A Thriving Bioeconomy: USDA s Role, Outreach, and Financial Programs. July 18, 2018

Transcription

1 A Thriving Bioeconomy: USDA s Role, Outreach, and Financial Programs July 18, 2018

2 Venus Welch-White, PhD National Rural Energy Program Coordinator Rural Development USDA

3 USDA An Overview The United States Department of Agriculture (USDA) was established on May 5, 1862 by President Abraham Lincoln. USDA estimated FY2019 Budget is $140 Billion USDA has impact: American agriculture (domestic and internationally), Driver and investment in economic growth, Innovative research and development, conserve natural resources, promote healthy families build stronger communities

4 USDA USDA Secretary Sonny Perdue s Motto: Let s do right and feed everyone OneUSDA: Comprised of 7 Mission Areas and 17 Agencies

5 USDA Rural Development is key partner in U.S. Infrastructure expansion 1901 to 1926 Cooperative Programs Evolves for Rural Businesses 1935 Rural Electrification Administration 1937 Water Facilities Act 1949 The Housing Act (Establishes Singleand Multi-Family Affordable Housing) 1949 Rural Telephone Program 1968 The Self Help Housing Program is Established 1990 Distance Learning/Telemedicine Program 1994 Restructuring: REA Plus Water and Waste Programs Every five years Congress sets direction for RD in the Farm Bill 2002 U.S. Farm Bill: Broadband Program, 9006 Renewable Energy Program, Value-Added, and Others 2009 American Recovery and Reinvestment Act of Additional (one-time) funding for water and broadband infrastructure 2014 U.S. Farm Bill: Broadband Program, Renewable Energy Programs, Value-Added, and Others

6 Leaders in the Bioeconomy Biomass Research and Development (BR&D) Board established by the Biomass Research and Development Act of 2000 BR&D Board is an interagency collaborative composed of senior decision makers from federal agencies and the White House, co-chaired by the U.S. Department of Agriculture (USDA) and the U.S. Department of Energy (DOE) Dr. Chavonda Jacobs Young, Acting Under Secretary for Research, Education, and Economics, USDA 6

7 Leaders in the Bioeconomy October 2008, the Board released its National Biofuels Action Plan (NBAP) In 2012, the Board released an update to the NBAP, which focused on advanced hydrocarbon fuels, the inclusion of algae as a potential biomass feedstock Board released the Federal Activities Report the Bioeconomy, which emphasizes potential for a robust U.S. Bioeconomy through the production and use of biofuels, bioproducts, and biopower 7

8 Bioeconomy/ Biogas Roadmap Biotechnology & Bioenergy Opportunities $ billion market Sustainability Reduce GHG emission 25% by 2020 Technological Innovation Partnerships US Departments: Agriculture, Energy, Commerce, Defense, Transportation-Federal Aviation Administration, Environmental Protection Agency, State Department 8

9 Interagency Task Force on Agriculture and Rural Prosperity Established in April 2017 by Executive Order Chaired by USDA Secretary Sonny Perdue Membership includes over 20 federal agencies and partners Report was published October

10 Interagency Task Force on Agriculture and Rural Prosperity

11 Rural Development s Roles Rural Development is committed to helping improve the economy and quality of life in rural America through: Investing financial resources and providing technical assistance to businesses located in rural communities. Establishing strategic alliances and partnerships that leverage public, private, and cooperative resources to create jobs and stimulate rural economic activity. Increasing access to capital in rural America. In 2016, RD s investment portfolio was nearly $216 Billion

12 Panel Members Toby Ahrens National Institute of Food and Agriculture, USDA Chris Cassidy Rural Business Cooperative Service(RBS), USDA Ed Legere Chief Executive Officer, Algenol

13 Toby Ahrens National Program Leader, Agricultural Bioproducts National Institute of Food and Agriculture (NIFA) USDA

14 An Overview of Funding Opportunities at USDA s National Institute of Food and Agriculture July 2018 Toby Ahrens National Program Leader, Agricultural Bioproducts toby.ahrens@nifa.usda.gov

