 Well, I think we'll go ahead and get started. Thank you for coming out so early in the morning, on a Monday morning, and joining us for another briefing by the Environmental and Energy Study Institute. My name's Ned Stowe, and I'm a policy associate with EESI. I work on sustainable biomass and energy issues. The topic in the news, one of them, besides what's going on at the Supreme Court today, but a big topic in the news today is soaring gasoline prices. And I don't know what you paid at the pump this weekend, but they've gone up tremendously since the beginning of the year. And compared to a year ago, their gasoline prices are higher still. But there's been at least one bright spot. There have been a number of bright spots on the energy horizon with respect to gasoline prices. Everything from improved energy efficiency that higher prices is driving and more efficient vehicles. But another significant bright spot is biofuels production. Corn ethanol today displaces about 10% of the gasoline supply. It reduces the price at the pump anywhere from $0.50 to a buck and a quarter compared to what it would have been if ethanol had not been on the market. It's made here at home. It's domestic. It's created over approximately 90,000 jobs over the past several years. That's direct jobs and a few hundred thousand additional indirect jobs that come from the ethanol industry, jobs that aren't exported abroad. It's renewable. It's not finite as a resource compared to petroleum resources. But it's come at a significant environmental cost as well to our rivers and our estuaries around the country. And so the question for our briefing today is, well, can we do more biofuels more sustainably? Can we do it better to advance our nation's energy, economic, and environmental security? Can we do it in a way that restores our water resources at the same time using multifunctional agricultural systems? What kinds of policies would advance these types of approaches to biofuel production and to conserving our water resources? We've got an excellent panel with us today to help guide us through and address some of these questions. I will introduce each at each presentation point. I'll begin with Dr. Richard Cruz. He's a professor of agronomy at Iowa State University and is director of the Iowa Water Center. His research focus is on soil management and soil erosion processes. He served on the National Advisory Council for Environmental Policy and Technology for EPA from 2007 to 2009, assisting with biofuel-related recommendations. Also served on the Iowa Climate Change Advisory Council from 2008 to 2010, and was a technical advisor for the Council on Sustainable Biomass Production, the Water Working Group from 2008 to 2009. Rick is a fellow of the American Society of Agronomy and the Soil Science Society of America. Welcome, Rick. Move this just a little bit so I can get out. Excellent, Ralph. Thanks, Ned. Appreciate the opportunity. So the question is, why are we here? Well, the San Jose biofuel industry, if developed correctly, offers rural America opportunities that we haven't experienced in decades. Why are we here? Growing population, the rise of the middle class worldwide. A brand-keeting University of California, Davis, makes an estimate for us to meet and feed fuel fiber demands of the growing population. In the next 50 years, we'll need to produce as much as we've produced since the dawn of civilization from agricultural lands. FAO suggests production increases will have to be increased 70% for what they are now. So that tells us our agricultural lands must be working lands. We no longer have the luxury of idling lands. They must produce. They're going to have to produce. The challenge is our current working land model creates issues. It creates water quality issues ranging from the Chesapeake Bay to the northern Gulf of Mexico. And water, surface waters, groundwater is in between. We have major soil erosion issues. Exemplified in 2007, the state of Iowa, the average soil erosion rate, when you take it across the entire state, average rate was 10 times greater than soil renewal rates. If you look spatially, and that's what we've done with the daily erosion project at the township level, we understand that in an area equivalent to 25% of all the corn and bean production in Iowa, soil erosion rates are from 20 to 100 times greater than soil renewal rates. So does that affect productivity? Numbers collected from Iowa farm fields on the vertical axis is corn yield. Horizontal axis is depth of what we call the a-horizontal topsoil for two different lines, two different major soil types we find in the farming areas of this country. What happens to the yield level as the thickness of that a-horizontal topsoil decreases? Yields go down. How do we meet growing world demand when we're reducing productive potential of the resource base that's required for food production? Better yet, what is the economic sacrifice we make by losing productive potential of those soils? Another issue associated with our current working lands model is that we have no risk diversity. How many successful business plans do you know of that puts all their eggs in one basket? We pretty much do that in agriculture these days. How do we fix that? People understand there is an economic consequence, so we've developed crop insurance policies. Well, now the cost of crop insurance is too high for what some groups think that farmers ought to pay, so now we're asking taxpayers to pay. It's a system that has significant challenges. So where do cellulosic biofuels come in? If we look at cellulosic biofuels as one point in the agricultural landscape, it may be difficult to justify, maybe. But if we look at it as a unit, it's like looking at a dot on this chart. One dot doesn't mean anything, but when you start to connect them, you see that there is something there of value. It becomes increasingly easy to understand what's there, and that's the value similar to the cellulosic biofuels we're going to finish talking about. We'll use a conservation reserve program as our model example against which we'll contrast the cellulosic biofuels industry. Conservation reserve program pays farmers. Government pays farmers to leave land idle to grow perennial biocrops, perennial crops, to reduce soil erosion, which it does. And the other fringe benefit is wildlife habitat. Those are not working lands. Let's change that paradigm and put perennial biomass crops, feedstocks, in place of the perennials we currently use simply to stop soil erosion. What do we have now? Well, we have employment opportunities, those that don't exist now. We reduce the tax burden. If we can get an income off of those properties, off of that industry, we should reduce the tax burden we're paying now to keep land idle in the CRP program. Water quality benefits, wildlife benefits, energy security benefits. We increase another income stream. We