic zone).
   3. Develop and use innovative storage systems that maintain the quality and quantity
      of feedstocks over time.
   4. Ensure quality in material and reliability in product and price through
      standardization of weights and measures of biomass feedstocks as addressed in
   5. Implement regional studies to strategically locate processing facilities between
      suppliers and end-product industries. Communities in these key areas should be
      encouraged to participate in the planning, ownership, and support of these critical
      supply chain links through business incentives, tax advantages, and upgrading or
      utilization of facilities for handling this new form of energy. Brownfield

         conversion presents an opportunity to participate in this new economy. (See BT-
         6.1 and 6.2 Wealth and Job Creation Options.)
            o Identify and support new opportunities in community economic
              development through participation in the supply chain logistics and plant
            o Use USDA Forest Service inventory data (FIA) and Timber Products
              Output Mapmaker (federal resource from USDA) to provide supply and
              location data of potentially available forest biomass. Supply estimates
              need to be mapped and correlated with ownership regionally and
              comprehensively to determine sustainable utilization.
            o Utilize existing tools such as the BioFeedstock Logistics Simulator,
              developed by a company in San Jose, CA. It was developed to model and
              analyze the transportation and receiving operations of biomass feedstocks
              delivered from on-farm storage facilities to the receiving facility at a
              cellulosic ethanol plant.
   6. Ensure that rural roads and travel-ways are suitable and sustainable for the year-
      round transport of biomass feedstocks. Cost-sharing programs may ameliorate
      impacts to counties where all who benefit from the maintenance of the
      transportation infrastructure contribute to its upkeep. Transportation planning
      should be sensitive to safety and quality of life impacts to residents who also rely
      on these travel-ways.
   7. Use the most fuel-efficient transportation and most energy efficient processing to
      maintain the life-cycle energy costs of biomass feedstocks low and add to the
      overall emission reductions sought.
            o Investigate the use of rail and/or barge in intra-region transport of
              densified biomass.
   8. Locate processing plants as close as possible to solid waste collection points is
      important to reduce transportation costs and tipping fees. Streamlined sorting
      mechanisms will maximize energy output and minimize the release of toxic
      elements. This also has the benefit of reducing methane, a potent GHG emission
      from landfills.
   9. Advance research and technology to facilitate the desired conversions of this
   1. Create a regional map of existing and potential production sites based on biomass
      sources. Connect the production sites to regional processing nodes, and where
      necessary, concentration sites.
   2. Evaluate travel routes for suitability for predicted traffic volume and types.
   3. Evaluate degree and type of change necessary to existing infrastructure. Seek key
      leverage points where change will encourage and facilitate further improvements.

   4. Invite competition between zones within the region for proposals to develop and
      support a biomass supply chain. Reward the most innovative, energy efficient
      proposals with funding through grants and loans.
Timing: Accomplish the above goals by 2011.
Parties Involved: Rural and country transportation and development planning
   departments, biomass producers, biomass processors, universities, freight
   transportation sector, USDA

Implementation Mechanisms
      Maximize funding to the region made available in The American Recovery and
       Reinvestment Act of 2009 creating an $800 million competitive grant program
       dedicated to the research, development and demonstration of converting biomass
       resources to biofuels.
      Evaluate the feasibility of converting underutilized or vacant facilities to regional
       collection and storage centers.
      Develop regulations for aggregators and regional collection centers for
       densification. Such regulations are necessary so there is consistency in product
       and results. (For example, corn elevators are regulated in every state)
      Provide development, direct assistance and technical support to broad array of
       sustainable and cost-effective transportation modalities. Reduce fees for
       transportation of biomass.
      Encourage research and development at colleges of technology

      Incentivize conversion technology within industry

      Build showcases, especially of scalable technology, for the production, harvest,
       transport and storage of biomass feedstocks.
      Implement policies and funding schemes to fill a gap in federal programs for
       equipment and storage for biomass feedstock production.
      Examine innovative loan programs to provide additional financial support to
       shipping and handling facilities and infrastructure.