15 AGENDA NIFA Programs Overview Bioproducts, Bioenergy, and Bioeconomy Programs Small Business Innovation Research

16 National Institute of Food and Agriculture (NIFA) MISSION: Invest in and advance agricultural research, education, and extension to solve societal challenges. GOALS: Our scientific goals include catalyzing exemplary and relevant research, education, and extension programs: Achieve global food security and fight hunger Mitigate climate change impacts on agricultural, forest, and rangeland systems Improve and increase the production of goods and services from working lands while protecting the nation s natural resource base and environment Contribute to the nation s bioeconomy, and enhance food production systems by creating ecosystem services through sustainable production of bioenergy and biobased industrial products Combat childhood obesity by ensuring the availability of affordable, nutritious, and safe food and providing individuals and families science based nutritional guidance Ensure the development of human capital, communities, and a diverse workforce

17 WE ACHIEVE THOSE GOALS through extramural funding of: Competitive awards, such as: Agriculture and Food Research Initiative ($400M in FY18) ~⅔ of budget Capacity grants: Includes land-grant institutions and state ag experiment stations Smith-Lever Act, Evans-Allen Research Program, 1890 Institutions ($420M in FY18 for Land Grant Institutions) Hatch Act of 1887 ($244M in FY18 for State Agricultural Experiment Stations) And many other competitive and capacity programs, such as: Expanded Food and Nutrition Education Program ($68M in FY18) Specialty Crop Research Initiative ($51M in FY18) McIntire-Stennis Cooperative Forestry ($34M in FY18) NOTE: Funding amounts shown reflect appropriated funds

18 Agriculture and Food Research Initiative (AFRI) is NIFA s flagship competitive grants program Program Areas designed to align with Farm Bill Priorities Plant health and production, plant products Animal health and production, animal products Food safety, nutrition, and health Bioenergy, natural resources, environment Agriculture systems and technology Agriculture economics and rural communities

19 Renewable Biobased Products: Feedstock to Product Value Chain Pharma Processed Oils Foods & Feeds Germplasm Production Harvest Processing & Conversion Meals Fuels Fiber Manufactured Products

20 Renewable Biobased Products: Feedstock to Product Value Chain Funding to address individual bottlenecks Processed Oils Pharma Foods & Feeds Germplasm Production Harvest as well as large integrated projects Processing & Conversion Meals Fuels Fiber Manufactured Products

21 Bioenergy & Bioproducts Division Portfolio AFRI: Agriculture and Food Research Initiative, Sustainable Bioenergy and Bioproducts Foundational Program Grants address bioproducts (lignin, nano-cellulosics, etc); feedstock genetics and evaluation; logistics; conversion; policy, social and environmental impacts Sustainable Agricultural Systems (similar to previous CAPs) Large transdisciplinary awards to stimulate regional supply chains of bioenergy and bioproducts SBIR: Small Business Innovative Research USDA & DOE Joint solicitations Plant Feedstock Genomics Program Biorefinery Optimization Biomass Research and Development Initiative

22 USDA SBIR programs: Stimulate innovations in the private sector Strengthen the role of small businesses in meeting federal research and development needs Increase the commercialization of innovations derived from SBIR-supported private sector research and development efforts Foster participation by women-owned and socially and economically disadvantaged small businesses Phase I Deadline & Timeline FY 2019 Phase I Solicitation has not been released: Phase I proposal deadline Usually in October Panels usually meet in January & February Award Decisions typically in March Phase I Grant Period typically from mid-summer through Winter (8 months)

23 SBIR Topic Areas and Contacts Dr. Charles Cleland Forests and Related Resources Dr. Robert Nowierski Plant Production and Protection Biology Dr. Rachel Melnick Plant Production and Protection - Engineering Dr. Robert Smith Animal Production and Protection Dr. Karelyn Cruz Air, Water and Soils Scott Dockum Program Coordinator, SBIR Dr. Jodi Williams Food Science and Nutrition Dr. Brent Elrod Rural and Community Development Dr. Gene Kim Aquaculture Dr. Toby Ahrens Biofuels and Biobased Products Dr. Denis Ebodaghe Small and Mid-Size Farms Elden Hawkes Program Specialist, SBIR

