august 2009 ethanol producer magazine

AUGUST 2009

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ETHANOL PRODUCER MAGAZINE August 2009 2

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94

vol. 15 no. 8

44 FEWA Call to Action Speakers at the International Fuel Ethanol Workshop and Expo encouraged attendees to address industry challenges head-on and look to the future of ethanol. –By Hope Deutscher and Erin Voegele

54 POLICYRFS2: Bridging the Gap to Advanced Biofuels While still supportive of the corn-based ethanol industry, the U.S. EPA’s proposed rulemaking for the second stage of the renewable fuel standard requires the biofuels industry to step up eff orts to commercialize next-generation technologies.–By Erin Voegele

68 TECHNOLOGYEverything ‘Old’ can be New Again A biomass conversion technology developer has created a plan for large, grain-based ethanol producers to host cellulosic ethanol facilities, and reap the energy rewards.–By Kris Bevill

76 FEEDSTOCKCovering Your Grass Unlike row crops, dedicated energy crops are not currently supported by crop insurance programs. EPM explores how this might aff ect cellulosic ethanol ventures seeking to use energy crops for feedstock.–By Ryan C. Christiansen

86 CELLULOSICThe Cellulosic Ceiling Th e renewable fuel standard calls for 100 MMgy of cellulosic biofuel to be blended into the nation’s fuel in 2010, but will the U.S. produce enough to satisfy the mandate?–By Ryan C. Christiansen

94 DUCKWEEDDuckweed ‘Quacks’ Volumes of Potential Researchers are tapping into duckweed’s environmental benefi ts and potential as a starch-based feedstock for ethanol production.–By Bryan Sims

102 CANADASlow and Steady Wins the Race? While the U.S. ethanol market has grown by leaps and bounds, the Canadian industry has grown at a slow, steady pace. As the country’s industry grows to meet demand, leaders say Canada is well-positioned to handle future growth as needed.–By Hope Deutscher

features

contents

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contributions

Ethanol Producer Magazine: (USPS No. 023-974) August 2009, Vol. 15, Issue 8. Ethanol Producer Magazine is published monthly. Principal Of-fi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offi ces. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203. BPA Worldwide Membership Applied for October 2006

9 Advertiser Index

12 The Way I See It Take Back the Message By Mike Bryan

18 Business & People

20 Commodities

22 View From the Hill RT @ethanolbob #Ethanol in Soc Ntwking By Bob Dinneen

23 RFA Update

24 BIObytes

26 Industry News

38 Drive Repeal Indirect Land Use Clause By Tom Buis

40 Legal Perspectives Ethanol Industry Financing Challenges Continue By Michael L. Weaver

42 eBIO Insider The Global Ethanol Market By Robert Vierhout

126 Events Calendar

128 Marketplace

departments

contents

110

116

120

7

110 EQUIPMENT Sourcing Equipment in Developing Countries While Minimizing RiskPurchasing operating equipment out-of-country can save money, but it is necessary to take the proper steps to ensure a quality product.–By Gregory T. Benz and Ling Du

116 CONSOLIDATION How Consolidation can Affect Shareholder ValueConsolidation has been a way of business for many years. A quick lesson in the history of industry consolidations and how they have aff ected shareholders could serve as an important review for companies considering this option.–By Scott McDermott

120 WATER Common Mistakes in Design, Use of Reverse Osmosis SystemsWhile relatively simple in components, there are several challenges in operating a reverse osmosis system eff ectively.–By Wes Byrne

Corrections from our July 2009 issue:Aqua Power Inc. and Premium Plant Services are not affi liated, as was incorrectly stated in the Business & People section of the July issue of EPM. Minnesota-based Aqua Power, established in 1981, continues to offer hydro-blasting and vacuuming services to the ethanol and all other industries.

AdIndex

114 & 11589

74 & 84

67 & 135

846601761

11973

12492 & 118

7271

28105675

10434

10585499839

101100

83 & 1254799

1173

3141333259

1121357

109973616

414 & 15

709637

2909151

10664787958

69348

1078843

13682

113108

35121

63122123

29655330668052

815062

111

2009 Fuel Ethanol Workhop Thank you2009 Atlantic Bioenergy Conference2010 International Biomass Conference & Expo2010 International Fuel Ethanol Workshop & ExpoAfton Chemical Corp.Agra Industries Inc.American Railcar Industries Inc.Anhydro Inc.Ansul - Fire SolutionsBBI Engineering & ConsultingBetaTec Hop Products Inc.Biodiesel MagazineBiomass MagazineBrock Grain SystemsBrown, Winick, Graves, Gross, Baskerville & Schoenebaum, P.L.C.Buckman Laboratories Inc.Burns & McDonnellCentrisys Corp.Cereal Process TechnologiesCGB Enterprises Inc.Check-All Valve Mfg. Co.Christianson & Associates PLLPCHS Renewable FuelsCloud/Sellers Cleaning SystemsCrown Iron Works Co. Inc.DuPont Chemical Solutions EnterpriseE3 Energy Partnersethanol-jobs.comEthanol Producer MagazineEISENMANN Corp.Encore Business SolutionsETS LaboratoriesFagen Inc.FCStone LLCFermentisFlottweg Separation TechnologyFreez-it-CleenGamajet Cleaning Systems Inc.GATX Corp.GavilonGEA Barr-Rosin Inc.

Genencor ® - A Danisco DivisionGusmer Enterprises Inc.Hengye USAHydro-Klean Inc.ICM Inc.InbiconIndeck Power Equipment Co.Interstates Cos.IntersystemsLallemand Ethanol TechnologyMaas Cos.Mist Chemical & Supply Co.MOR Technology, LLCNalco Co.Natural Resource Group Inc.Natwick Associates Appraisal ServicesNexen Marketing USA Inc.North American Safety ValveNovozymesPaceSetter ManagementPerten Instruments Inc.Peters MachinePetroleum Equipment InstitutePhibroChemPoet LLCPro-Environmental, Inc.R&R Contracting Inc.Renewable Fuels AssociationResonant BioSciencesRev TechRoskamp Champion/CPMSalco Products, Inc.SGS North America Inc.Spraying Systems Co.Sulzer Process PumpsTranter PheU.S. TsubakiUOPVAL-FAB Inc.Veolia Water Solutions & Technologies - HPDVogelbusch USA, Inc.W. Soule & Co.Wabash Power Equipment Co.WINBCO


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EDITORIAL

Kris Bevill [email protected]

Ryan C. Christiansen Assistant [email protected]

Erin Voegele Associate [email protected]

Hope Deutscher Associate [email protected]

Jan Tellmann Copy [email protected]

Megan Skauge E-Media [email protected]

ART

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Sam Melquist Graphic [email protected]

Elizabeth Slavens Graphic [email protected]

Jack Sitter Graphic [email protected]

PUBLISHING & SALES

Mike Bryan Publisher & [email protected]

Joe Bryan Vice President of Media & [email protected]

Tom Bryan Vice President of Content & [email protected]

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Howard Brockhouse Sales Manager, Media & [email protected]

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HOW TO REACH US

LETTERS TO THE EDITORWe welcome letters to the editor. Send your letter to:

Ethanol Producer Magazine Letters,

4650 38th Ave. S. Suite 160, Fargo, ND 58104 or

e-mail to [email protected].

Letters should include the writer’s full name, address

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visit www.EthanolProducer.com or call (866) 746-8385.

COPYRIGHT © 2009 by BBI International


The Way I See It

Take Back the Message One might be forgiven for thinking ethanol is a scam

if their only source of reference is mainstream media. Not very long ago, NBC news said ethanol is a hoax of gigan-tic proportions being perpetrated on the American public. Reliable sources such as the Wall Street Journal, radio talk shows, and newspapers across the country have all targeted ethanol, usually with the word “boondoggle” somewhere in the lead.

There is not much good press about ethanol. Yet, an objective tally of ethanol’s benefi ts reads like a wish list for environmentalists: it is clean, produced domestically, and is completely renewable. Most importantly, the ethanol indus-try doesn’t rely on imported oil. Simply put, ethanol is the only domestic liquid fuel that we have.

Somewhere along the line, the ethanol industry lost control of the message. We have allowed others outside of our industry to set our research agenda, defi ne the terms of our debate, and mischaracterize our political activities. From production to distribution to promotion, we have failed at delivering our message to the American public.

Who is saying these things? The larger question is: what precipitated these negative stories and commentary? Why has ethanol gone from a boom to a bust in the eyes of many?

I would submit to you that our image is the root of our problem; food versus fuel, land use, starving people, high food prices, the marginalization of women in third world countries—all have been attributed to ethanol’s infl uence on the economy.

It’s time we understand who profi ts by our pain. The food versus fuel “debate” was not really perpetuated by the grocery industry as we all think; land use theory was not perpetuated by American farmers, or even farmers in other

countries; energy effi ciency was not something that a Cornell professor dreamed up because he didn’t have enough to do on the weekend.

Someone paid him for that study. Someone drove the mes-sage that ethanol has a negative energy balance. Someone coor-dinated with the grocery indus-try to create the food versus fuel “debate.”

The best way to create controversy surrounding ethanol is not to attack it on its merits. Rather, it is to divide and con-quer. Our competition has done this by pitting the environ-mentalists’ interests against the perceived interests of “Big Ethanol.” It makes for a good story, but fi ction is always the opposite of truth.

The solution is to stop being reactionary and take back the message.

It’s time for us to become involved as individuals in this industry—to understand the issues and be willing to stand up and be counted. It’s time for each of us to go down to the local newspaper or radio station and talk to them. Edu-cate yourself on the issues and know enough about what you are talking about. Changing ethanol’s image won’t begin with lobbyists on K Street, but with regular people on Main Street. We are the people we’ve been waiting for. It’s time for us to act.

That’s the way I see it.

Mike BryanPublisher & CEO

[email protected]


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Making The New Ethanol™ takes mechanizing the biomass.

To convert 460,000 tons of cellulosic biomass a year, you’ve got to handle 460,000 tons. Gathering, bundling, storing, trucking, unloading, stacking, and conveying it bale by bale using highly mechanized and computerized equipment, over and over, day in and day out. It’s a big, tough, complex job requiring specialized machinery, synchronized logistics, a reliable infrastructure, and a smart business model. Relax. We’ve done this in Denmark for 14 years. Last year Inbicon’s parent company turned 1.6 mil-lion tons of biomass into green energy for generating electricity. Now we’re bringing all that expertise to North America to help jump-start your Inbicon Biomass Refinery. And put you years ahead. We’ve engineered a scale-up of Inbicon conversion technology that will demonstrate commercializa-

Inbicon Biomass Refinery. Making ethanol work for the world.™

tion at 55tph/20Mgpy. Figure 460,000 tons of corn stover or wheat straw. We’ve invited old-ethanol plants to join us in producing The New Etha-nol for North American markets. By integrating our operation with your 100Mgpy plant, we expect to self-generate enough green energy to drive our process 100%. And produce enough surplus to drive yours 50–100%, depending on your business model. Get the full story from our North American team. Call Thomas Corle at 717.626.0557 or e-mail [email protected].

© 2009 Inbicon, Kraftværksvej 53-Skærbæk, 7000 Fredericia, Tel +45 76 22 20 00 The New Ethanol™ and Inbicon Biomass Refinery™ are trademarks of Inbicon A/S and DONG Energy A/S. www.inbicon.com

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Flori-da-based bio-t e ch n o l o g y developer Dy-adic International Inc. recently settled a U.S. Securities and Ex-change Commission administra-tive proceeding without denying or admitting the SEC’s fi ndings. A cease-and-desist order was is-sued to Dyadic as part of the settlement, but no monetary pen-alties were applied to members of the company.

Additionally, litigation be-tween Dyadic and Abengoa Bioenergy New Technolo-gies Inc. has been settled and the companies have entered into a non-exclusive license agree-ment. As part of the agreement, Abengoa has been granted pat-ent rights related to Dyadic’s C1 technology platform. Abengoa plans to use the technology rights toward its commercialization of cellulosic ethanol.

Codexis Inc., an indus-trial biocatalyst development company, has appointed David Anton as senior vice president of research and development and John Grate as senior vice presi-dent of science and innovation and chief science offi cer. Anton joined Codexis Bioindustrials in 2008 as the company’s research and development vice president. Prior to that, he worked at Du-Pont for 25 years, most recently

as the company’s biofuels venture manager. Grate joined Codexis as the founding R&D vice presi-dent in 2002. He previously held various R&D positions more than 20 years at Catalytica and is a registered U.S. patent agent.

M a r k Lambert has joined the Na-tional Corn Growers As-sociation as a senior commu-nications man-ager. Lambert served as the communications director for the Illinois Corn Growers Association and the Illinois Corn Marketing Board for more than 20 years. In addi-tion, Lambert has written numer-ous articles for trade publications, magazines and Web sites regard-ing corn’s contributions to the general economy, the agricultural industry, national security and the environment. In the newly-creat-ed role at the NCGA, Lambert will be responsible for public and media relations, advertising and marketing support services.

Ontario-based Colling-wood Ethanol LP announced June 1 it has offi cially changed its name to Amaizeingly Green LP. The new name is designed to more accurately refl ect the company’s diverse product lines, according to the company. In ad-dition to ethanol, the company’s

52 million liter per year (13.74 MMgy) facility produces dried yeast, corn gluten meal, corn germ, corn fi ber, distilled soluble water and a line of 100 percent natural corn gluten meal fertil-izer for commercial and residen-tial use.

EcoSystem Corp., a company involved in the in-novation of new biological, chemical and physical tech-nologies, recently announced it has executed a manage-ment services agreement

with Global Ethanol LLC to provide corporate and plant management services to the com-pany. In addition, Global Ethanol LLC founder and CEO Trevor Bourne has been appointed to EcoSystem’s board of directors. According to the company, the appointment of Bourne is the fi rst step in EcoSystem’s plan to expand its management team in the event it successfully acquires one or more of its targeted ac-quisitions. Founded in July 2006, Global Ethanol operates a 45 MMgy ethanol production facility in Lakota, Iowa, and a 45 MMgy production facility in Riga, Mich.

Lallemand Inc., a pri-vately-held Canadian company specializing in the research, de-velopment, production, market-

ing and distribution of yeast and bacteria, recently announced it has completed the acquisition of AB Mauri’s GBI baker’s yeast business in Spain and Portugal as well as the AB Mauri yeast plant in Setubal, Portugal. According to Lallemand, the acquisition gives the company a major presence in the Iberian baker’s yeast markets as well as capacity to eventually compete more effectively in the French market and the world dry yeast markets and will increase European fresh yeast supply ca-pability for its subsidiary, Lalle-mand Ethanol Technology.

Dick Anderson of-fi cially left his post as chair-man of The Andersons Inc. during the com-pany’s annual shareholders meeting. He has been re-placed by The Ande r sons President and CEO Mike Anderson.

Dick Anderson has been with The Andersons since found-ing the company with his siblings and parents in 1947. He will now provide counsel to the board of directors as chairman emeritus.

Mike Anderson began his career with the company in 1978. He has held various positions

&Business PeopleEthanol Industry Briefs

Lambert

Dick Anderson

Mike Anderson

ETHANOL PRODUCER MAGAZINE • August 2009 19

Sponsored by

within the agriculture group, in-cluding grain buyer, grain pur-chasing manager, grain division manager and vice president and general manager of the grain di-vision. He has also served as vice president and general manager of the retail group and was named president and CEO of the com-pany in 1999.

P a u l Kreter has accepted the position of se-nior manager for ethanol sales and mar-keting at The Scoular Co.

Kreter has more than 20 years of experience in the petrochemical industry and will be responsible for expanding Scoular’s ethanol customer base with a focus on fuel sales. Prior to joining Scoular, Kreter held positions with Vera-Sun Energy Corp. and Methanex Methanol Co. Kreter began his career with ARCO Chemical Co. as a research chemist before becoming involved in sales of chemicals and methyl tertiary es-ter butyl ester (MTBE).

Philadelphia, Pa.-based petroleum refi ner and marketer Sunoco Inc. purchased the 100 MMgy Northeast Biofuels LP ethanol plant in Volney, N.Y., in June for $8.5 million through a bankruptcy auction. Brian Roach, CEO of Northeast Biofuels, said

approximately $200 million had been spent to build the plant at the site of a shuttered brewery, which closed in 1994. Northeast Biofu-els began producing ethanol in 2008, but closed due to technical production issues. Roach said the plant would need to be repaired at a cost of approximately $14 million before it could become operational. Northeast Biofuels fi led for Chapter 11 bankruptcy protection in January.

Irvine, Calif.-based Blue-Fire Ethanol Fuels Inc., which has developed a concentrated acid hydrolysis technology pro-cess to convert waste materials into ethanol, has announced that Solazyme Inc. will test sugars produced through BlueFire’s conversion process for compat-ibility with Solazyme’s algae-based renewable oil production process. BlueFire Ethanol is cur-rently developing its fi rst ethanol biorefi nery in Lancaster, Calif., which, when operational, will use post-sorted cellulosic wastes di-verted from landfi lls to produce 3.9 MMgy of fuel-grade ethanol.

Lignol Energy Corp. completed its fi rst end-to-end production of cellulosic ethanol

from woodchips at its fully inte-grated industrial-scale biorefi nery in Burnaby, British Columbia, on June 8. Lignol began construc-tion of the facility in June 2008 and commenced the start-up phase in April 2009. “Operating the pilot plant to-date has allowed us to identify areas for process enhancement that we will be in-corporating to further improve pilot plant operations,” said Ross MacLachlan, president and CEO of Lignol. Through planned pro-duction campaigns, the company intends to operate the pilot plant under a wide range of operating parameters to process various nonfood biomass feedstocks.

Massachusetts-based biofuel company Qteros, manu-facturer of the Q Microbe, has appointed Kevin Gray as the company’s chief technology of-fi cer. Anthony Tether has joined the company’s board of direc-tors. Gray previously served as Verenium Corp.’s senior director of biofuels research and develop-ment. He has more than 20 years of experience in managing high-level research at Verenium, Diver-sa Corp. and Energy BioSystems Corp. Tether recently served as director of Defense Advanced Research Projects Agency, the central research and development offi ce for the U.S. Department of Defense. He retired from the position, which he had held since 2001, in 2009.

Hanover, Mass.-based Sturtevant Inc., an international process equipment manufacturer, has entered into an agreement as exclusive supplier of corn frac-tionation mills to Crown Iron Works, which has provided corn fractionation systems to facilities around the world. Sturtevant’s Simpactor Pin Mill was chosen by Crown Iron to play a pivotal role in the corn fractionation system because of its performance, eco-nomic operations and expandable income-generating end product. “Our expertise in fractionation coupled with our ongoing dedi-cation to exploring new ways to increase ethanol plant effi ciencies and profi ts keeps Crown on the cutting edge,” said W. Sturtevant English Jr., Sturtevant’s president and CEO. EP

Kreter

SHARE YOUR INDUSTRY BRIEFS To be included in Business & People, send infor-mation (including photos or illustrations if available) to: Industry Briefs, Ethanol Pro-ducer Magazine, 4650 38th Ave. S. Suite 160, Fargo, ND 58104. You may also fax information to (701) 373-0638, or e-mail it to [email protected]. Please in-clude your name and telephone number in all correspondence.


COMMODITIES REPORT

Natural Gas Report

Corn Report

By Casey Whelan, U.S. Energy Services Inc.

By Jason Sagebiel, FCStone

June 18—An increasing number of tools and vehicles are be-coming available that allow a wider variety of investors to participate in commodity and security markets. In the natural gas commod-ity marketplace, a relatively new set of tools are Exchange Traded Funds. An ETF is a registered, exchange traded security that can be bought and sold in the same manner as any other registered invest-ment fund. The difference is that a natural gas-focused ETF invests only in forward natural gas contracts.

Participation in natural gas ETF’s has exploded over the past year. For example, the largest natural gas ETF, United States Natural Gas Fund LP, has increased in size by over 700 percent from roughly 30 million units on Dec. 31, 2008 to over 260 million units as of June 16. UNG now has natural gas positions in excess of $4 billion and cash on hand of over $3.6 billion.

The days are over when the natural gas fi nancial markets were largely defi ned by producers forward selling contracts to protect rev-enue streams and consumers forward purchasing contracts to protect operating costs. In the past, the process of purchasing and selling forward contracts was complicated because of initial margin require-ments, margin calls when markets moved and execution risk when contracts expired. That limited market participation to parties with a strong and direct interest in the market and the fi nancial capability to manage market positions. ETF’s have created an environment where market participation is very easy. For example, a unit of UNG would cost less than $16 today. There would be no margin calls or execution

risk. Units can be purchased through your investment account and if you change your mind tomorrow, you can simply sell them.

This development is neither good nor bad, but it certainly is important! Massive amounts of capital can now fl ow in and out of the natural gas market from unknown sources with unknown moti-vations. ETF’s are a new kind of market participant whose impact we are still trying to discern.

The bottom line is, it is reasonable to expect continued market volatility as it becomes easier for money to move in and out of the natural gas marketplace and as a wider variety of investors start view-ing natural gas as an asset class. EP

Casey Whelan, vice president of strategic initiatives, can be con-tacted at [email protected].

June 22—The corn market was volatile during May as new money found its way into the market as the dollar broke, crude oil rallied and the USDA decreased carry-out. The soybean market was another culprit as to why the corn market continued its fast pace rally. Nearby corn futures traded a 40.5 cent trade range in May, while soybeans traded a $1.56 range. With the rally that was experienced in corn, many end-users, such as the swine and dairy industries, suffered even more negative margins.

According to the USDA, old crop carry-out rested at 1.6 bil-lion bushels while new crop carry-out leaves potential concern with just a 1.09 billion bushel carry-out. The new crop scenario is still using the 85 million planted acres fi gure, which will be tested on June 30th. The latest yield estimation is 153.4 bushels per acre com-pared to 155.4 bushels per acre in the May report and 153.9 bushels per acre a year ago. The ethanol sector is expected to consume 4.1 billion bushels of corn next year compared to 3.75 billion bushels a year ago. Feed demand is the limiting factor, with demand esti-mated at 5.15 billion bushels versus 5.35 billion bushels a year ago.

One thing to note as July approaches is the planting intentions,

quarterly stocks and quarter end (impacted by the fund traders). The adjacent chart illustrates the changes from the March to June planting intentions. The 2009 bar indicates an estimated reduction of one million acres from the March report. EP

A new kind of market participant

Volatile market results in rally


COMMODITIES REPORT

DDGS Report

Ethanol Report

By Sean Broderick, CHS Inc.

By Rick Kment, DTN Biofuels Analyst

Soybeans, barge market affect prices

Prices slide with seasonal demand slipping

June 19—Distillers grains prices continue to be volatile. After spik-ing up almost $25 per ton—and even more in the barge market—at the end of May/early June, prices have come back down.

Several factors have been infl uenc-ing the prices and volatility of distillers grains. A tight barge market in May left many buyers scrambling for product in the Gulf of Mexico as boats were scheduled to arrive. The acute spot shortage of product also pulled up the deferred markets, which drove the Cal-ifornia and Southwest markets higher. Once the barge issues were alleviated, that market dropped and the destina-tion markets followed suit.

Worldwide, the soymeal market is tight. Buyers have been seeking pro-tein replacements, and DDGS works

well as a protein replacer. The Gulf is expected to continue to lead prices, since overseas demand is more elastic than the domestic market. The price of soymeal and the value of the U.S. dol-lar will infl uence distillers prices as the summer progresses.

Ethanol plants that budget DDGS as a percentage of corn are ecstatic, as they are getting up to 100 percent the value of corn, compared to summer numbers last year that were as low as 65 percent. But with several new plants starting up and profi t margins ensuring that everyone operates at capacity, that percentage could be in jeopardy.

As always, CBOT dictates the DDGS market’s direction. But for now, the foreign exchange markets are infl u-encing things as well. EP

June 22—The seasonal bump in prices pushed gasoline prices nearly 30 cents higher from pre-Memorial Day levels. Overall demand for gaso-line across the country remains steady, however, additional pressure was seen in the energy complex in mid-June as traders and analysts focused on the inability of the stock market to move higher. This is creating concerns that the overall economic recovery strength is not nearly as solid as fi rst expected, and that pressure may still be evident in most markets for a longer period of time. Additional pressure has resulted from lower than expected driving de-mand as consumers remain cautious about spending discretionary income. This may continue through the sum-mer months.

Ethanol prices remain mixed with

futures and spot prices staying stable, while rack prices have followed the upward tick in the gasoline market and posted a 10 cent to 12 cent gain. The support in the gas price has helped to signifi cantly increase the overall demand for ethanol product at the blending facility because of the wid-ening price spread between gasoline and ethanol. Earlier in 2009, ethanol contracts carried an 80 cent to 90 cent premium to the gasoline market. But now, gasoline prices are 30 cents higher than ethanol markets. This wide spread could continue to increase blenders’ demand for ethanol. The industry’s current challenges are the lack of stabil-ity in demand from decreased summer travel patterns and the need to increase ethanol demand through increased dis-cretionary blending. EP

Regional Ethanol Prices ($/gallon as of June 22)

Regional Gasoline Prices ($/gallon as of June 22)

DDGS Prices ($/ton)

Corn Futures Prices (Sept corn, $/bushel)

Natural Gas Prices ($/MMBtu)

U.S. Ethanol Production Output (barrels/day)

Cash Sorghum Prices ($/bushel)

REGION

West Coast

Midwest

East Coast

REGION

West Coast

Midwest

East Coast

LOCATIONMinnesota

California*

Chicago

Buffalo, N.Y.