Related Policies/Programs in Place
   1. 2008 Farm Bill includes energy crop incentives for growers and new funding for
       converting fossil fuel power to biomass.
       Biomass Crop Assistance Program (BCAP). This new program directs USDA
       to establish project areas in which potential biomass producers and a biorefinery
       or another facility agree to produce and use biomass crops for conversion to
       advanced biofuels or bioenergy. The program excludes commodity crops, food,
       wastes and algae.
              o Pays producers up to up to 75% of costs for establishing and planting
                  crops, plus annual payments to help compensate for lost opportunity
                  costs until crops are established.
              o Provides cost-share payments for collection, harvesting, storage, and
              transportation costs at a rate to match the biomass sale price, up to $45
              per dry ton.
           o Requires that all projects follow conservation or forest stewardship
           o BCAP selection criteria includes environmental, community ownership
              and other desirable conditions, and expresses a preference for perennial
              crops, highly energy efficient annual crops, and preserving natural
           o Funded with uncapped mandatory funding; at approximately $70
              million over five years.
  Repowering Assistance. This new program authorizes payments to encourage
  existing biorefineries to replace fossil fuels used to produce heat or power for
  operation of the biorefinery. Payments would be made for installation of new
  systems that use renewable biomass or for new production of energy from
  renewable biomass.
           o Mandatory funding of $35 million is available through the Commodity
               Credit Corporation for FY 2009, until expended.
           o Authorizes appropriations of $15 million annually FY 2009-2012.
  Biorefinery Assistance. This program was first created in the 2002 Farm Bill but
  no mandatory funding was included in final bill language.
           o Program authorizes competitive grants to assist development and
               construction of demonstration-scale biorefineries that convert
               renewable biomass to advanced biofuels. Grants may not exceed 30%
               of project cost.
           o Program authorizes loan guarantees to fund development,
               construction, and retrofitting of commerican-scale biorefineries. Loan
               guarantees of up to 90$ of principal and interest may not exceed $250
               million and are limited to 80% of project costs.
           o $75 million in funding for FY 2009 and $245 million in FY 2010 is
               mandated for loan guarantees until expended.
           o No mandatory funding specified for grant program, but authorizes
               appropriations of $150 million aunnually for FY 2009-2012.
           o Payments are also authorized to encourage existing biorefineries to
               replace fossil fuels used to produce heat or power. Payments would be
               made for installation of new systems that use renewable biomass or for
               new production of energy from renewable biomass. Mandatory
               funding of $35 million is available.

2. Energy Policy Act of 2006 – The Renewable Fuel Standard will double the use of
   ethanol and biodiesel by 2012 and provides that in 2013, 250 million gallons a
   year of cellulose-derived ethanol be included. This amount will require a
   conservative estimate of 3.5 million dry tons of biomass, less than 1% of what is
   available nationally.

3. USDA, Natural Resources Conservation Service‘s Cooperative Conservation
   Partnership Initiative (CCPI) is a voluntary program established to foster
   conservation partnerships that focus technical and financial resources on
   conservation priorities in watersheds and airsheds of special significance. Under
   CCPI, funds are awarded to State and local governments and agencies; Indian

       tribes; and non-governmental organizations that have a history of working with
       agricultural producers. The Upper Midwest could participate as a region.

   4. The Bioeconomy Institute of Iowa State University has addressed the issue of
      biomass transportation through the HST (Harvest, Transportation and Storage)
      Consortium. See

   5. State of Michigan Public Acts 314, 332 and 334 of 2008 creates tax incentives for
      the use of agricultural machinery that can harvest both grain and biomass. The tax
      incentives encourage farmers to invest in equipment that will allow harvest of
      crops while also collecting biomass residues from the crop or grain that can be
      used in alternative fuel production.

   6. State of Michigan Public Act 329 of 2008 adds five additional renewable fuels
      renaissance zones in Michigan, bringing the total to fifteen. Renaissance zones
      are specific geographic areas designated as tax exempt to encourage economic
      development. Additionally, the new law requires that five of the state‘s renewable
      fuels renaissance zones be designated for facilities that focus primarily on
      cellulosic biofuel production.
   7. Missouri Agricultural and Small Business Development Authority, created in
      1999. Seven commissioners, appointed by the governor, make capital available
      through grants, loan, loan guarantees, and tax credits to Missouri farmers,
      particularly independent projects, agribusiness and small business at competitive
      interest rates on a scale to make a major impact.
Type(s) of GHG Reductions
Primarily CO2 from the reduction of fossil fuel use for energy and transportation and
greater efficiencies in the harvest, storage and transportation of biomass for energy and

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Transportation Logistics for Biomass for Industrial Fuel and Energy Enterprises, a
presentation by Purdue University, Biofeedstock and Particulate Technology Research

Design, Simulation, Analysis and Optimization of Transportation System for a Biomass to
Ethanol Conversion Plant by Poorna Ravula, University of VA
Quantification Methods:
This policy option has not been quantified.

