Biomass Magazine - June 2009 by BBI International

INSIDE: SMETHPORT, PA., LOOKS TO WOODY BIOMASS FOR ENERGY June 2009

Biomass Conference Review Portland, Ore., Welcomes Record Crowd to the 2009 International Biomass Conference & Expo

www.BiomassMagazine.com

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s 0ATENTED POLYMER BUCKET s 4HICK h)CEBERG %DGEv FRONT LIP DESIGN IMPROVES PERFORMANCE s -AXIMIZE CAPACITY WITH IMPROVED lLLING AND DISCHARGE s 3TACKABLE DESIGN FOR REDUCED STORAGE AND SHIPPING SPACE

s 0ROTECTS ROTATING EQUIPMENT FROM DANGEROUS UNDERSPEED CONDITIONS s 3OLID STATE NON CONTACTING WITH SIMPLE h-AGNETIC 3WIPEv CALIBRATION s 0ROVIDES AND UNDERSPEED OUTPUTS AND DIGITAL SPEED OUTPUTS

Roto-Safe Failsafe Rotation Detection of High and Low Levels of Bulk Granular Solids in Bins, Tanks or Silos! s 3INGLE POINT ROTARY LEVEL INDICATOR s -OTOR AND GEARBOX SWITCH OFF WHEN ROTATION IS IMPEDED s 3ENSITIVITY ADJUSTMENT FOR LIGHT OR HEAVY MATERIALS

U.S. Pat. 496,052 www.go4b.com/biomass

Bolt ‘N’ Go The Revolutionary New Assembly Method for Drop Forged Conveyor Chains! s .O WELDING OR CIRCLIPS REQUIRED s #HAIN mIGHTS ARE ATTACHED USING A BOLT AND NUT WITH A HIGH STRENGTH HOLLOW PIN s .O NEED TO REMOVE CHAIN FROM THE CONVEYOR FOR INSTALLATION s 2EDUCED SHIPPING COSTS U.S. Pat. 7,080,728 www.go4b.com/biomass

TouchSwitch A Safer and More Efﬁcient Belt Alignment Monitoring Device! s 3ENSOR IS TRIGGERED BY THE FORCE OF BELT CONTACT s 2EQUIRES NO HEAT BUILD UP SO IT S SAFER AND MORE EFlCIENT s (ARDENED STAINLESS STEEL FACE FOR LESS WEAR s %XTERNAL TEST KNOB AND ,%$ FOR SENSOR TEST AND SYSTEM VERIlCATION U.S. Pat. 6,731,219 www.go4b.com/biomass

HotBus T500 Elite Continuous Bearing Temperature and Belt Misalignment Monitoring System! s $IGITAL #OMMUNICATION 3YSTEM FOR MONITORING UP TO POINTS s !BSOLUTE AND RELATIVE TEMPERATURE ALARMS s 5SER FRIENDLY MENU DRIVEN SET AND CALIBRATION s 3INGLE TWISTED PAIR COMMUNICATION SAVES COSTS IN WIRING AND INSTALLATION

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WHEEL OF FORTUNE Do you want to be a frontrunner in the cellulosic bioethanol industry?

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Get the odds in your favor Cellulosic bioethanol is key to optimizing the world’s future energy mix. Novozymes is leading the way in marketing cellulosic ethanol a commercial reality by 2010. And Novozymes’ Cellic™ products are just what you need to be a leader in the race to cellulosic bioethanol. So let’s start creating the future today. Together we can make cellulosic bioethanol a winning solution. Find out more at www.bioenergy.novozymes.com

Novozymes is the world leader in bioinnovation. Together with customers across a broad array of industries we create tomorrow’s industrial biosolutions, improving our customers’ business and the use of our planet’s resources.

4 BIOMASS MAGAZINE 6|2009

INSIDE

JUNE 2009

VOLUME 3

ISSUE 6

FEATURES ..................... 28 EVENT Biomass in the City of Roses More than 1,000 people assembled in Portland, Ore., to attend the 2009 International Biomass Conference & Expo. This year’s event focused on the value of the many forms of biomass, including wood, agriculture waste, food and beverage processing waste, municipal solid waste and algae. By Anna Austin

34 CHP Reinventing Smethport’s Forest Legacy Smethport, Pa., population 1,700, aims to be the first U.S. community of its size to employ a woody-biomass-powered district heating system to supply all of its heat and power. By Susanne Retka Schill

42 EQUIPMENT Have Trailer-Will Move Biomass Randy Hill has proven his agricultural drying trailers work in the peanut industry. Now he wants to show the biomass industry how they can be used to transport and dry wood chips. By Rona Johnson

48 FEEDSTOCK Duckweed ‘Quacks’ Volumes of Potential FEEDSTOCK | PAGE 48

DEPARTMENTS ..................... 07 Advertiser Index 08 Editor’s Note All Eyes are on the Biomass Industry By Rona Johnson

10 CITIES Corner Opportunity is Knocking By Tim Portz

Researchers looking for sustainable, nonfood ethanol feedstocks have found that duckweed can produce five to six times more starch per acre than corn. By Bryan Sims

CONTRIBUTIONS ..................... 54 FINANCE Biomass Project Financing Solutions in Today’s Difficult Capital Markets Biomass project developers can use government programs to bridge the gap in funding until the industry matures and traditional capital becomes available. By Sue Wyka

11 Legal Perspectives Don’t Overlook Biomass Stimulus in Farm Bill By John Eustermann

13 Industry Events 14 Business Briefs 16 Industry News 59 EERC Update Role of Biomass in Coal-to-Liquids By Tony Snyder

60 Marketplace

6|2009 BIOMASS MAGAZINE 5

e d

Sc ra

P k r Ba

Mul Boi ch ler Fu Saw dus el t

Chips Wood

k r p a a r c S B t e all

Woo Planer d C Shav hip ings s

Pallet Scrap

u Flo

Wood is a terrible thing to waste. Since 1928, Schutte-Buffalo Hammermill has been pulverizing the competition. We have produced more fine grinding hammer mills than any other manufacturer of size reduction equipment in the world. Designed specifically for the wood waste market, our mills reduce your wood chips, shavings, bark or hogged scrap to the exact finished particle size required for boiler fuel, pelletizing, briquetting and more. We offer a wide variety of configurations and the expertise to fit the right mill to your application, while making the environment greener. Let us put our experience to work for you. 1.800.447.4634

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advertiser INDEX 17th European Biomass Conference & Exhibition 41

EDITORIAL EDITOR Rona Johnson rjohnson@bbiinternational.com

PUBLISHER & CEO Mike Bryan mbryan@bbiinternational.com

ASSISTANT EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com

VICE PRESIDENT OF MEDIA & EVENTS Joe Bryan jbryan@bbiinternational.com

ASSOCIATE EDITORS Bryan Sims bsims@bbiinternational.com Anna Austin aaustin@bbiinternational.com Lisa Gibson lgibson@bbiinternational.com

VICE PRESIDENT OF CONTENT AND COMMUNICATIONS Tom Bryan tbryan@bbiinternational.com

E-MEDIA COORDINATOR Megan Skauge mskauge@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNERS Elizabeth Slavens bslavens@bbiinternational.com Sam Melquist smelquist@bbiinternational.com Jack Sitter jsitter@bbiinternational.com

2009 International Fuel Ethanol Workshop & Expo

2010 International BIOMASS Conference & Expo

4B Components, Ltd.

PUBLISHING & SALES

COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

2009 Atlantic BioEnergy Conference

SALES DIRECTOR Matthew Spoor mspoor@bbiinternational.com

Action Unloaders

Agra Industries

Amandus Kahl GmbH & Co.

Bandit Industries

Bio-Mizer

BRUKS Rockwood

Christianson & Associates PLLP

Continental Biomass Industries

SALES MANAGER, MEDIA & EVENTS Howard Brockhouse hbrockhouse@bbiinternational.com ACCOUNT MANAGERS Clay Moore cmoore@bbiinternational.com Jeremy Hanson jhanson@bbiinternational.com Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com SUBSCRIPTION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITON MANAGER Jason Smith jsmith@bbiinternational.com ADMINISTRATIVE ASSISTANT, SALES Christie Anderson canderson@bbiinternational.com

Energy & Environmental Research Center

Eisenmann Corporation

Envergent Technologies

Ethanol Producer Magazine

Gas Technology Institute

Harris Group Inc.

Hoffmann Inc.

Hunt, Guillot & Associates, LLC

Hurst Boiler & Welding Co. Inc.

Indeck Power Equipment Co.

Innovative Natural Resource Solutions LLC

Jeffrey Rader Corporation

Koger Air

Larox Corp.

MAC Equipment

Mid-South Engineering Company

Morbark Inc.

Novozymes

Peterson

R.C. Costello & Assoc. Inc.

Robert-James Sales Inc.

Ronning Engineering

Roskamp Champion/CPM

Schutte-Buffalo Hammer Mill The Teaford Co. Inc.

Subscriptions Subscriptions to Biomass Magazine are $24.95 per year in the U.S; $39.95 in Canada and Mexico; and $49.95 outside North America. Subscriptions can be completed online at www.BiomassMagazine.com or subscribe over the phone at (701) 746-8385.

Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com.

Advertising Biomass Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biomass Magazine advertising opportunities, please contact us at (701) 746-8385 or service@ bbiinternational.com.