Central Florida*Central Valley

DATEJune 19, 2009

May 19, 2009

June 19, 2008

NYMEX

N. Ventura

Calif. Border

March 2009

February 2009

March 2008

Superior, Neb.Beatrice, Neb.Sublette, Kan.Salina, Kan.Triangle, TexasGulf, Texas

SPOT

1.795

1.7

1.8125

SPOT

1.9993

2.0574

1.9849

JUNE 2009130

174

145

159

159

HIGH4.15 1/2

4.38 1/4

7.52 1/4

JUNE 20094.32

3.32

3.31

640,000

647,000

530,000

JUNE 17, 20093.583.483.193.533.204.00

RACK

1.9454

1.8317

2.075

RACK

2.2133

2.0913

2.0432

MAY 2009135

185

148

160

170

LOW4.06 1/4

4.30

7.32

MAY 20094.27

3.83

3.82

MAY 15, 20093.463.483.283.633.344.02

JUNE 2008175

230

165

170

205

CLOSE4.07 1/4

4.35 1/4

7.41 3/4

JUNE 200812.95

11.72

12.21

JUNE 12, 20086.196.446.396.446.616.77

SOURCE: DTN

SOURCE: DTN

SOURCE: CHS Inc.

SOURCE: FCStone

SOURCE: Sorghum Synergies

SOURCE: U.S. Energy Services Inc.

SOURCE: U.S. Energy Information Administration


VIEW FROM THE HILL

RT @ethanolbob #Ethanol in Soc NtwkingMuch to the chagrin of my children, I have reluc-

tantly (though with increasing enthusiasm) entered the world of social networking. I am on Facebook. I tweet (@ethanolbob is my Twitter handle) about events in Washington having an impact on ethanol. Heck, I even became frustrated when technical dif-fi culties didn’t allow me to tweet for two days while on my recent trip to Brazil.

All of the recent buzz about social networking may seem like it has little connection to public pol-icy but, to the contrary, public opinion is very much linked to public policy (see the polling on a public option for health care). And, increasingly, the public is forming and expressing its opinion on these so-cial network platforms.

Even lawmakers and public offi cials are getting in the game. For example, Sen. Claire McCaskill, D-Mo., is a prolifi c tweeter on subjects ranging from her personal observations to what is happening in the committees on which she sits. You can learn about the condition of the crop from Iowa Secretary of Agriculture Bill Northey. Even the venerable etha-nol advocate Sen. Chuck Grassley, R-Iowa, can be found tweeting away.

Now, I agree that all this talk about tweeting and the like seems a bit silly. But the topics of conver-sation that are happening online are not. All of the issues that we face on Capitol Hill and in traditional media are echoed throughout social media forums.

Curious what people are saying about ethanol and water use? This is a tweet from @thegreen-grok: “A recent study points out that when it comes to water usage, where your ethanol is brewed really matters.”

How about food and fuel? This from @corn-guy: “Market demand for corn for food in the U.S. uses 1 percent of the crop for human consump-tion.”

Social networks are not only about one-off opportunities to throw out facts. They are an op-portunity to engage in dialogue and drive our mes-sage. For example, during the week of May 25, the RFA saw what social networking efforts like Twitter can produce. A tweet from Missy Ruff (@renewablefuel), RFA’s market development man-ager, about the opening of the 2,000th E85 station warranted the attention of numerous bloggers and online publications, and ultimately led to published articles.

Such encounters have also opened doors into other industries desperate to learn more about ethanol.

Social networking will never take the place of old-fashioned shoe leather when it comes to in-forming lawmakers and shaping public opinion. Bending a lawmaker’s ear while he or she is back in the district can never be replaced by a 140-char-acter tweet. A cleverly produced YouTube video can’t hold a candle to a well-prepared in-person briefi ng. But in the time between such face-to-face opportunities, social networks allow our industry an avenue to keep our messages and our focus in front of policy makers and the American people. For an old Washington dog like me, these are the new tricks that we all must learn.

@ethanolbob: I’ll c u online.

Dinneen

Bob DinneenPresident and CEO

Renewable Fuels Association


RFA UPDATEwww.ethanolRFA.org

Government data proves ethanol does not impact food prices

New data released by the federal government shows consumers are paying less for groceries today than they were just six months ago. This decrease comes amid in-creased production and use of ethanol, often the scape-goat of choice by food manufactures and meat proces-sors when grocery prices rise.

According to the May Consumer Price Index (CPI) by the Bureau of Labor Statistics, prices for groceries (food consumed at home) declined for the sixth straight month, and prices for all the major grocery store individual food groups declined compared to April. The index for meats, poultry, fi sh, and eggs showed the largest one-month de-crease at -0.9 percent. Prices for dairy products, fruits and vegetables, and beverages also showed noticeable declines.

“Against the backdrop of tremendously volatile en-ergy and food markets over the past 36 months, the one constant that has remained is increased production and use of fuel ethanol,” Geoff Cooper, RFA vice president of research, said. “Oil prices have spiked to historic levels and crashed dramatically. Food prices have spiked and fallen at a rate not seen since 1950. Yet, America’s etha-nol producers continue to steadily increase our supply of domestic renewable fuel, which cuts oil imports and re-duces greenhouse gas emissions. Given this consisten-cy, it is clear that a host of unpredictable factors such as runaway oil and energy prices, exchange rates, changing diets, and weather events have had a far greater infl u-ence on food prices than American ethanol production.”

In addition, the CPI for May found:Overall food prices (including food consumed both

at home and away from home) decreased for the fourth consecutive month.

Prices for food and beverages have increased just 2.7 percent in the past 12 months, which is well below the 30-year average for annual food infl ation and less than half of 2008’s oil-fueled food infl ation rate of 5.5 percent. USDA projects 2009 grocery prices will increase just 2.5 to 3.5 percent compared to 2008.

Over the past 12 months, the overall Consumer Price Index has fallen 1.3 percent. This is the largest year-over-year decline since April 1950 and, according to the Bureau of Labor Statistics, is due mainly to a 27.3 per-cent decline in the energy index during that period. This underscores the fact that prices for all consumer goods, including food, are closely tied to energy prices.

ILUC concerns continueLeading agricultural and environmental academics

and economists continue to raise concerns about the con-troversial theory of indirect land use change (ILUC) cur-rently being applied to biofuels. Specifi cally, many believe that the policy has gotten far out ahead of the science and could be detrimental to the development of biofuels.

Currently, the U.S. EPA is seeking to institutionalize this theory as part of its proposed rule for the second stage of the renewable fuel standard (RFS2). Recently, Califor-nia’s Air Resource Board adopted a low carbon fuel stan-dard that applied this theory to biofuels at the exclusion of all other fuel sources, including petroleum.

Major concerns about the inclusion of ILUC calcula-tions include:

The analysis is not transparent. Models to be used by the EPA are not publicly accessible.

Inconsistent modeling approach. Domestic and in-ternational land use changes are determined using differ-ent methods.

Models assume the future will behave like the past. Much of the analysis relies on historical trends evaluation to project future behaviors.

Tremendously high level of uncertainty. In some cases, the margin of error could be greater than the es-timate itself.

The RFA has been very active combating this fl awed notion of ILUC and has been leading the ethanol industry’s response to both CARB and the EPA.


German manufacturer of catalysts and adsorbents Süd-Chemie AG and global engineering company The Linde Group began produc-ing lignocellulosic ethanol at a pilot-scale facility on April 27. The plant, which is located at Süd-Chemie’s research center in Munich, can produce up to 2 tons (64,000 gallons) of ethanol per year.

The production process developed by the two com-panies uses enzymes created by biotechnological meth-ods to convert cereal straw into biofuel. According to a statement released by the two companies, construction of a demonstration-scale plant is expected to commence soon.

BIObytes Ethanol News Briefs

In an effort to eliminate the food versus fuel debate, re-searchers are experimenting with microscopic organisms to con-vert sugars from cellulosic ma-terials into ethanol. Researchers are working with alternate bio-masses, especially lignocellulosic feedstocks such as corn stover, for microorganisms to ferment into ethanol, said Tim Donohue, professor of bacteriology at the University of Wisconsin-Mad-

ison, and director of the U.S. DOE’s Great Lakes Bioenergy Research Center. The research has demonstrated that it works, however, he said, the challenge is unlocking those sugars from the cellulosic biomass. In order to accomplish that, Oak Ridge National Laboratory scientists are conducting tests on poplar trees, which are more likely to give up their sugars than other biomass sources.

The U.S. DOE Energy Information Administration predicts that worldwide en-ergy demand will double by 2030, according to the admin-istration’s annual International Energy Outlook. Developing countries, led by China, India and various countries in the Middle East, will drive the in-creasing energy demand. EIA international energy analyst Linda Doman said that con-sumption increases in devel-oping countries will grow 73 percent by 2030 and will even-

tually drive oil prices to very high levels.

Because of the projected high oil prices, ethanol and biodiesel are predicted to play greater roles in supplying alter-native liquid fuels to the world market. Particularly strong in-creases in biofuels consump-tion are expected in the U.S. and in developed areas of Europe. Parts of Asia, Central America and South America are expected to experience no-table growth in the production of biofuels by 2030.

World energy use to double by 2030

Researchers study microbes to develop cellulosic ethanol

Pilot-scale cellulosic ethanol plant opens in Europe

Süd-Chemie AG corporate headquarters is located in Munich, Germany.

The U.S. DOE Energy Information Administration’s international energy outlook calls for drastically increasing demands for energy, meaning more demand for biofuels.

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Researchers at the Univer-sity of Missouri’s Food and Ag-ricultural Policy Research Insti-tute recently published a report, titled “Impacts of Selected U.S. Ethanol Policy Options,” that examines what would happen if changes were made to federal ethanol-related policies. Policies considered in the report include usage mandates established by the renewable fuel standard, the volumetric ethanol excise tax credit, and the ethanol import tariff. Among other fi ndings, the report found that if all three

supports were to be eliminated, the domestic ethanol fuel in-dustry would collapse, imports would increase and—due to decreased demand for corn—farmers would suffer lost rev-enue. The report was published in response to a request from several Congressional members.

In response to a lack of industry guidelines and rec-ommendations on analytical test methods for the testing of distillers dried grains with solubles (DDGS), a study was conducted to evaluate the ef-fi cacy, applicability and the inter-laboratory variation of a number of methods for mois-ture, crude protein, crude fat and crude fi ber in DDGS. The study was sponsored in part

by the Renewable Fuels As-sociation, the National Corn Growers Association and the American Feed Industry Asso-ciation. A report on the study’s fi ndings, titled “Evaluation of Analytical Methods for the Determination of Moisture, Crude Protein, Crude Fat, and Crude Fiber in Distillers” by Nancy Thiex has been pub-lished in the Journal of AOAC International, Vol. 92, No. 1.

Lack of DDGS guidelines prompts study

The U.S. DOE Alternative Fuels and Advanced Vehicles Data Center (AFDC), along with the National Renewable Energy Laboratory, have pub-lished the TransAtlas interac-tive map (http://rpm.nrel.gov/transatlas/launch), which uses a Google Maps interface to display locations of existing and planned E85 fueling sta-tions, ethanol production facil-

ities, and geographical fl exible fuel vehicle density data. Users can customize the map by se-lecting the information to be displayed. The database for the TransAtlas map is maintained by NREL, which obtains in-formation about new fueling stations from trade media, Clean Cities program coordi-nators, and a submittal form on the AFDC Web site.

TransAtlas map shows spread of E85

FAPRI report examines impacts of ethanol policy changes

Griffi n U-Gas in Davies, Fla., became the 2,000th E85 sta-tion to open in the U.S. The gas station, located north of Miami, celebrated its grand opening on May 28. The Griffi n U-Gas sta-tion is one of 12 new E85 sta-tions that have been built in Flor-ida over the past several months. U-Gas owns all of the current E85 stations in Florida. “For me personally, it feels really good when I fuel up to know that I’m not sending money to countries

that are not that friendly to us,” said Willie Urbieta, president of U-Gas. To celebrate the 2,000th E85 station opening, U-Gas’ 12 Florida stations offered E85 at a discounted price.

2,000th US E85 station opens for business

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A number of analytical methods are commonly practiced in laboratoriesto measure various specifi cs of distillers dried grains with solubles (DDGS). This inconsistency has led to confusion related to the analysis and interpretation for data of various DDGS qualities.

The TransAtlas interactive map can be used to display the locations of E85 fueling stations, ethanol plants, and where drivers own fl exible fuel vehicles (FFVs) to understand the proximity of those items. Here, FFV distribution is shown in yellow.

SOURCE: U.S. DOE


Latin American countries are ramping up ethanol production despite the fact that many people in countries outside of Brazil are not aware of ethanol as a fuel.

In Central America, Guatemala is the number one producer of high-yield sugar-cane and produces over 44 percent of Cen-tral America’s sugarcane-based ethanol. Ac-cording to Karla Tay, agricultural specialist for the USDA, fi ve of Guatemala’s 14 sugar mills produced approximately 64 MMgy of dehydrated ethanol from sugarcane in 2008, up from 42 MMgy in 2007 and 18 MMgy in 2006. Most of Guatemala’s ethanol was exported to the U.S. and Europe. Production for 2009 is expected to be approximately 93 MMgy. Having eight of Central America’s top 13 processing plants, Guatemala is ex-pected to produce approximately 130 MMgy of ethanol by 2010. Guatemala’s largest etha-nol producer is Bio-Ethanol SA, which has a 13 MMgy plant and is expected to triple its capacity by the end of 2010. Meanwhile, ethanol producer La Union SA operates a 7 MMgy ethanol plant. Guatemala is the fourth-largest producer of sugarcane in all of Latin America with 530,000 planted acres and the potential for 870,000 acres.

In South America, Colombia, which began producing ethanol from sugarcane in 2005, is the world’s second-largest sugar-cane-ethanol producer with an approximate capacity of 64 MMgy from fi ve plants in

the Cauca River Valley in southwestern Colombia. According to Leonardo Pinzon, agricultural special-ist for the USDA, Colom-bia has a mandate to use E10 by 2010 and current production can supply 85 percent of the requirement. In March, the Colombian government issued a decree that, beginning in 2012, all new vehicles sold in the country must be fl exible fuel vehicles. Ethanol pro-duction dropped 6.1 per-cent in 2008 due to a sugarcane workers strike, but production is expected to increase to a record high in 2009. The government is sponsoring research and feasibility studies for new feedstocks for ethanol production, including sugar beets and yucca.

In Uruguay, new investments in etha-nol production are expected to bear fruit in 2009, with approximately 1.5 MMgy of etha-nol expected to be produced this year from molasses, sugarcane, and sweet sorghum, ac-cording to Ken Joseph, agricultural specialist for the USDA. Two additional projects, one backed by a French company and another by a U.S. company, are expected to be complete within fi ve years to produce approximately 25 MMgy of ethanol each from sweet sorghum.

Ethanol produced in Uruguay is expected to be exported to Brazil and Venezuela.

Meanwhile, according to a recent Gallup poll, citizens in only a handful of countries in the Caribbean and Latin America have heard of ethanol, and only 47 percent of all poll respondents in the region have heard of ethanol. In eight countries, including Brazil, Costa Rica, Nicaragua, Uruguay, Paraguay, Colombia, the Dominican Republic, and Panama, the majority of respondents have heard of ethanol; however, in Peru, Ecuador, Bolivia, and Mexico, less than 40 percent of poll respondents have heard of the fuel.

—Ryan C. Christiansen

Latin America ramps up ethanol production

According to a recent Gallup poll, conducted in 20 Latin American and Caribbean countries, 47 percent of poll respondents have heard of ethanol.

SOURCE: GALLUP INC.P

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Due to an ethanol blending mandate in the Philippines, there has been a high de-mand for the fuel, however, according to a USDA Foreign Agricultural Service Global Agriculture Information Network Report, the investments to establish ethanol produc-tion facilities have been insuffi cient. As a re-sult, the report said that ethanol is being im-ported so that the country can comply with the Philippine biofuels law, which required local oil companies to begin blending 5 per-cent ethanol into the gasoline beginning in February.

There are only two ethanol production facilities in the Philippines. The Leyte Agri Corp. has an approximate capacity of 2.38 MMgy and the San Carlos Bioenergy Inc. facility has an approximate capacity of 8 MMgy. Located in the province of Negros Occidental, SCBI is a fi rst-of-its-kind facility in Southeast Asia – integrating a sugar mill, cogeneration plant and distillery complex.

Demand for ethanol is estimated to be around 55.5 MMgy, however the two facilities only have an operating capacity of approxi-mately 10.5 MMgy, which translates into a 45 MMgy defi cit of ethanol. According to

the report, the shortage of local ethanol has not stopped some local oil companies from selling an E10 blend of gasoline in some of their pump stations. For now, domestic sup-ply shortages are being fi lled mainly by im-ported Brazilian ethanol.

Meanwhile, in Japan, the government is focusing on cellulosic biofuels to meet the country’s future biofuels production needs, in part, because of the country’s limited ag-ricultural resources. According to the USDA report, last year, Japanese ethanol produc-tion was approximately 23,775 gallons. Gov-ernment and private sector research and investment in biofuels has increased since the country’s fi rst biomass plan, Biomass Nippon Strategy, was unveiled in December 2002 with four specifi c focuses - prevent global warming; formulate a recycling soci-ety; nurture strategic industry, and revitalize rural communities. The document has been updated several times.

The Kyoto Protocol requires Japan to reduce its carbon dioxide emissions to 6 per-cent below 1990 levels by 2010. According to the USDA report, Japan’s limited agri-cultural production will make it diffi cult for

Japan to produce enough biofuels to impact the domestic fuel market and greenhouse gas emissions without a major technological breakthrough, such as cellulosic technology. Potential domestically-produced feedstocks include sugarcane, wood, rice, rice straw and rice hulls. A report issued by the prime minister stated that with appropriate techni-cal development, Japan could produce ap-proximately 1.6 billion gallons of biofuels by 2030. Furthermore, a target was set to pro-duce approximately 13 MMgy of biofuels from molasses and off-spec rice by 2011 and 10 percent of domestic fuel from cellulosic materials by 2030.

According to the Japan Automobile Manufacturers Association, 74 million au-tomobiles consume about 15.9 billion gal-lons of gasoline annually. If an E3 blend of gasoline were nationalized, the GAIN report estimated that demand for ethanol would be around 475.7 MMgy. If E10 were used, the demand for ethanol would increase to 1.6 billion gallons per year.

—Hope Deutscher

Philippines, Japan work to meet ethanol demands

Asian countries are pursuing the use of ethanol; however, they are struggling with how to produce enough to meet mandates. In the Philippines, an insuffi cient investment in ethanol infrastructure has forced the country to import. In Japan, the government is researching what types of feedstocks it can utilize to produce ethanol.


Approximately 130 industry representatives and researchers attended the fourth annual International Distillers Grains Confer-ence and Trade Show in Denver on June 15. The day-long event was hosted by BBI International. Topics discussed during the con-ference included the future of exports, expectations from the feed industry, the role of antimicrobials, regulations, fractionation, im-proving quality control and available drying technologies.

Dr. Harold Tilstra, national coproducts technical support for Land O’Lakes Purina Feed LLC, said the attitudes of ethanol and livestock producers have evolved over time. In the beginning, etha-nol producers wanted to “make the mash go away” and livestock producers said they would use it only because it was free. Today, ethanol producers see it as a viable and valuable coproduct and livestock producers are determining how to best utilize it in their ingredient feed mix. As the industry moves forward, Tilstra said ethanol producers will need to view distillers grains as a coproduct to feed humans through animal products. “That’s the mindset that our biorefi neries need to assume,” Tilstra said.

Steve Markham, a merchandiser at CHS Inc., told the audi-ence that the distillers grains market continues to grow, especially

in the export sector. In 2008, total U.S. distillers grains production was approximately 22 million metric tons and more than 4.5 mil-lion metric tons of distillers dried grains with soluble (DDGS) were exported – a 91 percent increase over 2007 exports.

“I think worldwide we will see some more ethanol production in other countries, which will defi nitely affect what goes on here in the U.S.,” Markham said. Currently, the majority of U.S. distillers grains are exported to Canada and Mexico, followed by Asia, North Africa and the Middle East.

Domestically, he said the fastest growing user of distillers grains is the swine industry, while the dairy consumption of distill-ers grains is nearly saturated. As for the poultry industry, Markham said there was little increase in use last year as a result of corn pric-es. However, he said the laying industry is having issues regarding the use of antibiotics in distillers grains. Markham said if that issue is settled, distillers grains will become a staple to the industry.

However, in a later session, Amy Batal, a professor at the Uni-versity of Georgia, said there hasn’t been an issue with antibiotic residue in distillers grains in the past three years. In addition to crude protein, animal producers also use distillers grains because

IDGC: Distillers grains products markets grow

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it provides amino acids, she said, adding that the digestibility of amino acids is very important to the feed industry. However, she said, in addition to the nutritional elements of distillers grains, the availability, price and consistency need to be addressed by the ethanol industry to meet the needs of the poultry industry.

In an effort to improve DDGS prices and provide a better amino acid profi le, FWS Group Process Engineer Glen Foster said it’s important to look at alternative co-substrates. Among the substrates being studied are fi eld peas, oats, and barley. Foster said fi eld peas could deliver 45 percent to 52 percent protein; while oats could deliver more ethanol per acre than wheat or barley; as well, barley could be grown outside of the U.S. Corn Belt.

However, Batal said because of the different nutritional as-pects, corn, milo, wheat and barley, DDGS can’t be used inter-changeably in the poultry diet. Producers need to know exactly what product is available and that it is consistent, she added.

The fi fth annual IDGC will be held in June 2010 in St. Louis, Mo., as a co-event with the International Fuel Ethanol Workshop and Expo.

—Hope DeutscherAmy Batal, a professor at the University of Georgia, presents information on the use of coproducts from the biofuels industry in poultry diets during the International Distillers Grains Conference & Trade Show.

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Advanced Biofuels Workshop explores emerging market

The second Advanced Biofuels Workshop, hosted by BBI In-ternational, was held June 15 at the Colorado Convention Center in Denver. The one-day event, which drew 168 attendees, was co-locat-ed with the International Fuel Ethanol Workshop and Expo.

With the U.S. EPA’s recent release of the proposed rule for the second stage of the renewable fuels standard (RFS2), the domestic market for advanced biofuels is poised to rapidly expand. The need to quickly and effi ciently move the advanced biofuels industry from the research and development stage to commercial production was refl ected in the presentations of nearly all 20 speakers at the event.

PHOTO: RYAN C. CHRISTIANSEN, BBI INTERNATIONAL.

During his presentation at the Advanced Biofuels Workshop, Will Thurmond, managing principle at Emerging Markets Online, encouraged attendees to view recent market challenges as an opportunity to develop second generation biofuel technologies.


According to Will Thurmond, managing principle at Emerging Markets Online, there are six key factors driving global biofuels mar-ket growth. These factors include government mandates, tax incen-tives, the goal of energy independence, economic security factors, national security concerns and the need for environmental security.

The RFS2 is one such factor that is expected to be a primary driving force behind domestic market growth for advanced biofuels in the near term. However, the RFS2 does more than simply increase the volumes mandates for biofuels use. It also specifi es four catego-ries of renewable fuels, each with its own defi nition and mandate. According to Thurmond, since the RFS2 now specifi es one of these four categories as cellulosic biofuel – rather than cellulosic ethanol – the market has been opened to allow the introduction of other alternative fuels. More specifi cally, Thurman said that various algae technologies will now be able to play a larger role in meeting the RFS2 mandate for advanced biofuels. “There are many alternative pathways to get the 36 billion gallon RFS criteria, and we should start thinking about evolution in the markets,” he continued.

One key component in the commercialization of any advanced biofuel technology is the ability to secure funding. John Herrick, se-nior counsel with Brownstein Hyatt, Farber and Shreck, spoke to at-tendees about trends and developments in the fi nancing options for

advanced biofuels projects. “I’ve been dealing with project fi nancing, especially in the renewable sector, for almost 25 years,” he said. “But, I’ve seen a drastic change in the past three or four years—and in the past eight months, an even steeper change where old models of proj-ect fi nancing just aren’t in place.”

According to Herrick, these changes are largely attributable to two factors: the recession and political changes. While traditional sources of private funding have been reduced, federal funding sourc-es, such as the stimulus package, are fi lling the gap. “I’ve never seen anything like what was in the American Recovery and Reinvestment Act,” Herrick said. “It’s amazing … it is changing the nature of how things are being fi nanced right now.”