Key Uncertainties
None cited.

Additional Benefits and Costs
          Improved transportation systems can be used for more than biomass transport.
          Utilizing unused facilities for storage reduces overall costs while recycling
           vacant buildings.
          Actions in this policy option can increase local wealth and community
Feasibility Issues
      Research gaps
      Determining driving force, supply or demand.

Status of Group Approval

Level of Group Support

Barriers to Consensus

                       BT-6.1: Bioeconomic Wealth Creation

Policy Description
The Midwest is ideally positioned to benefit from the movement from a petroleum-based
economy toward a bio-based economy due to its strong agricultural and forestry bases
and the presence of some of the nation‘s best research colleges and universities. The
Midwest must build on the pattern of success established by the initial farmer owned
ethanol plants. Keeping feedstocks, production and markets in the region, strategically
coordinated and interrelated, will keep more dollars circulating in Midwestern

The entire corn ethanol business has been primarily driven by the Midwest as evidenced
by the fact that of the 207 fuel ethanol plants functioning or under construction in the
United States, 152 are located in Midwestern and Great Plains states. Most importantly,
50% to 60% of Midwestern ethanol production is primarily farmer-owned, limited
liability corporations as opposed to absentee, Wall Street investors. In the past, strong
state programs, primarily through producer credits, have encouraged local producers to
initiate processing plants.

The presently nine billion gallon-annual ethanol industry has created jobs in the facilities
and in the myriad of related industries. However, transferring this incredible local
success story to the Second Generation Biofuels production will be a challenge.

This policy option is designed to encourage and facilitate the development of funding and
investment sources, business interests, and entrepreneurs in deploying technologies
developed in the Midwest, pursuing business opportunities associated with the emerging
bioeconomy as quickly and as significantly as possible, and accruing to the region and its
local communities the value-added margins available from these new technologies.
This policy option encourages and facilitates the involvement of funding and investment
sources, business interests, and entrepreneurs in pursuing business opportunities
associated with the emerging bioeconomy, greenhouse gas (GHG) reductions and global
warming solutions as quickly and as significantly as possible.

Policy Design
The recent passage of the American Recovery and Reinvestment Act (ARRA) has created
an immediate opportunity to dramatically scale up the amount of workforce development
in the region. The sheer amount of funding made available for energy efficiency and
energy infrastructure improvements and renewable energy project development has
created a sense of urgency to utilize the federal funds made available and fill positions to
implement projects. The immediate workforce development opportunity for the region is
funding from the ARRA. Priority should be placed on leveraging these dollars to the
region. The rest of the policy design and implementation mechanisms found in this
document maps out a longer term strategy for the region in the area of workforce

This policy option will work in conjunction with other proposed options to encourage and
facilitate the deployment in the Midwest of technologies developed here and to accrue to
the region and its local communities the value-added margins available from these new
This policy option:
     Recognizes that a diversity of financing models will be necessary to develop a
         new generation of advanced technologies, and ensure that the benefits of biofuels,
         advanced transportation fuels and bio-based product developments accrue to
         public and private entities in the communities where they are produced.
     Attempts to assure that cooperatives, municipal authorities, other local and
         community-owned entities, and small investors are not excluded from government
         incentive programs.
     Attempts to give bonding authority or access to bonding funds to co-ops,
         municipal utilities, and other local and community-owned entities to fund biomass
         projects and to, wherever possible, make the opportunity available for local
         ownership in projects receiving public investments.

