Senate File 517 creates three new biochemical producer payment programs in the Department of Agriculture. They are:

1. an advanced biofuel production incentive program;
2. a renewable chemical production incentive program; and
3. a biomass thermal production incentive program.

Section 1 [Definitions] defines terms that are used in the three incentive programs created in the bill.  The terms defined are: “advanced biofuels,” “biomass thermal production,” “cellulosic biomass,” “cellulosic sugar,” “commissioner,” “cover crops,” “MMbtu,” “perennial crops,” and “renewable chemical.”

Section 2 [Advanced biofuel production incentive] establishes the advanced biofuel production incentive program to provide payments for the production of advanced biofuels in Minnesota.  The payments for advanced biofuel production are $2.1053 for each million metric British thermal units (MMbtu) of production from cellulosic biomass and $1.053 per MMbtu for advanced biofuel production from starch or sugar.  Total payments to a single producer of advanced biofuel are restricted to 2,850,000 MMbtu of biofuel production per year for up to ten years.  The total for all producers is restricted to 17,100,000 MMbtu of biofuel production per year.

Section 3 [Renewable chemical production incentive] establishes the renewable chemical production incentive program to provide payments for the production of renewable chemicals in Minnesota.  The payments for renewable chemical production are $0.03 per pound of sugar-derived renewable chemical, $0.03 per pound of cellulosic sugar, and $0.06 for each pound of cellulosic-derived renewable chemical.  Total payments to a single producer of renewable chemical are restricted to 99,999,999 pounds of renewable chemical production per year for up to ten years.  The total for all producers is restricted to 5,999,999 pounds of renewable chemical production per year.

Section 4 [Biomass thermal production incentive] establishes the biomass thermal production incentive program to provide payments for the production of biomass thermal in Minnesota.  The payment for biomass thermal production is $5 for each million metric British thermal units (MMbtu) of production.  Total payments to a single producer of biomass thermal are restricted to 30,000 MMbtu of biomass thermal production per year for up to ten years.  The total for all producers is restricted to 150,000 MMbtu of biomass thermal production per year.

Section 5 [Report; incentive programs] requires the Commissioner of Agriculture to report to the legislature by January 15, each year, on production and incentive payments for:

1. the advanced biofuel production incentive program;
2. the renewable chemical production incentive program; and
3. the biomass thermal production incentive program.

Section 6 [Appropriation] appropriates $2.5 million each year for the biochemical production incentive programs created in the bill.  Money remaining after making the payments each fiscal year is available for NextGen energy grants.  Up to 4.5 percent of the appropriation may be used for administration of the incentive payments.