Detroit Stoker Company

6 36

W.S. Tyler

West Salem Machinery

Wolf Material Handling Systems

Letters to the Editor We welcome letters to the editor. Send to Biomass Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rjohnson@ bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Cert no. SCS-COC-00648

6|2009 BIOMASS MAGAZINE 7

editor’s

NOTE All Eyes are on the Biomass Industry

would like to thank everyone for making the International Biomass Conference & Expo in Portland, Ore., a success. I have to say, people in the biomass industry are a patient bunch. As some of you may know, I spent a good deal of my time checking people in at the registration desk. I had just learned how to use the computer program and was pretty tentative at first, but nobody seemed to mind. In fact, my ineptness gave me a chance to visit with many of you. Oregon was the perfect venue for the conference as the state is so supportive of biomass projects. According to Oregon Department of Energy Director Michael Grainey, the state has an energy loan program to help pay for constructing renewable energy facilities and it has two tax credits to encourage the use of biomass. Oregon also has a renewable fuel standard for ethanol, and legislation is pending to establish one for biodiesel. The state also has a renewable portfolio standard that requires the largest utilities to provide 25 percent of their retail sales of electricity from renewable sources in 2025. If you didn’t make it to the biomass conference, you can read about it in this magazine. Biomass Magazine Associate Editor Anna Austin attended the conference and wrote a feature about it called “Biomass in the City of Roses,” which starts on page 28. The only thing that would have made the conference better was if during the conference the U.S. DOE would have announced that it was investing $786.5 million to produce renewable fuels. It would have been even better if Energy Secretary Steven Chu would have been at the conference to make the announcement. Oh well, there’s always next year. As much as I like to complain about the federal government, I was impressed with the funding announcement, and President Barack Obama’s creation of the Biofuels Interagency Working Group composed of the DOE, USDA and U.S. EPA. It makes perfect sense for these three agencies to work together as the U.S. looks to increase its use of renewable energy. These three agencies are not only tasked with accelerating the production of biofuels but also with increasing the use of biofuels, and, at the same time, improving the environmental sustainability of biofuels feedstock production. The president also directed Secretary of Agriculture Tom Vilsack to expedite and increase production of and investment in biofuels. Some of the ways the secretary will do this are by refinancing existing investments in renewable fuels, making renewable energy financing opportunities in the Farm Bill available within 30 days, providing loan guarantees for the development, construction and retrofitting of biorefineries, and providing grants to build demonstration-scale biorefineries. Do you suppose the president read my column last month where I criticized lawmakers for investing too much of our hard-earned tax money into losing ventures and urged them to start putting money into viable industries? Probably not, but a gal can dream.

Rona Johnson Editor rjohnson@bbiinternational.com

8 BIOMASS MAGAZINE 6|2009

You can’t put a price on peace of mind. That’s why we design every piece of equipment to help you meet NFPA and OSHA dust explosion standards. To offer you a wide range of safe, efficient and reliable pneumatic conveying and filtration solutions. All engineered to leave the smallest carbon footprint in the industry. To ﬁnd out more, call MAC at 1-800-821-2476 or email us at Sales@MacEquipment.com.

CITIES corner Opportunity is Knocking

wo policy discussions currently underway in our nation’s capitol will have significant implications for the biomass industry. The first, the renewable electricity standard included in first drafts of the American Clean Energy and Security Act, is a clear winner for our industry. The second, the rulemaking surrounding the renewable fuels standard enacted in the 2007 Energy Bill, has the potential to be incredibly disruptive. It is easy to see that a renewable electricity standard would be a welcome piece of legislation. Requiring 25 percent of the electricity available in the grid come from renewable sources is in many ways a biomass power mandate. When utilities are required to generate significant amounts of power renewably, they will ultimately turn to biomass. Biomass is widely distributed across this country, employs many people in its collection and handling, generates base-load quality power, and is relatively benign from a carbon perspective. The rulemaking surrounding the renewable fuels standard is a much more complicated situation, and the potential is there for it to significantly disrupt the largest biomass-to-liquid-fuels industry ever built. In question is indirect landuse change and whether deforestation in other parts of the world can be directly attributed to increased corn plantings to satisfy demand from ethanol producers. Some models, when including indirect land-use change, show corn ethanol as slightly more carbon intense than gasoline. Considering this, it’s not impossible to envision a time

10 BIOMASS MAGAZINE 6|2009

when corn ethanol finds itself the odd fuel out. Rightfully, the outcries and protests have already begun. U.S. Sen. John Thune, RS.D., has introduced a bill that would heavily scrutinize the U.S. EPA’s indirect land-use Tim Portz models and potentially pre- business BBI vent them from being used at developer, International all. The most interesting aspect of Thune’s bill, and one that could provide a new opportunity for our industry, is the portion of the bill that allows ethanol producers to apply for an individualized carbon score if they prove they have a production system with a lower carbon density. Utilizing biomass to satisfy the thermal requirements of an ethanol facility or using corn fertilized with biomass-derived ammonia would significantly reduce the carbon score at ethanol facilities employing these technologies. Biomass heat, power and fertilizers are all less carbon dense than their fossil fuel counterparts and corn ethanol may be the first industry to call upon biomass to reduce its carbon footprint. I doubt, however, that it will be the last time. Tim Portz is a business developer with BBI International’s Community Initiative to Improve Energy Sustainability. Reach him at tportz@ bbiinternational.com or (651) 398-9154.

LEGAL

perspectives

Don’t Overlook Biomass Stimulus in Farm Bill By John Eustermann

John Eustermann partner, Stoel Rives LLP

ll of the attention focused on the American Recovery and Reinvestment Act may have caused many folks to overlook other energy/fuel-centric federal “stimulus” programs. As of this writing, Title IX of the Farm Bill offers a number of good programs currently waiting in the shadows of the ARRA. The 2008 Farm Bill provides more programs and money than were available last year. Thus, a review of all of the programs under the bill is warranted, although space considerations allow for only a sampling of the programs to be presented here. Section 9004: Repowering Assistance Program—Section 9004 authorizes payments to encourage biorefineries in existence when the Farm Bill was passed to replace fossil fuels used for operational power with biomass power. Payments would be made for installation of new biomass systems. Section 9005: Bioenergy Program for Advanced Biofuels—Section 9005 provides for payments to be made to eligible agricultural producers to support and ensure an expanding production of “advanced biofuels.” Advanced biofuels under the bill are essentially those fuels derived from renewable biomass other

than corn-kernel starch and include, among others, ethanol from waste materials. Further, advanced biofuels must have life-cycle greenhouse gas (GHG) emissions at least 50 percent less than baseline (2005) life-cycle GHG emissions for gasoline or diesel as specified by the Energy Independence & Security Act of 2007. Section 9007: Rural Energy for America Program—Section 9007 is designed to promote energy efficiency and renewable energy development for agricultural producers and rural small businesses and provides grants and loan guarantees for energy audits, feasibility studies and project development of renewable energy systems/energy efficiency improvements. Grants in certain instances, however, may not exceed 25 percent of cost. Loan guarantees are capped at $25 million per loan, and any combination of grant and loan guarantees may not exceed 75 percent of cost. Section 9008: Biomass Research and Development Initiative—Section 9008 provides competitive grants, contracts and financial assistance to eligible entities to carry out research on and development and demonstration of biofuels and biobased products, and the methods, practices and technologies for their production.

Section 9011: Biomass Crop Assistance—Section 9011 provides support to establish and produce crops for conversion to bioenergy, and to help agricultural and forest landowners with the collection, harvest, storage and transportation of eligible material for use in a biomass conversion facility. Section 9012: Forest Biomass for Energy—Section 9012 appropriates $15 million annually for fiscal year 2009-’12 for the Forest Service to administer a competitive and comprehensive research and development program to use forest biomass for energy. The Forest Service, other federal agencies, state and local governments, Indian tribes, land-grant colleges and universities, and private entities are eligible to compete for such program funds. The priority research projects include: developing technology and techniques to use low-value forest biomass for energy production; developing processes to integrate energy production from forest biomass into biorefineries; developing new transportation fuels from forest biomass; and improving growth and yield of trees intended for renewable energy. John Eustermann is a partner with Stoel Rives LLP. Reach him at jmeustermann@ stoel.com or (208) 387-4218.

6|2009 BIOMASS MAGAZINE 11

BIOM M A S S 09

Visit www.undeerc.org/Biomass09

BIOM M A SS ’09 Powe r, Fu e l s, a n d C h e m i c a l s Wo r k s h o p

July 14–15, 2009 at

The Alerus Center OE 4USFFU 4PVUI t Grand Forks, North Dakota

EERC

Energy & Environmental Research Center ®

OFFICE OF RENEWABLE ENERGY & ENERGY EFFICIENCY

industry events Biomass Boiler Workshop

International Fuel Ethanol Workshop & Expo

June 11-12, 2009

June 15-18, 2009

Savannah, Ga. This workshop consists of presentations on technological developments and results to improve the operating performance, waste fuel burning capacity, efficiency and fuel economy of biomass-fired boilers. The program will include troubleshooting and problem-solving discussions that attendees bring to the workshop. Participants will learn about the current retrofit technology for biomass boilers and associated equipments, and see how other mill operations can solve their biomass boiler area problems. They will also receive information and solutions to mill-specific problems. (425) 952-2843 www.jansenboiler.com

Colorado Convention Center Denver This will mark the 25th anniversary of the world’s largest ethanol conference, with more than 3,500 attendees and 700 exhibitors representing more than 500 countries. The event will provide unmatched business development, networking opportunities, and an industry leading educational forum. The workshop will address conventional ethanol, next-generation ethanol and biomass. This year, all existing or under-construction ethanol plants within the U.S. and Canada will receive two complimentary passes for employees and board members. (701) 746-8385 www.2009few.com