24 USDA SBIR Topic Area 8.8: Biobased Products & Biofuels In general, a very broad category that covers process improvements or new product development for biobased products New non-food biobased products from new industrial crops New process for the manufacture of biobased industrial products, chemicals or biofuels Except: Aquaculture including photosynthetic algae (apply to 8.7) Woody biomass production or logistics (apply to 8.1) Engineering aspects of plant production & logistics (apply to 8.13) Genetic engineering of plants (apply to 8.2) If you are unsure about where it fits, ask us! All of the Topic Area leads communicate constantly

25 Final Thoughts Shift to bioenergy AND bioproducts or bioproducts alone Energy security argument has changed Environmental benefits should be spelled out Don t assume that just because it is bio-based that it is inherently good. Economic arguments also need to be well-articulated Price or performance benefit Potential addressable market share Understanding place in the value/supply chain Technoeconomics including final product specifications after separations/purification, etc

26 Please engage with us any time! Toby Ahrens National Program Leader, Agricultural Bioproducts

27 Biobased Product Efforts Across USDA Mission Areas Farm and Foreign Agricultural Services Rural Development BCAP: Biomass Crop Assistance Program has incentivized >800 producers on >47,000 acres in 12 states to establish and produce 7 different energy crops. Commodity oilseeds don t qualify but new oilseeds do (eg. Camelina). 9003: Loan guarantees for existing and pioneer biorefineries, renewable chemicals, and biobased product manufacturing Biopreferred Program Labelling and federal procurement program, ~2500 products in >100 product categories carry the Biobased Label Research, Education, and Economics Intramural research on feedstock production, logistics, conversion, and product development at many locations including the Bioproducts Research Unit in Albany, CA and the National Center for Ag Utilization Research in Peoria, Ill (including a microbial culture collection). Among other Mission Areas: Marketing and Regulatory Programs; Food Safety; Food, Nutrition, and Consumer Services; Natural Resources and Environment

28 AFRI Plant Health and Production and Plant Products Agricultural Production Systems Pests and Beneficials in Agricultural Production Systems Physiology of Agricultural Plants Plant Breeding for Agricultural Production Certification Minor Crop Pest Management Program Production Crop Protection and Pest Management Extension IPM Regional IPM Centers Applied Research and Development Renewable Chemicals: Feedstock to Product Value Chain Harvest Sustainable Agriculture Research and Education (SARE) AFRI Agricultural Systems and Technology Agricultural Engineering Bioprocessing and Bioengineering AFRI Critical Agricultural Research and Extension USDA-NRCS Conservation Innovation Grants Processing Processed Oils Meals Fiber AFRI Exploratory Research Program Pharma Foods & Feeds Fuels Manufactured Products Biomass Research and Development Initiative AFRI Food Safety, Nutrition, and Health AFRI Animal Nutrition, Growth, and Lactation AFRI Sustainable Bioenergy and Bioproducts USDA Small Business Innovation Research Grants USDA RD Value-Added Producer Grants USDA AMS Fed-State Marketing Improvement Program

29 CAP Feedstocks and Project Regions

30 Two NEW AFRI CAPs Joined the Community in 2017 SPARC led by University of Florida Partnering with Agrisoma and ARA, others Targeting alternative jet fuel and animal feed from the oilseed crop Brassica carinata (Carinata) SBAR led by University of Arizona Partnering with Bridgestone America, New Mexico State, others. Targeting natural rubber, industrial chemicals, and alternative jet fuel from the dry land crops guayule (why-oo-ley) and guar.