Secure and aid the local economic base of the biofuels industry. Beyond the existing
biofuels industry, which developed naturally and has concentrated itself in the Midwest,
lays the opportunity to spawn further industrial development as the country trends away
from petroleum-based fuels and chemistry towards a bio-based economy. The Midwest
is ideally positioned to benefit from this movement due to its strong agricultural and
forestry bases and the presence of some of the nation‘s best research colleges and

Support local farmer-investors through innovative funding strategies such as bonding
authorities, removing barriers to entry for small producers, and diverse financing
methodologies. By taking the initial risk to finance and build the facilities that have
become the backbone of the biofuels and biorefining business, local farmer-investors
have created a significant amount of local wealth. They have helped to positively
increase the prices of corn and other commodities grown in the Midwest, have created
significant new companies to build and service these facilities, and created a significant
number of new jobs. Building upon this pattern of success and keeping feedstocks,
production and markets in the region, strategically coordinated and interrelated, will keep
more dollars circulating in Midwestern communities.

        By 2010, establish a regional work group to study and provide recommendations
         on the removal of barriers preventing cooperatives and local funding entities from
         receiving government and grant monies for technology improvements to existing
         biorefining facilities.
        By 2011, create a regional business development office to develop key
         technologies that best leverage Midwestern intellectual capital and other assets in
         the bioeconomy, and emphasizes:
        By 2012, establish a fund to provide $50 million in underwriting for capital
         improvements to existing fuel ethanol facilities in the Midwest that meet the
         policy criteria listed above.

Implementation Mechanisms
     Support infrastructure mandates that enable the Midwest to ramp up agricultural-
      based energy (e.g. all new pumps must be certified to higher ethanol blends), even
      if they do not mandate its use.
     Develop diverse and innovative funding strategies such as bonding authorities,
      removing barriers to entry for small producers, and diversifying financing
     Establish bonding authority or access to bonding funds for co-ops, municipal
      utilities, and other local and community-owned entities to fund biomass projects
      and to, wherever possible, make the opportunity available for local ownership in
      projects receiving public investments.
     Develop an IPO (Initial public offering) showcase for each class of bioenergy to
      encourage greater private venture capital investment.
     Organize periodic major regional events that pull togggether the Midwestern
      Governor‘s Association, financial players and industry to leverage resources that
      can be matched with federal dollars.
     Fund sources of new crops or innovative uses of existing crop residues for
      cellulose to ethanol production.
     Establish a clearinghouse to seek and match investment capital and philanthropic
      funding for bio-based economic development and reduction of GHG emissions to
      communities and business.
     Establish state and regional programs to underwrite loans to existing biofuel
      facilities to purchase fixed cost technology that will accomplish one or more of
      the following:
      o Reduce GHG emissions;
      o Improve the energy balance of the facility; and
      o Improve the productivity of the facility (defined as an increase in the value of
          total products produced vs. the cost of the inputs of production).
     Establish state and regional task force(s) to remove barriers that would prevent
      cooperatives and other forms of local and community-ownership from
      participating in government incentive programs in the bioeconomic sector.
     Work with university technology transfer departments to provide incentives to
      keep bioeconomic intellectual property developed at Midwestern colleges and
      universities in Midwest businesses.
     Create a regional-level bioeconomic business development office that will
      connect emerging bio-based businesses in the Midwest to Midwestern Angel and
      venture capital sources as well as grant and philanthropic funds providers.
     Fund the conversion of corn ethanol plants into advanced cellulosic ethanol
      production, encourage any new facilities to have conversion options built-in.
     Develop integrated business model structures that incorporate as many
      components of community advantages as possible.
     Leverage funding, as a region, made available in the American Recovery and
      Reinvestment Act of 2009. Specifically, the $6 billion made available through an
      Innovative Technology Loan program to make available loan guarantees for
      renewable and transmission technologies.
Related Policies/Programs in Place
The House of the General Assembly of Georgia has completed a comprehensive study of
Bioeconomic Development with a far-reaching list of recommendations covering all
aspects of this policy option.
Current state ethanol production credit programs can serve as models for development of
production credit programs for next generation biofuels production. A complete listing
of these is available at www.deseire. Com.
Resource: Database of State Incentives for Renewable Energy;
Type(s) of GHG Reductions
Expected greenhouse gas reductions will be from carbon dioxide, through reductions in
the amount of fossil fuels and education and awareness from new business opportunities
in bioeconomy sector.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Real-life Economics: Understanding Wealth Creation by Paul Ekens and Manfred Max-
Transition to a Bioeconomy: Environment and Rural Impacts. Farm Foundation
Transition to a Forest Bio-economy: A Community Development Strategy Discussion by
Sylvie Albert, Faculty of Management, Laurentian University, Ontario, Canada.

