R2016-09 AUTHORIZING AGREEMENT AGRICULTURAL WATERSHED INSTITUTE

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Market and enterprise development is a critical part of the long-term strategy to establish the Decatur area and Lake Decatur watershed as a national showcase for perennial crops grown for renewable energy and water quality. During this period, we continued to work with GLBW and other coalitions to overcome economic and technical barriers to use of biomass crops for heating, power generation, and advanced biofuels. We also made two significant trips related to building contacts and exploring medium or long term opportunities for local biomass business development. (Travel expenses for these trips were not charged to the City of Decatur.) • In July, Tim McMahon participated in a week-long Bioenergy Study Trip to Germany organized by the German—American Chamber of Commerce. Other participants were from University of Illinois Extension, Roeslein Alternative Energy, plus Illinois farmers interested in on-farm heating with grass biomass. Benefits of the tour included seeing and learning about biomass and biogas projects such as district heating systems and making new contacts or strengthening relationships with potential partners. Of particular interest for AWI was a tour and meeting with Heizomat, a manufacturer of multi-fuel biomass boilers, which appears to be a promising unit to use grass biomass for small- to medium- scale applications for farm, residential, or institutional heating. AWI partners are working to arrange U.S. distribution of Heizomat boilers, which could advance biomass markets. • In September, Steve John met with Wes Bolsen and two other executives of Cool Planet Energy Systems at the company headquarters in Greenwood Village, CO. We previously arranged for Mr. Bolsen (who grew up near Decatur) to speak at the AWI/GLBW conference in November 2014. The CPES business model calls for development of small scale biorefineries using thermo-mechanical processes to produce drop-in hydrocarbon fuels and biochar. Their energy conversion technology can use a wide range of feedstock including perennial grasses. The purpose of ineeting in-person was to solidify a relationship with the company and discuss mutual benefits of a strategic partnership between CPES, AWI and other Decatur-area partners to locate their first biorefinery using grass feedstock in Central Illinois when they ramp up implementation of their plan. As previously reported, AWI collaborated with Argonne National Laboratory and other partners on a grant proposal for the U.S. Department of Energy's "Landscape Design for Sustainable Bioenergy Systems" program. We knew that DOE only expected to award a few grants nationally and that competition would be intense. During this period, we were advised by DOE that the Argonne team was not selected; however, the DOE letter said the Argonne proposal "was found to have merit" and could be considered for a grant if funding becomes available. AWI worked with our Argonne colleague to develop a draft proposal for a project that would include parts of the original ANL proposal with changes based on our understanding of DOE priorities. The draft we are working on emphasizes the potential of strategically sited and managed perennial biomass crops to provide bioenergy feedstock and forage plus nutrient loss reduction. It also includes on-farm demonstration of biomass heating equipment. AWI and the Upper Sangamon Watershed are prominent in the draft proposal now being refined for submittal to DOE. While there is no assurance of DOE funding, AWI is pleased that our ongoing work to link biomass production and water quality appears to be of great interest to DOE and we are ; cautiously optimistic that DOE funding may be awarded for a project that would allow us to � continue and expand the work we have been doing in recent years with funding from the City of Decatur and the Walton Family Foundation. 4