“Right now we are in a very challenging period for biofuels,” said Thurmond. “A lot of ethanol plants and biodiesel plants are go-ing out of business, and we’re in a transition in the meantime from fi rst-generation biofuels to second-generation biofuels.” According to Thurmond, it is important that those in the biofuels industry see these challenges as opportunities. “These are opportunities to entre-preneurs, investors, and inventors to help bridge the gap from where we are today—to where we want to go tomorrow,” he said.

—Erin Voegele

31


Researchers at Lebanon, N.H.-based Mascoma Corp. recently announced that they have made major advances in consolidated bioprocessing (CBP), using engineered microorganisms to produce cellulosic ethanol. According to the company, Mascoma’s modifi ed bacteria and yeast not only produce cellulase enzymes to break down cellulose into sugars, but they are also capable of converting those sugars into ethanol.

According to Jim Flatt, executive vice president of research, de-velopment, and operations at Mascoma, scientists have modifi ed the thermophilic bacterium Clostridium thermocellum to produce nearly 60 percent more ethanol from cellulose than the strain was capable of producing just a year ago. He said Mascoma has also modifi ed yeast to produce 3,000 times as much cellulase enzymes, eliminating

Mascoma advances bacteria, yeast technology

Candidate strains are tested in small scale fermentation bottles.

PHOTO: MASCOMA CORP.


the need for added enzymes to convert waste paper sludge to ethanol, for example.

“The potential to express small amounts of cellulase enzymes in yeast had been dem-onstrated previously by several of our collabo-rators,” Flatt said, “but expression levels were relatively modest—it was signifi cant from a scientifi c standpoint, but not particularly com-mercially relevant.”

Mascoma’s recent breakthroughs are bring-ing CBP closer to a commercial reality, accord-ing to Alan Belcher, senior vice president of operations for Mascoma, who spoke in June at the Advanced Biofuels Workshop in Denver. “All cellulosic ethanol conversion technologies are legitimate technologies,” Belcher said, “but CBP has been ‘pie-in-the-sky’ for the longest period of time.”

Mascoma’s technology could be used at existing corn starch-based ethanol plants to produce cellulosic ethanol from a variety of possible feedstocks, Flatt said. “We think the real advantage of this

solution for retrofi t applications is that it’s very compatible with the existing equipment and infrastructure,” he said, “thereby minimizing any additional capital required to run the process.”

After Mascoma’s organisms become commercially available, Belcher said Mascoma will continue to improve upon them. “We’ll see improvements coming out like versions of Windows, eventually,” he said. Belcher said Mascoma expects to be using its technology to produce ethanol at its 25,000 gallons per year pilot plant in Rome, N.Y. by early next year. Mascoma will also continue to utilize its pilot plant for testing CBP using both bacteria and yeast.

Flatt said Mascoma’s yeast will most likely be the fi rst of two organisms to be used in the production of ethanol at the commercial scale; however, the company’s modifi ed bacteria might be the pre-ferred organism in the long run, he said. “We think [the bacteria] has potential to be a sort of ultimate, lowest-cost solution,” Flatt said.

—Ryan C. Christiansen

Jim Flattexecutive vice president, research, development and operations,Mascoma Corp.


Governors’ Biofuels Coalition pushes for E15 fuel waiver

North Dakota Gov. John Hoeven, chair-man of the Governors’ Biofuels Coalition, spoke with U.S. EPA Administrator Lisa Jack-son to request that Jackson expedite the con-sideration of an E15 fuel waiver and increase the amount of ethanol that can be blended into gasoline from 10 percent to 15 percent.

The fuel waiver request was fi led with the EPA on March 6 by Growth Energy and a group of 54 ethanol producers. A 60-day comment period on the waiver request was originally scheduled to end on May 21. At the urging of the National Corn Growers As-sociation, which said farmers in the Corn Belt would be working extended hours throughout the duration of the comment period and may not be able to participate, the EPA announced in May the

comment period would be extended an addi-tional 60 days, until July 20.

“The nation needs greater energy indepen-dence, and domestic ethanol producers need a boost under current market conditions,” Ho-even said. “Increasing the proportion of etha-nol to 15 percent would move us closer to both goals.” Jackson said she will work to move the process forward expeditiously and noted that the EPA must respond to the request by De-

cember. According to Hoeven, a move to E15 would help expand the

market for domestically produced biofuels. On Feb. 17, he issued a letter to President Barack Obama, asking that he take action of fi ve specifi c biofuels initiatives.

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In the letter, Hoeven requested that Obama articulate a vision for the nation’s biofuels future. “As convinced as the governors are about the value of biofuels, misinformation from entrenched in-terests has done a great disservice to America,” the letter stated. “A continued, straight-forward message from your administration to the American people on the role of biofuels is necessary.”

Hoeven also asked that the president initiate an immediate sub-stantially similar ruling from the EPA on E13. Such a ruling would immediately expand the market for domestically produced biofuels.

In addition, the letter requested that Obama establish an inter-agency task force on life-cycle greenhouse gas emissions and trans-portation fuel, create new policy options that continue to increase the sustainability of biofuels feedstock production, and implement the nation’s fi rst comprehensive biofuel market development pro-gram.

On May 27, Obama issued a letter to Hoeven in response. In his letter, the president states that he appreciates the excellent work that the Governors’ Biofuels Coalition has been doing to educate policy makers and the public about the importance of transitioning the nation from its reliance on petroleum-based fuels to a sustain-able, low carbon future.

While Obama did not address Hoeven’s request to initiate a substantially similar ruling from the EPA on E15, he did note that the suggestions outlined in Hoeven’s letter were helpful in devel-oping the Presidential Biofuels Directive that was issued in May, establishing an interagency working group on biofuels. The group, which consists of members of the USDA, U.S. DOE and the EPA, is tasked with expediting advanced biofuels research and commer-cialization. The group will also work to evaluate roadblocks to the continued development of biofuels, and determine ways in which they can be reduced or eliminated.

“My administration is committed to moving as quickly as possi-ble to commercialize an array of emerging cellulosic technologies so that tomorrow’s biofuels will be produced from sustainable biomass feedstocks and waste materials rather than corn,” Obama wrote. “But this transition will be successful only if the fi rst-generation biofuels industry remains viable in the near-term, and if we remove long-standing artifi cial barriers to market expansion necessary for large volumes of advanced renewable fuels to fi nd a place in Amer-ica’s transportation fuels system.”

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GPRE becomes major industry player

In May, Omaha, Neb.-based Green Plains Renewable Energy Inc. agreed to purchase two former VeraSun Energy Corp. ethanol production plants and, as a result, the relatively new ethanol producer has become the fourth largest ethanol producer in the United States. With the addition of the two facilities, the company has a total ex-pected production capacity of 480 MMgy.

GPRE paid $123.5 million for the 100 MMgy Central City, Neb. production facility and the 50 MMgy Orb, Neb. production facility. The plants were purchased from a lender group led by AgStar Fi-nancial Services, which had previously taken control of the facilities through a VeraSun bankruptcy auction. GPRE committed $10 mil-lion towards its purchase; the remainder is being fi nanced by the lend-ing group. Jim Stark, vice president of investor relations at GPRE, said ethanol production at the facilities was expected to commence by the end of July and both facilities should be running at full capac-ity soon after start-up.

According to GPRE President and CEO Todd Becker, the com-pany’s long-term plan includes selected expansions. “The acquisition of the plants in Central City and Ord lowers our cost of production

Green Plains Renewable Energy Inc. Obion, Tenn., production facility.

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and improves our ability to compete in the industry,” he said. “This purchase is consistent with our strategy to selectively acquire assets at reasonable valuations that provide long-term benefi ts to our share-holders.”

AgStar President and CEO Paul DeBriyn said GPRE is a com-mitted member of the ethanol industry and the company has dem-onstrated expertise in successfully operating ethanol plants. “We’re pleased to sell these plants to Green Plains Renewable Energy and we are excited to expand our relationship with them,” he said.

GPRE also operates four other production facilities - a 50 MMgy facility in Shenandoah, Iowa; a 50 MMgy facility in Superior, Iowa; a 100 MMgy facility in Bluffton, Ind., and a 100 MMgy facil-ity in Obion, Tenn. Stark said all of the plants are operating above nameplate capacity.

The acquisition of the two Nebraska facilities is another major move made by the young company in a short amount of time. The company was formed in 2004 and began operations at the Shenan-doah plant in August 2007. The remaining three facilities began pro-duction in 2008. GPRE was one of few ethanol producers to report solid fi nancial results for the fourth quarter of 2008 and Becker owed that accomplishment largely to the company’s diversifi ed income stream, including an agribusiness segment “which exceeded our ex-pectations,” he said. The company operates a grain marketing busi-

ness under the name “Green Plains Grain” and services the bulk grain, agronomy, livestock feed and petroleum markets. In addition, Green Plains Grain sells diesel, biodiesel, gasoline and propane at a retail level and employs agronomists to consult with producers and provide application services.

In addition to producing ethanol at its facilities, the company also recently became involved in a project to commercialize algae production technology at its ethanol plants for the purpose of pro-ducing biodiesel. Through a partnership with BioProcessAlgae LLC, a joint venture between GPRE shareholder Green Plains NTR plc, Clarcor Inc. and BioProcessH2O, the company secured a $2.1 mil-lion grant from the Iowa Power Fund to build an algae pilot project at its Shenandoah ethanol plant.

“Algae has the potential to become an important carbon se-questration solution, biofuel feedstock and feed product,” Becker said. “If the pilot project is successful, BioProcessAlgae will move to expand the photobioreactor system to full commercial scale. The Shenandoah algae project is an opportunity to help the environment, the ethanol industry and the Iowa economy.

GPRE also markets an additional 350 MMgy of ethanol. In to-tal, the company controls 785 MMgy of U.S.-produced ethanol.

—Kris Bevill


hen Congress expanded the renewable fuel standard (RFS2), its goal was to pro-mote the expansion of biofuels in order to increase our energy and national security by providing an alternative to foreign oil,

creating new green-collar jobs and protecting the environ-ment. However, one clause threatens to derail the progress America’s ethanol producers have been making toward the production of cleaner, greener, more effi cient biofuels. A half-baked theory that is not based on sound science, called indirect land use change, could be used by the U.S. EPA in the calculation of ethanol’s greenhouse gas (GHG) emissions.

The RFS2 lays out several requirements for reduc-tions in GHG emissions in biofuels. For corn ethanol from new refi neries, a reduction of 20 percent compared with gasoline emissions is required. Cellulosic ethanol must have a 60 percent reduction. Under the Energy Indepen-dence and Security Act of 2007, Congress gave the EPA the authority to calculate the direct and indirect effects of biofuels under RFS2. We fully support measuring the di-rect effects of biofuels. We already know that the latest life cycle analysis, the agreed-upon method of GHG calcula-tion among academics, shows that the ethanol industry is currently producing a fuel that is as much as 59 percent lower in direct-effect life cycle greenhouse gas emissions compared to gasoline. In the future, ethanol produced from cellulose has the potential to cut GHGs by up to 86 percent compared to gasoline—if this new theory doesn’t halt prog-ress in its tracks.

Including the highly controversial indirect land use change theory in the calculation of ethanol’s carbon inten-sity leaves new corn ethanol plants unable to make the 20 percent reduction in GHG emissions. But indirect land use change theory uses speculative models and incorrect assumptions in an attempt to blame American farmers for

deforestation in Brazil. It is also directly contradicted by real-world data, which shows that deforestation in the Ama-zon declined sharply just as American biofuels production doubled. We can’t base government policies on theories that aren’t backed up with real-world evidence.

Land use decisions involve many factors that have nothing to do with renewable fuels, including changes in currency, monetary policy, export needs, productivity gains, and weather. Furthermore, the EPA does not examine the indirect effects of petroleum. According to a recent study, the carbon emissions that result from protecting the oil supply in the Middle East could alone double the carbon footprint of foreign oil. This is just one of the many poten-tially signifi cant indirect effects of fossil fuels that deserves further analysis, but is not being weighed by the EPA. Apart from all the fl aws with the science, it is unfair to penalize American biofuels producers and farmers for land use deci-sions in other countries that they have no control over.

We’re keeping our eye on the policies being developed inside the Beltway because they will have such a profound effect on our industry. We should support including the di-rect, measurable effects of biofuels in GHG calculations, in-cluding direct land use change. But as far as indirect effects go, the science clearly isn’t ready for primetime.

Take advantage of the fact that your member of Con-gress will be home this month and tell your representative that the indirect land use change component of the Energy Independence and Security Act of 2007 needs to be re-pealed. Let’s let America’s ethanol producers lead the way in providing an alternative to foreign oil by increasing our national security, keeping jobs and money here at home, and protecting our environment.

Tom Buis is the CEO of Growth Energy. Reach him at [email protected] or (402) 932-0567.

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Ethanol Industry Financing Challenges ContinueBy Michael L. Weaver

inancing of the nation’s ethanol industry continues to fl uctuate months after VeraSun Energy Corp.’s bankruptcy sale of seven ethanol plants to Valero for $477 million in cash, or 61 cents per gallon. Even AgStar Financial Service’s recent fi nanced

sale of two former VeraSun Nebraska plants at 82 cents per gallon of long-term debt, is well off the $3 to $4 per gallon (or more) highs of 2006. With positive operating margins con-tinuing to elude many producers, ethanol companies whose capitalization was based on higher valuations are fi nding themselves out of covenant compliance and unable to earn or make principal payments. Although bankruptcy fi lings continue for some highly-leveraged plants, ethanol compa-nies with more moderate debt levels (70 cents to 80 cents per gallon) are restructuring loans with existing lenders. However, with Washington’s uncertainty over the second stage of the renewable fuel standard, the E10 blend wall and pending climate-change legislation, near-term fi nanc-ing challenges for many ethanol producers could prevent them from capitalizing on the next generation of renewable energy production in the U.S.

Loan Restructuring ConsiderationsWhen restructuring your loan, keep in mind the bank’s

perspective. Loan policies adopted by the bank combined with increased regulatory scrutiny by examiners means that your loan classifi cation is at the top of your banker’s con-cerns. Once your loan starts climbing in classifi cation, the hurdle to bring it back down is higher than it was going up. With capital reserves for bad loans on the rise, your loan classifi cation is a key issue for your bank. Ironically, a loan to a new borrower (on the same terms that you are request-ing in your workout) is easier to classify as a performing loan than your restructured loan. This “clean-slate” analysis works against existing borrowers with troubled loans, and

will likely require a re-capitalization plan to provide some credit enhancement advantage over new borrowers.

You must also consider the fi nanced sales taking place on former VeraSun or other bankrupt company facilities. Re-cent fi nanced sales in the 80 cent- to 90 cent-per- gallon range means that write-downs or reclassifi cations of loans for existing borrowers to levels below that range are unlike-ly. With lenders also providing operating loans to buyers, buyers have purchased facilities with equity in the neigh-borhood of $5 million per 50 MMgy of production. Existing ethanol companies looking to restructure their loans will be well-served to keep in mind these bank perspectives and current sales and fi nancings when formulating their own re-capitalization plans.

Considering these factors, borrowers should view ad-ditional equity or other credit enhancement on the balance sheet as the key condition of a successful loan restructuring. Further, existing management should focus on operational, marketing and other competitive strengths that they bring to the assets and ultimately to the repayment of the loan. Armed with these tools, companies can approach lenders with forbearance requests, interest-only payments, cove-nant simplifi cations and adjustments, and excess cash fl ow and waterfall adjustments. Of course, strong working capital balances remain the cornerstone of any restructured loan and recapitalization plan. Lenders are looking for longer-term solutions to their ethanol loan portfolio. Be realistic in your objectives, keep your recapitalization plan simple, and offer them the long-term solution. You can turn lemons into lemonade in today’s ethanol industry fi nancing market.

Michael Weaver is chair of Lindquist & Vennum’s Agribusi-ness and Energy practice, which has been involved in the fi nancing and construction of 1.6 billion gallons of U.S. bio-fuel production. He can be reached at [email protected].

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The Global Ethanol Marketvery time I meet with my Brazilian colleagues, they complain about the absence of a global market for eth-anol. They say that American and European import tar-iffs, plus additional non-tariff barriers in Europe, make a global market impossible.

Their view puzzles me. First of all, it would suggest that no ethanol trade takes place between countries, and this is not the case. Secondly, their view seems to suggest that a global market only exists when a certain tonnage of product is being shipped around the globe or when a product can be traded freely at any volume with no border restrictions.

In 1998, Brazil exported a mere 3 million liters (800,000 gal-lons) of ethanol to the European Union. Last year, Brazilian etha-nol exports to the EU totaled an overwhelming 1.5 billion liters. Add to that the nearly 3 billion liters (800 million gallons) of Brazil-ian ethanol that entered the U.S. in 2008, and I would say that it is diffi cult to argue there is no global market.

Apparently this does not convince Brazil. At the June 2009 ethanol summit in São Paulo, the issue of the global market was the most important recurring theme. The audience was told over and over that as long as there is any kind of trade barrier, tariff or non-tariff, free trade is absent and therefore no global market is possible. There are political and economic realities that make that stance untrue.

The economic reality is that tariffs are not at a level that makes market access impossible. Brazil’s share of ethanol imports to the EU last year was 77 percent. The EU’s total 2008 ethanol produc-tion was approximately 3.7 billion liters, and we imported nearly 2 billion liters.

It is important to recognize the political reality that import tariffs serve a very legitimate purpose: to help develop and build a domestic biofuel industry. Brazil should understand that notion better than any other country in the world. After all, Brazil has a 30-year track record of government support and intervention. Even

though government involvement was pushed to the background a few years ago, the Brazilian government still carefully monitors what is happening in the domestic fuel market and intervenes when deemed necessary. For example, less than 5 years ago, the Brazilian government reduced the maximum blending ratio from 25 percent to 20 percent and threatened to install export duties be-cause ethanol producers were neglecting domestic demand and giving preference to boosting exports.

A second political reality is that biofuel trades with the EU are only allowed if it can be demonstrated beyond any doubt that the biofuel supplied is produced in a sustainable way. One could ar-gue that this is a non-tariff barrier. However, criteria in the Europe-an law apply to each batch of biofuel, whether produced inside or outside of the EU. Because there is a level playing fi eld between all biofuels, whatever the origin, it is legally not a barrier to trade. But this is not the real problem. Arguing against sustainability cri-teria because it hampers creating a world market makes it clear that one does not understand the crucial role of these criteria in bringing about a market at all.

The key to a global market is regaining public acceptance for the use of biofuels. European decision-makers felt so much public pressure from concerned society members last year that mandat-ing biofuel use could only be justifi ed by creating an environmen-tal and social sustainability scheme. Without such a scheme, EU governments would not have mandated biofuel use whether the biofuel was produced inside or outside the EU.

Brazilian producers need to understand and accept that com-pliance with these standards will eventually boost the market for biofuel use. And the more that biofuel can be used, the more ex-port opportunities there will be, resulting in a greater opportunity for a global market. It is just a matter of time.

Robert Vierhout is the secretary-general of eBIO, the European Bioethanol Fuel Association. Reach him at [email protected].

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A Call to ActionAlthough the ethanol industry is currently facing numerous challenges in both public perception and economics, speakers at this year’s International Fuel Ethanol Workshop and Expo encouraged attendees to take action - address

the challenges head on and look to the future of the industry and the potential benefi ts of cellulosic ethanol.

By Hope Deutscher and Erin Voegele


FEW

The 25th annual International Fuel Ethanol Workshop and Expo was held June 14-18 at the Colorado Convention Cen-

ter in Denver. For the fi rst time in its history, the event was co-located with the Advanced Biofuels Workshop and International Distill-ers Grains Conference. Together, the three events featured more than 200 speakers representing all aspects of the ethanol and advanced biofuels industries. More than 300 businesses and organizations participated in the 2009 FEW Expo, which attracted ap-proximately 2,100 attendees.

BBI International CEO Mike Bryan opened the FEW by addressing the negative press that has plagued the ethanol industry in the past year. Noting that ethanol has been characterized as a “hoax” and “scam” by ma-jor news organizations, Bryan acknowledged the past year has been a diffi cult one. Al-though the economy has played a role in the industry’s recent challenges, Bryan said that

public perception has played a role as well.“I believe the current economic condi-

tions are really only a bit player in the woes of the ethanol industry over the past year,” Bryan said. “I think that much of it had to do not as much with the economy, but far more with the image that ethanol has.” In fact, Bryan said the root of the problem was – and still is – ethanol’s image, and the way that image has been affected by the debates over food versus fuel, land use, starving peo-ple, high food prices and the marginalization of women in third world countries.

“For those of you who are in the busi-ness, you know that we couldn’t get plants fi nanced a year before the economy took a dive,” Bryan continued. “It had nothing to do with the economy being bad. It had ev-erything to do with the image this industry had within the fi nancial institutions. Bankers, lenders, equity people lost faith in this indus-try. They lost faith that they would get their money back if they invested in the ethanol

FEW


Philip Madson, president of Katzen International Inc., received the 2009 FEW Award of Excellence for his con-tribution to the ethanol industry. Award winners are selected through a formal nomination and peer review procedure to identify and recognize an individual who has published papers and/or made signifi cant research, technical advisory and development contributions to the ethanol industry.

“This is extraordinarily humbling,” Madson said in his acceptance speech. “I would like to salute all those who came before because you were my inspiration. Not only those of you who have received this wonderful award but all of you in the audience who inspired me in the industry every day by your actions and your dedication. There is one person that I simply must acknowl-edge for his inspiration to me, and that is Dr. (Raphael) Katzen, the founder of our fi rm and the one who really inspired me and helped me understand that ex-cellence is its own reward.”

In 1980, Madson joined Katzen International, a well-known technology company that has helped build and de-sign about 140 major ethanol plants in 34 countries. The company was found-ed by Dr. Katzen in 1955.

Madson admitted he seeks out op-portunities to write and teach students about ethanol and the industry, but he doesn’t seek out being recognized for his work. “Being an engineer, my life’s work is trying to design the next best ethanol plant that outperforms our cli-ent’s expectations. That is what turns me on,” he said. “I love teaching and what makes me feel good has always been seeing the people that I have helped train, that I have helped to de-velop their business – and that is what’s really exciting to me because through them I succeed. That’s what my world is, so being recognized for that is…it’s hard to come up with words.”

Madson receives Award of Excellence

Dr. Kevin Hicks, chair of the FEW Award of Excellence committee, presents the award and a $1000 check to Philip Madson during the FEW.

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industry. All of those things led to an equity freeze, and a freeze in the construction of new plants.”

Although some have said the industry was building too fast, Bryan dismissed the notion that a slowdown is positive. “Tell that to the hundreds of communities out there who desperately need new business,” he said. Contrary to what many believe, Bryan said the market for ethanol is not saturated. “We have a 150 billion gallon a year gasoline mar-ket,” he said. “I don’t think we have reached market saturation with ethanol. We can build hundreds of more plants, and we ought to be doing that, and we ought to be doing that now.”

The thing that has been holding the industry back, Bryan said, is that those in the ethanol industry have lost control of the message. Outsiders have been allowed to set the research and political agendas for the ethanol industry. “It’s time we take back control of our image,” Bryan said. “We can no longer let others outside of our industry set our agenda, set our message, set our po-litical objectives, set our research objectives. We need to take back control of our industry once and for all.”

The way to accomplish this, Bryan said, is for those in the ethanol industry to take ac-tion, educate themselves, and be prepared to address false information. “We need to stop being reactionary, and we need to start being

proactive,” he said. “When you do that, you are going to empower yourself, you are going to empower your community and you are, in fact, going to empower the industry.”

In his keynote address, Growth En-ergy co-chairman Gen. Wesley Clark echoed Bryan’s call to action. “You are the frontline soldiers in this fi ght, and you’ve got to take that fi ght back in your local communities,” he said.

Clark encouraged attendees to remem-ber the vital role they play in America’s na-tional security. “Let’s be honest,” he said. “This is not really just about business. This is really about national security. That’s why I’m here. I’m a national security guy.”

“From every aspect, what [the ethanol industry] is doing is about national security,” Clark continued. “I know you are here [at the FEW] for business, and we want you to make a profi t, but I don’t think there is any industry in America in which the good sense of making a profi t is any more closely related to the good work of national security than this industry of ethanol.”

Clark spoke about the national security implications of being dependent on foreign sources of energy. “If you have a vital re-source that is coming from abroad – and you can’t run your economy without it – then it becomes vital to your national security inter-ests to protect access to it,” he said. Alluding to confl icts in the Middle East, Clark stressed

FEW

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BBI International CEO Mike Bryan and Growth Energy co-chairman Gen. Wesley Clark speak to attendees during the FEW general session.

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that America’s motivation is not just an abstract dispute over political philosophy. “This is about America’s need for imported oil,” he said. “The difference between the Middle East and Africa is very simple. Where is the oil?”

According to Clark, the need for foreign sources of energy distorts national foreign pol-icy actions. Every dollar we spend on ethanol stays in the U.S., Clark said. “It’s not going to the Middle East – to Iraq or Saudi Arabia – or some other country that may or may not share America’s real interest,” he continued. “It gives us fl exibility to have the kind of foreign policy

that we want; based on good judgment, good values and what’s in the long-term interest of America.”