Because of the far-reaching and diverse options recommended, it was not possible to
neither quantify the potential reductions in greenhouse gases nor determine a cumulative
cost for specific actions by state or region, but to the extent bio-based fuels are created
which supplant petroleum or other higher carbon intensity fuels, the result will be a net
lowering of carbon emissions.

Key Uncertainties
Given the uncertain economic times and potential difficulty in raising venture capital or
bank loans, commitment to change may be less than enthusiastic in the short term.
However, these recommendations will lead to greater long-term diversification and
financial stability.

Additional Benefits and Costs
Thriving communities and quality natural landscapes attract a broad base of businesses.

Feasibility Issues
None cited.

Status of Group Approval
The group has approved these recommendations conceptually. Final approval pending.
Level of Group Support

Barriers to Consensus
None known.

                  BT-6.2: Bioeconomic Workforce Development

Policy Description
This policy focuses on labor force development in emerging industrial niches in the
bioeconomy and in energy efficiency. It is recognized that parallel efforts to develop
and sustain the intellectual capital and human resources necessary to design and engineer
policy, systems and structures includes land use planners, engineers, developers, and
inspectors who understand green design and the bioeconomic society. These are degreed
positions and not the target of this policy option.
Policy Design
It is the purpose of this policy initiative to create collaborative workforce development
programs between industry, state governments and educational institutions that will staff
and drive the development of bioeconomy and clean energy jobs.

Possibly more than any other geographic area of the United States, the Midwest has been
hit hard by job loss due to globalization and the shift of traditional manufacturing jobs to
other parts of the world. The technologies and processes associated with the bio- and
green-energy economy present possibilities for replacing jobs lost due to displacement
from globalization with jobs requiring similar skills in this emerging sector.

In order to capture as much value for the Midwest from the emergence of this sector we
must invest in the backbone of America‘s and the Midwest‘s labor force: workers with
more than high school, but less than a four-year degree . The new energy economy will
be built and sustained by middle-skill workers in traditional occupations. Providing both
the new technologies and the trained workers to support them will insure the accrual to
the Midwest of a significant percentage of the value to be created by the new bio-based
and green energy economy. Many of the jobs in this economy are closely related to jobs
that exist today.

Goals: A series of key principles has been outlined by the ―Greener Pathways‖ study
sponsored by the Center on Wisconsin Strategy, the Workforce Alliance and the Apollo
Alliance. These same principles should guide policy initiatives in the Midwest:

1. Develop a focused approach by building on a solid foundation of labor market data
   and analysis:
        Target specific sectors within the ‗green jobs‘ area;
        Use good labor market data to drive initiatives; and
        Measure and evaluate new jobs programs as they are created.

2. Build good jobs through partnerships, linking economic development and job creation:
        Employ energy standards as green job creation tools;
        Promote bioeconomy and green energy clusters;
        Link economic development in the sector to workforce development;
        Develop coalitions and partnerships; and
        Integrate green jobs initiatives into existing workforce systems.

3. Focus attention on job quality, access for all, and upward mobility in the green
2009: Establish coordinators in each state‘s Department of Workforce Development

2010: Establish state funds for investment in curriculum, equipment and other needed
resources to move job training from the general to the specific in regard to green jobs.

2010: Establish a Midwestern or state-level funds source to better survey and track
industry requirements so as to develop job data that is specific to the needs of
bioeconomy and green energy companies.

2010: Conduct a region-wide review on a state-by-state basis to determine existing
bioeconomy and green energy initiatives and requirements in order to better optimize
efforts to use policy and standards to drive economic development and green job creation.

Parties Involved: Economic Development and Workforce Development departments of
the Midwestern states; Management of the technical college systems across the Midwest;
Management of other two and four year college programs involved or potentially
involved in green job training programs; unions; Departments of Administration of
Midwestern states.


Implementation Mechanisms
Involve key players in partnerships among employers, unions, community-based
organizations, and public-sector institutions to create strong local and regional workforce
development programs for the emerging bioeconomy..