have another income stream for farms. And we have a favorable CO2 footprint. All connecting the dots. What might this look like? There's a project in central Iowa in the Neal Smith Wildlife Refuge, in which we have multiple watersheds. And on those watersheds, we have different treatments. All treatments have row crop of corn and soybeans. And those row crops, we use no-till. No-till is the conservation practice of choice throughout most of America, if you want to call it conservation choice. On other watersheds, we have 10% of it placed in perennials at the outlet point. Another treatment is 10%. But part of it is at the outlet point and then scattered in strips. And then one in which we have 20% of the total area in perennials. And then we measure waters that comes out the outlet. It comes out the bottom of the watershed to see what impact those different treatments have had. Pictures from that watershed indicating the type of diversity that exists. And then a picture of the flumes following a 4-inch rain. This was in 2008. Picture on the left-hand side, no-till sediment coming through those flumes following that event. And on the right, only 10% perennial cover. The impact of perennial cover. For those that feel more comfortable looking at graphs, 2008, where we had any perennial cover, 10% perennial cover, we reduced sediment export 90%. 10% of the watershed was taken out of row crops, reduced sediment export 90%. What could we use those perennial crops for? We could convert those to biofuels. That is one example. Another dot on that map, and this is an absolutely critical dot, and that is, as you look in the red, it's a rainfall. Over the last century, there was a 50% increase in the frequency of days with precip over 4 inches in the upper Midwestern US. Other places in the US, it's more dramatic than that. What is it that drives soil erosion? What is it that drives sediment loss? What is it that drives water quality problems? It's those rainfalls. And if we don't have a surface that will keep the rainfall in place, we have serious problems. What do these numbers look like? Well, Cedar Rapids Eye was the heart of the farming country. It simply applied a precipitation, annual precipitation that's on the vertical axis with time. Records started in 1890, about 1890, and runs through today. We see an upwards trend. OK, that's interesting. Let's do some data snooping. Let's look at the numbers and ask. Look at the number of days with total precipitation greater than or equal to 1.25 inches. We use 1.25 inches because that's kind of the number that hydrologists use when we run off begins. OK, there's an upward trend. And let's data snoop a little bit more. Let's ask how many years have more than eight days of 1.25 inches of precip? In the first half of the record, there were two. In the last half, we have eight. 13, I'm sorry. Increasing challenges. Our current working farm model, working lands model, gives us water quality problems, gives us productivity problems. It threatens food security in the future, and it has a negative impact on our current economy of agricultural areas because we're reducing productive potential. How many of you know what the dead canary in a coal mine means? Everybody's heard about that. We have our own canary, and it's arguably approaching the same fate. Pheasant populations are the lowest in history in a lot of the areas that are agriculturally dominated. Why? We don't have habitat. The habitat that keeps that bird alive and thriving is the same habitat that protects land against erosion and water losses and would be a source of biofuels in the cellulosic biofuel industry. Cellulosic biofuels has an opportunity. It's self-alone as an individual point on that diagram doesn't tell you the whole story. Well, when you connect those points, cellulosic biofuels is like CRP on steroids. It gives us a lot of advantages. It truly is something I think we seriously need to consider for our future. Thank you, Rick. Next up we have Steve Flick. Steve is currently chairman of the board of Show Me Energy Cooperative in Centerview, Missouri, a cellulosic biomass facility owned by 612 farmers. The $10 million project has been completed and is operational developing and processing energy crops and agricultural residues into biomass engineered fiber fuel. Show Me Energy Co-op was the first project area in the United States with the Biomass Crop Assistance Program in 2011 with the US Department of Agriculture. Mr. Flick is a trained environmental ecologist and has consulted for 20 years for EPA, DOD, and DOE, along with several state agencies. He's participating with the Meridian Institute Council for Sustainable Biomass Production, including with the Farm Bureau Sierra Club. And he is also a plenary speaker for bioenergy conferences around the world. He's also involved with the Midwest Governors Carbon Task Force on Carbon. Welcome, Steve. Thank you, Ed. Good morning. My briefing today is to talk about the American farmer and how he can help sustainably grow this great country into a market that we can reasonably have transportation fuels. He's fought for this country. He fed this country. And he's now protecting the soil for the next generation. That's you. I represent 600 farmers. My name is Steve Flick, and I am Board Chairman of Show Me Energy Cooperative. And it was an idea that came to fruition because seven of us said, we think this can be done. We felt like this country was built on the bicycle mechanics of innovation. And we said to ourselves, let's see what the possibilities were. Many years ago in 2007, we put our money where our mouth is and put and formed a cooperative. And we wrote the checks. And then from that standpoint, we went out and we said to our investor farmers, do you believe in us in building a multimillion dollar bio refinery built on science and facts? Our phase one is completed. But one of the things that we did when we made the facility is what we had tremendous partnerships. We partnered with the University of Missouri, Colombia. We understood economic development. We were creating jobs in small town America, research and development. The producers and farmers were the people that participated from day one and a sustainable harvest. Our vision was very clear. From the first part, it had a guiding vision to a commitment to establish an innovative, profitable leading model for the production of vast, bio-based fuels, which may be replicated across the country by small producer-owned cooperatives that will provide a positive economic impact on the regions where they are located at. Our objectives, innovation, creating jobs, and economic development. Where is Centerview, Missouri? So if you've been to the great state of Missouri, we are right on the northern edge of the Ozarks, about an hour and a half of the barbecue capital of the world, Kansas City, Missouri. And we lived there. We raised our families