2009 Biomass Power Forum II

BioPower Generation USA

June 18-19, 2009

June 23-24, 2009

Westin Casuarina Hotel Las Vegas The forum will explore biomass power operations/economics, feedstock procurement/logistics, stimulus package incentives/finance structures and biomass power contracting approaches. The forum will focus on six case studies and a panel discussion on biomass-to-power projects. Interactive discussions will also give attendees information on investment climate, biomass finance, carbon credits and genetic enhancements of energy crops. (781) 430-2110 www.platts.com/Events/2009/pc936/index.xml

Hyatt Regency McCormick Place Chicago This event will address the latest developments in the biomass power generation industry. Agenda topics include wood-based biomass production, alternative biomass feedstocks, biopower supply chains and conversion technologies. Sessions will discuss economic and life-cycle analysis of wood-based biomass, developments in biomass from waste resources, designing efficient future biopower supply systems and biomass cofiring. +44 (0)207 099 0600 www2.greenpowerconferences.co.uk/v8-12/Prospectus/ Index.php?sEventCode=BG0906US

Forest Products 63rd International Convention

17th European Biomass Conference & Exhibition

June 21-23, 2009

June 29-July 3, 2009

Doubletree Hotel Boise-Riverside Boise, Idaho The convention will begin with a general session, where attendees will hear from leading architecture firms on innovative uses for forest products and sustainable design. Other sessions will discuss carbon impacts on market opportunities, current topics in physics and drying, manufacturing and product innovation, and fundamentals of wood science, including chemistry, biochemistry, physics, micromechanics and analysis. This year’s convention will be held in collaboration with the Society of Wood Science and Technology, which will offer presentations and activities June 24. (608) 231-1361 www.forestprod.org/confic09.html

CCH-Congress Center Hamburg, Germany This event is expected to draw more than 1,500 participants from more than 70 countries. Participants will learn about the latest breakthroughs in the biomass field. The exhibition, taking place parallel to the conference, will feature the foremost companies and state-of-the-art products in the industry. The conference will also be accompanied by workshops, tours and a social program. +39 055-5002174 www.conference-biomass.com/index.htm

World Congress on Industrial Biotechnology & Bioprocessing

Atlantic BIOenergy Conference

July 19-22, 2009

Delta Beausejour Moncton, New Brunswick The Atlantic BIOenergy Conference, hosted by BBI Biofuels Canada, will focus on growth and sustainability, and renewable energy opportunities in Atlantic Canada. The conference will feature dynamic sessions and discussions on biomass-based energy generation, anaerobic digestion, waste management technologies, government incentives and more. The conference promises lively debates, action-oriented discussions and world-class presentations on the latest developments, applications and technologies in the bioenergy fields. (888) 501-0224 (North America) (519) 576-4500 (International) www.atlanticbioenergy.ca

Palais des congrès de Montréal Montréal This event will bring together individuals with diverse experience to share knowledge to speed the development and growth of a sector that is vital for value creation and sustainable industrial development. This conference will foster the exchange of ideas and provide real-world scenarios, present an overview of the latest technological developments and offer networking opportunities. The meeting will focus on relevant topics in the field of industrial biotechnology, including advanced biofuels, feedstock collection, biodiesel, energy from algae and the use of agricultural and forestry residues. (202) 962-6630 www.bio.org/worldcongress/

September 21-23, 2009

6|2009 BIOMASS MAGAZINE 13

business

BRIEFS UMass Amherst receives DARPA award The Department of Defense has awarded $1.9 million in funding to a biofuel research team led by chemical engineer George Huber at the University of Massachusetts-Amherst so he and colleagues can turn wood and corn waste into fuel precursors. The DoD’s Defense Advanced Research Projects Agency has granted Huber and colleagues funding to investigate new catalysts to enable low-cost pathways for the conversion of lignocellulosic biomass (derived from the cells and woody fibers of plants and trees) into a liquid composition that can be easily refined to a fuel such as JP-8. Huber and his team will exploit new chemistries to develop an end-to-end process that starts with biomass as the input and ends with JP-8 range alkanes and aromatics, which are both hydrocarbons and are the essential ingredients in military fuel. BIO

River Consulting recognized as Top 500 Design Firm River Consulting was ranked as one of the Top 500 Design Firms in the country by Engineering News-Record for the second consecutive year. Published annually, the ENR Top 500 recognizes top-performing architectural and engineering firms. River took the 440th spot in the Engineering News-Record April 20, 2009 issue. The ranking is based on 2008 revenue, and is a 7 percent increase from last year’s 475. “This places us in the top 0.5 percent of the more than 90,000 design firms nationwide,” said Gregory DiFrank, PE, president of River Consulting, citing the number of design firms based upon the most recent economic census. River Consulting delivers multidiscipline engineering and project management solutions for major capital projects and facility and process expansions. River’s experience spans 28 years and 57 countries with offices in Columbus, Ohio, New Orleans, Pittsburgh, Houston and Salt Lake City. BIO

Michael Best forms climate change group Milwaukee-based law firm Michael Best & Friedrich LLP is responding to the growing need for more specialized focus in the area of climate change by assembling a multidisciplinary team of attorneys to assist clients in identifying the opportunities, addressing the uncertainties and understanding the challenges that climate change presents to their businesses. The Michael Best Climate Change Group has followed the developments of international, federal, regional and state greenhouse gas (GHG) reporting and reduction programs and is offering services in the areas of baseline GHG monitoring and reporting, carbon markets, transactions, project development, including debt and equity financing, compliance with the emerging GHG reduction proposals and strategic planning. “Our team members combine diverse backgrounds from the worlds of renewable and fossil fuel energies, business, agriculture, finance and the environment to provide clients in-depth knowledge of the impacts of climate change,” said Ray Krueger, co-founder of the Climate Change Group. BIO

MAC celebrates 40th anniversary MAC Equipment is marking a major milestone by celebrating its 40th anniversary. In 1969, Gary and Virginia McDaniel established MAC Equipment in Sabetha, Kan. The company pioneered the development of dust collection and clean air systems based on the Clean Air Act of 1970. For four decades, MAC has demonstrated the ability to respond and react to changes in the industry. Gary McDaniel retired in 1998 and sold the business to George K. Baum and Co., allowing for continued growth in both dust collection and pneumatic conveying during the next decade. This dramatic growth in such a short span of time caught the attention of Clyde Process Solutions PLC, which acquired MAC in 2007. The acquisition created a global presence for both MAC and Clyde technologies that continues today. MAC Equipment employs more than 350 people in North America. BIO 14 BIOMASS MAGAZINE 6|2009

GPRE, BioprocessAlgae complete funding for algae project Green Plains Renewable Energy Inc. and BioProcessAlgae LLC have executed a grant award agreement with the Iowa Office of Energy Independence for a $2.1 million research and development grant from the Iowa Power Fund to build an algae pilot project at Green Plains’ ethanol plant in Shenandoah, Iowa. The Iowa Power Fund grant provides matching funds to install a series of photobioreactor units at Green Plains’ Shenandoah ethanol plant. Water, heat and carbon dioxide will be recycled from the ethanol manufacturing process to support continuous algae production. The grant provides funding through the end of the first quarter of calendar year 2010 with installation of the pilot project expected in the third quarter of 2009. BIO

Hastings advises Gevo in series D financing Paul Hastings of Janofsky & Walker LLP, a San Diegobased international law firm, announced that the firm represented Gevo Inc., a biofuels company, in raising a series D round of private investment led by Total, a French oil and gas company, the Virgin Green Fund, Khosla Ventures, Malaysian Life Sciences Capital Fund and Burrill & Co. The transaction closed on April 24, 2009. Gevo is commercializing technology for the costeffective production of renewable, fungible hydrocarbons such as gasoline blendstocks, renewable jet fuel and renewable diesel blendstocks. In addition to fuels, Gevo’s technology enables the production of a wide variety of chemicals and plastics such as polyacrylates and polyethylene terephthalate from renewable sources. Corporate partner Deyan Spiridonov led the Hastings team, which included senior associate Teri O’Brien. BIO

business

BRIEFS Novozymes recognized for ethical leadership For the second consecutive year, Novozymes has been recognized for demonstrating real and sustained ethical leadership and is listed as one of the most ethical companies in the world. According to Ethispere Magazine, all of the 2009 World’s Most Ethical Companies are standouts in their industries; they use ethical leadership as a purposeful method to drive profits. “Novozymes has proven to be one of the world leaders in upholding high ethical standards, making it a true standout in its industry, especially as unethical business actions and decisions grab headlines each day,” said Alex Brigham, executive director of the Ethisphere Institute. The institute reviewed more than 10,000 of the world’s leading companies on six continents. The companies are analyzed over a six-month period. Other companies on the list include Dell, T-Mobile, American Express and NIKE. To see the complete list, visit http://ethispere. com/wme2009. BIO

Ze-gen hires Sidwell as senior process engineer Boston-based Ze-gen Inc. announced the addition of Roderick Sidwell. Sidwell will play a key role in the process design and execution of the company’s first commercial advanced gasification facility and all subsequent facilities. Sidwell brings more than 18 years of experience to Ze-gen. Prior to joining Ze-gen, he worked as an application engineer for Catalytic Solutions, developing catalyst test rigs and providing field support of SCR installations. In addition, Sidwell has worked as an industry consultant, and has held positions with Ceramatec and Argonne National Laboratory. Sidwell has published a number of articles on his fuel cell research, and holds a patent on the subject. BIO