Clark also spoke of the national security implications of climate change. Change in rain-fall patterns, the melting of glacial ice, rising sea levels, crop failures and the outward spread of pests and disease from tropical areas all con-tribute to dislocation of the world’s population. “Dislocation economically, dislocation socially, and dislocation politically means confl ict,” he said. “And confl ict means national security.”

The ethanol industry has the ability to take

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BBI International President and Co-founder Kathy Bryan received the 2009 High Octane Award, in recognition for her signifi cant contributions to the etha-nol industry, during the International Fuel Ethanol Workshop and Expo.

The High Octane Award is a peo-ple’s choice award, meant to recognize a person who has helped the ethanol industry mature and progress over the years and, in particular, has made an im-pact on the industry in their own special way.

Since the 1980s, Bryan has been a dynamic and prominent fi gure in the eth-anol industry, beginning with operating a small ethanol plant in rural Minnesota, said Ralph Groschen, a senior market-ing specialist at the Minnesota Depart-ment of Agriculture who has known Bry-an since her early years in the industry. “It was so easy to see her high octane enthusiasm, the ability to communicate and collaborate with people,” he said. “She has it all.”

During his presentation of Bryan’s award, Groschen relayed some of the comments that were received regarding Bryan’s nomination. Comments includ-ed were: “she is a tireless ethanol sup-porter and has befriended hundreds of people,” “she was ethanol before it was cool,” and “she has truly made an impact worldwide in this industry.”

“She will always have a special place in my heart, in my memories of the times in Minnesota when we were start-ing out,” Groschen said. “We used to sit around and say, ‘wouldn’t it be nice if we had one or two decent-sized plants.’ At that time in Minnesota, a decent-sized plant was anything over the largest plant that we had, which was 1.5 million gal-lons. Her dream didn’t stop there.” With her husband, Mike, and their families, Kathy helped put together a program (the FEW) that played a key role in building a vibrant ethanol industry. “Who says dreams don’t come true,” Groshen added.

Due to her battle with cancer, Bryan was not in attendance at the conference, but provided a pre-recorded acceptance speech. “I’m usually here behind the podium giving this award, so it’s a little awkward to be receiving it this year,” she said. “I can only tell you that I am truly, truly honored. I am also very proud to be part of the huge team of ethanol pio-neers.”

Bryan honored for passion for the industry

unlimited – in the near-term, the long-term, and as far as our eyes can see and our minds can imagine.”

One way the industry is growing is by adding cellulosic ethanol opportunities. Many U.S. ethanol producers are rapidly developing technologies that use biomass feedstocks, such as corn cobs, switchgrass or municipal solid waste.

“One of the things I’ve said many times over the years is that the bridge from energy de-pendence to independence is not a single span bridge, it’s a sectional bridge,” ICM Inc. CEO

Dave Vander Griend said. “Fuel ethanol from corn is one of those sections and it is not like we are passing the baton from generation one to generation two; there are opportunities for all renewable energies to thrive and work to-gether.”

Vander Griend was one of eight industry representatives who participated in an opening session panel to discuss the future research and technology of ethanol production.

Over the past 18 months, Poet LLC CEO Jeff Broin has become a believer that cellulos-ic ethanol will be a reality. “I invested in it 18

the nation into the 21st century the nation forward into the 21st century, Clark said. “But, to do it, we are going to have to take this fi ght to the public and we are going to show them how good this industry is - how good you are and how important we are to the future of the United States of America. That’s the mission – that’s where we are go-ing – and we need you.”

“This audience is the heart and soul of the ethanol industry,” echoed Bob Dinneen, president and CEO of the Renewable Fuels Association. “You are the people that make it happen. You run the plants, supply the services, and provide the technology that is driving this industry to new heights, even in the face of unprecedented challenges.”

Despite the deepening economic down-turn last year, Dinneen said the U.S. ethanol industry grew by 34 percent – opened 31 plants, added 240,000 jobs and produced more ethanol than ever before. “As the world and nation look at regulating carbon - through taxes, cap and trade or assigning a greenhouse gas profi le to biofuels in the renewable fuel standard - Dinneen said the industry will need to ensure that “the bu-reaucrats get it right – that they recognize the carbon benefi ts of biofuels like ethanol and do not unfairly and with no scientifi c foun-dation penalize biofuels for the carbon foot-print of other industries or other countries.”

Ethanol producers must work with scientists and environmentalists to answer the question of ethanol’s carbon footprint, he said. “We can’t legislate the criticism away, and we can’t ignore it,” he said. “We need to answer the critics with sound sci-ence and facts. And the facts are on our side. Our carbon footprint is improving with every new plant and each new technology. [The oil companies’] carbon footprint is get-ting worse with every gallon of tar sands and every new deepwater well they dig. For that reason, carbon regulation need not be something to fear. It should be something to embrace. I suggest that every plant manager and every employee that cares about this in-dustry should be thinking about ways to re-duce their plant’s carbon footprint.”

While the industry may have troubles, Dinneen said it also has a great story to tell. “If we stick together, do our work well, and stay focused on the future, our potential is

FEW


months ago with high risk, but today I’m very confi dent that it will become a reality and we will see combined ethanol plants, a grain-based facility next to a cellulosic facility, using the waste energy to power both facilities,” he said.

However, there is a stumbling block to making cellulosic ethanol a reality, some of the

panelists said. Pure and simple – political will and support is needed to further the cellulosic industry, said Neal Briggi, Global Head of En-zymes with Syngenta Biotechnology Inc.

A U.S. energy policy will transform into in-vestment that will move the industry forward, Vander Griend added. “If there is not a long-

term policy, there’s not going to be a long-term industry,” he said.

In the short term, Broin said the industry and government need to address the blend wall, increasing the percentage of ethanol in gasoline and creating a fl exible fuel mandate to encour-age the use of more fl exible fuel vehicles. “We can all talk about the future 10 years down the road but if we don’t get our politics in order and our public relations in order, I don’t think the future looks too bright,” he said.

However, Troy Hobbs, corn biofuels strat-egist at Monsanto Co. disagrees. “I think if the political will is there, if we’ve got any business climate at all, things will take shape but we need to advance that political will and move it to the next level,” he said.

Wes Bolsen, chief marketing offi cer and government affairs director for Coskata Inc., said political will is good for the country but the cellulosic industry is currently hampered by economics. “The biggest thing is the produc-tion costs,” he said. “When we can sell ethanol cheaper than a gallon of gasoline, even on a Btu basis, people will demand that product. We don’t need government involvement because we have a superior product.” EP

Hope Deutscher and Erin Voegele are Ethanol Producer Magazine associate editors. Reach Deutscher at [email protected] or (701) 373-8046. Reach Voegele at [email protected] or (701) 373-8040.

FEW


The International Fuel Ethanol Work-shop and Expo featured a two-part session on carbon designed to provide attendees with an overview of the current status of a potential U.S. carbon cap-and-trade pro-gram as well as provide answers to how ethanol producers may be impacted by that type of program. High attendance at the sessions demonstrated the desire of ethanol producers to better understand this new aspect of the industry.

Lee Tharp, senior project manager at Aquaterra Environmental Solutions Inc., opened his presentation by asking how many attendees believe in man-made global warming. Regarding the future like-lihood of a federal carbon cap-and-trade system, Tharp said it doesn’t matter if a person believes in it or not. “Whether you believe in it – or you are absolutely against it – it doesn’t matter,” he said. “This is go-ing to have to be part of your business model in the future or you probably won’t survive.”

“We stand poised for the fi rst time ever to have a federal regulatory approach

on greenhouse gas emissions,” said Dave Crass, partner at Michael Best & Friedrich LLP, referring to pending climate change legislation. However, even if federal law-makers are unable to pass current leg-islation, Crass said the idea of a carbon cap-and-trade system is not going to die. “If Congress can’t do it, [President Barack Obama’s] administration is going to,” he said. “Congress and the (U.S.) EPA are sort of in a little race to implement climate change regulation.”

“Cap-and-trade deals fi rst and fore-most with the point of combustion,” said Beau Griffey, account executive at US Energy Services Inc. Griffey said it will be important for ethanol producers to un-derstand their emissions levels. “Measur-ing your risk and quantifying your market opportunities are very critical to being an effective participant [in a cap and trade program], and not getting whacked with penalties or alternative compliance pay-ments.”

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RFS2: Bridging the Gap to Advanced BiofuelsIf corn-based ethanol is the bridge to next generation biofuels, then the U.S. EPA’s proposed rulemaking for the second stage of the renewable fuel standard (RFS2) may be the driving force to launch that journey. While still supportive of the corn-based ethanol industry, the RFS2 program clearly requires the biofuels industry to step-up efforts to commercialize next generation technologies.

By Erin Voegele



POLICY

The U.S. EPA published its long-anticipated proposed rule for the second stage of the renewable fuel standard (RFS2) on May 26.

In the proposed rule, the agency lays out its strategy for achieving the renewable fuel man-dates required by the Energy Independence and Security Act of 2007 (EISA), which re-quires the use of 36 billion gallons of renew-able fuel by 2022.

The current renewable fuel standard (RFS1) was adopted by the EPA in order to implement the Energy Policy Act of 2005. EISA, which was signed into law two years later, required the agency to expand and revise the current program. The EPA was originally scheduled to issue a fi nal rule for RFS2 by Jan. 1, 2009, but announced in July 2008 that the rulemaking would be delayed due to complex new elements that EISA added to the pro-gram. Nearly one year later, the agency was fi nally able to complete its proposal.

In addition to increasing the renewable fuel mandate from 7.5 billion gallons by 2012 to 36 billion gallons by 2022, EISA also speci-fi ed other changes to the RFS program. These changes are refl ected in the EPA’s proposed rule for the RFS2.

As directed by EISA, the proposed rule specifi es four unique categories of renewable fuel, each with its own respective mandate. In order to generate renewable identifi cation numbers (RINs) that are used by obligated parties to meet these mandates, renewable

fuels must meet certain baseline carbon re-duction thresholds and must be manufac-tured from feedstock meeting the defi nition of renewable biomass. In addition, the RFS2 program has been expanded to include diesel and non-road fuels. The proposed rulemaking also outlines several changes to the RIN pro-gram, which will be detailed in the September issue of EPM.

Fuel CategoriesThe proposed rule specifi es four cat-

egories of renewable fuel: cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel. Each of the four cat-egories has a unique greenhouse gas (GHG) emissions reduction threshold that the fuel must meet in order to qualify for the RFS2 program.

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0

1

2

3

4

5

6

7

8

Cellulosic Biofuel

Biomass-based Diesel

Advanced Biofuel

Renewable Fuel

Proposed Standards for 2010 (shown as a fraction of a refiner's or importer's gasoline

and diesel volume that must be renewable fuel)

*Data sourced from page 4 of EPA Fact Sheet: EPA Proposes New Regulations for the National Renewable Fuel Standard Program for 2010 and Beyond

A fuel’s life-cycle GHG emissions are de-fi ned as the aggregate emissions attributed to all components of fuel production and use, including feedstock production and distribu-tion, fuel production, delivery, use and signifi -

cant indirect emissions from land use change. The full life-cycle emissions level of a particu-lar fuel is measured against a baseline fossil fuel in order to determine its GHG emissions reduction threshold.

Cellulosic biofuel is defi ned as any re-newable fuel – not necessarily ethanol – that is derived from cellulose, hemicelluloses or lignin. In order to qualify as cellulosic biofuel, the renewable fuel must achieve a life-cycle

POLICY

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Renewable Fuel Volume Requirements for RFS2 (billion gallons)

Year

200820092010201120122013201420152016201720182019202020212022

2023+

Cellulosic Biofuel Requirement

n/an/a0.1

0.250.51

1.753

4.255.57

8.510.513.516b

Biomass-based Diesel Requirement

n/a0.5

0.650.81aaaaaaaaaab

Total Renewable Fuel Requirement

n/a0.6

0.951.35

22.753.755.5

7.259

1113151821b

Total Renewable Fuel Requirement

911.1

12.9513.9515.2

16.5518.1520.5

22.25243628303336b

(a) To be determined by EPA through a future rulemaking, but no less than 1.0 billion gallons(b) To be determined by EPA through a future rulemaking

*Chart sourced from page 2 of EPA Fact Sheet: EPA Proposes New Regulations for the National Renewable Fuel Standard Program for 2010 and Beyond

GHG emission-reduction threshold of 60 percent.

Advanced biofuel is defi ned as a re-newable fuel other that ethanol derived from cornstarch. The advanced biofuel cat-egory can apply to a variety of fuels, includ-ing biomass-based diesel, biogas, butanol or other alcohols and fuels derived from cellu-losic biomass. This may include ethanol de-rived from cellulose, hemicelluloses, lignin, sugar or any starch other than corn starch. Both advanced biofuel and biomass-based diesel must achieve a life-cycle GHG emis-sion-reduction threshold of 50 percent.

Additional fuel used to meet the total renewable fuel mandate is required to meet a 20 percent GHG-reduction threshold. The majority of this fuel is expected to be corn-based ethanol. Although new corn-based ethanol plants will be required to meet this reduction threshold in order to generate RINs, the proposed rule includes a component that allows many existing plants to be grandfathered. Under the proposed rule, any renewable fuel facilities that com-menced construction on or before Dec. 19, 2007, as well as facilities that commenced construction in 2008 or 2009 and are fi red with natural gas, biomass, or a combination thereof, are grandfathered. “We expect that a signifi cant number of facilities out there would be grandfathered, and very likely the majority of them out there would be grand-fathered,” says EPA Senior Policy Advisor Paul Argyropoulos. From a volume per-spective, he says the EPA is expecting to grandfather approximately 15 billion gal-lons of ethanol production, and possibly more.

It is important to note that while EISA limits the participation of corn-based etha-nol in the RFS2 to 15 billion gallons, there is not a mandated volume for corn-based eth-anol. Excess RINs from cellulosic biofuel, biomass-based diesel and advanced biofuel can be used to meet total renewable fuel mandates in place of corn-ethanol RINs, Argyropoulos says. “Any of the compliant fuels can count toward the total renewable fuels standard.”

POLICY

continued on page 63

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Industry, Lawmakers React to Possible Indirect Land Use Policy

The inclusion of indirect land use change in the U.S. EPA’s proposed rule for the second stage of the renewable fuel standard (RFS2) has garnered heavy criticism from those in the ethanol industry as well as several Midwest Con-gressional members.

Sen. Chuck Grassley, R-Iowa, said he is disappointed by the EPA’s inclusion of speculative assumptions on indi-rect land use in the RFS2 rulemaking. “Frankly, there’s no sound science to calculate indirect land use and it’s ridicu-lous to think that Brazilian farmers are looking to see what Iowa farmers are doing to determine how they run their own businesses,” he said.

Sen. Tom Harkin, D-Iowa, said that while the RFS puts the nation on a clear path to producing and using steadily increasing levels of biofuels, he too questions the science of indirect land use. “As to the life cycle greenhouse gas provi-sion of the rule…I am skeptical about the science around it and have previously urged EPA to make sure that the sci-ence is sound before enacting such a provision,” he said.

Representatives of the American Coalition for Etha-nol, Growth Energy, and the Renewable Fuels Association shared their thoughts on indirect land use at a House Com-mittee on Agriculture hearing held May 21.

“International land use change theory predicts that us-ing corn ethanol in the United States somehow causes ripple effects in the food and feed systems that cause farmers liter-ally halfway around the world to make a land use decision to put virgin land into production to replace feed, and the carbon emissions resulting from this should be ascribed to corn ethanol,” ACE Executive Vice President Brian Jennings said. According to Jennings, real world measurements actu-ally indicate reduced levels of deforestation in the Amazon during the ethanol boom of 2004-‘07. “The fact that the in-ternational land use change predictions are not validated by on-the-ground measurements should be persuasive enough to justify more scientifi c scrutiny before moving ahead in a policy context,” he added.

In his testimony, Growth Energy CEO Tom Buis said both the RFS2 rulemaking and California’s low carbon fuel stan-dard should apply equally to all transportation fuel, should be based on universally accepted science and economic mod-eling, and should exclude indirect land use change consid-erations. “The proposals at both the state and federal levels that we’ve reviewed do not meet these requirements, and we’ve spoken out aggressively to address the shortcomings in these proposals,” he said.

RFA President and CEO Bob Dinneen said the EPA has over-read the statute for developing the next stage of the renewable fuel standard while under-evaluating the science that is being used. According to Dinneen, these actions have threatened the continued development and evolution of the biofuels industry and may have undermined the continued movement toward climate change policy in this country.

Two pieces of pending federal legislation seek to elimi-nate the requirement that the EPA include indirect land use change calculations in the rulemaking for RFS2. The Renew-able Fuel Standard Improvement Act (H.R. 2409) was intro-duced by U.S. House of Representatives agriculture com-mittee chairman Collin Peterson, D-Minn., ranking member Frank Lucas, R-Okla., and a bipartisan group of 42 House members. Sen. John Thune, R.-S.D., introduced S. 943, which contains similar language to the House bill.

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Modeling Life-cycle Emissions

No single model can currently capture all the complex factors that must be evalu-ated in order to estimate the life-cycle greenhouse gas (GHG) emissions of biofuels, so the U.S. EPA has used several different tools to complete these evaluations.

GREETThe greenhouse gases, regulated emissions, and energy use in transportation

model (GREET) was utilized by the EPA to assess emissions data associated with the production and transportation of agricultural inputs. GREET is a spreadsheet analysis tool developed by the U.S. DOE’s Argonne National Laboratory and is used to calcu-late the GHG emissions associated with the production and consumptions of fossil fuels, as well as the GHG emissions associated with electrical production.

FASOMIn order to estimate domestic land use changes and their associated emissions,

the EPA relied on the forest agriculture sector optimization model (FASOM). The mod-el, developed by Texas A&M University and others, tracks production possibilities for fi eld crops, livestock and biofuels on private lands in the U.S. It also accounts for changes in carbon dioxide, methane and nitrous oxide from most agricultural activities and tracks carbon sequestration and losses over time.

FAPRIThe Food and Agricultural Policy Research Institute model was used to estimate

the impacts of feedstock production on international agriculture and livestock produc-tion. The FAPRI model was developed by Iowa State University and the University of Missouri to capture the biological, technical and economic relationships of key vari-ables of commodities. It predicts how much land use change will occur in other coun-tries but doesn’t predict what kind of land will be affected. To assess international land use change as well as the GHG emissions associated with those conversions, EPA used date provided by Winrock International.

GTAPAlthough the life-cycle emissions estimates included in the RFS2 rulemaking

were not analyzed using the global trade analysis model (GTAP), the EPA is currently working to address shortcomings that have been identifi ed with the model and will continue to evaluate how the model could be used as part of the fi nal rule. One poten-tial advantage of the GTAP model, which is maintained by Purdue University, is that it projects international land use change based on the economics of land conversion rather than using the historical data approach implemented by FAPRI and Winrock.

SUPPLEMENTAL MODELSValues provided by the Intergovernmental Panel on Climate Change were used

by the EPA to estimate the impacts of fertilizer applications. The agency also worked with two models developed by Colorado State University to update these assess-ments. Models developed by the USDA and the DOE’s National Renewable Energy Laboratory were used to estimate GHG emission associated with renewable fuel pro-duction. These assessments were cross-checked with the biofuel energy systems simulator model. In addition, the EPA’s motor vehicle emission simulator model was used to estimate vehicle tailpipe emissions. In the fi nal rulemaking, the agency also intends to use a version of the Energy Information Administration’s national energy modeling system to estimate secondary impacts on the energy market.

Defi nition of Renewable Biomass

As required by EISA, the defi nition of renewable biomass includes planted crops and crop residue, planted trees and tree resi-due, animal wastes, algae, and yard and food wastes. The defi nition, however, limits these feedstocks according to the management practices of the land they are produced on. To qualify as renewable biomass, crops and crop residues must be harvested from agri-cultural lands cleared or cultivated prior to

Dec. 19, 2007. This land must be actively managed or fallow and non-forested. Feed-stocks that do not meet this defi nition of renewable biomass cannot be used to pro-duce fuel that complies with the RFS2.

Under the defi nition, feedstocks can be sourced from cropland, pastureland and USDA Conservation Reserve Program land; not rangeland, federal land or other rural land. Trees and tree residues can be sourced from actively managed tree plan-tations on non-federal land cleared prior to Dec. 19, 2007, as well as slash and pre-

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Lifecycle GHG Emissions Changes for Various Corn Ethanol Pathways in 2022 Relative to the 2005 Petroleum Baseline

Corn Ethanol Production Plant Type

Percent Change from 2005 Petroleum

Baseline (100 yr 2%)

Percent Change from 2005

Baseline (30 yr 0%)

Natural Gas Dry Mill with dry DGs -16% +5%Natural gas Dry Mill with dry DGs and CHP -19% +2%Natural Gas Dry Mill with Dry DGs, CHP, -27% -6%and Corn Oil Fractionation Natural Gas Dry Mill with dry DGs, CHP, -30% -10%Corn Oil Fractionation, and Membrane Separation Natural Gas Dry Mill with dry DGs, CHP, Corn Oil Fractionation, -35% -14%and Membrane Separation, and Raw Starch Hydrolysis Natural Gas Dry Mill with wet DGs -27% -6%Natural Gas Dry Mill with wet DGs and CHP -30% -9%Natural Gas Dry Mill with wet DGs, CHP, and Corn Oil Fractionation -33% -12%Natural Gas Dry Mill with wet DGs, CHP, -36% -15%Corn Oil Fractionation, and Membrane Separation Natural Gas Dry Mill with wet DGs, CHP, Corn Oil Fractionation, -39% -18%and Membrane Separation, and Raw Starch Hydrolysis Coal Fired Dry Mill with dry DGs +13% +34%Coal Fired Dry Mill with dry DGs and CHP +10% +31%Coal Fired Dry Mill with dry DGs, CHP, and Corn Oil Fractionation -5% +15%Coal Fired Dry Mill with dry DGs, CHP, -13% +8%Corn Oil Fractionation, and Membrane Separation Coal Fired Dry Mill with dry DGs, CHP, Corn Oil Fractionation, -21% -1%and Membrane Separation, and Raw Starch Hydrolysis Coal Fired Dry Mill with wet DGs -9% +12%Coal Fired Dry Mill with wet DGs and CHP -11% +10%Coal Fired Dry Mill with wet DGs, CHP, and Corn Oil Fractionation -17% +3%Coal Fired Dry Mill with wet DGs, CHP, -25% -4%Corn Oil Fractionation, and Membrane Separation Coal Fired Dry Mill with wet DGs, CHP, Corn Oil Fractionation, -30% -9%and Membrane Separation, and Raw Starch Hydrolysis Biomass Fired Dry Mill with dry DGs -39% -18%Biomass Fired Dry Mill with wet DGs -40% -19%Natural Gas Fired Wet Mill -7% +14%Coal Fired Wet Mill +20% +41%Biomass Fired Wet Mill -47% -26% *Chart sourced from page 317-318 of EPA's preamble to the proposed regulation

continued from page 58

commercial thinning from non-federal forest-land. In addition, biomass obtained from cer-tain areas at risk for wildfi re can be used. The defi nition does not reference municipal solid waste (MSW), only the yard and food waste components of it. According to Argyropou-los, the EPA is seeking comment on allowing greater fl exibility in interpreting the defi nition of MSW.

It is important to note that the regula-tion does not prohibit the production of feedstocks and fuels that do not meet these defi nitions and GHG emissions-reduction thresholds. It does, however, prohibit produc-ers from generating RINs from fuels that do not meet these compliance standards.

The Program in ActionThe EPA is proposing to implement the

program beginning on Jan. 1, 2010. Under the proposed rule, the party that generates RINs would be responsible for verifying that the feedstock used to produce renewable fuels meets the defi nition of renewable biomass. The EPA has outlined several processes that could be used to implement this requirement and is seeking comment on each of them. The agency has also proposed that producers who do not generate RINs for their fuel will be required to provide documentation that their feedstocks do not meet the defi nition of renewable biomass.

In order for EPA to adequately imple-ment the RFS2 program, the agency says it will need to gather information on each

producer’s feedstocks, facilities and prod-ucts. This will be accomplished through a

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(a) Assumes 100-year timeframe and 2 percent discount rate*Data sourced from page 343 of EPA's preamble to the proposed regulation

Applicable Categories for Each Fuel Pathway: Ethanol (a)

Fuel Type Feedstock Production Process Requirements Category

Starch from corn, wheat, barley, oats, rice, or sorghum





Cellulose and hemicellulose from corn stover, switchgrass, miscant-

hus, wheat straw, rice straw, sugarcane bagasse, forest waste,

yard waste, or planted trees

Cellulose and hemicellulose from corn stover, switchgrass, miscant-

hus, wheat straw, rice straw, sugarcane bagasse, forest waste,

yard waste, or planted trees

Sugarcane sugar

Process heat derived from biomass

Dry mill plantProcess heat derived from natural gas

Combined heat and power (CHP)Fractionation of feedstocks

Some or all distillers grains are dried

Dry mill plantProcess heat derived from natural gas

All distillers grains are wet

Dry mill plantProcess heat derived from coal

Combined heat and power (CHP) Fractionation of Feedstocks

Membrance separation of ethanolRaw starch hydrolysis

Some or all distillers grains are dried

Dry mill plantProcess heat dervied from coal

Combined heat and power (CHP)Fractionation of feedstocks

Membrane separation of ethanolAll distillers grain are wet

Enzymatic hydrolysis of cellulose; Fermentation of sugars;

Process heat derived

Thermochemical gasification of bioomass; Fischer-Tropsch process

Process heat derived form sugarcane bagasse

Ethanol

Ethanol

Ethanol

Ethanol

Ethanol

Ethanol

Ethanol

Ethanol

Renewable Fuel

Renewable Fuel

Renewable Fuel

Renewable Fuel

Renewable Fuel

Cellulosic Biofuel

Cellulosic Biofuel

Advanced biofuel

new registration requirement, which must be completed by each producer by Jan. 1, 2010, or 60 days prior to the date a pro-ducer begins producing fuel. According to Argyropoulos, the information gathered during the registration process will also help the EPA determine whether a specifi c facil-ity will be eligible for grandfathering.