and buried our parents. This is a group of producers that felt very inclusive to make sure it was a regional project. And we were very fortunate to be the first application accepted under the USDA FSA BCAP program. These 39 counties, 32 of them in Western Missouri and seven in eastern Kansas, are planting dedicated energy crops presently from last September all the way through June of this year. These dedicated energy crops are polycultures and native grasses, big bluestem, switchgrass, Indian grass, and forbs. And we were fortunate enough to be one of the only recipients of a BCAP to get the acclimates and endorsement of the National Wildlife Federation because of those plantings. Farmers fuel the world. Our concept was very innovative because those farmers that were growing food and fiber for the world now have the ability to grow fuel. And our first process when we developed the idea was to make a pellet. This pellet itself is to heat our homes and, in turn, heat our facilities locally. Our project itself was to compete against propane. That was our number one component that we heated our homes for. And these polycultures to be planted are going to be sustainably harvest after a killing freeze each and every year. We consider ourselves one of the biggest solar collector of the country. One of the nice things that we did when we rolled the program out, those individual farmers made that decision to put their marginal land into BCAP acres under a program we called Plant Baby Plant. And they signed up 26,000 acres in seven weeks. The incentivization of producing dedicated energy crops was the future. They harvest the biomass after a killing freeze without having to retool or recapitalize any of their equipment, just like bailing hay. But they actually are harvesting cellulose off these fields. The livery of the material comes to our facility in these big semi-trailers, or the small Gooseneck trailers, when we buy the material on weight, moisture, BTU, and sugars. Our phase one has been completed by manufacturing a pellet, and our phase two is to utilize it for power and liquid fuels, butanol. That's the concept we have developed and chased for some time now. We believe that that is a future for us as a player for the transportation industry. These pellets were recognized by USDA as an advanced biofuel. And we sell these pellets all over the United States and also there locally. The benefits to the state of Missouri is incredible. First and foremost, the farmer's income per acre has gone up considerably because we're taking marginal land that he had no economic basis for whatsoever to produce a crop. Rural community development, we created green-collar jobs. When the facility was first open, there was 21 jobs immediately produced. We also looked at working utilizing the advantages of the utility companies. We completed the largest test burn with coal in the United States, 29,000 tons with Kansas City Power and Light in 2009 to understand the mechanics how we could build a power plant on our site. We have cleaner water, renewable energy crop growth because these plants are planted one time, and that's it. These perennial grasses grow every year, year after year. But the underlying thing was the energy production without affecting the feedstock supply for animals or humans. I'll have to take questions later, and if you want to take my contact information down, you feel free to call me or contact me at any time. Thank you. Thank you, Steve. Our next speaker is Steve John, Executive Director of the Agricultural Watershed Institute in Decatur, Illinois. The Agricultural Watershed Institute's mission is to conduct research and educational programs on practices and policies to improve water quality, to maintain or restore ecosystem health and conserve and manage land and water resources and agricultural watersheds. One of the institute's projects is to research and develop bioenergy from perennial grasses. AWI is a leader in this emerging field, their report establishing the report, establishing a grass energy crop market in the Decatur area, analyzes the economics and environmental benefits of renewable energy from perennial grasses and presents a roadmap for using this biomass for power and heat. Funding for AWI's local bioenergy initiative is provided by the Walton Family Foundation, the City of Decatur, the Illinois Department of Commerce and Economic Opportunity, and Caterpillar Incorporated. Welcome, Steve. Thanks to all of you for being here and appreciate very much EESI organizing this briefing and giving us this opportunity to speak to you today. I want to speak about some of the things that are going on on the ground, mostly on a much smaller scale than Steve's work in Missouri, but a number of our projects are involved with trying to get energy crops on the ground in a way that specifically is focused on trying to provide a suite of environmental benefits, including water quality and wildlife habitat. In some cases, these projects are already receiving assistance and I'll give some examples as I go through from farm bill programs. We would suggest that with certain minor modifications, hopefully, that could be developed by consensus, USDA could do even more to advance the concepts of multifunctional agriculture that Dr. Cruz spoke about. I'm going to begin with talking about a project in Pennsylvania that's really put a lot of this together on a small scale. These photos are provided by Scott Singer, who's an NRCS biologist based in Bloomsburg, Pennsylvania. They've been working with Equip to establish energy grasses or grasses that can be harvested for energy, basically warm season native grasses that in the summer can be harvested as hay or grazed as a late summer forage. In the fall, these grasses can be harvested at peak biomass and in the future can be used as feedstock for cellulosic biofuels. In late winter, and this is one of the things that they're doing now, this can be harvested and made into pellets or briquettes for use as a heating fuel. And these are the types of things that they're put into. They're using primarily the Equip program as incentives to get these grasses planted, and they've really had quite a bit of interest by producers in the Benton, Pennsylvania area. A number of the things, the projects that we're working with actually use equipment manufactured by American manufacturers, very often small companies. This Poconos project has a pelletizing system that was built by a firm in Indiana to make grass pellets on a small scale. The Benton schools in Pennsylvania are currently being heated with biomass briquettes burned in a boiler that's made in Pennsylvania. This is a six million BTU boiler that can burn grass briquettes. And now our project, the Local Bioenergy Initiative, we're trying to do this in Central Illinois. You'll see there's a little bit of difference in the economics of Central Illinois versus Pennsylvania, and that factors into how we have to approach this. This is a Lake Decatur watershed. This is what Agricultural Watershed Institute, we call our home watershed. We consider it kind of a laboratory without walls. 