Lewis County to be Home to Plant That Will Promote Commercialization of Homegrown Renewable Fuel, Create New Business Opportunities in Emerging

Energy Sector, and Boost Agriculture and Forestry Products Industries

Governor George E. Pataki today announced that two companies have been selected to develop and construct pilot commercial cellulosic ethanol facilities in New York State. The State has awarded a total of up to $25.2 million to the companies to increase the production of clean and renewable fuels and reduce our dependence on imported energy.

One of the companies, Catalyst Renewables Corporation, will build a 130,000-gallon/yr. biorefinery adjacent to the company’s existing

wood-to-energy plant in Lyonsdale, Lewis County.

"Our State and nation must focus on developing clean and renewable energy to reduce our costly dependence on petroleum imports," Governor Pataki said. "Cellulosic energy has significant potential to not only meet our growing energy needs, but also boost our economy and agriculture sector as well, and create new jobs here in the Empire State.

"As part of the comprehensive energy independence plan I unveiled this year, New York is making important investments in alternative energy

and innovative energy solutions," the Governor said. "With this $25 million investment, we are supporting the development of a viable, homegrown energy alternative and building on our position as a national leader in the field of renewable fuels."

Senator Raymond A. Meier said "Utilizing New York’s agricultural resources to create alternative energy is of the utmost importance to our future economic growth as a state and country. The creation of these new ethanol facilities coupled with the research and development at our fine higher education institutions will secure New York State’s future. I commend Governor Pataki for investing in this partnership."

Senator Jim Wright said, "As chairman of the Senate Committee on Energy, I am pleased to see renewable energy sources, such as cellulosic ethanol, continuing to be developed in New York State. Renewable fuel plants will not only help to decrease our reliance on foreign oil, but also add jobs and increase economic opportunities in communities throughout the state, including right here in the North Country."

Assemblyman William B. Magnarelli said, "The future of the ethanol industry is based in Central New York, thanks to the researchers at SUNY-ESF, who developed the technology used in the production of cellulosic ethanol from northern hardwoods, such as willow trees. I am proud to have advocated for the inclusion of biofuels funding in the state budget and am pleased that this funding will commercialize technology developed at SUNY-ESF."

Assemblywoman Dierdre K. Scozzafava said, "My colleagues in the Assembly and I have continued to push for funding for alternative fuel programs here in New York State. Developing ethanol facilities, such as the two announced by the Governor today, is a great step toward relieving our dependence on foreign oil, while also creating job opportunities for agriculture, helping to boost our economy, and working to create cleaner air and an overall healthier environment for future generations. I commend Governor Pataki on his effort to help create two new ethanol facilities, and I certainly hope to have a role in the creation of more facilities in the near future."

Onondaga County Executive Nicholas J. Pirro said, "Renewable energy and alternative energy sources are important efforts which county

government supports and we commend New York State for its continued investment in this national direction for our environment."

Eric Spomer, President of Catalyst Renewables Corp. said, "Catalyst Renewables is very excited to receive this award. Every region of the country has its resource, and New York’s is wood. This project will be the ultimate energy solution for New York State. By commercializing SUNY ESF’s bio-refinery technology, we will be able to maximize energy production, while helping to combat global warming, reducing our dependence on foreign energy sources and revitalizing New York’s rural and farming communities. Thank you to Governor Pataki and the many others in New York State that see the value in making this pilot project a reality."

Dr. Cornelius B. Murphy, Jr., President of SUNY-ESF, said, "The Governor has been a strong supporter of sustainable and renewable energy and his announcement this afternoon makes this a tremendously exciting day in the history of our state. We are proud to have been selected to work with the Department of Agriculture & Markets and our partners Catalyst Renewables, O’Brien & Gere Companies and New Energy Capital to develop the first biorefinery in New York. We are proud of the research and innovation exhibited by our faculty to help make this project possible. And we are very proud of the support the college has received for many years from the Governor. By endorsing this project, the Governor has solidified Central New York’s reputation as a center for renewable and sustainable energy and provided for a tremendous future economic development activity for the people of the North Country."

Nathanael Greene, senior policy analyst at the Natural Resources Defense Council (NRDC), said, "Cellulosic ethanol is a homegrown fuel that has the potential to play a huge role in our clean energy future by reducing our dependence on oil. By building two of the first cellulosic ethanol plants in the United States, New York is paving the way for the rest of the nation and the world in ways that will help both the economy and environment. Because of Governor Pataki's leadership on this issue, New York’s success will convince other states and the federal government to follow in its footsteps."

The two projects will build upon ongoing research at several New York universities and accelerate efforts to make cellulosic ethanol a viable energy option for commercial use. These projects are an important step to attract investments in full-scale cellulosic ethanol facilities located in New York, create new jobs and economic opportunities, and develop new and expanded markets for local agricultural and forestry products. This is an important first step in making New York a major supplier of homegrown, environmentally-friendly fuels that will reduce our nation’s reliance on imported petroleum.

The State grants will be matched by the individual companies, resulting in significant private investments for the facilities. The projects are expected to initially create 48 permanent jobs, with the potential for additional job creation in the years ahead. In addition, the facilities will create new markets for 45 tons of biomass per day, which will generate approximately $10 million in the local economies over the next three years.

Catalyst Renewables Corporation is a Dallas, Texas-based renewable energy company that currently owns two biomass-to-energy plants in New

York. The company has been awarded $10,345,673 in State funding for the cellulosic pilot project in Lyonsdale. The SUNY College of Environmental Science and Forestry (SUNY-ESF) also will conduct research at the Lyonsdale facility in collaboration with the engineering firm of O’Brien & Gere and New Energy Capital, one of the nation’s leading renewable energy venture capital companies.