31 Chris Cassidy National Business Renewable Energy Advisor Rural Business-Cooperative Service USDA

32 Feedstock Development BIOECONOMY SUPPLY CHAIN Feedstock Production Feedstock Logistics Conversion Conversion Process Scale-up/Integration Product Testing/Approval Performance Environment Assessment Enable Production End User Markets FEEDSTOCK PRODUCTION AND DEVELOPMENT INTEGRATION SCALE UP COMMERCIAL PRODUCTION DATA POLICY ANALYSES & EVALUATION OUTREACH ENABLE PRODUCTION END MARKETS 32

33 Rural Business-Cooperative Service FEEDSTOCKS Woody Biomass: Purpose grown trees, forest residues, construction /demolition Oil seeds Grasses Algae Lemna Crop residue Agriculture waste Municipal solid waste Waste water 33

34 Rural Business-Cooperative Service CONVERSION TECHNOLOGIES Biological Biochemical Thermochemical Hybrids 34

35 Rural Business-Cooperative Service BIOFUELS Alternative Aviation Fuel Biodiesel Renewable Diesel Renewable Hydrogen Biogas Ethanol Methanol 35

36 Rural Business-Cooperative Service Renewable Chemicals & Bioproducts Pharmaceuticals Nutraceuticals Soil amendments Nylon Bioplastics Pigments Adhesives Lubricants 36

37 Rural Business-Cooperative Service Protein Food Feed Fish Dairy Poultry Swine Pets 37

38 Rural Business-Cooperative Service Technical Strategy Public Private Partnerships Risk Mitigation Scaling Construction 38

39 Bench Pilot Integrated Demonstration Unit (IDU) First Commercial Facility Commercial Replication Rural Business-Cooperative Service How It Works 39

40 Rural Business-Cooperative Service Challenges Pre processing technologies Feedstock delivery systems Performance guarantees Equity 40

41 Rural Business-Cooperative Service Funding Tools Loan Guarantees Credit Enhancement Grant Payment Programs 41

42 Rural Business-Cooperative Service Funding Programs Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (9003) Rural Energy for America Program (REAP 9007) Biorefinery Program Advanced Biofuels (9005) BRDI 9008 BCAP 9011 Business and Industry Guaranteed Loan Program (B&I) Rural Economic Development Loan and Grant Program (REDLG) Intermediary Relending Program (IRP) Rural Business Development Grant (RBDG) Value-Added Producer Grant Program (VAPG) DPA Title III 42

43 Rural Business-Cooperative Service 9003 Program 9003 Biorefineries Eligible projects are the development, construction, or retrofitting of a Commercial-Scale Biorefineries using Eligible Technology. Must produce an advanced biofuel May produce biobased products and renewable chemicals Guaranteed Loan up to $250 Million 43

44 Rural Business-Cooperative Service 9003 Program Applications (April 1 and Oct 1) Executive Project Summary Feasibility Study Business Plan Technical Report Environmental Report 44

45 Aemetis (InEnTec & LanzaTech) REG American Biocarbon Ensyn Fulcrum Novus Biosynthetic Technology Ryze (Reno & Vegas) Red Rock Algenol Sierra, Madera, & Dexter Rural Business-Cooperative Service 9003 Program 45

46 Rural Business-Cooperative Service USDA Rural Development Resources: (Rural Development State Offices) Chris Cassidy

47 Ed Legere Chief Executive Officer Algenol

48 Experience with 9003 Program BIO World Congress on Industrial Biotechnology Ed Legere, CEO July 18, 2018

49 Algenol Biotech Overview Algenol Biotech LLC is an industrial biotech company developing biobased ingredients utilizing algae (founded in 2006) HQ, R&D and manufacturing in Fort Myers, FL R&D facility in Berlin, Germany Operates in multiple sectors Food and Cosmetics Ingredients applications Algae-based extracts Natural colorants for food and cosmetics Proteins for human nutrition and personal care Functional ingredients for personal care products Contract research, development and manufacturing Algal product research and development Developing algae as heterologous expression systems Photobioreactor-based algae production tolling 49

50 Technology Scale-Up Path Private Equity is the Lifeblood of Early Stage Companies Algenol Technology Development Algenol s financing structure has been ~90% private funds and 10% public grants Although Public grants are a minor amount of the total capital raised, they were very important for the development of our technologies Algenol would not be here today without the USDA Loan Guarantees and DOE grants Early financing came solely from private investors to develop technology from idea stage Built appropriate corporate infrastructure to develop the technology Advanced our technology based on milestones set by investors and management (Lab scale) Production organism development Production system development Demonstrated technology at small scale Private Equity Financing Process development scale outdoors Modular system allowed us to demonstrate commercial scale results at relatively small scale 50