The proposed rule also specifi es that all renewable fuel facilities will be required to have a third-party engineer review com-pleted by a licensed professional engineer working within the chemical engineering fi eld. In addition to completing this review for registration purposes, each facility would be required to repeat the engineering review every three years. Under the proposed rule, foreign renewable fuel producers who ex-port fuel into the U.S. market would be re-quired at minimum to meet the same com-pliance standards as domestic producers in order to generate RINs.

While renewable fuels are required to meet GHG reduction thresholds to qualify for the RFS2 program, these life-cycle emis-sions are not determined for each individual facility. Rather, the EPA has determined life-cycle GHG values from specifi c combi-nations of fuel type, feedstock and produc-tion process. To date, the EPA has focused efforts on developing fuel pathways for fu-els initially expected to be high-volume con-tributors toward the RFS2 mandates, Argy-

ropoulos says. “There are multiple pathways that have been identifi ed,” he says. “There are other pathways that are being evaluated right now, between the proposal and the fi nal [rule], so we expect that as new path-ways are anticipated – especially to be com-mercialized – then we are going to need to assess all of those.”

The EPA has used a variety of models and data sets to complete these life cycle GHG emissions estimates, or fuel path-ways. According to Argyropoulos, this is due to the fact that no one model can cur-rently capture and calculate all of the rel-evant information that must be considered. Although the ethanol industry has criticized the EPA’s inclusion of indirect land use in the life-cycle analysis of biofuels, Argy-ropoulos says the agency is simply doing what is required by law. “I think from our perspective, that’s the intent that Congress wanted – inclusion of indirect land use,” he says. “It’s written in the law, and we feel it’s important that we follow what Congress has intended for us to do. Therefore, we have done that.”

The proposed rule details multiple op-tions for assessing these emissions impacts over time. One option is to assume a 30-year time frame with no discounting, meaning all emissions impacts are valued the same regardless of when they occur. A second option would be to assess the impacts over

a 100-year time frame while discounting fu-ture emissions by 2 percent annually.

According to analysis completed by the EPA, a number of corn-based ethanol natu-ral gas-powered plant confi gurations would be able to meet the 20 percent GHG re-duction threshold when assessing emissions over 100 years with the 2 percent discount rate. However, no corn ethanol pathways analyzed by the agency to date would be able to reach the threshold if the emissions are assessed over a 30-year timeframe with no discount rate.

In order to implement the program, EISA does allow the EPA some limited fl exibility to reduce the GHG thresholds for each category of fuel by up to 10 percent. In the proposed rule, the EPA proposes adjusting the GHG threshold for advanced biofuel down to 44 or 40 percent. This would allow sugarcane ethanol to count as advanced biofuel and help ensure that the volume mandated for advanced biofuel could be met. EP

Erin Voegele is an Ethanol Producer Magazine associate editor. Reach her at [email protected] or (701) 373-8040.

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TECHNOLOGY


A biomass conversion technology developer has created a plan for large, grain-based ethanol producers to host

cellulosic ethanol facilities, and reap the energy rewards.

By Kris Bevill


TECHNOLOGY

During his speech at the 2009 In-ternational Fuel Ethanol Work-shop and Expo, Renewable Fu-els Association President Bob

Dinneen cautioned producers to not think in terms of new ethanol and old ethanol. “Just as with any new generation, the new generation of ethanol needs an older generation before it,” he said. “Grain ethanol gives rise to the compa-nies, the infrastructure, the trained and skilled workforce, the markets, the vehicles and even the public policies that are so essential for cel-lulosic ethanol.”

Leaders at Inbicon A/S, a biomass con-version technology developer and subsidiary of Denmark’s DONG Energy, wouldn’t ar-gue Dinneen’s point. However, they believe the time has come for North American grain-based producers to begin producing “new” ethanol along with traditional ethanol and they believe they have created the technology to al-low them to do it.

Early ExperimentsInbicon’s beginnings date back to the 1990s

when the Danish energy company Elsam be-gan burning wheat straw for power production

in Denmark and discovered operational prob-lems that begged to be addressed. According to Inbicon CEO Niels Henriksen, early problems included high temperature corrosion, contami-nation of nitrogen oxide reduction catalysts, contaminated fl y ash and limited amounts of straw that could be used in boilers. “The prob-lem was alkali salts,” he says. “We tried to wash the salts out and found that we could combine the washing with ethanol production.” A bio-mass conversion project was begun with the construction of a pilot plant at the Fynsvaerket Power Station in 2003. In 2006, the company was one of six energy companies to merge and form Dong Energy, which is now Denmark’s largest energy group. One year later, Dong En-ergy established Inbicon as a subsidiary com-pany and transferred all of the ethanol-related technology commercialization activities to the company. “Today, we are proud to say that our process, besides producing ethanol, results in a high-quality solid biofuel without alkaline salts and a molasses that can be used for cattle feed,” Henriksen says.

Process Triumphs and Challenges

Inbicon’s biomass-to-ethanol conversion process works in three stages: mechanical con-ditioning of the biomass, hydrothermal pre-treatment and enzymatic hydrolysis. Biomass (primarily wheat straw in Denmark, but corn stover, sugar cane bagasse and other soft lignin biomass have has also been tested) is cut from large bales into small pieces before being con-ditioned and treated by continuously heating it to break down the lignin structure of the ma-terial. Enzymes are added and the biomass is liquefi ed in a reactor known as a free-fall mixer. The mixer reduces the viscosity of the biomass so dramatically, according to Inbicon, that the resulting liquid can be pumped to fermenters that have traditionally been used only for grain-based ethanol production.

Inbicon business development and mar-keting senior manager Christian Morgen says the pre-treatment process is the most impor-tant aspect of conversion and has been In-bicon’s greatest simultaneous challenge and breakthrough. “The pre-treatment process determines the remaining process, due to the fact that we are able to maintain high dry mat-

TECHNOLOGY

ter content,” he says. “The development of our high-gravity enzyme liquefaction technology allowed us to go from 10 percent or 15 percent dry matter in the pre-treated material to above 30 percent. The pre-treatment is the greatest challenge when it comes to the equipment, but the process makes it possible to have low en-zyme consumption and high dry matter con-centration going into fermentation.”

The company is in the process of com-pleting a demonstration-scale facility in the Kalundborg port facility, which will serve to demonstrate Inbicon’s conversion process as well put to rest many technical and commercial uncertainties surrounding biomass-to-ethanol conversion, Morgen says. The $70 million demonstration plant is on-track to begin op-erations in December, although there is still a considerable amount of work to be completed. “Commissioning this plant is every bit as big a job as a full-scale plant,” he says. “It has the same amount of instrumentation, tanks [and] vessels as a full-scale plant. In order to prepare ourselves for the task at hand, we have built one-quarter scale components in our pilot facil-ity in order to test and operate them to get ex-perience and correct design errors. So far, these

tests have been successful.” Once fully-opera-tional, the Kalundborg facility will process 110 tons of wheat straw per day and will produce ethanol as well as various co-products.

Crossing the PondInbicon’s next step is to incorporate its

technology with 100 MMgy corn ethanol plants in North America. Well-known U.S. ethanol in-dustry members Jeff Robert and Larry Johnson signed on with the company as G-team consul-

TECHNOLOGY

A computer-aided design rendering of a 20MMgy Inbicon biomass refi nery

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tants in 2008 and are assisting Inbicon in North America. The team’s fi rst mission was to locate potential “host plants.” The candidates? Any 100 MMgy grain-based production plant that is surrounded by ample amounts of corn fi elds, making it possible to co-locate a 20 MMgy cel-lulosic production plant. By mid-June, the com-pany had formed general agreements with three specifi c clients, including Global Ethanol. John-son says the G-team reviewed all of the ethanol plants in the U.S. and has compiled corn acre-age data on each plant that they have an agree-ment with. “We will need to collect only about 25 percent of the available corn stover within

25 miles of the plants we selected,” he says. “So there’s a huge amount of corn stover out there if we only have to collect 25 percent to fi ll the needs of our fi rst plant.”

There needs to be a huge amount of corn stover available to make the process effective, because a huge amount of feedstock is required to operate each facility. Approximately 460,000 tons of corn stover will be required to feed each 20 MMgy plant. The logistics behind collecting such massive amounts of biomass can be hard to fathom. Tonnage per acre will vary greatly, of course, but Johnson estimates that good yield-ing corn (approximately 200 bushels per acre)

will produce 1 ton of corn cobs and 4.5 tons of stover per acre. Not all of the cobs and stover can be collected - some must be left in the fi elds for erosion control and to replen-ish nutrients, he says. But if Inbicon utilizes 2.5 tons per acre of stover and/or cobs, the company needs to have access to 200,000 acres to obtain the feedstock it requires. Johnson breaks it down even further. “If we average 500 acres per farmer contract, that’ll be about 400 farmers we’ll have to contract to take their stover,” he says. “Just from a communication standpoint and a data col-lection standpoint, that’s a lot of effort, a lot of communication [and] a lot of contracts that will require time and effort.”

Johnson, who spent 25 years of his life as a farmer, has invested a considerable amount of time speaking to corn farmers and garnering their interest in an Inbicon project. “I have a pretty good idea what they will accept for a price,” he says. “And let’s face it - collecting 500,000 tons of corn stover and bringing it to collection sites and delivering it to the plant…there’s no doubt it can be done. It’s really quite simple. The question is going to be the economics. If we can afford to pay enough, farmers will fi ght to be able to deliver corn stover to us. If we have a low price, we’ll be hard-pressed to sign up enough to guarantee delivery.” In-bicon will base its price-paid for stover on

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Inbicon’s demonstration-scale cellulosic ethanol production facility at Kalundborg port in Denmark is nearly complete and is set to become operational in December.

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into the cellulosic era, we’re not starting from scratch but we have to recognize that there’s go-ing to be a signifi cant shift in the metrics that we’ve all commonly utilized to measure perfor-mance, success and the effi cacy of a particular technology,” he says. “As an industry, we need to be patient. Nobody is going to be able to in-troduce technology that is going to provide the best potential metrics that we will enjoy fi ve, 10, 15 or 20 years from now. We’re at the beginning and, from a technological perspective, no one is close to the fi nish line.”

Johnson agrees. “[Inbicon’s process] is re-

ally the fi rst step into the future - into cleaner energy. I really think that it’s the general direc-tion that this whole industry is going. Trying to get the fi rst 15 MMgy ethanol plants built [in the mid-1990s] was a huge challenge. Eventu-ally, with enough hard work, we ended up get-ting it done. Now we’re just on a new phase and a new challenge and we’ll look back sometime and say ‘that wasn’t so hard.’” EP

Kris Bevill is the editor of Ethanol Producer Magazine. Reach her at (701) 373-8044 or [email protected].

conversion capabilities such as the cost of harvest, but there are still many unknowns and Johnson says there will need to be fl ex-ibility for the fi rst few years of operation. However, he believes that corn stover will eventually become a commodity, similar to corn.

Dong Energy has many years of expe-rience in feedstock logistics and can provide some mentoring to Inbicon in that area. Johnson says he saw fi rst-hand the com-pany’s ability to handle large amounts of biomass and was very impressed. However, Dong’s experience is based on wheat straw and in the U.S., corn stover is the feedstock of choice. Morgen admits that presents a challenge to the company. “We will bring our experience to the U.S., but farmers and equipment manufacturers will have to work together, and with us, to develop new har-vesting techniques,” he says.

Johnson says U.S. equipment manufac-turers see the switch to cellulosic feedstock harvesting coming and are already working to create new methods to harvest corn sto-ver.

Economics are the make-or-break fac-tor of any project, and ethanol producers who are strapped for cash might need some convincing before being willing to sign on for a cellulosic project. Both Johnson and Robert stress that while the up-front capital costs for a 20 MMgy cellulosic plant will be considerably more than a grain-based plant, the benefi ts of hosting an Inbicon facility at a 100 MMgy grain-based plant make it worth the cost. The company’s production process creates ethanol, obviously, as well as C5 molasses and lignin. The molasses can be used as a livestock feed and/or fuel for the plant’s boilers. The lignin can be used to power the entire cellulosic facility with en-ergy to spare. “We’ll be reducing the host plant’s energy costs by several million dollars just by using the lignin,” Johnson says. “And, if we use some of the molasses as a boiler fuel to burn, we can offset all of their energy requirements.”

Robert says the progression to cellulos-ic ethanol production is an ongoing process and it’s important to remember that ethanol production has continuously evolved as tech-nologies have become better understood. “As we move away from the grain-based era

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Some ventures to produce cellulosic ethanol propose using dedicated energy crops such as switchgrass and miscanthus as feedstocks. However, unlike row crops, dedicated energy crops are not supported by crop insurance programs. What is being done to level the playing fi eld?

By Ryan C. Christiansen

PHOTO: CERES INC



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As U.S. policymakers and regula-tors shift their focus from corn starch-based ethanol to ligno-cellulosic biomass-based etha-

nol the agricultural economy attempts to fol-low suit. Many sources of biomass are being identifi ed as possible feedstocks, including dedicated energy crops such as switchgrass and miscanthus.

Of these two perennial grasses, switch-grass is receiving the most attention. Accord-ing to the U.S. EPA, the USDA’s forest and agricultural sector optimization model (FA-SOM) indicates it is feasible to expect that nearly 1 billion gallons of ethanol per year will be produced from switchgrass by 2022. The majority of the crop is expected to be grown in Oklahoma.

The EPA notes that in southern states such as Oklahoma, where perennials devel-op more quickly in spring and remain viable until later in the fall, dedicated energy crops have the potential for higher yields per acre than row crops.

The EPA reported its fi ndings in late May as part of its proposed regulations for

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the second stage of the renewable fuel stan-dard program. The prediction that 1 billion gallons of ethanol might be produced each year from switchgrass could be a modest forecast, according to the EPA, because the FASOM model does not include all catego-ries of grassland and rangeland captured in the USDA’s major land use datasets. The EPA says it constrained FASOM to assume that 32 million acres of land would remain in the USDA Conservation Reserve Pro-gram, consistent with the 2008 Farm Bill.

Some in the agricultural and ethanol in-dustry agree with the EPA’s assessment that dedicated energy crops will play a signifi cant role. Last summer, more than 1,100 acres of switchgrass were planted in Oklahoma as part of a demonstration project that is being managed by the Samuel Roberts Noble Foundation Inc. The independent, nonprofi t institute conducts plant science research in Ardmore, Okla. and recently received more than $1.2 million from the National Science Foundation and the Okla-homa State Regents for Higher Education through the Oklahoma Experimental Pro-

gram to Stimulate Competitive Research for continued studies to improve varieties of switchgrass for cellulosic ethanol produc-tion. The foundation has also teamed with Oklahoma State University and the Univer-sity of Oklahoma through the Oklahoma Bioenergy Center to develop new switch-grass varieties for ethanol production.

In Vonore, Tenn., Dupont Danisco Cel-lulosic Ethanol LLC is building a 250,000 gallon demonstration facility that will pro-duce cellulosic ethanol from multiple feed-stocks, including switchgrass. The Universi-ty of Tennessee continues to enroll farmers in a state-funded incentive program to stimulate the establishment of switchgrass. Another program, known as the 25Farmer Network, is coordinated through the Mem-phis Bioworks Foundation’s AgBio initia-tive and consists of 25 western Tennessee farmers who will plant fi ve acres each of experimental crops, including switchgrass.

Meanwhile, energy crop developer Ceres Inc. announced in April that it will work with University of Georgia research-ers to develop new high-yield switchgrass

seed varieties and improved crop manage-ment techniques for the southeastern Unit-ed States. In May, Ceres announced that, based on results from a nationwide network of fi eld trials, switchgrass can produce sub-stantially more biomass than previously re-ported, as much as 50 percent more than the government’s projected yields for 2022.

Also, farmers in Missouri, Kentucky, Illinois, and Kansas have signed produc-tion contracts with Agrosil Energy LLC to grow giant miscanthus. The company an-nounced it will provide farmers with the rhizomes and specialized equipment neces-sary to plant a total of 20,000 acres in 2010. Agrosil expects the crops will yield 15 tons per acre beginning with the fi rst harvest in 2012 when custom harvesting crews and machines will harvest the biomass.

Managing RiskFor farmers, being fi rst in the fi eld to

plant dedicated energy crops can be risky. According to the EPA, it takes 10 to 12 years to recover startup costs. It takes two years to

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establish a miscanthus crop, for example—if the crop can survive its fi rst winter—and maximum yields won’t begin until the third year, depending on soil fertility.

To help farmers in general to manage risk, the USDA’s Risk Management Agency provides insurance policies for more than 100 crops. However, neither switchgrass nor

miscanthus is on the list of crops covered under the 2008 crop insurance program. Al-ternatively, the USDA’s Farm Service Agency has a noninsured crop disaster assistance program (NAP) to provide fi nancial assis-tance to producers of uninsurable crops, but dedicated energy crops are not eligible for that program, either.

The unavailability of crop insurance is a problem for many potential growers. Mis-canthus-related studies by researchers at the University of Illinois at Urbana-Champaign and switchgrass-related studies at Iowa State University indicate reluctance on the part of farmers to adopt dedicated energy crops in the absence of crop insurance. During a re-cent Nashville Public Radio interview, U.S. DOE Biomass Director Jacques Beaudry-Losique addressed the issue. “It’s very hard to ask a farmer to switch from existing crops to a crop that does not exist, that doesn’t have a market, that doesn’t have a lot of the basic tools such as crop insurance and things like that,” Beaudry-Losique says.

Crop insurance is “something that the growers are very used to, because that's what they do on a routine basis,” says Richard Sheppard, president of Agrosil. “It will affect the adoption of [energy crops] and we will have to fi nd people who will be willing take a little bit more risk.”

“They (farmers) defi nitely are bringing it up a lot,” says Hillary Spain, coordinator for Tennessee’s 25Farmer Network. “Through our network, we had three training programs before we ever selected crops to plant and that was one of the questions that the farm-ers had. ‘How are we going to manage our risk?’ I think crop insurance is very impor-tant, because farmers are going to be hesitant to commit to a larger amount of acreage if

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Growers Andy Holt (left) and Tony Brannon are part of the Memphis Bioworks Foundation’s 25Farmer Network, a program funded by the Tennessee Department of Agriculture to involve farmers in the commercialization of alternative crops.

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they don't have anything to kind of guarantee that they are covered, because they could be out a whole lot of money that could eventu-ally put them out of business. When it's more risky, lenders are sometimes unwilling to loan funds.”

Anna Rath, vice president of commer-cial development for Ceres, says farmers are communicating to Ceres that crop insurance for dedicated energy crops is important. “As we were getting out into the community and meeting with growers, we were getting the question back about whether these kinds of crops were going to be covered by crop insur-ance programs because, obviously, they con-sider those programs to be very important for their businesses,” she says. “It’s important to allow growers to hedge certain risks to en-sure themselves that they are going to be able to have a consistent livelihood, even in an in-dustry that's very dependent on the vagaries of weather and other things.”

Rath testifi ed at a U.S. Senate agriculture subcommittee fi eld hearing in Brookings, S.D., in April 2007 about the importance of crop insurance. “As the cellulosic biofuels industry develops, we believe it is of critical importance that dedicated energy crops not be disadvantaged relative to other crops in terms of the safety net that the government provides for these crops,” she testifi ed. “This safety net could come in a form similar to ex-isting crop programs or could be substantially

different. The goal must be to allow growers to make decisions about which crops to grow based on market forces, not based on which crops are or aren’t supported by government programs. Toward this goal, we suggest a pilot program to begin collecting the data that will be necessary to enable a program like crop in-

surance. The objective of this pilot program would be that by the 2012 Farm Bill, the nec-essary data will have been collected to enable the roll-out of a crop insurance program for dedicated energy crops.”

During the same period, the South Car-olina Biomass Council urged its constituents

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Tennessee grower Tim Brannon checks the seed hopper during the planting of a fi ve-acre block of Blade Energy Crops brand EG 1101 and EG 1102 switchgrass seed varieties. He and his brother Tony Brannon (driving the tractor) are part of the 25Farmer Network, a group evaluating the potential of alternative crops in western Tennessee.

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to communicate with members of Congress about the need for crop insurance for dedi-cated energy crops, including for switchgrass and miscanthus, and at the very least to offer catastrophic insurance under the NAP.

The testimony from Rath and oth-ers struck a chord and the 2008 Farm Bill included a provision requiring the Federal Crop Insurance Corporation to study devel-oping insurance policies for dedicated energy crops, including annual and perennial crops that are grown as feedstocks for renewable biofuel, renewable electricity or biobased products and are not typically used for food, feed or fi ber.

According to Shirley A. Pugh, director of public affairs at the Risk Management Agency, a study regarding a policy for switch-grass as a dedicated energy crop determined that “while the crop could be suitable for coverage under the existing pasture, range-land, and forage concept, the industry did not appear to be mature enough for inclusion at this time.” In other words, unless some fur-ther action is taken outside of and before the 2012 Farm Bill, it appears that no insurance will be available for switchgrass as a dedi-cated energy crop for the foreseeable future. Further details about the Risk Management Agency’s determination for switchgrass were not available at press time in mid-June.

Cause and ConsequenceThe EPA notes that because dedicated

energy crops have not been grown in agricul-tural sectors, they have not been extensively researched and developed for optimization. This lack of data might be the biggest hurdle facing crop insurance proponents. “It could be a chicken-and-the-egg problem,” Shep-pard says. “OK, there's not enough acreage out there; but there isn't enough acreage out there because crop insurance isn't available.”

Spain says to make up for the lack of in-surance, the Tennessee Department of Agri-culture is providing growers in the 25Farmer Network $500 per acre during the fi rst year. “We have (also) been providing the seed for them,” she says, “and so this kind of man-ages their risk. If something happens to the crop, it covers that.”

The federal government’s ostensible inaction toward insuring dedicated energy crops has led some growers to believe the feds are being wishy-washy. “I don't think we can count on it from the government,” Sheppard says. “They will never react fast enough. The U.S. is so far behind on biomass compared to the U.K. and the EU and, for some reason, whenever you talk to fi nance people or project people or anyone else, they don't pay attention to anything that's ever been done anywhere else. If it's not invented here, they won't do it. But the U.K. has been growing this stuff for well over a decade and

the EU has for many years. Why can't we use that [data] and move on with biomass if the government is really serious about it? I'm never sure if the government is ever serious about anything.”

Spain says policymakers need to be made more aware of rural issues. “A lot of them don't come from a rural agricultural background,” she says, “so they just hire in people to advise them. I think it's important that we just make the policymakers aware of what's going on. I sometimes feel like on the one hand, they're promoting alternative en-ergy, but they're not looking at the barriers and trying to fi nd out a way to accomplish what they need to accomplish.”

Sheppard says if a local market for Agrosil’s biomass doesn’t pan out, the com-pany will take its feedstock elsewhere. “Our backup plan is that we will just export every-thing and deal with the people who under-stand stuff and know stuff and are dealing with reality.” EP

Ryan C. Christiansen is the assistant edi-tor of Ethanol Producer Magazine. Reach him at [email protected] or (701) 373-8042.

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CELLULOSIC


THE CELLULOSIC CEILING

The renewable fuel standard calls for 100 MMgy of cellulosic biofuel to be blended into the nation’s fuel in 2010, ramping up to 16 billion gallons per year in 2022. Will the U.S. produce enough to satisfy the mandate?

By Ryan C. Christiansen


CELLULOSIC

By 2022, the U.S. EPA expects the domestic biofuels industry to pro-duce more than 32 billion gallons per year of renewable fuel. How-

ever, less than half of that fuel is expected to be corn-based ethanol. The majority, 16 billion gallons, will be cellulosic biofuel. The Energy Independence and Security Act of 2007 de-fi nes cellulosic biofuel as renewable fuel pro-duced from any cellulose, hemicelluloses, or lignin that is derived from renewable biomass and has life-cycle greenhouse gas (GHG) emis-sions that are at least 60 percent less than the baseline life-cycle GHG emissions. The EPA predicts that, in the long run, those 16 billion gallons of cellulosic biofuel will be cellulosic ethanol. However, EISA’s defi nition for cellu-losic biofuel leaves open the possibility that the mandate can be met by other fuels.

