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A revolution is taking place within the United States. Driven by rising costs of fossil fuels, a marked shift toward greater use of renewable energy is underway. For example, nineteen states have established targets for renewable energy production. Sixteen states have mounted initiatives to encourage production of ethanol, and seven more have enacted laws to encourage its use. Thirty states have installed wind generated electricity capacity. Many are pursuing possibilities of electricity from various forms of biomass.

A key element of renewable energy development is biomass. To date, bio-energy has largely come from corn starch, soybeans, firewood for residential heating, black liquor from chemical pulping operations, and various forms of waste wood. In the near term corn starch-derived ethanol will increase in importance as an energy source. However, emerging technology is likely to expand bio-fuels options to include energy crops such as switchgrass, agricultural crop residues, and broader applications of woody biomass. Such materials will also become important as a source of industrial chemicals and industrial feedstocks.

The increasing importance of biomass as a source of energy and chemicals translates to a substantial opportunity for the U.S. farm economy, as well as potential for revitalization of the forestry and wood products sector. Diversified and sustainable farm income, long a point of concern, is likely to receive a significant boost, and the forest products industry stands to benefit from expanded product options and increased profit potential.

The opportunity and potential does not come without risk, however. Care must be taken within agriculture to ensure that one critical resource – topsoil – is not sacrificed to obtain another critical resource – energy. On the forestry front, new markets for wood may strain increasingly tight supplies, drive up prices of already high-priced wood, and provide an incentive for over harvesting. On the other hand, new markets may provide an incentive for establishment of tree plantations.

This report explores bio-energy opportunities in Minnesota as a model for both how one state might contribute to renewable energy development and also how one state’s actions could impact energy availability and costs throughout the country.

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