Mascoma moves corporate office to New Hampshire Mascoma Corp. announced that it is moving the company’s corporate headquarters from Boston into a new research laboratory and office building in Lebanon, N.H. Construction of the new building will be completed in August with occupancy by September 2009. The move will allow research and development engineering and commercial development staff to work together under one roof—providing smooth technology transfer from the lab to operating facilities. It will eliminate travel between offices and decrease the company’s carbon footprint. Corporate administrative and operating costs will also be reduced. The corporate office move will involve a reduction of 12 to 15 positions due to elimination of redundant functions and inability of some staff to relocate. However, some new positions will be created in Lebanon, and Rome, N.Y., staffing will be unaffected. BIO

Future ethanol producers continue to seek funding Fledgling cellulosic ethanol company Biofuels America Inc. is seeking equity investments to advance proposed facilities in Tennessee and Illinois that will use a combination of wood waste and municipal solid waste to produce ethanol, lignin and furfural. CEO Pete Reeves, is confident investors will be enticed to participate in these projects because of the federal policy initiatives to assist in the build-up of this type of facility. The company planned to begin retrofitting a 35-acre Tennessee ethanol facility in early June. The plant has been idle for about eight years. However, Reeves said while the work would begin as scheduled, it could not be completed if the company fails to raise approximately $20 million within the next six months. Operations are expected to begin by 2010, with the initial capacity of 30 MMgy and gradually ramping up to 100 MMgy by 2014. BIO

Stoel Rives publishes economic stimulus guide Stoel Rives LLP, a U.S. business law firm, announced the publication of a guide to federal clean energy funding opportunities under the $787 billion American Recovery and Reinvestment Act. Signed into law by President Obama in February, ARRA contains almost $94 billion in investments and tax incentives for renewable energy, smart grid/transmission, energy efficiency, green vehicles and green job training. Titled “Show Me The Money,” the guide reviews the various programs and potential sources of federal funding for clean energy companies and projects. The guide separately addresses funding opportunities under the ARRA for the following energy industry areas: wind, solar, biofuels, biomass, smart grid, transmission, geothermal, marine and hydrokinetic, green building, energy efficiency, advanced battery and fuel cell technology, clean energy equipment manufacturing, green vehicles and clean coal. The firm will also continue to track the frequent updates and funding notices at the federal and state level which may also be of interest. The guide is available on request at www.stoel. com/lawofseries. BIO

6|2009 BIOMASS MAGAZINE 15

industry

NEWS Policy Impacts on Electricity Prices 90 Wholesale Electricity Prices (2006 dollars per KWh)

Cap and Trade

Cap and Trade + 15% Renewable Electricity Standard (RES)

Cap and Trade + 15% + 15% Energy Efficiency Resource Standard (EERS)

75 70 65 60 55 20 2020

2025

ACEEE analyzed the impact of proposed cap-and-trade polices on electrical rates when applied alone and in conjunction with renewable electricity standards. They found that adding efficiency standards to the mix reduces the cost to the consumer the most. Source: ACEEE

Energy efficiency savings offset cap-and-trade costs As the Obama Administration and Congress consider approaches to promote clean energy and reduce greenhouse gases (GHG) in the electricity sector, a coalition of advocacy groups released a report in late April countering industry claims that carbon cap-and-trade legislation will be too costly for consumers. The report suggested energy efficiency improvements and renewable energy standards will make cap-and-trade legislation affordable, create 300,000 jobs by 2025 and save consumers more than $200 billion. “This report shows that the doomsday predictions utility companies are making don’t take into account the consumer benefits of this bill,” said Rob Kelter, senior attorney at the Environmental Law and Policy Center. “This legislation will be good for the economy and good for the environment.” The Environmental Law and Policy Center was joined by the American Council for an Energy-Efficient Economy, the Energy Future Coalitions Environment NorthEast, Natural Resources Defense Council and the Union of Concerned Scientists in releasing the analysis titled, “A Comprehensive Approach to Setting Clean Energy Standards for the Electricity Sector.” The report supports proposals contained in the WaxmanMarkey (Reps. Henry Waxman, D-Calif., and Edward Markey, DMass.) draft of the American Clean Energy and Security Act of 2009 before Congress, which combines energy and climate legislation in one bill taking a three-pillar approach. An Energy Efficiency Resources Standard would reduce electricity usage by at least 15 percent and natural gas usage by at least 10 percent by 2020. A renewable electricity standard would increase renewable energy 16 BIOMASS MAGAZINE 6|2009

production to at least 20 percent by 2020. And a global warming cap would cut GHG emissions by at least 35 percent below current levels by 2020 and by at least 80 percent by 2050. Opponents say the EERS and RES are overly ambitious and would increase costs to utility companies trying to meet emission reduction targets. The report argues that eliminating the standards or combining them in order to weaken both would be a mistake for the following reasons: Weakening or eliminating the EERS or RES results in fewer new jobs, lower utility savings for consumers and businesses, and fewer opportunities for new economic development—at a time when jobs and economic growth are top national priorities. Energy efficiency and renewable energy investments can help lower the cost of electricity under cap-and-trade legislation, saving consumers money. Energy efficiency reduces energy demand, providing utility bill savings and making the RES target easier to meet while renewable energy sources provide energy without the carbon dioxide emissions associated with traditional generation sources. Energy efficiency and renewable energy sources reduce the need for expensive new power plants, which in turn reduces the cost of generating power and cuts GHG emissions. An American Council for an Energy Efficient Economy analysis shows that electricity prices under cap-and-trade legislation will be 15 percent less if an EERS and RES are in place. In other words, investing in energy efficiency and renewable energy will help minimize the cost of complying with climate legislation. —Susanne Retka Schill

industry

NEWS

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OriginOil achieves rapid algae oil extraction OriginOil Inc. is making progress toward reducing the cost of harvesting algae and extracting the oil in a rapid, one-step process. In addition to integrating this process into its own algae production system, OriginOil plans to quickly commercialize the patent-pending process for use by others in the algae industry. While a number of developers have been working on various systems to efficiently grow algae, a major hurdle for the industry has been efficiently harvesting the algae and extracting the oil. Not only does algae production require large volumes of water, but algae share the same specific gravity as water, hindering easy separation. “The energy cost of extracting algae is 10 times the energy cost of extracting soybean oil,” said OriginOil CEO Riggs Eckelberry. In the past several months, OriginOil has combined its ultrasound-based Quantum Fracturing process with pH modification and electromagnetism. “In a single step you can extract the oil and get the biomass and oil to separate spontaneously shortly afterward,” he explained. The process releases the oil to rise to the top for skimming, while the remaining biomass settles to the bottom. In less than an hour, the oil, water and biomass separate by gravity alone. No chemicals or heavy machinery are used, and no initial dewatering is required. OriginOil is already in talks with po-

tential partners to quickly commercialize the technology, Eckelberry added. The company has completed a series of bench prototype testing and continues to experiment with adjusting the various factors to optimize the process. OriginOil intends to distribute the technology for algae harvest and oil extraction separately, as it continues to work with its own algae production system. In February, OriginOil announced it had signed a cooperative research and development agreement with the U.S. DOE’s Idaho National Laboratory. In the first phase, INL will develop a model to evaluate algae systems’ mass and energy balance. In the second phase, INL will work with OriginOil’s prototype technology to validate and further develop the company’s algae technology. With breakthroughs being announced weekly by the multiple companies developing algae technology, Eckelberry admits healthy skepticism is in order. “It’s a dotcom environment right now, and it’s going to take a while for it all to sort out,” he said. He advised observers to follow the announcements, and “see how it settles out.” Eckelberry is an advocate of sharing information and progress, while respecting the need to protect proprietary information. For more information, visit the company’s Web site at www.originoil.com.

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6|2009 BIOMASS MAGAZINE 17

industry

NEWS Californians engineer microbes to produce methyl halides University of California-San Francisco researchers have published a paper on their work with a bacteria and a yeast that have the potential to become a feedstock flexible process producing an intermediate chemical new to the biomass industry. Christopher Voigt, an associate professor in pharmaceutical chemistry at UCSF, was the principle investigator for the paper, “Synthesis of Methyl Halides from Biomass Using Engineered Microbes,” published online April 20 bytheJournaloftheAmericanChemicalSociety. The report can be viewed at http://pubs. acs.org/doi/abs/10.1021/ja809461u. “In corn-to-ethanol, corn is the only feedstock and ethanol the only product,” Voigt said. In the UCSF process, the engineered bacteria/yeast duo have successfully converted sugarcane bagasse, corn stover,

switchgrass and poplar into methyl halide. While methyl halides are produced in nature at usually low volumes, it is a chemical familiar to the petrochemical industry that can be used in solvents, propellants and soil fumigants. Methyl halides can be manufactured into gasoline, olefins, aromatics, alcohols, ethers and other chemicals using zeolite catalysts. UCSF research uses synthetic metagenomics to identify and select enzymes that were then genetically engineered into brewer’s yeast to produce methyl halides instead of alcohol. The researchers grew their engineered yeast with a cellulose-eating bacteria originally isolated in the early 1980s from a French landfill. In the UCSF process, the yeast consumes the bacteria’s products in a symbiotic relationship providing a novel

conversion of biomass to the intermediate chemical. Several aspects of the process promise an energy efficient conversion process: the biomass is simply chopped finely and not chemically pre-processed; the microbes grow at 30 degrees Celsius (86 degrees Fahrenheit); and the methyl halides come off as a gas. The research team is now working on improving yields and rates. Work also needs to be done on the scalability of the fermentation and chemical catalysis of the methyl halide. The researchers have formed Biomex Inc. to help with commercialization, although the corporation is unfunded at this time. —Susanne Retka Schill

