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F I S C A L I M P A C T R E P O R T

SPONSOR Papen

ORIGINAL DATE

LAST UPDATED

2/10/2007

HB

SHORT TITLE NMSU Biomass Energy Research

SB 699

ANALYST McOlash

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$1,078.0 Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB 463, SB 418, SB 221/HB 253, SB 309/HB 433, HB 430, and HB 188.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Energy, Minerals, and Natural Resources Department (EMNRD)

Higher Education Department (HED)

SUMMARY

Synopsis of Bill

Senate Bill 699 appropriates $1,078,000 from the General Fund to the NMSU Regents for ex-

penditure in FY 2008 to contract for research on the potential development of biomass as an en-

ergy source.

FISCAL IMPLICATIONS

The appropriation of $1,078,000 contained in this bill is a non-recurring expense to the General

Fund. Any unexpended or unencumbered balance remaining at the end of FY 2008 shall revert to

the General Fund.

The appropriation appears to be for a single research contract through NMSU.

Senate Bill 699 – Page

2

SIGNIFICANT ISSUES

EMNRD Analysis

The use of Biomass as an energy source has many advantages ranging from ru-

ral economic development to minimizing environmental impacts on air quality

and diminishing water supplies. New Mexico has a broad base of biomass

feedstock ranging from forest waste, municipal solid waste and dairy animal

biomass. New Mexico’s dairy industry boasts that they possess the largest av-

erage herd size in the United States. Manure management systems that can

prevent pollution and produce energy are becoming increasingly attractive to

the industry.

New Mexico State University (NMSU) is currently conducting a demonstra-

tion project that involves evaluation of a two-phase, bio-fermentation system to

convert carbon in dairy manure to methane, produce electricity for on-site use,

interconnect to the local utility, sell excess power to the grid and evaluate the

reuse of the resulting solids as beneficial soil amendment.

This proposal of $1,078,000 was not submitted to HED by NMSU for review, but is included in

the Department’s funding recommendation for FY08 as a non-recurring appropriation of

$140,000 for "bioenergy research and development."

The University lists, as one of its priorities, a $1.0 million request from the NM Department of

Agriculture and Office of Facilities and Services for a “Sustainable and Renewable Energy Re-

search Development Program."

ADMINISTRATIVE IMPLICATIONS

The appropriation will be administered as a contract with an unidentified external entity.

OTHER SUBSTANTIVE ISSUES

According to HED, New Mexico's dairy industry is the largest cash-producing agricultural com-

modity in the state with an economic impact estimated at $2.1 billion annually. However, the in-

dustry faces a big challenge in disposing of a high volume of waste in an environmentally and

economically sound manner. The estimated 330,000 dairy cows in New Mexico produce almost

eight million tons of wet manure waste annually.

Researchers from the NMSU College of Engineering and WERC: A Consortium for Environ-

mental Education and Technology Development are developing a system that uses an anaerobic

bio-digester to turn manure into energy and useful byproducts.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB 463 adds biomass-derived energy source to tax credit legislation.

SB 418 defines renewable energy, in part, as including biomass.

Senate Bill 699 – Page

3

SB 221/HB 253 authorizes NM Finance Authority financing assistance for 20 alternative energy,

biomass, or renewable energy projects throughout the state at up to forty-nine percent of project

financing, not to exceed $5.0 million.

SB 309/HB 433 enact the Land, Wildlife and Clean Energy Act that includes biomass as a clean

energy development project and creates the Conservation and Clean Energy Bonding Fund.

HB 430 enacts the Advanced Energy Product Manufacturers Tax credit Act defining biomass as

a renewable energy source for manufacturers’ tax credits.

HB 188 enacts the New Mexico Renewable Energy Transmission Authority Act defining bio-

mass as a renewable energy source and creates the Renewable Energy Transmission Bonding

Fund and the Renewable Energy Transmission Authority Operational Fund.

BM/mt