925 square miles of the world's greatest cropland. It's used overwhelmingly for two crops, corn and soybeans. I carry around sometimes a blow-up of this, and if you look very closely, you can pick out the grassland on it, but believe me, you have to have a high-resolution photograph to find the grassland there. We got involved because we're trying to figure out how to reduce sediment and nitrates in Lake Decatur and do that in a way that's going to make economic sense for farmers. That's how we first became interested in perennial energy crops. We have three major components to our Local Bioenergy Initiative, working with people that would like to begin growing, providing both technical and financial assistance. Some of the people that we work with are interested in the idea of growing their own fuel. We'd like to put in a few acres of prairie grasses and use that to heat their own homes. We're working on developing landscape design concepts, trying on the ground to figure out how to optimize co-production of biomass and environmental benefits. This photo is where switchgrass has been put in as a buffer separating a conventionally farmed field from an organic field. And of course, market development is a key to making all of this work, and we always talk about markets for both the biomass and markets for the environmental benefits or ecosystem services. The photo there, Eastern Illinois University, has recently replaced an ancient coal-fired steam plant with a 100% biomass plant. Right now, they're burning wood ships, but they're expecting to move to a grass wood blend in the future. We're working with Caterpillar, and very grateful to Caterpillar for allowing us to use 60-plus acres of land that they own for farm-scale demonstration sites. And this is an area, a wet area on the Caterpillar plots, where we're going to be putting in a crop that we think is a very exciting crop that has a lot of potential as a biomass crop, and that's prairie cordgrass. Prairie cordgrass can grow in areas like this that are flooded part of the year, areas where you're not going to get a corn crop most of the year, and areas that can provide a significant amount of water quality benefits as buffers. This is our briquette-er. It's made by a small company in Pennsylvania that we're using in our demonstration projects to make inch-and-a-half diameter briquettes. And a couple of our local cooperators that are putting in biomass furnaces, in this case, it's to heat a home, and in this case, it's to heat a farm shed with a furnace that's actually made by a small manufacturer in Illinois. The Medillia project in Minnesota, one of my colleagues from the Greenlands Blue Waters Consortium is Linda Meschke, who's the founder and president of Rural Advantage, non-profit in Medillia, Minnesota. And the Medillia model concept was developed by Linda when she was trying to identify a solution to reduce non-point source pollution from the intense agricultural lands in central Minnesota. The project that emerged that met the sustainability goals that she was looking for is a 300 ton per day torrefaction facility to be located next to a major agricultural processor at Medillia, Minnesota. Torrefaction is an interesting process. It's kind of a modified form of pyrolysis, and it can take a variety of feedstocks and convert it into basically a coal substitute that can be used for a wide variety of energy end uses. And one of the approaches that they're trying to use, which is similar to what we wanna do in Illinois, is to target the establishment of the energy crops to the areas that are marginal for conventional crops, but will provide the maximum water quality benefits. So they're examining land use to determine what would be the best places to grow which crops, and it's their intention to grow a variety of biomass feedstocks. This slide, I think, illustrates one of the issues that we're dealing with, how to make all this work. To actually get this done on the land, it has to make sense economically for farmers, and it has to fit into their farm operations. So one of the things to keep in mind is that this is targeted to marginal lands, so we're not necessarily considering the economics of comparing this with prime farmland. Of course, establishing the energy crops, since they're perennial crops, will have lower production costs. They don't have to be planted every year. Obviously, a key part is receiving a payment for the crop itself, but then that fourth circle on there to make this work, somehow there's gonna have to be recognition of the value of the ecological services provided, and both in Minnesota and our area of Illinois, we think some type of green payment is gonna be necessary to make all this work. An example from closer to home, coming to Washington, I thought it'd be nice to have a Chesapeake Bay example. The Y Research Center of University of Maryland, which is just over across the bay from Annapolis, they're growing prairie cord grass to reduce nitrates in Chesapeake Bay and provide biomass as a heating feedstock. And actually, this furnace was made in the United Kingdom, but there are now US manufacturers that are making what we describe as whole bale burners. They actually take bales of grass from their research farm and throw it into this large furnace to heat the research facility. In Illinois, Argonne National Laboratory is working on a project that will use trees, actually, hybrid poplars as buffers to help protect water quality, especially by removing nitrates. And one of the things that's interesting about the tree crops, the woody crops, is that some of these short rotation trees can be harvested with modified farm equipment. We've often thought that there's kind of a conflict between agricultural groups and environmental groups on some of these things, but really, I want to say that I've been very pleased. I think this is a wonderful book that developed by National Wildlife Federation with a vision of how biomass crops can be integrated into current cropping systems, and I would encourage you to take a look at it. I think it's a very thoughtful publication. Finally, to wrap up, I'd like to say that biomass crops can be used for thermal energy today, without waiting for large biorefineries to come online. Hay producers, including very small farmers, can be innovators and pioneers in developing the kind of multifunctional agricultural systems that Dr. Cruz spoke about. This is a place where small manufacturers in the U.S. can find a niche in the green energy economy, and stakeholder-led projects can be laboratories to develop these concepts on synergies between biomass production and conservation benefits. Thank you. Look forward to the