Federal InvestmentsThe goal of ultimately producing billions

of gallons of cellulosic biofuel has a hefty price tag. Between 2002 and 2008, the U.S. DOE’s Energy Effi ciency and Renewable Energy

Biomass Program, established to develop and demonstrate biomass feedstock and conversion technologies for integrated biorefi neries and to ensure cellulosic ethanol can be produced cost-effectively by 2012, was allocated more than $800 million in federal funding. Since 2007, the DOE has announced more than $1 billion in multi-year investments in cellulosic biorefi ner-ies and since 2006 the USDA has invested al-most $600 million to develop biofuel technol-ogy.

The bulk of the DOE’s investments be-gan in February 2007 when it announced plans to invest $385 million in six biorefi nery proj-ects over four years for a total cellulosic ethanol production capacity of 131 MMgy. Combined with the industry cost share, the projects equat-ed to more than $1.2 billion in investments. Projects identifi ed for funding included an 11 MMgy Abengoa Bioenergy SA plant in Kan-sas, a 14 MMgy Alico Inc. plant in Florida, a 19 MMgy BlueFire Ethanol Fuels Inc. facility in California, a 30 MMgy Poet LLC plant in Iowa, an 18 MMgy Iogen Corp. plant in Idaho, and a 40 MMgy Range Fuels Inc. plant in Georgia.

In May 2007, the DOE announced it

would provide up to $200 million over fi ve years to support the development of small-scale cellulosic biorefi neries. The fi rst $114 million was allotted in January 2008 for four projects. The companies identifi ed for fund-ing included ICM Inc., Lignol Energy Corp., Pacifi c Ethanol Inc., and Stora Enso Oyj. The remaining $86 million was allotted to RSE Pulp & Chemical LLC, Mascoma Corp. and Ecofi n LLC in April 2008. In July 2008, the DOE an-nounced an additional $40 million investment for two more companies - Flambeau River Biofuels LLC for its project in Wisconsin and Verenium Corp. for its demonstration-scale facility in Louisiana. Seven of the nine plants were funded for cellulosic ethanol and two for cellulosic diesel.

On the research side, both the DOE and the USDA also provided funding to companies and universities. In March 2007, the DOE in-vested $23 million in fi ve projects to develop highly effi cient fermentative organisms to con-vert biomass material to ethanol; the compa-nies and organizations identifi ed for funding included Cargill Inc., Verenium, E. I. du Pont de Nemours and Co., Mascoma, and Purdue

CELLULOSIC

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University. In June 2007, the DOE and USDA together awarded $8.3 million to 10 universi-ties for biomass genomic research. During that month, the DOE also announced a $375 mil-lion investment in three new bioenergy research centers, including the DOE BioEnergy Science Center, the DOE Great Lakes Bioenergy Re-search Center, and the DOE Joint BioEnergy Institute.

To close out the year, the DOE awarded $7.7 million in December 2007 to four projects to demonstrate the thermochemical conver-sion process of biomass-to-biofuels. Then, in February 2008, the DOE invested $33.8 mil-lion in four projects to develop improved en-zyme systems to convert cellulosic material into sugars suitable for the production of biofuels. The companies identifi ed for funding included DSM Innovation Center Inc. (a partner with Abengoa), Genencor, a division of Danisco A/S, Novozymes A/S, and Verenium. In March 2008, the DOE and USDA awarded $18 million to 18 universities and research in-stitutes to develop biomass-based products, including biofuels.

Finally, in May 2009, the DOE an-

nounced that it would provide $786.5 million from the American Recovery and Reinvest-ment Act to accelerate advanced biofuels re-

search and development and to provide addi-tional funding for commercial-scale biorefi nery demonstration projects. Of the total, $480

CELLULOSIC


To meet renewable fuel standard targets, the U.S. EPA says cellulosic ethanol plant startups must begin in earnest with a few small plants during 2010-'11 and must continue at an increasing pace thereafter with larger plants. The EPA says the rate of growth for the cellulosic ethanol industry should be similar to that of the corn starch-based ethanol industry in recent years.

SOURCE: U.S. EPA

million will be distributed among 10 to 20 projects for pilot- or demonstration-scale in-tegrated biorefi neries that produce advanced biofuels, bioproducts, and heat and power in an integrated system, which must be operational within three years. In addition, $176.5 mil-lion will be used to increase the federal fund-ing ceiling on two or more demonstration- or commercial-scale biorefi nery projects that were selected and awarded funds within the past two years. Also, $110 million will be used to support new research. Finally, $20 million has been set aside for optimizing fl exible fuel vehicle tech-nology, evaluating the impact of higher ethanol blends on conventional vehicles, and upgrading refueling stations to be compatible with ethanol blends up to E85.

Scaling upTo meet renewable fuel standard targets,

the EPA says cellulosic ethanol plant start-ups must begin in earnest with a few small plants during 2010-'11, increasing pace thereafter with larger plants. The EPA says the rate of growth for the cellulosic ethanol industry should be similar to that of the corn starch-based etha-nol industry in recent years, beginning with 40 MMgy plants from 2010-'13, increasing to 80 MMgy during 2014-'17 and 100 MMgy and upwards during 2018 and beyond. The EPA projects that approximately two billion gallons per year of new plant construction will need to come online between 2018 and 2022. In total,

approximately 180 plants will need to be com-pleted by 2022.

However, with only a few months to go before petroleum blenders must begin to use cellulosic biofuels, there are no commercial-scale plants ready to deliver the fuel. Since the DOE’s initial February 2007 funding announcement, very little money has actually been distributed to selected projects. Two of the fi rst six companies to be awarded DOE money - Alico and Iogen - have dropped their applications. Lignol an-nounced in February that it was discontinuing its project as a result of instable energy prices, capital market uncertainty and general market malaise. Meanwhile, subsidiaries of Pacifi c Eth-anol fi led for bankruptcy in May.

Abengoa and Poet say they are on track to begin production, but not until 2011. Only Range Fuels, which received an additional $80 million loan guarantee from the USDA in Janu-ary (the fi rst-ever USDA loan guarantee for a commercial-scale cellulosic biofuels plant), ex-pects to begin producing at near-commercial scale during 2010, with plans to complete the fi rst phase of its planned 100 MMgy facility in Soperton, Ga., early next year.

According to Range Fuels CEO David Al-dous, the plant is expected to be mechanically complete during the fi rst quarter of 2010 and commissioning will begin in the second quarter of 2010. The plant will produce cellulosic bio-fuel from wood chips, he says, and will be scaled up gradually from an initial capacity in Phase 1

of less than 10 MMgy of cellulosic biofuels. The EPA is predicting that Range Fuels will supply 10 million gallons of cellulosic ethanol toward the cellulosic biofuels mandate in 2010.

Aldous says Range Fuels’ technology is unique. “It is proprietary technology,” he says. “There are a lot of companies that are doing thermal front-end processes, whether they are pyrolysis or gasifi cation, and there are a lot of other companies using different kinds of back-ends, converting the syngas into ethanol, (but) we use a proprietary catalyst on the back end and we use a proprietary technology on the front end.” Prior to leading Range Fuels, Aldous was executive vice president for strategy and portfo-lio at Royal Dutch Shell plc and also served as president of Shell Canada Products. He is also the former CEO for the Shell Group’s catalyst company, CRI/Criterion Inc.

Meeting the MandateTo help meet the 100 MMgy cellulosic

biofuels target for 2010, the EPA says there will be 24 pilot- or demonstration- scale plants and seven commercial- scale plants producing cel-lulosic ethanol or cellulosic diesel in 2010. How-ever, ethanol will satisfy only 28 percent of the total cellulosic biofuels mandate. The EPA says the only companies that will produce more than one million gallons of cellulosic ethanol during 2010 are Verenium, Western Biomass Energy LLC, Fulcrum Bioenergy Inc., RSE, Southeast Renewable Fuels LLC, and Range Fuels.

CELLULOSIC


The majority of the cellulosic biofuels vol-ume (72 percent), the EPA says, is projected to come from cellulosic diesel. A small portion (3 million gallons) will be produced by Flambeau River Biofuels at its 6 MMgy plant in Park Falls, Wis., while the majority of all cellulosic biofuels that will be produced, the EPA says, will be cel-lulosic diesel from Cello Energy (pronounced “sell-oh”), which has a 20 MMgy plant in Bay Minette, Ala. The EPA says to expect 20 mil-lion gallons from the Bay Minette plant, as well as 16.67 million gallons from each of three future 50 MMgy plants, which are expected to be swiftly built—two in Alabama and one in Georgia—at locations to be determined.

Feedstock for Cello Energy’s operation can include plant biomass, waste wood, and other organic materials, as well as plastics and used tires. The company uses a catalytic de-polymerization technology, the EPA says, to convert the feedstock into short-chain hydro-carbons that are polymerized to produce diesel fuel that meets ASTM standards at a cost be-tween 50 cents and $1 per gallon. The process is reported to be 82 percent effi cient and the only energy input is electricity. Allen Boykin, president of Cello Energy, told EPM that the catalyst used by the company is a proprietary catalyst that takes approximately 22 to 25 min-utes to convert garbage into fuel oil using a continuous process.

Boykin says Cello Energy’s technology has been in the making for 12 to 15 years. His fa-

ther, Dr. Jack Boykin, a chemical engineer who served as a Lieutenant in the U.S. Navy from 1961 to 1965, is CEO of Cello Energy and has been conducting the research. Allen says he became involved in 2002 to help bring the sys-tem to commercial-scale. Allen says bench- and pilot-scale testing was previously conducted in Prichard, Ala.

Imports to Meet TargetsThe EPA admits that because cellulosic

ethanol production technology is still devel-oping, production plants will be considerably more complex and expensive to build than corn starch-based ethanol plants, thus requir-ing much more capital funding as well as de-sign and construction resources. “Although technologies needed to convert cellulosic feed-stocks into ethanol (and diesel) are becoming more and more understood, there are still a number of effi ciency improvements that need to occur before cellulosic biofuel production can compete in today’s marketplace,” the EPA renewable fuel standard report says. “Addition-ally, because cellulosic biofuel production has not yet been proven on a commercial level, fi nancing of these projects has primarily been through venture capital and similar funding mechanisms, as opposed to conventional bank loans.”

Alternatively, the EPA suggests that usage targets might be met using cellulosic biofuel that is produced internationally, for example,

from feedstocks such as bagasse or straw. In-deed, as much as 21 billion gallons per year of cellulosic biofuel might be produced outside the U.S. by 2017, the EPA says, the majority from bagasse, but also from forest products, and mostly from Brazil.

A recent report from Novozymes de-scribes how Brazil might produce more than two billion gallons of cellulosic biofuel from bagasse by 2020, which would represent an additional $4 billion in export revenue for that country. Like in the U.S., the development of cellulosic biofuels in Brazil will depend on the industry’s ability to attract the needed invest-ments and political support, Novozymes says.

Despite a slow start for cellulosic biofu-els in the U.S., some in the industry are bullish about the future. “Advanced biofuel compa-nies are ready to deploy their technology and begin meeting the requirements of the [RFS],” says Brent Erickson, executive vice president of the Biotechnology Industry Organization’s Industrial and Environmental Section. “Now that the rules of the program are fi nally mov-ing forward and the Obama administration has demonstrated a fi rm commitment to the industry, companies are prepared to build the next generation of biorefi neries.” EP

Ryan C. Christiansen is the assistant edi-tor of Ethanol Producer Magazine. Reach him at [email protected] or (701) 373-8042.

CELLULOSIC

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass. Collectively, these biomass utilization industries are positioned to replace nearly every product made from fossil fuels with those derived from plant or waste material. The publication covers a wide array of issues on the leading edge of biomass utilization technologies, from biorefining, dedicated energy crops and cellulosic ethanol to decentralized power, anaerobic digestion and gasification. It’s all here.

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DUCKWEED

Spriodela polyrhiza—a specifi c genera of duckweed—is shown in a fl ask after a week of growth under lab conditions. Beakers are seeded with one or two plants and grown under light and dark cycles. S. polyrhiza has a genome size of 150 megabases and is being sequenced by researchers at Rutgers’ Waksman Institute of Microbiology.PHOTO: TODD MICHAEL, RUTGERS UNIVERSITY


Duckweed ‘Quacks’ Volumes of Potential

Since the late 1960s, scientists have studied duckweed for animal and human consumption because of its high protein content. Researchers are now tapping into the plant’s innate environmental benefi ts, from desalinating wastewater to exploring its potential as a viable starch-based feedstock for ethanol production.

By Bryan Sims


DUCKWEED

The drive to develop sustainable nonfood, starch-based ethanol feedstocks and more effi cient conversion processes is in-

tensifying as the U.S. attempts to reduce ethanol’s carbon footprint by transition-ing from corn to cellulosic ethanol. That has prompted researchers at North Caro-lina State University to take a closer look at plants, such as duckweed, that could be a potential feedstock for ethanol produc-tion.

Duckweed has traditionally been stud-ied because of its inherently rich protein content at 30 percent to 35 percent on a dry-weight basis. The purpose was to ex-plore whether duckweed could be a pro-tein source for animal and human food. A growing interest in sustainable ethanol feedstock development, however, has re-searchers exploring the plant’s starch con-tent.

North Carolina State University re-searchers Anne-Marie Stomp, associate professor of forestry, Jay Cheng, professor of biological and agricultural engineering, and Mike Yablonski, post-doctoral research associate, are discovering that duckweed can be used to clean up animal waste at industrial hog farms and could be used to make ethanol. They have determined that duckweed grown on swine wastewater can produce fi ve to six times more starch per

acre than corn, according to Stomp, who co-authored the research with Cheng. The research, funded by the Biofuels Center of North Carolina, was presented at the an-nual conference of the Institute of Biolog-ical Engineering in March in Santa Clara, Calif.

“The original investigations focused pretty much entirely on the protein side,” Stomp says. “At the time all of that work

was being done, there was no compelling economic reason to domesticate this plant because we had plenty of other plant pro-tein sources in grain and legumes. Back then, the prices of those grains and le-gumes were low and the market was fully supplied.”

The one challenge that has impeded duckweed’s progress in becoming a sus-tainable, dedicated energy crop for biofuels

DUCKWEED

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ELECTRICAL CONSTRUCTION • ELECTRICAL ENGINEERING • AUTOMATION • INSTRUMENTATIONETHANOL PRODUCER MAGAZINE August 2009 96

Anne Stomp and Jay Cheng examine various strains of duckweed at their pilot program at North Carolina State University in Raleigh, N.C.

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production or being used as a bioremedia-tor for farm or city wastewater treatment operations is the fact that it wasn’t domes-ticated. “The trick to domesticating duck-weed is going to be how much it will cost per ton to grow this stuff,” Stomp says, adding that data on economic feasibility will be released later this year. “That num-ber provides a threshold for commercial viability,” she adds.

Cheng and Stomp are currently devel-oping a pilot-scale project to further inves-tigate the best way to establish a large-scale system for growing duckweed in animal wastewater, and then harvesting and dry-ing the plant. “We’re actually exploiting a lot of existing technology used in the food industry, because duckweed is like a slur-ry,” Stomp says. “You can pump it, sieve it and do other things.”

In the meantime, duckweed will re-main of interest to scientists as a viable synergistic component to the renewable fuels/energy sectors, possibly even being used with corn in existing ethanol opera-tions, according to Stomp. “We’re not say-ing we’re going to replace corn,” she says. “It’s just another option out there for etha-nol producers. It’s the idea that if we’re go-ing to solve this energy crisis we’re going to need a bunch of ideas. One idea isn’t going to save us.”

Water Purifi cation Potential Propagated in agricultural and/or

municipal wastewater, duckweed naturally extracts nitrogen and phosphate pollut-ants. This could benefi t large-scale hog farms where animal waste is stored in large lagoons for biological treatment. Duck-weed’s bioremediation properties allow it to capture pollutants and prevent their release into the air. The plant could save

farmers money because they wouldn’t have to purchase expensive desalination equip-ment for their lagoons. “Duckweed is ex-quisitely good at recovering low levels of nutrients from water,” Stomp says. “It gets the water clean enough for reuse naturally, and it’s virtually cost-free for farmers.”

Duckweed can also reduce algae growth (by shading), coliform bacteria counts and mosquito larvae on ponds, while

DUCKWEED


Duckweed can grow in any body of freshwater in the world. It grows especially well in polluted water, such as in the Raritan Canal in Delaware shown here. Each year, lawns along the Raritan Canal are fertilized and duckweed quickly grows to cover the canal until nutrients are depleted.

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concentrating heavy metals, capturing or degrading toxic chemicals and encouraging the growth of other aquatic animals such as frogs or fowl. Additionally, duckweed is one of the fastest growing plant species on the planet. Scientists are also beginning to unlock duckweed’s potential as a player in carbon cycling and carbon sequestration.

Duckweed bioaccumulates about 99 percent of the nutrients contained in waste-water and produces a valuable protein-rich biomass as a byproduct, which can be fed

to certain fi sh and added to poultry feed. Duckweed can also assimilate small hydro-carbons such as glucose and sucrose and, as a result, perform heterotrophic growth from the wastewater. The nutrients can be removed permanently from the system as the plants are harvested.

Due to its high affi nity for absorb-ing pollutants in wastewater, Stomp posed a hypothetical scenario where the use of duckweed by farmers could mutually ben-efi t a city willing to provide wastewater

effl uent for fresh water reuse. For ex-ample, a farmer could pay the city or municipality for its wastewater and have it transported to his farm, a concept that some people refer to as duckweed-based wastewater treatment, Stomp says. The farmer could take that wastewater and mix it with his livestock wastewater to dilute it so that it can be used to grow duckweed, which would clean the water and the farmer could sell it back to the municipality for reuse.

Calling on Genome Sequencing

The duckweed family, or Lemnaceae, is a family of fl owering plants. Specifi -cally, Lemnaceae is an aqueous mono-cot—similar to grasses and palms—

DUCKWEED

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The "leaf" structure in Spirodela is referred to as a "frond." Duckweed generally multiplies by vegetative reproduction. The daughter (front) develops in the "pocket" of the mother frond and emerges as a new plant.

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potential to do things like enhancing the DNA of genes to uptake specifi c types of heavy metals or modulate how fast we con-trol growth rate,” he says.

By harnessing the naturally occurring ability of plants to transform genes by way of various DNA interactions in their own natural habitats, Michael’s research team intends to continue researching these specifi c duckweed varieties in sterile cul-ture environments to determine what the ecology of each looks like in different lo-cations and the behavior of each with an

array of other microorganisms. “We can then use that information to go back and maybe suggest specifi c varieties for differ-ent locations, and maybe utilize the genetic makeup we already have to target specifi c applications,” Michael says. EP

Bryan Sims is a BBI International associate editor and is currently on mili-tary leave. Questions or comments on the article can be directed to EPM Editor Kris Bevill at (701)373-8044 or kbevill@bbiinternationalcom.

and is divided into fi ve genera: Lemna, Spirodela, Wolffia, Landoltia and Wolffiel-la. Of these fi ve genera, Spirodela is the largest and Wolffiella is the smallest.

Researchers at Rutgers University’s Waksman Institute of Microbiology—a research facility on the Busch Campus of Rutgers University in New Jersey—channeled its resources in July 2008 into sequencing the Spirodela polyrhiza genome. The Spirodela has the least DNA per cell compared with its genera counterparts. The team aims to inves-tigate duckweed’s potential for sustain-able sequestration of carbon dioxide, ecosystem carbon cycling and biofuel production.

In related research, the U.S. DOE’s Joint Genome Institute announced in July 2008 that its Community Sequenc-ing Program would support the genomic sequencing of Spirodela polyrhiza as one of its priority projects this year directed toward new biomass and bioenergy pro-grams.

Preliminary fi ndings by the Rutgers research team found that, through high-throughput sequencing, specifi c duck-weed varieties obtained from 50-year-old sterile duckweed cultures shipped from Switzerland are comprised of Bradyrhizobium—a nitrogen-fi xing bac-teria that forms nodules on host plants. Bradyrhizobium also have symbolic re-lationships with legume plants, which can’t live without the bacteria’s essential nitrogen-fi xing processes, according to Todd Michael, a member of the Waks-man Institute and an assistant professor of plant biology and pathology.

“This was really surprising to us because we didn’t expect to fi nd this microorganism,” Michael says. “There’s still a chance this could be one level of contamination. Now the question is: Is this bacteria DNA actually affi xing ni-trogen for the Spirodela? This is a totally new relationship that we didn’t expect, but this could explain why the plant grows so fast.”

Michael said the research team is also developing methods to exploit the Wolffia gene. “This would give us the

DUCKWEED


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CANADA

While the U.S. ethanol market has grown by leaps and bounds, the Canadian industry has grown at a slow, steady pace. As the country’s industry grows to meet demand, rather than outpacing it, leaders say Canada is well-positioned to handle future growth as needed.

By Hope Deutscher



CANADA

In the U.S., the ethanol industry has experienced tremen-dous growth over the past few years. Some would argue it built beyond current demand, creating an environment where some producers are being forced to declare bank-

ruptcy or sell. By contrast, the Canadian renewable fuels industry has experienced steady incremental growth. With approximately 1.4 billion liters (approximately 370 million gallons) of current production capacity, Canada’s growth has been characterized as being built out in a cautious manner. Industry leaders say it has been an intentional growth, driven by government, industry and partnerships with oil companies.

“Clearly we’ve experienced some very important growth in the ethanol industry in terms of plants that have come on line but we haven’t been overly ambitious to build production capacity out ahead of govern-ment policies and programs,” says Gor-don Quaiattini, president of the Canadian Renewable Fuels Association. Since 1984, CRFA has promoted the use of renewable fuels for transportation through consumer awareness and government liaison activities. “The industry values partnerships and the relationship we have with government, both federally and provincially, and in doing so, I think there has certainly been an intelligent

way that the industry has been built out in an effort to not get into some of the challenges that are being faced on the U.S. side,” Quaiattini adds.

As much as the industry would have liked to have seen it grow bigger and have more plants in place, Quaiattini says Ca-nadians have learned from the U.S. that in not building out too quickly, projects are not in jeopardy. “We don’t have plants that

are seeking bankruptcy protection. All of our plants are oper-ating. We have projects moving forward and as the economy recovers, as energy demands begin to increase, additional in-vestment will continue to happen here. I think the measured approach we’ve taken has ultimately served us well.”

Provincial Government Support In part, Canada’s success was driven by the initial efforts

of provincial governments to bring renewable fuels into the country’s marketplace, Quaiattini says. Saskatchewan was the fi rst province to pass a law requiring ethanol to be blended into its gasoline. A mandate requiring fuel distributors to blend 1 percent of ethanol into their gasoline became effective Nov. 1, 2005. On Jan. 15, 2007, the blend was increased to 7.5 percent.

In November 2007, the Manitoba legislature passed the 2007 Biofuels Amendment Act, which mandated that beginning Jan. 1, 2008, all fuel suppliers would be required to blend at least 8.5 percent ethanol into their gasoline. Manitoba and Saskatch-ewan recognized the market opportunity for wheat- and corn-based grain ethanol, Quaiattini says.

On Jan. 1, 2007, Ontario, the largest jurisdiction and the

CANADA

Gordon Quaiattinipresident,Canadian Renewable Fuels Association

Today, Canada’s industry consists of 15 operating plants producing 1.4 billion liters (approximately 370 million gallons) of ethanol production capacity. Two of those facilities are planning expansions which, when completed, will add another 600 million liters to the nation’s total capacity.

country’s largest transportation market, set a mandate requiring the use of 5 percent renewable fuels. In addition to the benefi ts that ethanol could provide for the province, Ontario was also driven by the role that the fuel could play in addressing climate change imperatives and reducing greenhouse gases.

When Ontario set a renewable fuels mandate, the federal government began to look at it from a national perspective. “That became the tipping point in which the federal govern-ment, in partnership with the industry and this association, moved forward on bringing in a national renewable fuels man-date to govern the whole country,” Quaiattini says.

The other factor that helped start Canada’s ethanol indus-try, he adds, was the determination by government to meet cer-tain oxygen levels in gasoline and the banning of methyl ter-tiary-butyl ether (MTBE) as a blending component in order to meet those standards. “When that happened the oil industry was looking for alternatives and some turned to ethanol as a good blending fuel to help meet those requirements. That allowed for the fi rst ethanol plant to be built, followed by the second facility. It was done in a very measured way and now we’ve come full circle,” he says. “We now have a national mandate that’s coming into effect in 2010, and that has allowed the industry to build out. We have 20 years of ethanol experience in Canada but it’s because of the MTBE ban and subsequently provincial stan-dards that came into effect that sort of got us off in a measured incremental way.”

Federal Government Support Today, Canada’s industry consists of 15 operating plants

producing 1.4 billion liters of ethanol production capacity. Two of those facilities are planning expansions which, when com-pleted, will add another 600 million liters (approximately 158 million gallons) to the nation’s total capacity. In total, the indus-

try will then be producing the 2 billion liters of ethanol neces-sary to meet the federal government’s 5 percent renewable fuels mandate, which will become effective Sept. 1, 2010. Industry representatives are currently working with Environment Canada to help bring the mandate into effect.

