Renewable Energy and the Financial Crisis - Weathering the Storm Tony Crooks USDA Rural Development SAAS and SRSA Combined Annual Meeting February 2, 2009 Atlanta, Georgia Committed to the eventual fate of rustic groupsSlide 2
Agenda Wisdom of Yogi Berra The Boom, the Bust, the Aftermath Consolidation on a shoestring Energy markets & arrangement rotate focuses Never squander an emergency! Brilliant vitality approach Rational desiresSlide 3
A previous Major League Baseball player and supervisor for the New York Yankees and was chosen to the baseball Hall of Fame in 1972 One of just four players to be named the Most Valuable Player of the American League three times One of just six chiefs to lead both American and National League groups to the World Series Known particularly for his concise comments, known as "Yogi-isms." Wisdom of Lawrence Peter "Yogi" BerraSlide 4
Famous "Yogi-isms" "It ain\'t over, till it\'s over." After Berra\'s 1973 Mets trailed the Chicago Cubs by 9 recreations in the National League East ; the Mets encouraged to win the division title on the by a day ago of the season. "It resembles d éjà vu all over again." Upon seeing Mickey Mantle and Roger Maris more than once hit consecutive grand slams for the Yankees in the mid 1960s.Slide 5
"A nickel ain\'t worth a dime any longer." The Boom, the Bust, the AftermathSlide 6
Financial Crisis: A generous enduring Top Ten Financial Bubbles Dutch tulip knobs, 1636 English South oceans, 1720 French Mississippi arrive surge, 1720 US stock cost, 1927-29 Mexican bank advances, 1970 Japanese land and stocks, 1985-89 Scandinavian land and stocks, 1985-89 Southeast Asian land and stocks, 1992-97 Mexican surge in remote venture, 1990-93 US over the counter stocks, 1995-2000 Kindleberger and Aliber, Manias, Panics and Crashes , 2005.Slide 7
This time a year ago: Food ware costs climbed more than 60 percent in the most recent 2 years Trostle, "Worldwide Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices," USDA ERS, WRS-0801 May 08.Slide 8
All item costs were rising Trostle, "Worldwide Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices," USDA ERS, WRS-0801 May 08.Slide 9
Markets moving pair Rolling connections - Vegetable oils and Brent Crude Jul 06 - Apr - 08 Kingsman Biodiesel Weekly , utilized with authorization.Slide 10
The Boom, the Bust, Washington Post , "The blast, the bust, and the fallout"Slide 11
The AftermathSlide 12
Total Federal obligation as a rate of GDPSlide 13
"Dependably go to other individuals\' funerals, else, they won\'t go to yours." Consolidation on a shoestringSlide 14
Consolidation on a shoestringSlide 15
Ethanol stock costs Pacific Ethanol, Aventine, VERASUN, Biofuels Energy, and Green Plains RESlide 16
Midwest ethanol valuationSlide 17
Commercial biodiesel generation in the U.S. 176 plants ~ 2.61 billion gallons generation limit 176 plants Source: National Biodiesel Board Updated: September 2008Slide 18
Estimated Biodiesel Production and Sales in the U.S. A huge number of gallons Source: National Biodiesel Board Updated: September 2008Slide 19
DOE gifts for popularized CE plants Corn fiber & stover Wheat straw Wood squander Municipal green waste BagasseSlide 20
Second era biofuels An unvarnished look Progress upgrade: Commercial scale plants got first installments Range Fuels, BlueFire, POET, Abengoa What about Iogen? Alico?? Exhibit scale plant grants $114 million declared Feb \'08 for 4 "10 percent" show offices and 2 TBD Opportunities and difficulties ahead Technology dangers and financing DOE/USDA Rural Development bolster Range Fuels LG Approved, 1/16/09Slide 21
Cellulosic ethanol contemplations Acute issues of cost, lawful structures, administration Capital consumptions/gallon ~ 3/5 times customary plant Maybe moderate just to partnerships and value reserves, or in little scale to provincial groups Intellectual property privileges of key significance Design/Build firms less noticeable Enzyme/pre-treatment R&D instrumental to industry achievement Number and specialization of co-items to increase Diverse and confused blend of outsider promoting firms Extra cost of profoundly specialized applications – Specialized showcasing and administration firms Long-term off-take assentionsSlide 22
Food, Conservation, and Energy Act \'08 Energy Title Programs with Mandatory Funding $1.1 billion to influence renewable vitality industry interests in new advances and feedstocks Rural Energy for America Program (REAP) - $255 M Biorefinery Assistance - $75 M (\'09), $245 M (\'10) Biomass Crop Assistance Program (BCAP) – ($70) M Repowering Assistance - $35 M Bioenergy Program for Advanced Biofuels - $300 M Biomass Research and Development - $118 M Biobased Markets Program - $9 M Biodiesel Fuel Education Program - $5 M Biofuels Infrastructure Study - $1 MSlide 23