The facility will use low-grade timber from surrounding North Country forests, as well as willow grown on nearby agricultural lands, to produce cellulosic ethanol, electricity, and other bio-based energy products. SUNY-ESF and Catalyst previously received $60,000 from the State Department of Agriculture and Markets to initiate the nation’s first commercial willow plantation in the Tug Hill area of Jefferson County.

The other firm selected to receive a State grant - Mascoma Corporation - is a recently-formed company based in Cambridge, Massachusetts that specializes in cellulosic ethanol technology. The State will provide a grant of $14,800,000 to the company to assist with the construction of a 500,000-gallon/yr. facility in the Town of Greece, Monroe County.

In addition, researchers from Cornell University and Clarkson University will collaborate with Genencor, a leading enzyme company, on this project. The facility will use paper wastes from International Paper’s Ticonderoga plant in Essex County and wood chips from a St. Lawrence County supplier to make the cellulosic ethanol, and will also eventually employ a range of New York-produced feedstocks on a test basis.

State Agriculture Commissioner Patrick H. Brennan said, "With the Governor’s announcement of these two pilot projects today, cellulosic ethanol will definitely be a part of New York’s renewable energy portfolio. It makes sense to produce cellulosic ethanol here in New York for many reasons – we have the energy demands from our 19 million people, we have 7.6 million acres of farmland to provide the feedstocks, and we have the research institutions to help ensure success along the way. It is an exciting day for New Yorkers and I thank the Governor for his foresight and resources to make this happen."

Peter R. Smith, President and CEO of the New York State Energy Research Development Authority (NYSERDA), said, "NYSERDA supports the advancement of cellulosic ethanol - the freedom fuel of the 21st Century. The construction of facilities of this kind will enhance the opportunities for new business and the agricultural and forestry sectors in the Empire State, as well as foster partnerships with some of the State’s top universities. Building on our indigenous resources to develop cellulosic ethanol will put New York State on the path to help break our addiction on imported energy, and embrace new and innovative alternatives."

Most of the ethanol currently produced in the United States is made from corn. Cellulosic ethanol uses biological or thermal processes to produce ethanol from plant materials such as grasses and wood, which are abundant in New York State. Studies indicate that less energy is required to produce cellulosic ethanol than to create corn ethanol, and that cellulosic ethanol provides as much as a 16:1 positive net energy balance.

Although cellulosic ethanol holds tremendous potential to reduce the nation’s dependence on imported petroleum, certain technical and other barriers need to be overcome before widespread production is commercially viable. The only commercial-scale production facility currently operating in the world is in Ottawa, Canada, though several pilot-scale facilities exist and other commercial facilities are close to completion. The projects receiving State support will address important issues such as feedstock availability, input costs, engineering, and overall viability.

On June 15, 2006, New York State issued a Request for Proposals (RFP) to solicit proposals to obtain State grants to design and construct a pilot-scale cellulosic ethanol facility. Under this RFP, which was jointly administered by the State Department of Agriculture and NYSERDA, private corporations, public benefit corporations, not-for-profit corporations, colleges and universities, or combinations of these entities working in collaboration could apply for a grant. The proposals must demonstrate that the sponsors have the technical, financial, business, and organizational capability to use information derived from the operation of the pilot plant to develop a commercial-scale facility.

Governor Pataki has been a leading proponent of renewable energy, greater energy efficiency, and the development of alternative energy sources. He also has pushed for a broad, aggressive national program to reduce our dependence on imported energy. New programs the Governor initiated in New York State include:

· Renewable fuel production tax credits of up to $2.5 million annually per project to provide incentives for the production of ethanol, biodiesel or other renewable fuels;

· The elimination of all State taxes on renewable fuels, saving consumers approximately 40 cents/gallon;

· A $10 million grant program to assist private service stations in installing alternative fuel pumps for ethanol, biodiesel, or compressed natural gas (CNG);

· An end to "exclusivity" contracts between fuel distributors and service stations, which will allow retail fuel stations to offer renewable fuels;

· The expansion of the State’s Empire Zone tax benefits to qualifying clean energy companies regardless of where they are located in New York;

· A $10 million program to retrofit the nearly 6,000 hybrid vehicles in the State fleet to be plug-in hybrids, which will boost mileage to up to 100 miles per gallon.

The New York Energy $martSM Program, funded through the System Benefits Charge (SBC), provides more than $175 million annually for improving energy efficiency and reducing energy use in New York State. The Program is reducing energy expenses for consumers by more than $300 million a year and eliminating 1,840 tons of nitrogen oxide emissions, more than 3,360 tons of sulfur emissions, and more than 1.4 million tons of carbon dioxide emissions.

The Renewable Portfolio Standard is designed to increase the amount of electricity sold to consumers in New York State that is generated from renewable resources to at least 25 percent by 2013. In establishing the RPS, the PSC noted that the primary benefits expected from implementing the RPS Program include: 1) diversifying the generation resource mix to improve energy security and independence; 2) attracting the economic benefits from renewable resource generators, manufacturers, and installers to New York State; and 3) improving New York’s environment by reducing air emissions and other adverse environmental impacts of electricity generation.

This year, Governor Pataki also secured a $10 million appropriation to spur the conversion process of the State fleet’s 450 traditional hybrid vehicles to Plug-in Hybrid Electric Vehicles (PHEV). The conversion is expected to double the usual 50 miles per gallon of gasoline efficiency by adding advanced battery technology that allows the car to extend its electric mileage and be charged through household electric current. The technology uses less gasoline, which will help reduced air emissions.

2006 Press Releases