discussion period. Thank you, Steve. Our final speaker this morning was Nicholas Jordan. He's Professor of Agronomy and Plant Genetics at the University of Minnesota. Nick is an agroecologist. His work is focused on development of multifunctional agriculture, which aims to produce a wider range of ecosystem services than do the currently dominant forms of agriculture, such as the corn-soybean system. He studies the biophysical and social organization of multifunctional agriculture, and especially the interactive effects of biophysical and social factors on the development of this form of agriculture. Throughout his career, he's been interested in working and capacity-building across academic disciplines and social, economic, and professional sectors. Welcome, Nick. Good morning, everybody, and thanks a lot, Ned. Yeah, and I'm also very grateful to be here talking to you this morning. So my task, I think, is to try to bring things a little bit around full circle. So we have heard from Rick Cruz this morning that there are indeed all sorts of kind of new things that we could be growing on agricultural landscapes, and we have had a sense from Rick of the really wide range of benefits that some of which have to do with sort of environmental goods, some of which have to do with other kinds of public goods, like job creation in rural communities and the recreational opportunities, and even just the sort of aesthetic quality of rural landscapes. So a pretty attractive bundle of things, I should say, and we have also seen how there may also be a way, a fundamentally important way of protecting against urban flooding and some of the other really heavy-hitter problems that could be associated with climate change as well. And so an interesting question to ask then is if we kind of think this is an interesting possible future for agriculture and the rural part of the United States and so on, how can we sort of move in that direction? How could we get there from here? And that's what I'd like to address myself to a little bit. So we have seen also from Steve Fleck and Steve John Bolff some very interesting case studies of efforts to move forward with this kind of change in agriculture, and we've gotten a sense of what that looks like, and we've gotten a sense of all the kind of creativity and entrepreneurial energy and policy experiments and so on that are going on. And I think that one thing that you would agree with me about is that, I guess that's not necessarily going to work, that all of these involved, all of these kind of case studies that Steve's presented to us involve some sort of relatively transformative change. In other words, this is not tweaking an existing system. Show Me Energy is not tweaking an existing form of farming and all the associated infrastructure and markets. It was a real kind of systemic change. And so we can ask ourselves, what does it take to achieve that kind of change? And that very question was the subject, actually, of an extensive report, one of the National Research Council reports that come out periodically on sort of where U.S. agriculture should be going, that was put together by John Reganold, who's a distinguished soil scientist at Washington State University and a bunch of other distinguished folks. And they wrote a little sort of op-ed piece, essentially, in the journal Science about a year ago that talked about the notion of transforming U.S. agriculture. In other words, moving forwards towards this kind of genuinely transformative change as opposed to tweaking. And what they tried to do in this little opinion piece was to point out that what we're really talking about, when we're talking about transformative change, is essentially a whole system redesign. In other words, changing a bunch of moving parts that have to fit together and have to work well together. And that that's really quite different from sort of the steady incremental improvement of a particular kind of established agriculture where you're not really changing the basic rules of the game. And they pointed out as well, and everyone in this room is very familiar with this, that there are all sorts of barriers and impediments that stand in the way of that sort of transformative change. And they suggested something that I think is an important message for us here this morning. And that is that what it takes in their carefully formed opinion to achieve this kind of transformative change is in fact sort of new organizations and institutions that have the ability to span a number of boundaries that we don't typically cross often enough. And so what I want to put on the table for the remaining, for the last part of our presentation here is to think together a little bit about, well, what would it take? What kinds of, you know, as Reginald and Company said, boundary spanning organizations could possibly do the trick to, you know, kind of get off the dime and take advantage of the obvious opportunities in this kind of agriculture and the obvious energy and entrepreneurial spirit and so on that exists out there. What would it take to do that? And we think that what is really critical here is a real emphasis on innovation. Steve Flick mentioned innovation as one of the key things that his group is aiming for, and we certainly concur. And in particular, we think it's very important to realize that there's a number of fundamentally different kinds of innovation. That have to arguably be sort of bundled together so that they can feed off of each other to again achieve this kind of whole system redesign that Reginald and Company talked about. And we think that sort of pilot scale startup projects of the kind that we've heard about from Steve's are critical to this sort of innovation. And I wanted to spend a minute or two to just present to you the kind of innovation that's necessary just so that you can appreciate the sorts of things that have to be worked out and worked through if whole system redesign is going to actually occur. So for starters, we think there are three basic kinds of innovations. The first of these is innovation in land use. And here what we're really talking about is innovation in the way that different kinds of... different kinds of production systems, different crops essentially are sort of woven together in an agricultural landscape. Rick Cruz mentioned that arguably we have to have essentially all of our farmland working, all of our farmland producing something. And so what we're looking at in these two paintings of Southwest Minnesota in fact is a transformation in land use in which we sort of crank up the degree to which the landscape is working with the introduction of various kinds of perennial crops in various places. And this highlights the question of what do we want these new landscapes to look like, especially if there's a significant shift like growing more trees, people have very strong feelings about how landscapes look