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NEWS KL Energy expands to Brazil Cellulosic ethanol developer KL Energy Corp. has announced it will expand into Brazil, as a result of a partnership with renewable energy business development company add blue Ltda. Through an exclusive cooperation agreement, the companies will construct a demonstration-scale cellulosic ethanol plant in Brazil to implement KL Energy’s enzymatic process. KL Energy CEO Steve Corcoran told Biomass Magazine that the company began talks with add blue in mid-2008, when KL Energy executives visited several sugarcane mills and technology institutes and met with investors in Brazil. “Our interest was to add value to and improve the sustainability of the Brazilian sugarcane industry,” he said. “Our highest financial and environmental returns would come from cellulosic ethanol and optimizing the 550 million ton crush ca-

pacity of the 360 existing mills. KL Energy and add blue quickly decided to team up and jointly develop the cellulosic and process optimization business in Brazil.” The 5 MMly (1.3 MMgy) plant will utilize sugarcane bagasse as a feedstock. “The Brazilian sugarcane industry alone coproduces approximately 70 million dry tons of bagasse per year,” Corcoran pointed out. “With the continued strong growth of the domestic fuel ethanol demand and evermore efficient captive power generation, the bagasse quantities, which can be made available for cellulosic ethanol production, will increase rapidly.” KL Energy and add

blue plan to construct and operate the plant, which will be integrated into a sugarcane mill and will be expanded to commercial scale when the targeted yields are achieved. Corcoran said the sugarcane mill will supply approximately 15,000 to 20,000 tons of the bagasse feedstock in its first year of operation. The companies expect to have the facility operational by 2010. KL Energy operates Western Biomass Energy, a cellulosic ethanol pilot plant in Upton, Wyo., which uses woody biomass as a feedstock. The company recently signed an agreement with Prairie Green Renewable Energy Inc. to provide its technology for use at a 5 MMgy to 10 MMgy cellulosic ethanol plant near Hudson Bay in northeastern Saskatchewan. The project is slated to begin construction in the third or fourth quarter of 2009. —Anna Austin

6|2009 BIOMASS MAGAZINE 19

industry

NEWS Valero Energy invests in waste-to-fuel company Waste-to-energy developer Terrabon LLC has received the first installment of an equity infusion of an undisclosed amount, from Texas-based oil refiner Valero Energy Corp. Valero Energy owns and operates 16 oil refineries in the U.S. Its subsidiary, Valero Renewable Fuels, recently became the owner of bankrupt ethanol producer VeraSun Energy Corp assets, including five ethanol production facilities and a development site. Terrabon said it intends to use the funds to accelerate commercial deployment of its MixAlco technology, an acid fermentation process which converts biomass materials such as municipal solid waste into fuel chemicals. The MixAlco process works by first

treating the feedstock with lime to enhance its digestibility, and then ferments the biomass using a mixed-culture of microorganisms to produce a mixture of carboxylic acids. Calcium carbonate is added to the fermentation to neutralize the acids to form their corresponding carboxylate salts, which are dewatered, concentrated, dried and thermally converted to ketones. The ketones are hydrogenated to alcohols and refined into renewable gasoline, diesel and jet fuel. Terrabon believes the technology is economical for both large- and small-scale plants and that the plants can be built for about $2 per gallon.

In partnership with Texas A&M University, Terrabon currently operates a pilot plant at College Station, Texas, and is in the process of starting up an advanced biofuels research facility in Bryan, Texas, where the company will confirm MixAlcoâ&#x20AC;&#x2122;s commercial feasibility. Terrabon is also working with the city of Port Arthur, Texas, to build a small plant designed to turn 50 tons of waste per day into organic salts, which would then be sent to a local refinery. Engineering work has started, and Terrabon is negotiating with the city on the use of the municipal waste and location of the project, according to the company. â&#x20AC;&#x201D;Anna Austin

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industry

NEWS 25Farmer Network plants new crop trials Participants in the 25Farmer Network will grow sunflowers, sweet sorghum and switchgrass this summer for use in manufacturing biomaterials and biofuels. It is the first crop they will plant for the program. The network is coordinated through Memphis Bioworks Foundation’s AgBio initiative and consists of 25 western Tennessee farmers who will plant five acres each of experimental crops, a step toward identifying crops that can be grown locally for several potential products ranging from novel health products to biobased materials. The farmers will learn first-hand how to manage the new crops in the region and assess their variability as a long-term source in an ongoing pipeline, according to Memphis Bioworks. Their crops could be used in manufacturing biobased plastics, cleaning products, automotive components and consumer products such as high-fashion clothing and industrial plastics.

“We picked three crops to start with and we hope to expand the range and increase acreage of the crops each year,” said Hillary Spain, Memphis Bioworks representative. “We start with growing anything and everything on small plots to see what grows the best and has a potential market.” The farmer participants have a say in which experimental crop they grow. Sunflowers have an oil market in Oklahoma, Spain said, and sweet sorghum can be used in manufacturing ethanol. “It’s looking like it’ll be a better crop for producing ethanol than corn,” she said. Switchgrass production is targeted for future cellulosic ethanol production. “We’re hoping there’ll be a market for that in the next few years,” Spain added. For more information, see “Tennessee group launches 25Farmer Network” in the October 2008 issue of Biomass Magazine.

Participants in the 25Farmer Network will grow switchgrass, sweet sorghum and sunflowers this summer, the first crops for the program.

—Lisa Gibson

6|2009 BIOMASS MAGAZINE 21

industry

NEWS Homeowners in Cincinnati, Columbus and Dayton, Ohio, who use wood pellet stoves and furnaces to heat their homes, now have the option of having the fuel delivered directly to their residences. Wood pellet provider PelletSales.com said the new option was offered in response to a record increase of pellet stove and furnace installations and an increased demand for residential delivery. Jennifer Nickaulas, PelletSales.com marketing coordinator, said the company expects to see a greater interest in wood pellets now that they offer home delivery to more areas. “We’re constantly expanding our service areas based on demand, and we’re seeing that people overwhelmingly value both their time and money, preferring to have wood pellets delivered,” she said. “It makes sense, really, because someone who heats their home with natural gas for example, doesn’t have to haul the fuel in one tank at a

time from the store, so why should someone heating with biomass have to do so?” The company recommends purchasing wood pellets in early spring because oil prices are forecast to rise again, and it is typically the most cost-effective time of year to purchase pellets. As of April 14, crude oil was selling for $50 per barrel, up from less than $35 per barrel in February. Along with the option of having pellets delivered, customers can also choose to lower their delivery costs by using a community pooling registry on the company Web site. The registry helps customers find others in their area who are also looking for pellet fuel with whom they can share the cost of transporting the pellets. A truck can carry approximately 24 tons of fuel. Nickaulas said the amount of pellets a homeowner burns in a typical season varies based on home size and temperature preference, but most purchase three to five tons a season.

PHOTO: PELLETSALES.COM

Ohio residents get wood pellet delivery option

Due to increased demand, residents in Cincinnati, Columbus and Dayton, Ohio, have the option of having wood pellets delivered directly to their homes.

Pellet pricing varies by zip code and time of year. For current pricing, visit the Web site at www.pelletsales.com. —Anna Austin

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industry

NEWS Q microbe ethanol production to begin this year Small-scale ethanol production using the Q microbe should begin by the end of the year, according to Jeff Sharp, founder and vice president of Qteros, formerly Sun Ethanol, the company formed in 2006 to develop Q microbe technology. The pre-treatment phase will occur at Solutia, a specialty products plant in Springfield, Mass. The site is advantageous because labs and other necessary facilities already exist there, according to Susan Leschine, a professor of microbiology at the University of Massachusetts. “The Solutia site is where we are going to put at least one phase of our scale-up,” Sharp said. “Other phases may also be at Solutia. They are being engineered as well. The final site is yet to be determined.”

Developing the pre-treatment pilot at Solutia will cost about $6 million, Sharp said. He declined to release costs for other phases, as they are still in the engineering stage. Since Q microbe technology development is only in the pilot process, ethanol will be produced in small quantities, Sharp said. The conversion rate depends on the feedstock, he said, but it’s better than 80 percent. The feedstock is all cellulosic and includes corn stover, sugarcane, woody biomass and other energy crops. “Just about anything we feed it, it breaks down and turns it into ethanol,” he said. The Q microbe, found in the soil near a Massachusetts reservoir, simplifies the ethanol process by condensing the enzymatic hydrolysis and fermenting processes into

one step, said Leschine, who is on the team of scientists that discovered the trait. It’s a huge savings in capital costs, she says, because two separate facilities aren’t necessary. The Q microbe also requires a less harsh pre-treatment, she added. “Definitely the financial aspect is the most important benefit,” she said. “Making it viable and cost effective is critical.” The team was looking for microbes that make good enzymes when the discovery was made, Leschine said. “It wasn’t until we looked carefully at how it does the conversion process that we discovered this,” she said. —Lisa Gibson