Establish coordinators in each state‘s Department of Workforce Development that are
responsible for:
     Focusing on and coordinating the transition of jobs programs from generalized
        skills toward green and bioeconomy-specific skills;
     Coordinating resource deployment across the Midwest to optimize job training
        investment and resources and to avoid unnecessary duplication of expense and
     Tracking current job losses and determining which categories of displaced
        workers are good candidates for training for green jobs;
     Working with industry partners to understand and predict the industry job market
        requirements and to develop curriculum and programs to meet those industry
     Developing labor standards and safety programs that address changes in work
        settings and potential job hazards; and
     Working with Government, Industry and Labor to establish pay scales that reflect
        skills required and be sufficiently competitive to encourage participation.
Establish state funds for investment in curriculum, equipment, and other needed
resources to move job training from the general to the specific in regard to green jobs.
For example, invest in providing wind turbine motors to help move a generalized
electrical technicians program toward a specialized wind turbine repair and installation

Establish a Midwestern or state-level funds source to better survey and track industry
requirements so as to develop job data that is specific to the needs of bioeconomy and
green energy companies.

Conduct a region-wide review on a state-by-state basis to determine existing bioeconomy
and green energy initiatives and requirements in order to better optimize efforts to use
policy and standards to drive economic development and green job creation.

Invest in the development of workforce training programs that:
    Tie development of projects and the industry to specific training options in
        technical schools and other education providers to ensure the necessary workforce
        is available;
    Stress on-the-job training as an important facet of workforce development;
    Work with unions to adapt apprenticeship programs to train new green job skill
    Simultaneously meet the emerging needs of industry; train and support workers;
        and create good, family-supporting jobs;
    Develop job skills commensurate with the requirements of the sector;
    Focus on job quality – compensation, job satisfaction, opportunities for
        advancement – not just job quantity; and
    Develop community college programs for skilled labor in solar installation, wind
        tower maintenance, biomass production, and ethanol plant production and
Develop incentives to attract the workforce of the future to more rural areas. Programs
that support spouse careers, education opportunities (child and adult learning), quality of
life, and community infrastructure are essential.

Related Policies/Programs in Place
   University of Illinois curriculum
   Milwaukee-based Wisconsin Regional Training Partnership (WRTP) and Jobs With a
    Future (JWF) of South Central Wisconsin. In addition, COWS spearheaded the
    Milwaukee Jobs Initiative (1997-2004), which provided training, mentoring, and
    other services to help low-income, central city residents connect to family-supporting
   Advanced Manufacturing Project, a research consortium that investigates how
    suppliers of large equipment producers can stay competitive and preserve quality
    manufacturing jobs in the upper Midwest.
   AgBioworks is an initiative of Memphis Bioworks Foundation and BioDimensions
    dedicated to developing new agricultural technologies and processing.

   The 21st Century Jobs Fund is a $2 billion, ten-year initiative created to accelerate the
    diversification of Michigan‘s economy by increasing the amount of capital available
    to Michigan companies. Alternative energy is one of the targeted sectors.
   Agriculture Processing Renaissance Zones (Michigan) – areas of no-tax for
    agriculture and forestry-related businesses including those producing biomass for
    fuels or energy.
   Iowa, Ohio and other Midwestern states have a number of programs and initiatives to
    attract jobs in the bioeconomy sector.Center on Wisconsin Strategy (COWS) at This national policy center and field laboratory for high-road
    economic development promotes a competitive market economy of shared prosperity,
    environmental sustainability, and capable democratic government. Their publications
    contain numerous recommendations for attracting jobs and employees with the skills
    to match.
   Environmental Defense Fund, Green Jobs Guidebook, is a useful reference to
    understand the types of green jobs available. The guidebook focuses on California,
    but has instructive value.
Type(s) of GHG Reductions
Primarily CO2 through the creation of jobs in the bioeconomy and energy efficiency

Estimated GHG Reductions and Net Costs or Cost Savings
Because of the far-reaching and diverse options recommended, it was not possible to
neither quantify the potential reductions in greenhouse gases nor determine a cumulative
cost for specific actions by state or region.

Key Uncertainties
The ability of states to redistribute resources to create recommended positions in the
short-term is uncertain.

Additional Benefits and Costs
All efforts to improve community prosperity through job creation, retention and
enhancing the skills of the workforce serve to attract more industry and services,
especially when quality of life, environment and work are emphasized.
Feasibility Issues
None cited.

Status of Group Approval
The group has approved these recommendations conceptually. Final approval pending.

Level of Group Support


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