The federal government has provided immense support to Canada’s ethanol industry. Currently, the federal government has set aside CA$ 1.5 billion (approximately US$ 1.32 billion) through its ecoENERGY biofuels program that provides capital investment to build renewable fuels facilities. As well, the gov-ernment created a CA$ 500 million NextGeneration Biofuels

CANADA


Canada's largest ethanol producer, GreenField Ethanol Inc., operates four facilities in Canada, including this one in Chatham, Ontario.

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Fund to assist with the commercializa-tion of next-generation technology.

One of the ethanol companies to utilize government funding support is GreenField Ethanol Inc. The company, previously known as Commercial Al-cohols, built its fi rst ethanol plant in Tiverton, Ontario, in 1989. GreenField Ethanol nego-tiated the fi rst fuel ethanol supply contract in the coun-try and, two years later, built Canada’s fi rst large-scale ethanol facility. Today, the largest ethanol producer in Canada operates four plants in Tiverton, Chatham, and Johnstown, Ontario, as well as Varennes, Quebec. When the market allows, the com-pany is planning to build a fi fth facility in Hensall, Ontario.

The ongoing government support, which is designed around a safety net concept, is important, says Robert Gal-lant, president and CEO of GreenField Ethanol. “The ecoENERGY program

provides a payment of about 10 cents per liter of produced ethanol. It’s a pro-ducer payment, not a blender credit,” Gallant says. “The actual payment is based on the average industry profi t-ability and that’s determined on a quar-terly basis so it’s variable – if the indus-

try is doing well, there’s less there, if the industry average shows that margins are too tight for sustainability then the program kicks in.”

In Ontario and Quebec, similar programs exist. For example, the Ontario Ethanol Growth Fund which provides operating support of up to 11 cents per liter is in place until the end of 2016. Gallant says the formula for accessing that money refl ects fl uctuations in

the price of corn, ethanol and crude oil. In Quebec, the system is a reimbursable tax credit program that provides up to 18 cents per liter of ethanol, however, it’s dependent on the prevailing value of crude oil.

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Bob Gallantpresident and CEOGreenField Ethanol Inc.

Suncor Energy Inc. operates a 200 MMly ethanol facility in the Sarnia-Lambton region of Ontario.

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“I call them safety nets and it just boils down to if you need it, it’s there and when you don’t need it – it’s not,” Gallant says. “It’s a healthy way of help-ing an industry to get to its feet without just saying ‘here’s some money, call me when you’re successful.’ If the funda-mentals of the business when you start up are problematic, and we all know that this industry in North America has been very volatile, that’s when the safety net concept contributes best. Be-cause it helps you get over the low spots and buys the industry time effectively to get it back together.”

Gallant says the economy has been tough, but with a current installed ca-pacity of 1.3 billion liters and a future mandate of 2 billion liters – the sup-ply and demand ratio is good, allow-ing the industry to weather the current economic climate. The ethanol industry has further been helped by the estab-lishment of take-or-pay agreements with the oil industry. Under the multi-year contracts, ethanol producers must supply an oil company with ethanol; and an oil company must take the etha-nol or pay for it.

While U.S. ethanol producers have only recently begun to see a shift in working with the oil industry, the oil-ethanol relationship has been estab-lished in Canada for several years. Some of the largest ethanol producers in Canada are also oil companies. Suncor Energy Inc. currently operates a 200 MMly ethanol facility in the Sarnia-Lambton region of Ontario. A CA$ 120 million expansion project is underway to expand production capacity to 400 MMly. Royal Dutch Shell plc is a ma-jor investor in Iogen Corp., a Canadian cellulosic ethanol technology and pro-ducer. Industry leaders fully expect that the oil industry will continue to see the value of participating in the renewable fuels industry.

“Here in Canada, the oil industry has recognized the fact that biofuels are here to stay and participates in two ways – obviously they purchase from ethanol

producers and some of them have elect-ed to get into ethanol production for their own captive use, primarily on their own,” Galllant says. “It’s somewhat less confrontational than it has been in the U.S., but from what we are seeing in the U.S. – that’s shifting as well.”

The CRFA expects to see the part-nerships between government and the industry continue as the volumes of re-newable fuels required in the Canadian market place increase. “We would con-tinue to look to the government to be a partner in investing, not only in the production capacity that’s being built out now but more importantly the com-mercialization of advanced renewable fuels like ethanol. And that’s certainly the next step,” Quaiattini says. “In the absence of government policy and pro-grams being in place, the investment would continue to likely happen in the U.S. and then you would simply import the fuel to meet these mandates.” The provincial and federal governments un-derstand the value of having the invest-ment and production capacity in Cana-da – and the economic investments and activities that occur when a facility is built, he says.

The provincial mandates were a great start. However, Quaiattini says the biggest step for the industry is moving from provincial mandates to a federal mandate. “Ultimately we needed a national footprint for renewable fu-els. This blending needs to happen in all regions of the country and, there-fore, having the federal government see the value of bringing a renewable fuels strategy to Canada on a national basis is a big step. It would be pretty hard for the industry to have been viable simply with a patchwork of different provin-cial standards in place.” EP

Hope Deutscher is an Ethanol Producer Magazine associate editor. Reach her at [email protected] or (701) 373-8046.

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Sourcing Equipment in Developing Countries While Minimizing RiskPurchasing operating equipment out-of-country can save money, but it is necessary to take the proper steps to ensure a quality product.

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily refl ect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

EQUIPMENT. BY GREGORY T. BENZ AND LING DU

Contribution

he current global credit crunch has made it more diffi -cult for biofuel pro-

ducers to obtain fi nancing for capital projects, which makes it more important than ever to look for ways to reduce capital costs. Moreover, a low capital in-vestment is mandatory to assure

a reasonable rate of return in a time when reduced travel com-bined with low petroleum prices places a heavy downward pres-sure on biofuel selling prices.

Developing countries, in general, have lower quality man-ufacturers than those in the de-veloped world. However, the top 2 percent to 5 percent of suppli-

ers in developing countries have engineering resources and prod-uct quality comparable to the U.S., Canada, Japan and the Eu-ropean Union. In addition, low labor rates and freedom from excessively burdensome regula-tions result in capital equipment costs that are up to 90 percent lower than those in the devel-

oped world. Such savings greatly reduce plant costs and increase the return on investment.

ApprehensionsThere are many misconcep-

tions about the conditions in the manufacturing facilities in devel-oping countries. However, many of the top vendors are certifi ed

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by the International Organiza-tion for Standardization (ISO), comply with U.S. Occupational Safety and Health Administra-tion (OSHA) standards, use fully integrated CAD/CAM systems, have fi nite element analysis capability, numerically controlled machining and weld-ing equipment, full x-ray analy-sis/documentation and clean factories. In other words, many are indistinguishable from their developed-world counterparts.

Yet many people will still have uneasiness about buying from such companies. How does one really know that a company will deliver a quality product? Some American companies, such as Cargill Inc. and CPC International Inc., have done their own investigations before buying. For most companies, it

is better to enlist the help of ex-perienced professionals who can guide you through the process of vetting new potential suppli-ers and recommend those they have already investigated. Such professionals can also aid you in writing specifi cations to modify the vendor’s standard product to meet typical U.S. standards as well as your own unique require-ments.

Cultural Minefi eldsWhen dealing with devel-

oping countries, miscommuni-cation is a potential problem due to language and cultural differ-ences. Most communication is done less directly than in West-ern countries. Direct probing of a company’s product quality can be taken as questioning the integrity of the company’s rep-

resentative. It is better to be in-direct and use a list of items to be checked rather than to chal-lenge someone directly. Busi-ness is also often conducted at a slower pace; people prefer to get to know each other before con-cluding any business deal. This can sometimes be infuriating for those who wish to get the busi-ness done and go home. But rushing things can offend the host and ultimately slow things down more.

There are also various pro-tocols to be followed regarding greetings, dinners, exchanging of business cards and respect for hierarchy. Some companies have in-house people to help deal with such issues. Some are put in this position with no cul-tural training and learn the hard way. Others come from the host

country originally and have to learn to bridge cultures. Often, it is better to enlist the aid of persons or companies that have experience in such matters to smooth communications and facilitate win-win results.

Factors for Company Evaluation

A number of factors can be investigated to properly vet a potential supplier. Among the quantitative and verifi able are:

ISO certifi cation as appropriate

American Soci-ety of Mechanical Engineers code stamp or equivalent as appropriate

Annual sales volume Mean time to prepare

quote Typical manufactur-



Some of these are diffi cult to deter-mine by the end user. For example, many users of the equipment within the biofuel industry will refuse to comment, as they may not wish to aid a competitor. Lack of familiarity with the differences between the vendor’s standard products versus what the buyer has become accustomed to in the Western world may make it hard to specify what is needed. A third-party expert can aid with all of these concerns and act in effect as the main channel of communication. Such an expert or expert fi rm should have personnel familiar with not only with language and cultural issues but also the technical issues unique to the equipment and what the differences are between countries.

Modifying the ProductMost vendors make their products

primarily for their home country. Their requirements may be very different from those in a Western developed country. The components they purchase for manufac-ture may be different from what is cus-tomary in the Western world. For a good result, the vendor must be fl exible about making changes and the buyer must know what changes are needed. If the buyer does not know, the service of someone with ex-perience in such matters is essential. Some examples:

Material of construction. Some alloys readily available in the U.S. are not always available overseas. Usually, a suit-able substitute may be specifi ed.

Gear drives. Locally manufac-tured gear reducers in developing countries are not usually as reliable as world-class brands. Unless the buyer wants to vet re-ducer manufacturers separately, gear drives supplied as part of process equipment should come from well-known brands with a proven track record of service and reliability.

Bearings. Only world-class asso-ciation member company products which are available locally near the buyer’s facility should be used. Journal bearings should be avoided whenever possible.

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American Gear Manufacturers Association ratings

Energy consumption, effi ciency as appropriate for product category

Qualitative factors, which can be just as important as the above, are:

Supplier’s reputation within its industry

Feedback from users of equip-ment, especially within buyer’s industry

Flexibility to make product changes and adapt to local and buyer’s needs

Specifi c experience in biofuel ap-plications

Ability to provide service and training at the customer jobsite

Ease of communication/dedi-cated English-speaking account manager

EQUIPMENT .


Rotary steam joints, mechanical seals. The buyer should specify brands that are familiar and which are readily available near the jobsite.

Safety issues. OSHA-approved guards as required, proper size and con-struction of manways, ladders and other items are all things which cannot be taken for granted.

Miscellaneous issues are product-specifi c and require product knowledge of both the developed-world product and the developing world product

Many Products are SafeProducts that are believed to be ac-

ceptable to North American biofuel pro-ducers include: multiple effect evapora-tors; fl uidized bed dryers; drum dryer/coolers; rotary tuber bundle dryer/coolers; reactors, tanks, heat exchangers/evapora-tors with special metals; dewatering screw presses; bio-reactors/fermenters; ion ex-change columns; fi lters; high speed solids mixers, and many others.

Whatever kind of equipment, chances are that someone in a developing country makes it well and makes it for less. The key is to fi nd the right companies.

Getting the right product at an at-tractive price overseas is a challenge that can pay off handsomely, but the job is not done until it’s installed at your plant site. For mundane items, such as pumps, there is no particular problem shipping from manufacturer to plant site. For large items, such as vessels and dryers, attention must be paid to transportation. Special equip-ment may be required for offl oading the ocean vessel, and special permits and rout-ing may be needed to get it from the arrival port to your job site. A full-service import/export company can usually help with the shipping, permits and any other logistics issues you may encounter. Some may opt to use a separate logistics company.

Sourcing equipment from develop-ing countries has the potential to have a huge impact on your return on investment. However, to assure that operating costs are not negatively impacted by poor quality,

proper vetting of the suppliers and their products is essential. This can be done in some cases by properly trained and experienced in-house personnel, or it can be done with the aid of experienced specialists, who understand the relevant communication, cultural, equipment and logistics issues. Properly done, such sourc-ing will have a positive effect on your bottom line. EP

Gregory T. Benz is president of Benz Technology International, Inc. Reach him at (937) 289-4504 or [email protected]. Ling Du is vice president of engineering at Terrace International Inc. Reach her at (630) 242-5661 or [email protected].

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How Consolidation can Affect Shareholder ValueConsolidation has been a way of business, particularly in the food and agriculture sectors, for up to 100 years, in some cases. In a period of industry stress such as is currently being experienced in the ethanol industry, it is important to step back and review what history teaches us about consolidation and what it could mean to the creation and destruction of shareholder value.


CONSOLIDATION. BY SCOTT MCDERMOTT

Contribution

he boom in etha-nol over the past fi ve years and sub-sequent stress over

the past year are symptoms of a much bigger structurally chang-ing world. Structural changes in global growth and energy, grow-ing consensus on problems as-sociated with greenhouse gas emissions and continued geopo-litical volatility are causing some of the most dramatic changes

the world has seen in the past century. These changes are driv-ing technological innovation that will rival the societal impact of the internal combustion engine, electricity, and communication and entertainment equipment, although it is likely to manifest itself a little differently.

These structural chang-es will likely encompass new sources of nutrition and medi-cine; fuel for transportation,

heat and power; innovations in the engines for transportation; new sources of heat and power; a revolution from producing waste to the reuse of resources and a whole new set of goods and support services. All of this will be driven from public policy, science and technology to public markets, industries and business commercialization.

The point of the discussion about structural change is to set

the context that the current cy-cle in ethanol is one of the fi rst cycles (boom and consolidation) in this very different world. This doesn’t mean we can’t use his-tory to give us an indication of how things might unfold in the future but we should be con-scious about mixing past fun-damental market and economic lessons with new rules, challeng-es and opportunities that pres-ent themselves in the future.

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Learn by ExampleA review of some of the higher pro-

fi le consolidation examples in the past 15 years gives a better understanding of how value was created and destroyed for shareholders. It is also important to dis-cuss how the structural change may pose opportunity and risk. The fi rst example is the consolidation of Aventine Renewable Energy Holdings Inc.’s core asset in Pekin, Ill. The 100 MMgy wet mill is one of the older plants in the ethanol industry and has had a number of owners over the years. In the mid-1990s, Williams BioEnergy, a subsidiary of The Williams Company Inc., purchased the corn wet-mill plant for $167 million, or $1.67 per installed gallon. The company upgraded the plant and also pur-chased a majority stake in a 30 MMgy dry-grind ethanol plant in Aurora, Neb.

In 2003, Williams sold the ethanol as-sets as well as other company assets after having fi nancial problems related to the impact of its telecom-related losses and the shock wave from the government in-vestigations into energy marketing and trading practices. The assets were sold for $75 million, or approximately 57 cents per installed gallon, to Aventine, a company formed by Morgan Stanley Capital Partners to purchase Williams BioEnergy. Aventine was able to turn around and launch its initial public offering (IPO) in June 2006. The $9.06 million share IPO raised nearly $390 million ($3.00 per installed gallon at the time of the IPO), which it used to pay down some debt and expand both loca-tions a total of 107 million gallons.

In its December 2006 U.S. Securities and Exchange Commission10-K fi ling, Aventine had a capacity of 150 MMgy and a total of $408 million of debt and equity, or $2.66 per installed gallon. If you include the full 107 million gallon expan-sion, Aventine was at $1.64 per gallon of installed capacity. The IPO timing worked out well for the original investors. Aventine recently fi led for Chapter 11 Bankruptcy and at press time in mid-June was in the middle of restructuring.

Archer Daniels Midland Co. has been in the ethanol industry as part of its di-versifi ed agribusiness and food enterprise since ethanol’s introduction as a fuel addi-tive. Corn wet mills are the core of ADM’s corn milling operations and the company is the largest corn wet milling company in the world. In 1997, ADM purchased 30 percent of the non-voting shares of Min-nesota Corn Processors for $120 million after MCP expanded production capacity and debt in the 2005-‘06 corn price rally. MCP was a successful farmer cooperative that operated two corn wet mills in Min-nesota and Nebraska. However, negative margins in ethanol were at or below 20 cents per gallon for a year, which drained capital from MCP and forced the bank to call the note.

In 1997, MCP had about $672 million in assets and could grind about 126 million bushels of corn annually, which put the fa-cility at just over $2 on an ethanol gallon equivalent basis. In 2002, ADM paid $382 million for the remaining interest in MCP, which was more than double the equity held by the original members and includ-ed assuming $232 million in debt. If you convert corn grind-to-ethanol equivalent gallons, ADM’s total purchase of MCP was just under $1.50 per ethanol equiva-lent installed gallon. The timing worked out well for ADM because ethanol mar-gins expanded dramatically in the follow-ing years; however, for ADM, the driving force behind the acquisition was probably more about consolidating the sweeteners industry.

The fi nal company review is VeraSun Energy Corp., which was one of the fi rst companies to build a large 100 MMgy dry-grind facility. The fi rst plant was estimated to cost about $1 per gallon, with following plants and plant acquisitions costing be-tween $1.80 and $2.20 per installed gallon of capacity. The company’s IPO in June 2006 raised a total of $450 million with 230 million gallons of capacity in production. That was almost $2 per installed gallon in equity. The VeraSun liquidation of etha-

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nol assets to Valero Energy Corp. and term lenders (West LB AG, Dougherty Funding and AgStar Financial Services) ranged from

50 cents to 84 cents per installed gallon.The most obvious lesson learned is buy

low and sell high, but market timing is not as

easy as it looks by these examples. The etha-nol industry has always been a very volatile commodity industry, meaning companies are more likely to be successful and enhance shareholder value if they are low-cost pro-viders on the commodity cost curve and can effectively manage margin risk. Again, these strategies are easy to talk about but much harder to execute effectively. Commodity markets are very diffi cult to manage, but one thing that a plant can control is plant effi ciency and performance.

The top ethanol companies perform value at risk (VAR) calculations that tie mar-ket volatility and the outlook for margins to calculate working capital requirements and retained earnings for the business. In a com-modity business such as ethanol, deep pock-ets can keep an ethanol plant in the game even if it is less cost competitive than some of its peers. There were ethanol plants as re-cently as two or three quarters ago that were paying out dividends that put the plants at minimum working capital thresholds. The pressure on board members at some of the

CONSOLIDATION .

Ethanol Margin Simulation at Different Installed Cost Levels

Avg Margin Avg Marg % Avg Marg % Avg Marg % Avg Marg % Time Period $/Gal $3/Gal $2/Gal $1/Gal $0.50/Gal

1990-1993 $0.07 2.4% 3.6% 7.2% 14.4%

1994-1996 ($0.08) -2.8% -4.2% -8.5% -16.9%

1997-2000 $0.05 1.5% 2.3% 4.6% 9.3%

2001-2005 $0.29 9.7% 14.5% 29.0% 57.9%

2005-2007 $0.83 27.5% 41.3% 82.5% 165.0%

2008-Current $0.20 6.7% 10.0% 20.0% 39.9%

newer plants to distribute earnings exposed company leverage that did not show up on the balance sheet. In the exuberance to build and expand ethanol plants, some sharehold-ers opted to borrow money to cover their investment. Conversely, the farmer-owned plants are on par with large commercial companies with deeper pockets because they understand the long-term commitment that is often required in commodity invest-ments and have a track record of reinvesting in tough times to protect their investment.

Key Success FactorsMany people will point to scale as a key

critical success factor; however, this review points out that although important, what is more critical to creating or destroying share-holder value is what you pay to buy or build the plant. There is no magic number nec-essarily; however, this assessment points to current plant values well below $1 per gallon of capacity as being relatively low, and pay-ing much above $2 per installed gallon can be problematic if the plant does not have

time and margins to pay down debt. The value of company scale may be less about the scale of the assets and more about the company’s ability to hire talent to improve plant performance, participate in integrat-ing or diversifying product and services, participate in research and development and investing in public relations and key political initiatives.

In the future, plants will need to posi-tion themselves for the structurally chang-ing environment. Plants will need to make prudent business investments to strengthen balance sheets and improve plant effi cien-cies and competitiveness because the mar-kets may get worse. Other opportunities for plants to create and protect shareholder value are to make investments to diversify or vertically integrate the business, acquire plants if possible, maintain capital to weath-er challenging markets or merge. The im-portant test for these business investments is to determine if they will produce tangible economic benefi ts and not spread the com-pany too thin. An example of the value of

business and product diversity is ADM. Its average annual operating margin volatility is 17 percent, compared to an average ethanol plant, which is closer to 70 percent. An ex-ample of the value of vertical integration is to review the combined ethanol production margins and ethanol blending margins. Only one out of the past eight years has had etha-nol prices at a premium over conventional gas prices plus the blenders’ credit, and that was due to the impact of hurricane Katrina and the banning of methyl tertiary ester bu-tyl ester (MTBE) blended gasoline in Colo-nial and Plantation pipelines in 2006.

The fi nal crucial action for plants to focus on is lowering greenhouse gas life cy-cles, diversifying energy sources and making progress on lowering resource intensity pro-fi le for water usage and air emissions such as carbon dioxide. EP

Scott McDermott is a partner with Ascendant Partners Inc. Reach him at (303) 221-4700.

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Common Mistakes in Design, Use of Reverse Osmosis Systems The components of a working reverse osmosis system are few — a pump, some membranes, vessels and plumbing. The challenge is to operate it in a way that minimizes membrane fouling, maximizes membrane life, and avoids hydraulic catastrophes.

WATER. BY WES BYRNE

Contribution

he most common cause of a complete failure of a reverse osmosis (RO) sys-

tem is inadequate pretreatment of the RO feed water. RO sys-tems must be protected from in-compatible contaminants, from the potential for scale forma-tion, and from excessive fouling. Compromises made in the pre-treatment methods, monitoring instrumentation, or quality of the equipment will usually result

in operational problems in the downstream RO unit.

For example, a common compromise is to use the same fl ow control orifi ce on a mul-timedia fi lter discharge line to control both the fi lter backwash fl ow rate and the rinse fl ow rate performed after a backwashing. This method results in roughly the same fl ow rate being used for both steps. But where a backwash fl ow rate based on 12 gpm/ft2 of cross-sectional

area is appropriate for obtain-ing 40 percent expansion of the media granules ( at 54 degrees Fahrenheit), this same rinse fl ow rate will compact the media granules under a pressure drop exceeding 10 psid (pounds per square inch differential). This will tend to push any suspended particles still in the upper sec-tion of the media fi lters deeply into the media bed. Acceptable performance will only begin to be achieved after the fl ow rate

has been reduced to the normal service fl ow rate. If this only oc-curs while the fi lter is in service, much of the solids shed by the fi lters will end up in the RO car-tridge pre-fi lters and in the RO membrane elements.

Another common mistake with media fi lters is not install-ing individual fl ow meters on each of multiple fi lters in par-allel. Without these fl ow read-ings there is no way to know if fl ow rates are balanced between

T



the fi lters. If any particular fi l-ter starts to plug up with sol-ids, more fl ow will divert to the other fi lters. If the media fi lter is not capable of provid-ing water with a maximum silt density index (SDI) of fi ve, as noted as a requirement on some membrane manufacturers’ ele-ment specifi cation sheets, a fatal mistake is to inject a polymeric fi ltration aid directly prior to the media fi lters. This mistake is particularly devious in how it appears to dramatically improve the effl uent quality of the fi lters. What does not show up in the effl uent turbidity or SDI analy-sis is the residual polymer break-ing through the fi lter.

Because of the polymer’s charge characteristics, it will permanently bond with the RO membrane. Any suspended sol-ids will now attach to the poly-mer rather than migrate along the membrane surface. The rate of RO fouling will increase and cleanings will no longer restore original performance because it

will not be possible to get the polymer off the membrane. The membrane elements will need to be replaced.

If media fi lters are not pro-viding water of a suffi cient qual-ity, there are ways to improve their performance. A common misconception of pressurized fi lters is that they provide the best fi ltration at a fl ow rate of 5 gpm/ft2. Actually, fi lter perfor-mance will keep improving as the fl ow velocity is reduced until reaching the limits of the abil-ity of the distribution laterals to prevent channeling.

It may be necessary to co-agulate fi ne colloids upstream using a coagulant. If so, an in-organic coagulant should be employed, such as an aluminum product or ferric chloride. If these materials break through the media fi lter, they will also foul the downstream RO, but they can be cleaned. They should be used in a reaction tank of suffi cient size to allow the reac-tion time necessary for the sus-

pended solids to bind with the coagulant before getting to the media fi lters.

Chlorine EliminationThe polyamide thin-fi lm

membrane commonly used in most RO systems cannot han-dle chlorine. Some membrane manufacturers have promoted that their membrane could tol-erate free-chlorine equivalent to the exposure of 1 ppm over a period of 1000 hours before a doubling of salt passage would occur. This guideline has often been misinterpreted as mean-ing that it is acceptable to allow chlorine to occasionally contact the RO membrane as a means of reducing biological fouling. But membrane damage will soon occur if it is exposed to any amount of chlorine and will be cumulative. The damage will be worse if iron or other transi-tion metals have fouled out on the membrane.