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industry

NEWS US-Brazil Biofuel Network brings researchers together A network of scientists and universities in the U.S. and Brazil should help forge partnerships and collaboration in biofuelsrelated research. Funded by the U.S. State Department and coordinated by the Fulbright Commission, Brazil, the Brazil–U.S. Higher Education Network’s Biofuel Network aims to promote awareness of research activities, improve communication, and develop and enhance scientific exchange between the two countries in the biofuels field, according to Fulbright Brazil. This is the first such program coordinated by Fulbright, according to Thais Rodrigues Coser, Fulbright secretariat–thematic networks coordinator. “I believe this network could help to not duplicate efforts,” she said. “The basic objective is to work as a clearinghouse so people know what is going on in Brazil and in the U.S. in research.” The Biofuel Network’s Web page, www. brazil-usa-henetwork.org/biofuels, includes a forum, a virtual library and database with educational and research background, and contact information for members divided by area of interest. When collaboration begins, information about joint research projects, published articles, products, patents and other topics will be updated in the network and on the Web page, according to Fulbright. Network participants also will meet periodically for workshops. The network advisory boards, one in each of the two countries and made up of researchers from academic, federal and private sector firms, are taking applications for membership. The registration form can be found on the Web site. Drawing Brazil and the U.S. together through a cohesive mechanism makes sense, said Andre Boehman, advisory board member from Pennsylvania State University. “There are more opportunities for contact and collaboration.” The Brazil–U.S. Higher Education Network also will develop networks for research collaboration in the areas of environmental 24 BIOMASS MAGAZINE 6|2009

sciences and health, but partnerships in biofuels research will be especially beneficial, Coser said. The network also is expected to provide information and access to funding for research and projects. The network initiative developed from a meeting in August 2007, when U.S. Secretary of Education Margaret Spellings and a U.S. university delegation visited Brazil to discuss areas of mutual interest. Together with Brazilian university rectors, the delegation identified the need for information sharing among higher education sectors in the two countries. Board members will focus on nine subfields of biofuels research: feedstocks; biodiesel; alcohol fuels; hydrocarbons and synthetics; hydrogen; coproducts; engines and lubricants; life-cycle analysis; and environmental, social and economic sustainability, according to the Web site. The Biofuels Network advisory boards, which met for the first time in late February in Florida, established the first short course on biofuels technology offered to graduate students and professionals from both countries. It is slated for July 27 through Aug. 7 at the University of Sao Paulo Institute for Advanced Studies, Sao Paulo, Brazil. Forty participants, 20 from each country, will be admitted to the course, Coser said, and instructors also will hail from both countries. The course is an important tool and vehicle for people who want to learn and discuss the best ways to serve the biofuels community, according to Michael Haas, of the USDA Agricultural Research Service center in Philadelphia and one of two network co-leaders. Information on the course and registration can be found on the Biofuel Network Web site. “The Biofuel Network is intended to and very likely will be successful in bringing people together,” Boehman said. That facilitated collaboration among researchers is the key benefit to the network, he added. —Lisa Gibson

industry

NEWS

Small-scale distributed energy to benefit Wisconsin If Wisconsin would take advantage of “low-hanging fruit” and cash in on the state’s biomass potential via small-scale distributed energy systems, advantages would reach both the agricultural sector and rural communities, according to a recently released Program on Agricultural Technologies (PATS) policy perspective. “How Could Small Scale Distributed Energy Benefit Wisconsin Agriculture and Rural Communities?” was published in late April. Authors Gary Radloff, director of policy and communications with the Wisconsin Department of Agriculture, Trade and Consumer Protection, and Alan Turnquist, outreach specialist at the Program on Agriculture Technology Studies at the University of Wisconsin-Madison, say a distributed energy system in the state might curb logistical challenges that come along with large-scale, industrial production, such as biomass feedstock aggregation, short-term storage and transportation. “In policy discussion, we need to keep in mind policy incentives for smallerscale operations,” Radloff said. Wisconsin has almost 15 million tons of potential biomass, the paper states, and if smaller local operations use that feedstock, it could increase energy production opportunities and increase returns for rural communities. It’s not just the scale of biomass potential that makes distributed energy a powerful tool in Wisconsin, but also its diversity, Turnquist said. “The single biggest benefit is that we have the capacity to do it right now,” he said. Small-scale operations are starting to pop up around the state, according to Radloff, and Wisconsin Gov. Jim Doyle has ordered four university campuses in the state to “come off the grid” and switch to biomass. If more energy is produced and used locally, it can complement other renewable energy sources such as wind and solar, Radloff said. The two researchers compare local energy production with something most Wisconsinites can relate to, a

local farmer’s market, where the money locals spend goes to other locals they might know personally. It is possible to construct a system in which a portion of the renewable energy dividend stays at home and the long-term benefits are shared by the landowner, farmer, forester or local community, according to Turnquist and Radloff, as several biomass technology options can be economically efficient when located in rural settings, as indicated by studies and real-world examples. But what if local people don’t want the energy systems in their communities? According to Radloff and Turnquist, local systems would require local participation, including organization and decision making, that could eliminate the not in my backyard, or NIMBY, opposition that wind farms and new ethanol plants have met. If the payoff and decision-making processes stay in the community, locals may rally more support toward community renewable energy products, they said. “It’s not just about natural resources and infrastructure,” Turnquist said. “It’s also about people and communities.” Opportunities also exist for smallscale projects to partner with larger-scale operations, according to the authors. For example, they cite Xcel Energy’s 2008 proposal to add a biomass-to-energy burner to its existing plant in Ashland, Wis., which already uses woody biomass. The amount of biomass that can be produced and harvested in Wisconsin is an open question, the paper states, along with how much the communities will actually benefit from bioenergy and other renewables. But, it adds, local energy production is an important part of the state’s economic future and policies should be crafted to ensure the economic and energy returns go to rural Wisconsin residents and that groups undertaking distributed energy projects can manage the risk in the bioenergy market. —Lisa Gibson

6|2009 BIOMASS MAGAZINE 25

industry

NEWS SMUD to purchase landfill gas from Texas Landfill gas will be piped from Texas to California to help the Sacramento Municipal Utility District meet its renewable portfolio standard. SMUD announced April 20 it had signed a 15-year contract with Shell Energy North America for 6 billion British thermal units of gas per day. Most of that will be from a landfill near Dallas, supplemented by a variable amount of conventional natural gas. The gas will be used to fuel the SMUD Cosumnes Power Plant near Sacramento, Calif. “Shell is the intermediary and providing balancing services,” explained Barry Brunelle, SMUD supervisor for natural gas operations. “We were concerned about how this variable supply would work with our system.” Shell worked out the contracts with both SMUD and the landfill gas developer, and will supplement the landfill gas volumes with a varying rate of conventional natural gas to supply SMUD with a consistent supply. “At the end of the month, Shell will bill us and let us know how much was conventional and how much was renewable,” Brunelle said.

SMUD expects the landfill gas to provide about 8 percent of its renewable target in 2010, or 200 to 300 gigawatt-hours of renewable power per year. SMUD will pay Shell approximately $21 million a year for the landfill gas, which works out to approximately $90 per megawatt-hour of electricity. “The cost of this supply is higher than our expected energy prices for nonrenewable energy but lower than the expected cost of renewables,” Brunelle said. One month earlier, on March 19, SMUD announced it had signed a 15-year contract with Gas Recovery Systems LLC, a subsidiary of Fortistar Methane Group, for the purchase of approximately 1.5 megawatts of renewable energy from a plant near Santa Cruz, Calif., generating electricity from landfill gas. The expected output is 12 gigawatt hours per year. SMUD’s goal is to have renewable energy account for 33 percent of its power supply by 2020. Last year, renewable energy accounted for approximately 19 percent of SMUD’s power supply. —Susanne Retka Schill

Dynamotive secures feedstock for bio-oil plant Dynamotive USA Inc. has secured a supply of 220,000 tons per year of sawdust from Southeast timber producer Springhill Land and Timber for a proposed bio-oil plant in southern Arkansas. That’s more than enough to operate the facility, according to Delphin Thebaud, a Dynamotive representative, as it will require 200 tons per day, operating about 330 days per year. The contract secures the feedstock supply for an initial term of 10 years with pricing linked to energy prices in the region, according to Dynamotive USA, a subsidiary of Dynamotive Energy Systems Corp. The company is working with the El Dorado Chamber of Commerce on development of the plant, it said. Dynamotive Energy uses fast pyrolysis technology to convert waste 26 BIOMASS MAGAZINE 6|2009

cellulosic biomass into bio-oil for power and heat generation. Bio-oil can be further converted into liquid transportation fuels and chemicals. No specific site has been named for the $40 million plant, but the state of Arkansas was chosen because of its strong alternative energy policies, according to the company. A final selection should be made by the end of the year and construction should begin in 2010. The plant will incorporate Dynamotive’s new technology on upgrading of bio-oil from lignocellulosic biomass pyrolysis, scheduled to be deployed in 2011, according to Dynamotive. The $7 million upgrade module is included in the $40 million figure. —Lisa Gibson

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EVENT

Biomass in the City of Roses The 2009 International Biomass Conference & Expo drew a record crowd of more than 1,000 people to Portland, Ore., where they networked, shared and absorbed information, and determined how to successfully move forward in the growing biomass industry. By Anna Austin

28 BIOMASS MAGAZINE 6|2009

EVENT

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EVENT

he weather in Portland, Ore., may have been glum, but it didn’t dampen the spirits of attendees at the International Biomass Conference & Expo, which was held from April 28-30. From the moment registration opened to the last session, the Portland Convention Center buzzed with excitement. Prior to the event, 134 attendees participated in an industry tour of three Oregon biomass processing plants—animal bedding and fuel pellet producer West Oregon Wood Products, food residue-to-ethanol producer Natural Energy, and Clean Water Services, a wastewater treatment center that produces power through anaerobic digestion and gas recovery. During the tour, 133 exhibitors set up their booths on the sold-out trade show floor preparing for the 1,045 people who registered to attend the event. Attendance increased by more than 20 percent, compared to the 2008 conference. Conference organizer BBI International was pleased with the turnout and is already mapping out next year’s event. “The trade show Mike Bryan CEO, sold at a much faster BBI International pace than we anticipat-

ed,” said Joe Bryan, vice president of media and events for BBI International. “Next year, as the economy improves and demand for biomass power, fuels and chemicals soars, we fully expect to double attendance and the size of the trade show.”