like. And you've got a lot of explaining to do if you propose to really change the look of a rural landscape. Moreover, how should they work? How should they function? If we want them to produce wildlife habitat, water quality improvements, flood protection, annual crops, perennial crops, that's a lot to ask out of a single landscape and careful thinking about how the pieces fit together is crucial. A second kind of innovation is to figure out how to link together all of the great kind of new technologies and new machines, burners and palletizers and whatnot that folks are inventing and wanting to get into business building and operating. And so this is what generally speaking is called a supply and value chain. That linkage of sort of operators, industries that take stuff from, take biomass from farm field to a utilization facility. And right now it's a very risky environment indeed for any kind of rural entrepreneur that wants to get into the business of, you know, building the kinds of machines that Steve, Steve John was illustrating. It's very important to develop these supply and value chains in a sort of coherent way. And they have to be rooted since they're rooted in production. They have this kind of innovation and this kind of creativity and invention has to be carefully linked to innovation and land use as well. And then there's a third sort of innovation and that is in the whole climate of policy and regulation that surrounds this kind of agriculture. And, you know, as everyone in this room is well aware, there's a whole bundle of policies at all sorts of levels that affect this kind of biomass agriculture in complex ways. And as you're all aware, it would be a very nice thing because this policy and regulation environment were a little more coherent and there were more synergies and less conflicts between these various kinds of policies as well. So that's a third fundamental level of innovation that also has to be responsive to innovation in land use and innovation in supply and value chains. So how could we bring these kinds of innovations together? And an overarching concept and a number of groups in the Midwest that are trying to develop is what we call a land lab. And so this illustrates a sort of land lab scheme that a number of us have been prototyping in the Midwest around what we call regional bioenergy systems. And the important point about land labs is kind of a busy slide, which I'll walk you through a few points of in a second, but the important point is land labs are meant to be not a bricks and mortar institution, but a new sort of organization, a new set of working relationships is what that really means, that couple this innovation in land use, what we might call biophysical innovation, with the social and economic and policy innovation around supply and value chains, policies, regulations, incentives, and so on. We need something to link together that kind of thinking and that's what the land lab is intended to do. And the way that it does that is, I hope this is somewhat legible for you, over on the left-hand side of that figure there, that column refers to what we call participatory bioenergy system design. And that is a lot of jargon, but what it really means is bringing folks that are interested in land use and landscapes, folks that are interested in technology and supply and value chains, folks that are interested in policy and regulation together, long enough to work out some of the things that they have to kind of come to agreement about. And the way that we think that works, and again we're prototyping this in various places in the Midwest, is through, on the one hand, using sort of state-of-the-art techniques for dialogue and deliberation. Steve John pointed out that mainstream agriculture and mainstream environmental groups are starting to kind of get on the same page around bioenergy. That's fantastic. There's still a lot of trade-offs and sort of conflicting worldviews to work through. And so that's one tool, sort of state-of-the-art methods for dialogue and deliberation. The second tool is new techniques for understanding how landscapes, how complex landscapes, and how complex supply and value chains work using essentially computer-based decision support. And so our approach is to bring those two together in, you know, again, what we refer to as participatory bioenergy system design. And we think those techniques have a pretty good track record in other situations for allowing folks that need to get on the same page from distinctly different sectors to come together and agree on, basically, what does a sustainable bioenergy system look like? That's what we need for the kind of political consensus that will enable us to really go forward here. So that would be my closing message for you. I will mention in passing, vis-a-vis the upcoming Farm Bill, that the USDA has recently understood that it needs to make much larger grant investments than it's made in the past, the regional bioenergy systems, coordinated agricultural project is a new granting program that has provided $45 million total budgets for five-year periods. That's, in our opinion, what it takes to really make something like this work. And so as we think about the next Farm Bill, that's, you know, a policy measure, that general idea that we need to make big enough research grants and development grants to bring these pieces together. So that is what I wanted. That's a closing thought, and I, too, really look forward to some dialogue here this morning. So thanks a lot. Thank you, Nick. I thought I'd exercise the prerogative of the chair to ask the first question and then invite others to ask questions of our panel. The first question, though, Nick already brought us to the policy and regulatory framework. I was wondering if our panelists, if the Farm Bill is coming up and is being debated this spring, is there a policy tweak or a new initiative, policy initiative, or one particular thing that each of you would recommend at this point as being sort of critical to advancing the type of bioenergy models that we've discussed today. Jump off. We're trying to face a challenge of drawing plenty of energy costs for both energy and water quality in what I would describe as a very high-priced landscape. And one of the things about the BCAP program, the BCAP program, there's a wonderful program that we certainly support and continue to fund it for. But the BCAP program only provides the status during the establishment period for the crops. The assumption is, I guess, an implicit assumption. It's once you get beyond the establishment period, the economics are going to work with that need for continued subsidies for the producer of the crop. In areas that have highland prices and in many cases, there's a particular need for more grass on the landscape to reduce nutrients to the new seven. There's probably going to be some sort of an ecosystem service payments