Sodium bisulfi te is often used to reduce the chlorine con-

centration going into the system. But sodium bisulfi te will also re-act with dissolved oxygen in the water and any excess bisulfi te will tend to reduce the oxygen concentration, increasing the potential for increased anaero-bic biological growth. These are the species responsible for heavy slime formations that can rapidly foul the systems. A de-fi nitive symptom of this is the sulfur dioxide, rotten-egg smell noted when membrane vessels are opened.

The optimum concentra-tion of sodium bisulfi te can be diffi cult to maintain. Sodium bisulfi te present in the injection day tank or in chemi-cal totes will degrade over time as it reacts with oxygen from the at-mosphere. If sodium hypochlorite

Wes Byrnepresident, CEA


WATER.

122

(bleach) is injected upstream, its concentration will also change depending on its age.

Oxidation-reduction po-tential (ORP) is a relatively inex-pensive method of monitoring bisulfi te dosage but its method may not directly refl ect the re-sidual chlorine concentration. Other variables can also impact its reading, especially pH.

When ORP is used to con-trol bisulfi te dosage on a con-tinuously operating system, the results may be disastrous if the RO permeate returns back to an upstream feed tank when pro-cess water is not being demand-ed. During times of minimal usage, the increased concen-tration of RO permeate in the blended feed means that little alkalinity will be present. Added bisulfi te will have an increased impact on the water pH and cause it to drop. The declining pH will cause the ORP reading to increase even if no chlorine is present. The control system will respond by adding even more bisulfate and the bisulfi te injec-tion pump will eventually max out on its dosage. All of the

excess bisulfi te will deplete the oxygen in the water and a severe anaerobic bacterial outbreak will eventually result.

Scale InhibitionThe injection of a chemi-

cal scale inhibitor is typically the least expensive way to prevent scale formation in an RO system. Chemicals work by binding with

the growing scale crystals, which reduce their particle growth rate. The smaller scale particles are more likely to remain suspended and exit out of the RO system in the concentrate stream.

A ritual of rinsing super-saturated salts from the RO prior to shutdown is essential to the success of this mechanism. The best method is to tee in

pressurized permeate water with an automatic valve downstream of the inlet isolation valve to displace the water in the RO at shutdown. This has the added advantage of reducing the po-tential for anaerobic bacterial growth during shutdowns by reducing the concentration of anions in the RO, which are re-quired for the anaerobic bacteria

0

50

100

150

200

250

300

350

400

60 Hz and VFD Modified Pump Curves

Using a variable frequency drive to overly restrict a pump’s output may put the pump off of its curve.

0 6.25

10 13.8

17.5

21.3

25 28.8

32.5

36.3

40 43.8

47.5

51.3

55 58.8

62.5

66.3

70 73.8

77.5

81.3

85 88.8

92.5

96.3

100

104

108

111

115

119

123

Flow Rate

Pres

sure

Pressure w/VFD@47Hz Pressure@60 Hz

SOURCE: CEA-ENCYCLOPEDIA OF WATER TREATMENT

GETTING ANSWERSFROM FIELD TO FUELALTERNATIVE FUEL SERVICES

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to proliferate. It also improves the quality of permeate during startup, which may mean that a permeate diversion system may not be needed at startups.

Applying Variable Frequency Drives

A variable frequency drive (VFD) used to control the out-put of the high pressure pump can enable operation of an RO with an optimum permeate fl ow rate without wasting energy by having to throttle the pump outlet. However, if the pump is over-sized, a substantial reduc-tion in the motor frequency may be needed to suffi ciently bring down the output pressure. This shifts the pump curve well to the left, which means that too much fl ow will be going through the pump and it may be damaged. The potential for this problem is magnifi ed when two pumps are used in a series but only one is controlled by a VFD.

Controls and InstrumentationRO systems that will not

be well-attended by trained op-erators should have suffi cient

alarms and controls to prevent catastrophic failures. The coor-dination of alarms conditions with system shutdowns is of-ten performed with a human-machine interface (HMI). If an HMI is employed, it is critical that the HMI can be bypassed in case something goes wrong. An unforeseen problem in the pro-gram or a bad transducer should not prevent an RO system from being operated until the HMI programmer can get to the site.

Accurate fl ow rate and pressure readings are critical to monitoring the performance of the RO membrane elements. Flow transducers must be in-stalled with a suffi cient length of straight pipe upstream and downstream of the transducer to meet the manufacturer rec-ommendations. Otherwise, the meter may not perform under reduced fl ow conditions.

Flow meters should be calibrated based on an accurate measurement of the fl ow rate. This may be diffi cult to accom-plish with larger systems, but some method must be devised. This may be as simple as timing

the rate at which a downstream storage tank fi lls. The incorpo-ration of redundant fl ow meters will assist in noting when a trans-ducer is not reading accurately.

InstallationIt is common for the

RO concentrate stream to be plumbed to a discharge drain lo-cated beneath the highest point of the membrane pressure ves-sels. Unless an automatic isola-tion valve or a vacuum breaking valve is installed on the concen-trate line, a siphon will be pulled on the RO while it is shutdown. Water will continue to fl ow through the line after shutdown and will pull a vacuum on the RO system.

This vacuum will cause wa-ter to partially drain from the RO pressure vessels. Victaulic-style couplings enable this draining because their standard gaskets allow air to be pulled into the system to displace the vacating water. Specialty gaskets can be purchased that maintain a better seal under vacuum conditions.

When an RO drains, the incoming air will carry bacteria

and fungi spores into the mem-brane elements. This may con-tribute to fouling of the mem-brane elements. When the RO restarts, water hammer may oc-cur and can break the fi berglass wrap and plastic anti-telescoping devices on the end of the ele-ments.

A check valve that uses a lightly weighted spring (1-2 psi) may be teed in the top of the concentrate discharge line to al-low air to be sucked into the line under vacuum conditions. It should be directed or plumbed in a way that does not spit water at personnel whenever the RO starts up. EP

Wes Byrne is the president of CEA, a water treatment consult-ing company, and is an adjunct professor at St. Cloud Technical College. He wrote this article as a consultant for US Water Services Inc. Reach him at (763) 553-0379 or [email protected]


126

World Bioenergy – Clean Vehicles & Fuels September 16-18, 2009 Stockholmsmässan Stockholm, Sweden This conference will focus on the practical imple-mentation of bioenergy and sustainable transport systems. A variety of commercial examples from Sweden will be highlighted. Topics will include so-cio-economic drivers, impact of international trade in biofuels, emergence of bio-refi neries, coproduc-tion of fuels, chemicals, power and materials, and the development of markets for clean vehicles and fuels. Attendees will include delegates, offi cials, re-searchers, and visitors from Europe and beyond.

+46 (0)18-67 38 03www.wbcvf2009.se

Atlantic BIOenergy ConferenceSeptember 21-23, 2009 Delta Beausejour Moncton, New Brunswick The conference, hosted by BBI Biofuels Canada, will focus on growth and sustainability and renew-able energy opportunities in Atlantic Canada. The conference will feature dynamic sessions and discussions on biomass-based energy genera-tion, anaerobic digestion, waste management technologies, government incentives and more. The conference promises lively debates, action-oriented discussions and world class presenta-tions on the latest developments, applications and technologies in the bioenergy fi elds.

(888) 501-0224 (North America) (519) 576-4500 (International) www.atlanticbioenergy.ca

Ethanol Conference & Trade Show Aug. 11-13, 2009MilwaukeeThe American Coalition for Ethanol’s 22nd annual conference will highlight public policy, technology and education in regard to the ethanol industry, among many other topics. The conference will include: updates from high level political offi cials, updates on technological innovations and effi cien-cies in corn and cellulose, discussions on blend-ing economics, risk management techniques, and updates on biofuels role in reducing greenhouse gas emissions.

(605) 334-3381 www.ethanol.org

Midwest Algae Commercialization Workshop August 18, 2009 Fredrikson & Byron, P.A.MinneapolisAttendees will learn about commercial opportuni-ties related to algae and network with others in the industry. Speakers will include producers, scientists, investors, potential customers and policymakers and will discuss the issues sur-rounding commercial viability of algae production in the Midwest, current government and private initiatives, evolving technologies, processing concepts, life cycle analysis, and venture and project fi nance trends. The workshop will also offer opportunities to learn about the intellectual property issues of algae production, application and commercialization.

(612) 492-7864 [email protected]

Land Use: Carbon Impacts of Corn-based Ethanol 2009August 25-26, 2009Renaissance St. Louis HotelSt. LouisThe National Corn Growers Association confer-ence will focus on land use and climate impacts of corn-based ethanol. Session topics will include land use change, nitrous oxide, new technologies and their effects on greenhouse gas emissions, domestic and international yields, satellite and land conversion emissions data, renewable biomass and distillers grains.

(636) 733-9004 ext. 118www.ncga.com

EVENTS CALENDAR

From Crude Oil to Biofuels: A U.S. – Brazil Energy RelationshipSeptember 9-10, 2009 Hotel Sofi telRio de Janeiro, BrazilSession topics will include the future of ethanol in the Brazilian and global markets, biofuels sustain-ability, fuels market outlook, Western Hemisphere ethanol policy and new technology developments.

(703) 891-4804www.hartenergyconferences.com/index.php?area=details&confID=124

The Alcohol SchoolSeptember 13-18, 2009MontrealThis course will educate fuel-ethanol and dis-tilled beverage producers in the science of alcohol production. The program will cover the ethanol production process from milling and mash preparation through fermentation and distillation. Enzyme usage, yeast biology, bacterial contamination and control will also be discussed, along with other issues currently af-fecting both industries. Registration is limited, with preference given to fuel-ethanol and dis-tilled beverage producers.

(800) 583-6484 www.ethanoltech.com

Biofuels Supply Chain Summit 2009September 15-17, 2009Ghent, BelgiumAll major issues within the biofuels industry will be discussed at this summit. Leading authorities from Europe and Brazil will showcase their experiences. Discussions will cover the latest EU policies, legis-lations and economic effects, and the current de-velopments and future initiatives for the transpor-tation and logistics of biofuels. Attendees can also take part in 3 interactive panel sessions on: crucial evolution and recent developments of custom tax-es and its impact on the European import/export market, current and future outlook of EU’s biofuels market, and exploring current country legislations and their infl uence on the future of biofuels trading, transportation and sustainability.

+44 (0)20 7753 4268www.vibenergy-events.com/biofuels/programme.htm

Aug Sept

126 ETHANOL PRODUCER MAGAZINE August 2009

Global Sugar Trade & FinanceSeptember 29-30, 2009 Goodwood Park HotelSingaporeSpecialists, producers, bankers and traders will share their insights set to alter direction of the glob-al sugar market. The conference will focus on the uncertain times ahead for the world sugar industry and marketplace. Session topics will include risk management, political initiatives and price volatility. Attendees will get insights from Brazil, the world’s largest sugar and ethanol producing country, and hear key industry members explore the dynamics of the sugar-ethanol equation.

(65) 6345 7322www.cmtevents.com/aboutevent.aspx?ev=090937&

Biomass & WtE: Waste to EnergyOctober 28-29, 2009Shanghai, ChinaAttendees will include producers of biomass, biod-iesel, ethanol and cellulosic ethanol; local, mu-nicipal and provincial government representatives; enzymes and catalyst providers; and other industry experts. The conference will focus on power gen-erations, cellulosic ethanol and biotechnology for fuels & chemicals, dedicated energy crops, agri-cultural residues, and energy from municipal solid waste.

(65) 6345 7322www.cmtevents.com/aboutevent.aspx?ev=091035&

Biofuels 2009October 27-29, 2009Budapest, HungaryIndustry leaders from more than 50 countries and fi ve continents are expected to attend this event, hosted by the World Refi ning Association. Session topics will include a global overview on the biofuels industry, strategies of refi neries within the biofuels fi eld, new supplies and processing for feedstocks, and a bioethanol market outlook.

+44 (0) 20 7067 1800www.wraconferences.com/2/4/articles/57.php

Next Generation Biofuels MarketsSeptember 28-30, 2009 NH Grand Hotel KrasnapolskyAmsterdam, The NetherlandsThe 5th annual conference will address the latest developments in creating cost competitive, industrial scale production of next generation biofuels tech-nologies. Topics will include commercial strategies and business models, how to make sustainable bio-energy a practical solution and advances in cellulosic ethanol and biobutanol.

+44 (0)207 099 0600www2.greenpowerconferences.co.uk/v8-12/Prospectus/Index.php?sEventCode=BF0909NL

Air Quality VIIOctober 26-29, 2009Crystal Gateway MarriottArlington, VirginiaThis event will be a forum for reviewing the current state of science and policy in conjunction with air quality, particularly as it relates to the energy indus-try. The focus will be on related air quality impacts regarding policy; markets; health and ecosystems; measurement methods; separation, capture, and storage; emission control and prevention; and at-mospheric reactions and modeling.

(701) 777-5000www.undeerc.org/AQ7

Oct



EPM MARKETPLACE

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Pioneer Hi-Bred International, Inc.800-247-6803 www.pioneer.com

Associations/OrganizationsTrade

API Credit Exchange202-682-8192 www.api.org/ace

ChemicalsPhibroChem 800-223-0434 www.lactrol.com

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Bio-Cide International.Inc405-329-5556 www.bio-cide.com

Ferm Solutions859-402-8707 www.ferm-solutions.com

PhibroChem 800-223-0434 www.lactrol.com

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Novozymes919-494-3101 www.novozymes.com

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Buckman Laboratories, Inc.901-278-0330 www.buckman.com

Yeast

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Fermentis-Division of SI Lesaffre800-558-7279 www.fermentis.com

Lallemand Ethanol Technology800-583-6484 www.ethanoltech.com

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Hydro-Klean, Inc.515-283-0500 www.hydro-klean.com

Seneca Companies800-369-5500 www.senecaco.com

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Fans


Filter Media

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Fabrication

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VAL-FAB Inc.877-482-5322 www.valfab.com

Foundations

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Petrochem Insulation707-644-7455 www.petrocheminc.com

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Marcus Construction Company800-367-3424 www.marcusconstruction.com

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Railworks913-888-4091 www.railworks.com

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Caldwell Tanks502-964-3361 www.caldwelltanks.com

WINBCO Tank Company641-683-1855 www.winbco.com

Consulting

Central Energy Plant


Environmental

Air Resource Specialists,Inc.970-484-7941 www.air-resource.com

ICM, Inc.877-456-8588 www.icminc.com

Natural Resource Group, LLC.612-347-6789 www.nrg-llc.com

Pinnacle Engineering Inc.507-280-5966 www.pineng.com


Weaver Boos Consultants888-645-5240 www.weaverboos.com

Feasibility Studies

Harris Group Inc.206-494-9422 www.harrisgroup.com

Management Services

Greenway Consulting,LLC320-589-3085 www.greenwayconsulting.net

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Granatus Consulting, Inc.218-773-0005 www.granatusinc.com




Project Development


EducationIowa Lakes Community College800-242-5108 www.iowalakes.edu

EmploymentRecruiting

McDermott & Bull-Energy Practice415-722-8966 www.mbsearch.net

SearchPath of Chicago815-261-4403 www.searchpath.com/chicago

EngineeringBiomass Energy


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Process Engineering Associates, LLC865-220-8722 www.processengr.com

Vogelbusch USA, Inc.713-461-7374 www.vogelbusch.com

Equipment & ServicesAgitation Equipment

ProQuip, Inc.330-468-1850 www.proquipinc.com

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Ceco Abatement Systems, Inc.630-493-0624 www.cecoenviro.com/Abatement

Analytical Instruments

Gusmer Enterprises, Inc.847-277-9785 www.gusmerbiorefi ning.com

Blowers & Fans

Robinson Fans, Inc. 724-452-6121 www.robinsonfans.com

Boiler Systems

Hurst Boiler & Welding Co., Inc.800-666-6414 www.hurstboiler.com

Combustion Equipment

Eclipse.Inc.815-637-7213 www.eclipsenet.com

Alaqua Inc.Evaporators, Crystallizers, Distillation, Columns, Solvent

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dbc SMARTsoftware, Inc.770-427-7633 www.dbcsmartsoftware.com

Encore Business Solutions204-989-4330 www.encorebusiness.com

Control Systems


Revere Control Systems800-536-2525 www.reverecontrol.com

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U.S. Tsubaki847-459-9500 www.ustsubaki.com

Conveyors–Pneumatic

MAC Equipment, Inc.816-891-9300 www.macequipment.com

Cooling Towers

Delta Cooling Towers, Inc.800-BUY-DELTA www.deltacooling.com

Corn Oil Recovery


Distillation Equipment

SRS Engineering Corporation800-497-5841 www.srsbiodiesel.com

Dryers-Fluid Bed

Aeroglide Corporation919-851-2000 www.aeroglide.com

Littleford Day, Inc.859-525-7600 www.littleford.com

Dryers-Ring

Barr-Rosin,Inc630-659-3980 www.barr-rosin.com

Dryers-Rotary Drum

Barr-Rosin,Inc.630-659-3980 www.barr-rosin.com


Ronning Engineering Company, Inc.913-239-8118 www.ronningengineering.com

Dryers-Rotary Steam Tube


Dust Control Systems

MAC Equipment, Inc.816-891-9300 www.macequipment.com

Emission Monitoring Systems

MonitorTech Corp.866-682-6771 www.monitortechgrp.com

Fermentation Monitoring

ETS Laboratories707-963-4806 www.etslabs.com

Fermentors



Filtration Equipment

Fluid Engineering814-453-5014 www.fl uideng.com

Fire Suppression

FLAMEX Inc.336-299-2933 fl [email protected]

Fractionation-Corn

Buhler Inc.763-847-9900 www.buhlergroup.com/us

Cereal Process Technologies217-779-2595 www.cerealprocess.com

Crown Iron Works651-639-8900 www.crowniron.com


MOR Technology, LLC618-522-8324 www.mortechnology.com

Grain Handling & Storage


McC, Inc.763-477-4774 www.mccormickconstruction.com

Heat Exchangers

Munters - Des Champs Products540-291-1111 www.deschamps.com

Insulator

Industrial Construction & Engineering636-970-1650 www.ic-e.cc

Laboratory-Outsourcing

SGS North America Inc. 281-479-7170 www.sgs.com/alternativefuels

Laboratory-Supplies

CHATA Biosystems877-246-2428 [email protected]

Phenomenex310-212-0555 www.phenomenex.com

Laboratory-Testing Services

Midwest Laboratories, Inc.402-829-9877 www.midwestlabs.com

Trilogy Analytical Laboratory636-239-1521 www.trilogylab.com

Loading Equipment

Carbis, Inc.800-845-2387 www.carbis.net

SafeRack866-761-7225 www.saferack.com

Maintenance Services

Joule’ Industrial [email protected] www.jouleinc.com

Ethanol Effi ciency. Integrated business management system for purchase/sales contracting, risk management, plant production and material usage data collection, and automated receiving and loadout.

800.518.0472JohnDeereAgriServices.com

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EPM MARKETPLACE

Mechanical Solutions, LLC515-332-7035 www.mecsol.com

Maintenance Software


Mapcon Technologies, Inc.800-922-4336 www.mapcon.com

Mills-Hammer

CPM/Roskamp Champion800-366-2563 www.cpmroskamp.com

Millwright


Moisture Analyzers

Sartorius Mechatronies-Omnimark800-835-3211 www.sartorius-omnimark.com

Molecular Sieve Desiccant

3 Angstrom630-980-5205 www.3Angstrom.com

Molecular Sieves


Vaperma, Inc.418-839-6989 www.vaperma.com

Motors

Trico TCWind, Incorporated320-693-6200 www.tricotcwind.com

Paint & Protective Coatings

Mongan / Bockman 260-748-7655 www.monganbockman.com

Parts & Services


Pipe

ISCO Industries800-345-4726 www.isco-pipe.com

Robert-James Sales, Inc.800-666-0088 www.rjsales.com

Pipe-Fittings


Pipe-Flanges


Pressure Vessels


Process Control


VFTechnical Services, LLC423-794-6747 www.vftechserv.com

Pumps

PeopleFlo Manufacturing847-929-4774 www.peoplefl o.com

Valley Equipment Co. Inc.423-753-3541 www.valleyequipment.com

Resource Recovery

Eco-Tec, Inc.905-427-0077 www.eco-tec.com

Scales-Software

John Deere Agri Services800-518-0472 www.johndeereagriservices.com

Scales-Truck

Weigh-Tec Inc.1-800-461-4153 www.truck-scales.com

Seals

Aesseal Inc.865-531-0192 www.aesseal.com

Separation Equipment


Puritan Magnetics, Inc.248-628-3808 www.puritanmagnetics.com

Size Reduction-Shredders

DuraTech Industries / Haybuster701-252-4601 www.haybuster.com

Storage-DDGS

Laidig Systems, Inc.574-256-0204 www.laidig.com

Structural Fabrication


Tanks



Brown Tank LLC651-747-0100 www.browntank-mn.com

Federal Equipment Company800-652-2466 www.fedequip.com

i ll l d

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EPM MARKETPLACE

Paragon Trailer Sales800-471-8769 www.paragontrailer.com


Thermal Oxidizers

Pro-Environmental, Inc.909-989-3010 www.pro-env.com

Used Equipment

Valves

Check-All Valve Mfg. Co.515-224-2301 www.checkall.com

North American Safety Valve800-800-8882 www.nasvi.com

Wastewater Treatment Services

Biothane Corporation856-541-3500x501 www.biothane.com



UEM, Inc.561-385-7515 www.uemgroup.com

Water Treatment

Aquatech International Corporation724-746-5300 www.aquatech.com


Yield Enhancement

EdneiQ, Inc.310-592-4158 www.EdeniQ.com

Ethanol ProductionExisting Producers

Louis Dreyfus Commodities402-844-2680 LDCommodities.com

POET LLC605-965-2200 www.poetenergy.com

FinanceAccounting

Christianson & Associates PLLP320-235-5937 www.christiansoncpa.com

Eide Bailly LLC605-977-2703 www.eidebailly.com

[email protected]

PROVENRELIABILITYfor VOC, CO & PM

ABATEMENT

EISENMANN CorporationCrystal Lake, Illinois

EPM MARKETPLACE

With all contact information placed in one convenient location, Ethanol Producer Magazine not only con-tains top editorial content but also a useful directory in each publica-tion. Whether a fi rst-time adver-tiser wanting to raise awareness of your business or a frequent dis-play advertiser looking for added exposure, EPM Marketplace is the perfect solution.

Reach your customers

Your Solution. Advertise Today.

EPM MARKETPLACE


EPM MARKETPLACE

Appraisals

Natwick Associates Appraisal Services800-279-4757 www.natwick.com

Due Diligence


Mergers & Acquisitions

Kent Group, Inc.715-358-7528 www.kentgroupinc.com

Risk Management

R.J. O’Brien800-621-0757 www.rjobrien.com

Software-Accounting

Encore Business Solutions204-989-4330 www.encorebusiness.com

Software-Commodity

John Deere Agri Services800-518-0472 www.johndeereagriservices.com

Legal ServicesAttorneys

BrownWinick Law Firm515-242-2400 www.biofuellawyers.com

Faegre & Benson, LLP612-766-6930 www.faegre.com

MarketingDistillers Grains

CGB Feed Ingredients985-867-3554 www.cgb.com

Fuel Ethanol

Gavilon402-595-5678 www.gavilon.com

Miscellaneous

Nelson Ink Promotional Products218-222-3831 www.nelsonink.com

TransportationMarine

Evolution Markets, Inc.914-323-0259 www.evomarkets.com

Rail

Ameritrack RailRoad Contractors, Inc.765-659-2111 www.ameritrackrailroad.com

Railcar Moving

Shuttlewagon, Inc.816-767-0300 www.shuttlewagon.com

Railcar Parts

Salco Products, Inc.630-783-2570 www.salcoproducts.com

Terminals & DSP

ERS Rail Transload205-322-8312 www.ersrail.net

UtilitiesUtility

Integrys Energy Services608-235-2547 www.integrysenergy.com

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass. Collectively, these biomass utilization industries are positioned to replace nearly every product made from fossil fuels with those derived from plant or waste material. The publication covers a wide array of issues on the leading edge of biomass utilization technologies, from biorefining, dedicated energy crops and cellulosic ethanol to decentralized power, anaerobic digestion and gasification. It’s all here.

www.BiomassMagazine.com

For additional informationplease contact us at (701) 746-8385 or at

[email protected].

EPM MARKETPLACE

With all contact information placed

in one convenient location, Ethanol

Producer Magazine not only con-

tains top editorial content but also

a useful directory in each publica-

tion. Whether a fi rst-time adver-

tiser wanting to raise awareness

of your business or a frequent dis-

play advertiser looking for added

exposure, EPM Marketplace is the

perfect solution.

Reach your customers


EPM MARKETPLACE

Your Ad HERE


EPM MARKETPLACE

poet.com

august 2009 ethanol producer magazine

Documents

ethanol production

future of ethanol

educatingfuel ethanol

ethanol market

cellulosic ethanol facilities

cellulosic ethanol ventures

cornbased ethanol industry

grainbased ethanol producers