"In the event that you go to a byway, take it." Energy advertise turn focusesSlide 24
Energy advertise rotate focuses How will the Obama organization address vitality issues? Where will vitality and environmental change remain in the general needs of the organization and congress? Where will environmental change enactment remain on the rundown in contrast with renewable portfolio models and crucial vitality financial aspects? What new activities are relied upon to bolster elective vitality? What will get government help?Slide 25
"The towels were so thick there I could barely close my bag." Never squander an emergency!Slide 26
Never squander an emergency! A genda things for New Administration and Congress American Recovery and Reinvestment Plan - foundation spending on "scoop prepared " activities to kick off the economy and make up to 4 million occupations; Jan/Feb Energy Bill - Renewable Energy assess titles and portfolio measures; Jun/Jul Climate Change Bill (2010/11)Slide 27
American Recovery and Reinvestment PlanSlide 28
Energy Bill may give numerous "open doors" Revive impose value markets with jolt or vitality bill is a huge issue particularly for Wind Installations have been lessened by 50 percent . Empower wind vitality organizations to adapt credits Investment charge credit, generation impose credit and a push to reclaim devaluation attributes Perhaps retroactive to 2008? Three imperative contemplations/choices are in play for Renewable Energy Credits : Redeemable (for money) Tradable (uninhibitedly transferable), Refundable (includes quick deterioration and the capacity to contribute retroactively)Slide 29
Climate Change Bill How will new Admin address carbon controls? • Difficult and precarious issues Cap and exchange is more probable than duty instrument Lesson from \'93 Act with push to push a Btu expense that fizzled pitiably Still resounds on the Hill – no state of mind to remember this • Carbon recompenses/control sales are required to be a colossal money related occasion Pres. Obama is requiring a 100% staged in closeout Expected to be most lucrative/difficult partSlide 30
"In the event that you don\'t know where you are going, you may twist up somewhere else." "He hits from both sides of the plate. He\'s land and/or water capable." Smart vitality approachSlide 31
Smart vitality arrangement Value nature\'s administrations Align vitality effectiveness with atmosphere strategySlide 32
Value nature\'s administrations Renewable Portfolio Standard – Wind, sun powered, geothermal, biomass Utilities must have bit of their vitality created by renewable vitality Or must buy Renewable Energy Certificates (counterbalances) 10% by 2012 25% by 2025Slide 33
Align vitality proficiency with atmosphere arrangement Four very much perceived premises on practical biofuels generation: Should have a positive vitality adjust No carbon advances from nature Maintain feedstock biodiversity – no monocultures No exchanging nourishment for fuel at scaleSlide 34
"The future ain\'t what it used to be." Rational desiresSlide 35
Rational desires These 3 expected Bills have as of now been portrayed as the GOLD RUSH of 2009! Renewable vitality entryway might exaggerate its hand Bills might be less lucrative than foreseen. Search for Administration to beseech Americans to search for new definitions for Doing Well and Doing Good Sacrifice and open administration might be the new request of the day Greatest era established a framework for us - Nation working in America by leading the pack in taking care of the world\'s most concerning issue - Energy Technology insurgency - WE ought to work out, not rescue!Slide 36
"I simply need to thank everybody who made this day essential."Slide 37
"I wish I had a response to that since I\'m worn out on noting that question."Slide 39
"No one goes there any longer. It\'s excessively swarmed."Slide 40
"Even Napoleon had his Watergate."Slide 41
"I never point the finger at myself when I\'m not hitting. I simply accuse the bat and on the off chance that it keeps up, I change bats."Slide 42
U.S. Districts fit for supporting cellulosic ethanolSlide 43
Value of U.S. dollar, 1970-2008Slide 44
Dollar shortcoming and the cost of oil Daily midpoints with the exception of Oct. 29 Source: Hawkes, "Does Dollar Weakness "Cause" High Oil Prices?," St. Louis Federal Reserve Board, Nov \'07.Slide 45
Factors adding to higher nourishment product costs Trostle, "Worldwide Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices," USDA ERS, WRS-0801 May 08.Slide 46
Biodiesel request drivers Strong petroleum value desires Biodiesel Blender\'s Credit, Fed. Extract Tax Credit, Income Tax Credit for Biodiesel utilize Remedy for lubricity issues of
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