51 Technology Scale-Up Path Bridging the Valley of Death Algenol Technology Development Entering the Valley of Death, common technology development delays and failures, progress set backs and cost escalations cause significant private investor fatigue by this stage Doubt has usually set in and investors are looking for some outside validation and some assistance in further advancing the technology Government grants and government backed loans and their required technology evaluation processes can fill this gap allowing the best projects to move forward Demonstrated technology at Pilot Scale (Private/Public Partnership) Applied for and received US Department of Energy grant to develop pilot scale Integrated Biorefinery to demonstrate Direct to Ethanol and proprietary photobioreactor technology This project forced us to grow up, solidified our technology and greatly reduced risk Commercial scale deployment (Private/Public Partnership) Private/Public Partnership Financing Utilize Government Loan Guarantees to attract private capital to build first-of-a-kind plant 51

52 USDA 9003 Biorefinery Assistance Program What to Expect USDA and US DOE have well developed technology evaluation processes Investors view the receipt of a Public grant and/or Loan Guarantee and the passing of a rigorous due diligence process as an important sign of project risk reduction and technology maturity It is always great to have your technology rigorously reviewed by competent third parties Review by people with different backgrounds and expertise can illuminate flaws in your technology and business plans saving you from expensive and disastrous results from which your company may not be able to recover Don t be too arrogant to take constructive criticism Don t underestimate the amount of resources, effort and cost to file for the Loan Guarantee Months and months of work by just about everyone in the company Biology, engineering, finance, business development, regulatory, external consultants You will only be successful if you have all your ducks in a row PRIOR to starting the process well organized data, detailed engineering plans, detailed engineering process models, detailed marketing plans, sophisticated financial models, etc. You have to be completely responsive to all questions and check every single box on the list The Independent Engineer review process is comprehensive Quit fooling yourselves and check your rosy yield data and marketing baloney at the door Only sound science, engineering and business plans will make it past the IE review 52

53 USDA 9003 Biorefinery Assistance Program Algenol applied for a USDA 9003 Loan Guarantee in December 2014 for a 12MGPY advanced biofuel plant based on Algenol s Direct to Ethanol technology The Project was to be colocated with an existing power plant in rural central Florida for source of anthropogenic CO 2 Would have been first largescale commercial application of Algenol s algae-to-ethanol process Algenol has Extensive Experience with the 9003 Program When oil prices collapsed, the project was cancelled 53

54 USDA 9003 Biorefinery Assistance Program In 2015, USDA made significant changes to the 9003 Loan Guarantee program Changes Included Qualifying Renewable Chemical And Biobased Manufacturing Projects Changes to the 9003 Program in 2015 This change was very significant as it is critical for biorefineries to have high value co-products to help improve the economics of biofuels production Algenol s Planned Biorefinery High value co-products allows for facilities with higher returns to significantly reduce project risk and attract capital New two phase application process makes process much more user friendly Integrated Demonstration Unit must be run for 120 days of continuous operation 54

55 9003 Loan Guarantee Pros and Cons PROS CONS Allows first-of-kind projects to obtain debt financing from an established lender USDA professionals very helpful in navigating the process Established group of lenders that are willing to use the program Established group of bankers, lawyers and technical consultants to assist in the application process Recent program changes make application process more user friendly with significantly reduced upfront fees Passing the due diligence process lends significant credibility to the technical readiness of your technology New application process is much improved, but it is still a major company effort to apply for the loan guarantee Financing vehicle is expensive, but this should be expected for first-of-kind facility Working capital requirements are significant, tying up cash On-going reporting requirements increase project resource needs Significant fees associated with the program A NEPA is required for the project Davis Bacon requirements can inflate project costs 55

56 Algenol Biotech Thank You 56

57 Panel Discussion