as an ongoing thing to make the economics work. And we would like to see the farm bill do that in some ways. A possible way to do that would be, for example, to allow state conservationists to grant waivers for more harvesting of biomass off of the CRP gate consistent with the conservation objectives of the CRP program. Those are the kinds of discussions that we would like to see happening between agriculture and the environmental and water quality. No matter what side of the political aisle you stick to the Bioware Rights Assistance Program is what I consider the gemini-space shot of what NASA did in the late 50s or early 60s. If you do not have the feedstock supply given in a particular area, no matter what technology you have, you won't give the bill. I mean, we are on a high different ground. Our began area is the fuel shed providing energy security to the United States. I don't expect too many terrorists running around blow up bills and switchbacks to you. I sense that this is a huge emphasis from the standpoint of farmers. Producers are not looking for a handout but a handout. And the farm bill itself, we start at the process. That process needs to have policy that ensures that the producers can grow those dedicated engine crops no matter what technology is coming down the pipe. And I believe with the emphasis that we have to read the Bioware Rights Assistance Program if we shut the door on the farm bill today it will be 20 to 40 years for this country to decide to do it again. I think this could refer to a potential method as being related to the energy we would replace. That's a very good question. I will ask you the same standpoint, sir, is that what produces the energy of the local level we don't have to put on a train instead. It's usually picked up locally from a local distribution. So that feedstock that we actually secure is within a 50 to 100 mile radius of that fuel shed. So that fuel shed is being grown in small little 5 to 20 acre fields throughout that spatial landscape. When we actually value add to pellets when our future is in the liquid fuels we see that as a small microburry we're not going to be in large refining we have no ambition to be but to be efficiently replacing that whatever it is. And I'm not a position to say that when it comes down to the market will bear but you can say that we can compete with coal we can compete with that for gas we can compete with $4 gas. That's the opportunity that I think our consumers will have in the future. Cash payments impacts on other mining prices of cloud gas production. I would not be there to take up other bridges. This year of livestock we have disbanded much of our infrastructure for livestock in the world. Fences around the water facilities around it. The opportunity to build biomedes, if I'm to say biomedes, is really not making that sense. There are spot locations. The dominant areas or these large parts of the areas they may have large birds that can find out. That's a very good question. 65% of our producers are livestock farmers in the United States and we recognize that we have tried to put it in the idea of defining what a large land figure is. I think what USDA has said was our definition was unproductive and inaccessible. Missouri is a very large livestock state and because of our altitude we had the ability to grow with the contemporary climate and moisture in the grass crop. But what we found out is the producers had actually enrolled into a VECAC program. They didn't put all of the cattle in it. They realistically started to input into rotational grains until the dunes exited a line truck around where some of the ministry passers hardly believed. But they actually had enough a little bit of cash that the support would help them in the grade. Last fall when we was in the drought as a group we were asked to supply the feed stuff. Now we're a biome in Miami but we can ship three times the amount of feed to those areas versus the amount of feed out from the midwest that doesn't come out to 42 pounds per cubic foot. It was 15,000 per cubic foot. So we ship three times the amount of feed on one semi, the one on the other semi that they can dump there in the industry a lot throughout that drought. And I just have a quick follow up on that. Do any shifts on that? And that quick follow up is that there are some new technologies for producing animal feed that essentially do the same thing that Steve Flick just mentioned. There's something called the ammonium fiber expansion technique or AFEX. And what's interesting about this idea is we now have beginning to see the opportunity to shift our animal agriculture away from reliance on annual agriculture which is a difficult and sort of dangerous linkage because of the risks associated with annual agriculture because it's much more sensitive to climate variability for example then grass-based perennial agriculture. And so what Steve Flick just described is a very interesting idea which could in fact be carried out on kind of a continental scale and would have a lot of environmental benefits and would also tend to reduce the competition that we have right now between corn for biofuel and corn for animal feed. So the expansion of perennial agriculture for more things than just biofuel so for example animal feed on a major scale is a facet that we haven't explicitly talked about this morning but illustrates the value of a sort of broader shift to more perennial agriculture in the places in the landscape where it really makes sense. There's also talk about ultimately getting these crops up and running permanently using but ultimately the intention is to get the market developed and I guess I was wondering a question to the researchers whether any simulations have been that take a look at instead human producers given this margin of lands in our fields we need producers of crop and subsidies and disaster payments and in that environment they may be motivated to grow these crops new piece of perennial crops that are more... Very good question and I think the degree of policy that we see BCAP as an educational shift from producers I sense that it's the next generation of farmers that are coming on board that allows them to understand the mechanics of growing a dedicated energy crop but in the final analysis it's the producers looking at he owns land he has to make a farm payment to the banker every year it's $6 corn plus $11 beans $2 pack out whatever it is the incentivization of him to take that marginal piece and then put it into a dedicated energy crops as policy gives a start now he's doing it without crop insurance today that farmer in BCAP does not have crop insurance so he's already bearing some risk of production right off the bat when he comes to sign up his particular farm for BCAP in that area he's getting a payment but I look and I forecast this down the road from a policy standpoint I can see BCAP be in the