Changing the World’s Energy Future At the opening general session, the importance of biomass was emphasized as a solution to ever-increasing energy demands and a way to solve America’s dependence on foreign energy sources. In his opening remarks, BBI International CEO Mike Bryan told attendees that while the road to success in the biomass industry may be long and challenging, opportunity is great and the possibilities are endless. From Bryan’s perspective, in the future all biomass technologies may have the potential to be successful to some degree, but some will be on a faster track than others. Companies in the industry that don’t have a well-defined niche may have difficulty knowing how to position themselves. “One of the challenges in the biomass industry is the large variety of technologies—direct firing of biomass, gasification, pyrolysis, anaerobic digestion, fermentation, algae production— the problem is we don’t really know for sure, at this juncture, which of these technolo-

gies are going to be successful in the years ahead,” Bryan said. “But let me be clear on one thing. I believe that when the oil refineries of today are nothing but rusted relics of a past generation, renewable biomass will still be powering our world. Biomass will change the world’s energy future, and the wonderful thing about that is it will change it in a way that does not create global conflict.” Oregon Department of Energy Director Michael Grainey reminded the general session crowd of exhibitors, project developers, technology providers, academia and other attendees of the energy challenges the U.S. faces. “In Oregon, we spend over $12 billion a year on energy; half of that is for oil—most of it goes out of state, and much of it goes out of the country. Your state may be similar.” Grainey pointed out that the U.S. imports more than twothirds of the oil it consumes, which is twice the amount that was imported when the oil embargo drove up fuel prices more than 30 years ago. “While the recent drop in oil prices Michael Grainey provides relief, we are director, Oregon all still paying over five Department of Energy times the price we paid

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EVENT for oil just a few years ago,” he said. “Oil is the largest cause of our trade deficit, our balance payments deficit, and the single largest cause of inflation.” Major renewable energy initiatives have been developed in Oregon that are especially important to biomass, Grainey said, including an energy loan program which provides loans up to $20 million to cover capital costs of constructing renewable energy facilities. “We have over 30 biomass projects—totaling more than $100 million in landfill gas, cogeneration and biofuel facilities,” he said. “We also have two tax credits—a capital investment tax credit called a business energy tax credit and a production tax credit—to encourage biomass use.” Oregon also has a renewable fuel standard (RFS) for ethanol which has been in effect for more than a year, and has legislation pending to activate a biodiesel RFS this fall. Grainey said President Barack Obama and his administration have shown their support for biomass. “Even before [Obama’s] campaign, from his remarks you could tell that his belief in renewable energy is deeply felt,” he said. “It is encouraging to know that we now have a strong ally at the very top of the White House—we have some fundamental choices to make about our energy future, and obligations to weigh the impacts of our energy choices. Your efforts will de-

CROSS-EXAMINING CARBON CAP AND TRADE Issues surrounding biomass-related greenhouse gas reduction opportunities and cap-and-trade systems were topics of discussion at the 2009 International Biomass Conference & Expo in Portland, Ore. One session investigated possible issues surrounding carbon capture and trade in the U.S., and included speakers Rena Gelb, vice president of Carbon Credit Capital; Bill Holmes, a partner with Stoel Rives LLP; and Peter Weisberg, offset project analyst for Onsite Power Systems. During her presentation, Gelb emphasized that although the U.S. market for carbon credits is in the early stages, numerous initiatives currently underway could impact project development according to type and location. “Regional cap-and-trade schemes create current demand for carbon credits, and a federal scheme is under discussion,” she said. “Eligible projects, with respect to types and locations will vary with the different regional schemes, and hopefully a federal scheme will help level this.” The voluntary carbon markets create demand for a wider variety of projects, however voluntary carbon markets have limited liquidity and less developed

financing structures, according to Gelb. “Carbon finance has been used successfully in international compliance markets to assist with project financing, and this can serve as a model for the U.S. compliance models,” she said. Holmes steered the panel toward legalities involved with carbon cap and trade. “These credits have value, and this is an initial point you need to keep in mind—whether in a voluntary market, or a regional compliance market, or under some sort of a federal cap-and-trade system,” he said. “It’s going to have greater value under a federal cap-andtrade system, but from a lawyer who sees a fair number of project documents, if this thing has value, everyone involved in the project needs to give very careful thought about who actually owns the carbon offset. It is by no means obvious, and that can create problems.” Holmes pointed out that if carbon credits become extremely valuable at some point, ownership will become something worth fighting over. “Is it the developer, is it the lessor, or is it some other party [who owns the credits]? Don’t assume the answer to that question,” he said. “The need to communicate that effectively in agreements is essential.”

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EVENT cide whether biomass and other renewable energy will play an increasing role in our future, or whether we will continue on a path of increased fossil fuels, increased pollution and increased imports.”

Fighting for Legislative Support

PHOTO: RONA JOHNSON, BBI INTERNATIONAL

Biomass Power Association President Robert Cleaves changed the focus of the general session to the importance of passing legislation that supports the aims and initiatives of the biomass industries. Cleaves spoke directly to the substance of continued energy and environmental policy reform. “We (the biomass industry) have incredible growth potential,” Cleaves said. “By the time our kids are in college, every town in America will be combusting wood, gasifying municipal solid waste (MSW), digesting manure and making biofuels—but let’s get real, this is a very hard business.” Cleaves said the current focus of the BPA is to urge the government to provide a correct set of incentives to make the biomass industry and those involved successful because in the end, subsidies—whether outright subsidies such as production tax

credits, or carbon tax credits—are what will make the industry move. “Without biomass, this country doesn’t stand a prayer for meeting its renewable energy goals,” he Robert Cleaves said. “If you look at president, the potential of bio- Biomass Power Association mass as a base-load, carbon-neutral alternative fuel to coal, things get really exciting.” Cleaves referenced a study recently brought before the U.S. Senate Energy Committee, which indicated biomass gives the “biggest bang for the taxpayers buck” in replacing carbon. “The study said if you look at wind, it has a 30 percent capacity factor and if you consider a 30 percent capacity factor with the 2-cent production tax credit (PTC) that it gets, it costs the taxpayer $12.28 per ton of carbon removed,” he said. “Geothermal costs the taxpayer $7.74 cents, and biomass is close to $3 per ton [of carbon removed], at 1 cent for the PTC. For every dollar spent on a PTC, biomass re-

More than 1,000 people attended the 2009 International Biomass Conference & Expo where the focus was on the value of the many forms of biomass.

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EVENT moves four times the amount of carbon for the same dollar spent on wind. That’s not to say that wind is not an important technology in meeting our renewable energy goals, but it does highlight the fact that there is something wrong with this situation.”

Defining Biomass So with all of this potential, why is the biomass industry unable to realize faster growth, greater support and better traction? “The answer is complicated, but I think it has a lot to do with failed government policies,” Cleaves said. “Let’s look at federal policies—we have no uniform definition of biomass, or what is considered renewable, or what is considered advanced technology. These terms are applied disparately among the states, and inconsistently at the federal level.” Cleaves pointed out there is no uniform definition for biomass, which varies in the Farm Bill and the Federal Transportation Bill, which are both at odds with the U.S. EPA definition and the U.S. Department of Defense definition. “It tends to be somewhat comical,” he said. “Biomass should be a simple concept. If you look at the internal revenue code, you find a simple definition. It says essentially, biomass is organic material other than fossil fuel.” As a nation, the U.S. can’t decide which technology it likes or dislikes and why, which causes incredible confusion in the marketplace and for developers, according to Cleaves. “Quite frankly, it’s mess,” he said. Take New England for example, Connecticut encourages combusting urban wood waste and New Hampshire bans it. Massachusetts bans combusting MSW, Maine excludes it from its renewable portfolio standard and Connecticut provides renewable energy credits for it.” Cleaves pointed out the lack of neutrality in the current energy tax policy, describing the internal revenue code as a “mish-mash of incoherent, irrational credits with largely no basis in economics or sound environmental policy.” “On the whole, biomass is not well-treated,” he said. “Every time we go to the Congressional meetings, we are told, ‘We don’t really understand why you only get a half-credit; that must have been an over-

sight by congress.’ We know it wasn’t an oversight, because in the end, what it came down to is that there was only so much money to go around and industries with the largest lobbying teams won.” From Cleaves’ perspective, in order to excel, the biomass industry needs to succeed in the next era of environmental energy policy expenditure. “The BPA is hard at work crafting a legislative solution to be successful in that fight,” he said. “This industry needs to fight for every scrap that it is given, and it needs to be heard, well-organized and wellfunded.” One of the BPA’s main goals for the future is focused on the preservation of what the industry already has by extending the production tax credit for existing facilities, which expires at the end of this year. “If we let the production tax credit expire for existing facilities, then we will never restart plants that are currently shut in places like Maine and

California,” Cleaves said. “It will put many plants at risk of shutting down.” Besides extension of the current tax credit, Cleaves said the industry must also fight for what it doesn’t have. “There is no policy justification for biomass being the one-half credit technology,” he said. “If this country is really serious about renewable energy, it needs to pony-up. For too long, renewable energy technologies have lived in an uncomfortable coexistence—where they all are producing green power, but chasing a limited pie.” The 2010 International Biomass Conference & Expo will be held May 4-6 in Minneapolis. BIO Anna Austin is a Biomass Magazine associate editor. Reach her at aaustin@ bbiinternational.com or (701) 738-4968.