implementation of growing the crop model I don't see it as a long-term objective from a standpoint that once he starts if the producer can make money from that which I believe he will then that incentivization of those payments could be lessened down the road and new producers can keep coming on board for the definition of that marginal acre and then in turn from a budgetary standpoint we're not just as I said before looking is that the farm policy is a handout it's a handout and then in turn he can move it on to the next generation of growing that polyculture for dedicated crops thank you one of the things that Steve alluded to is the competition with roll crops in those areas because of the high income there are a variety of policy issues that support roll crop production direct payments potential subsidies for crop insurance that also work against implementation of perennials on the landscape I'll take an initial stab at that you know the idea first of all that there is a a significant amount of land right now that is not involved in producing food crops even in the sort of prime corn belt area of the US and that that is you know arguably something like 25% of the landscape so that would be the first place to kind of look for this shift to these biomass crops and an analysis was done by Bruce Dale at Michigan State University recently that was very illuminating in this regard he looked at a scenario in which he did what Rick Cruz has told us to do which is that every acre needs to of agriculture needs to be a working acre and so he looked at a scenario of converting current CRP lands and there's a certain percentage of sort of idle land in the corn belt area and a scenario of converting those to bioenergy crops and presumably some of those would need to be native polycultures to keep our friends in the wildlife conservation world happy but he looked at that kind of a scenario and what he was able to show was that there would be a substantial uptake first of all in biofuel production both from grasslands but also from freeing up corn because in that scenario there would be enough perennial crops being grown to substantially supply US animal agriculture and so that is a scenario in which we have essentially no impact on food security but we get a lot more biofuel from the landscape and we get a lot more other ecosystem services so I think in principle there are ways to go forward here that are really don't raise food security issues whatsoever one thing we do know for certain is our continued land degradation that we see with our current practices is a threat to food security and if we don't build an agricultural system that will keep soil in place and water efficiently used food security is going to be a serious issue I think it's worth noting that on different landscapes in different areas economically there will be different kind of drivers of change the particular area that I'm focused on water quality is a very serious issue so we're interested in getting more grass onto the landscape and of course we see bioenergy utilization of that biomass as potentially part of the economics of making all that work but actually since our principal driver just in our case is improving water quality it doesn't make a lot of difference to us if the highest and best use of that grass is if the highest and best use of that grass economically and in a total system view is as as a feed product for livestock that would be fine with us because it's certainly going to still provide the water quality benefits that we're after so I think you end up having to kind of look at this and the problems that you're trying to address you know to come up with solutions that make sense in a particular context I sit on the agree committee that's looking at this feeding this country in the next 20 years and the world billions of people Chinese populations to double in the next 20 and I guess the question is will we can we you know when we come to feeding the world I think we can when it comes to rec land use change one of the things that we felt very strongly about from the development of a BCAP area was the producers made that decision on their own I don't see them planning it on the corn acres well as it just wasn't possible because the competition for net income what they're going to make to pay their bank in the year was key one and I really worry more about if it came down to rec land use change is commercialization of ag farm values I mean you look out any expanding area of a metropolitan area and how much farmland they've taken in the last 20 years it's incredible so that's kind of my side piece but I think that the there is great synergy between two of them and as I share with Steve that the water side of this is the is the focus from us as perennial grass based crops because water will determine how communities will be developing in the future American farmland trust indicates we've lost 23 million acres of agricultural land since 1976 to expansion development well a certain amount of nitrate is present pretty much in any fossil fuel so I don't think there's a significant difference between the nitrates that would be involved in combustion the nitrates in our particular area the problem that we face in a lot of Illinois and Iowa faces is that our best crop land is generally tile drained and so those tiles provide a pathway by which the nitrogen or nitrates move into surface waters we have to remove it from our water system in Lake Decatur it's a public health issue of course it contributes to problems in the Gulf so one of the things that we're particularly interested in and kind of the nitrate balances are looking at things like water table management drainage water management where you move some of that high nitrate water into the soil column where it can basically the nitrogen that's been lost by the corn crop can in effect provide free fertilizer for the grass crop and help remove the nitrates now a lot of that takes place just as soil denitrification so the nitrate is going to the atmosphere as M2 gas some of that of course is taken up in the crops as you harvest a bioenergy crop it's normally harvested after senescence so that you're reducing the amount of nitrogen and phosphorus that you're taking off the land as part of the harvesting process so there's kind of a total nitrogen balance to look at but we're particularly interested in kind of the challenge of addressing the issue of the soil that's been lost through tile systems and we think that energy grass conservation buffers combined with drainage water management can be a very effective way to do that slide addition one of the things Steve alluded to was the harvesting at maturity physiological maturity perennial grass is different than crops like corn move their nutrients a large part of them back into the root system a greater percentage of carbohydrates and cellulose and the absence of those nutrients