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CHP

Reinventing Smethportâ&#x20AC;&#x2122;s

Forest Legacy A small Pennsylvania community has long built its economy around the forest. Looking ahead, it wants to be the first small town in the U.S. with a woody biomass-fired combined-heatand-power district heating system. By Susanne Retka Schill

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CHP

The forest had been clear-cut around Smethport in the mid-1800s , shown in this 1858 painting by Helen Cowles Parker. Today, the community wants to harvest biomass for heat and power, and maintain the healthy regrowth forest, shown in the 2009 photo. PAINTING: HELEN COWLES PARKER PHOTO: ROSS PORTER, MAYOR OF SMETHPORT

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CHP

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PHOTO: SMETHPORT WOODY BIOMASS LEADERSHIP TEAM

methport, Pa., is a little town with a history of biomass use, and abuse. The forest around the small town in the Alleghany Mountains of northcentral Pennsylvania was first logged to supply tall, white pine poles for the masts of sailing ships when they were the primary mode of world commerce. Hemlock bark was harvested to supply tannic acid to the hide tanning industry. In the next industrial development, a dam was built in 1825 to power the sawmills that turned the hardwood forest into lumber for furniture and construction. In the mid-1800s, the chemical wood industry moved in to clear-cut the remaining forests to manufacture chemicals such as acetate, acetone and wood alcohol, and by the 1930s, the hills were bare. “That will never happen again,” says Tim Pierson, forestry specialist for the Pennsylvania State Cooperative Extension Service in McKean County, who works in Smethport. The forest grew back after its abuse, this time with stands of mixed hardwoods, including high-quality black cherry. Where the cherry covered less than 1 percent of the forest before, many areas now have stands of 25 percent black cherry. “McKean is the black cherry capital of the world,” Pierson says. Loggers select the best of the cherry trees for the furniture business, along with maple, oak and white ash. “We have the

The woody-biomass CHP system in Gussing, Austria, powers and heats the community of 4,000. The rural community’s research and development center and business incubator attracts tourists and researchers.

highest quality hardwoods, and nature did it,” Pierson says. Maintaining that quality through sustainable forestry practices is his goal as the community moves forward with a plan to harvest low-grade woody biomass for heat and power. Pierson was part of a group of foresters who visited Austria a year ago to see for themselves how one nation has managed

its forests for multiple uses for hundreds of years. A heavily-forested country about two-thirds the size of Pennsylvania, Austria has 1,560 district heating plants using woody biomass—about 20 of those are combinedheat-and-power (CHP) systems. Soon 50 percent of Austria’s energy will come from renewable resources, with 15 percent to 20 percent from wood. “The forester is one of

PHOTO: ROSS PORTER, MAYOR OF SMETHPORT

CHP

Hamlin Lake Park is located in the center of Smethport and surrounded on all sides by hardwood forested mountains. Hamlin Lake was constructed in 1824 as a mill pond to float logs.

the most respected persons in the community,” Pierson says. “And their forests didn’t look like they were overused, even though they’ve been used for thousands of years.” Smethport Mayor Ross Porter remembers when Pierson was touring Austria. “He called me three times,” he says. “He was aware of our need to replace our water system in Smethport—some of our pipes

are still wooden. The day he returned he was in our kitchen at 6:15 in the morning. That was the beginning.” The two became co-chairmen of the Smethport Woody Biomass Leadership Team and held a series of community meetings to gain widespread support for the project. “[Using the forest] is part of our history, this is part of our tradition, and we’ll be doing it a lot smarter

than it was done in the wood chemical industry,” Porter says.

Duplicating the Austrian Model Smethport is modeling its woody biomass project on one the foresters visited in the rural town of Gussing, Austria, where the biomass CHP system covers a plot of

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CHP land about the size of a football field and provides the town’s 4,000 residents with electricity and heat in a system that burns wood chips at 93 percent efficiency. The research and development center and business incubator draws about 1,000 people a week to tour the renewable energy facilities. The renewable energy center has revitalized the local economy, which was suffering from job losses and the loss of many of its young people. Smethport is hoping to duplicate Gussing’s experience. McKean County is home

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to the Allegheny National Forest, Pennsylvania’s only national forest. Seventy-eight percent of the county is forest, which includes a considerable amount of private forests. The woody biomass project would harvest undesirable trees for heat and power, while enhancing the quality of the trees that remain. Pierson is working with a group of foresters and local loggers to develop criteria for sustainable harvest. “We want to demonstrate how to harvest woody biomass sustainably to benefit the ecosystem and the forest industry,” Pierson says.

Smethport’s leaders hope to reinvent the community. “Biomass is local, so you keep your energy dollars local,” Porter says. “I like to call it localization rather than globalization, localization of energy dol- Ross Porter lars.” mayor of The borough of Smethport Smethport operates its own electric utility, paying more than $1 million a year for wholesale electricity. “That doesn’t include the heating bills everyone pays,” Porter adds. Smethport proposes to install a CHP system, to generate electricity and supply heat for the entire community, installing the pipes for a district heating system at the same time as replacing its aging water system. The estimated cost for the water system alone is $20 million, of which the largest expense would be digging in the water lines. Porter says a preliminary figure for the combined district heating and water project is $50 million, even with the considerable savings from doing only one excavation for the combined project. As the county seat of McKean County, there are opportunities to partner with county, state, federal and borough governments for the centralized heating system. The proposal also includes building a research and outreach center and a business incubator. While there are college campuses and a handful of cities with district heating, it is believed that Smethport would be the first community of its size in the nation with such a system. The group is hoping the innovative nature and demonstration value of the project will attract funding. The project has already attracted grants totaling $150,000 to help with the planning. In March, Smethport’s woody biomass team sent letters to 65 engineering firms soliciting those interested in developing the project for the community of 1,700 residents and 830 homes. “The response knocked our socks off,” Porter says. “We received 13 really strong statements of qualifications. We had top engineering firms from Denmark, Austria, Sweden, Germany, some partnering with U.S. firms, as well as strong U.S. firms

CHP apply.” At press time, interviews were being from national forests for bioenergy. Lan- the efficiency of the renewable resource. After touring large and small woody scheduled to pick the winning candidate. guage in the 2007 Energy Independence & Security Act does not qualify woody biomass biomass CHP systems in Austria and seeing from national forests and natural private for- the impact of keeping energy dollars local Growing Regional Interest Smethport is one of several com- ests as feedstocks for advanced biofuels in while sustainably managing the forests, Mcmunities in the Northeast studying woody the renewable fuel standard (RFS). Similarly, Creery says he’s a convert. “We can [harvest biomass-fired CHP systems, according to language in the renewable electricity stan- forests for bioenergy] and have a real posiLew McCreery, woody biomass coordina- dard (RES) currently being discussed in the tive impact, if we use the efficiency concept tor for the U.S. Forest Service in the North- U.S. Congress would not qualify the use of and share the energy.” BIO east. “To some extent this drop in oil prices woody biomass from national forests or prihas slowed the interest,” but as soon as vately held natural forests. Missing from the Susanne Retka Schill is the assistant editor of the economy turns around those oil prices discussions on the RFS or RES, McCreery BiomassMagazine.Reachheratsretkaschill@ bbiinternational.com or (701) 738-4922. will go up again, he says. Compared with says, is the utilization of heat to maximize the recent volatility in oil prices, the price of wood has been much more stable over the past 20 years, he points out. However, for McCreery, the efficient utilization of renewable energy resources, not cost, is the most important factor. Capturing and utilizing the waste heat from electrical generation increases the efficiency of the system from a mere 30 percent when waste heat is exhausted to nearly 90 percent. McCreery adds that in the Austrian tour, he learned that any combustion system installed there, whether it’s a big power plant or small trash incinerator, is required to have a market to utilize the heat. McCreery would like to see the concept deployed in the U.S., with multiple distributed power systems matching the available renewable resource with residential or commercial customers able to use the heat in CHP systems. Part of the groundwork is in PETERSON’S Patented Impact Release System place, he says. A Community Wood Energy Minimizes damage caused by contaminants. Program is authorized as a U.S. Forest Service program in the energy title of the Farm Bill, although the program remains unfunded. “If there were money in CWEP, we would be trying to support projects where communities take a look at their wood reHeavyweight performance in a middleweight package! For high sources and determine what could be used production combined with portability Peterson is the one name to trust. locally for a CHP project, whether to heat Less downtime, higher productivity. Ask us! a few buildings or the whole community,” McCreery says. “Other USDA programs BLUE is the color of POWER. can help fund building the projects.” BLUE is the color of RELIABILITY. While funding CWEP could boost BLUE is the color of PETERSON. woody biomass utilization efforts, an even larger policy issue needs examination. Because of the experience in communities such as Smethport that saw its forests exploited and abused in the past, there is a reluctance to allow the harvesting of woody biomass

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EQUIPMENT

42 BIOMASS MAGAZINE 6|2009

EQUIPMENT

Have TrailerWill Move Biomass

Randy Hill believes he has the solution for transporting and drying large amounts of wet, woody biomass. The president of Advanced Trailer is working with the University of Idaho to evaluate the economic and environmental benefits of using his agricultural crop drying trailers to move biomass. By Rona Johnson

6|2009 BIOMASS MAGAZINE 43

EQUIPMENT

ne of the problems plaguing the biomass industry is the efficient transport and storage of mountains of biomass. In situations where wood chips are used the product may be handled several times before it reaches its final destination. That takes time and energy. Then there’s the issue of drying wet biomass so it can produce the maximum amount of British thermal units, while releasing the least amount of carbon dioxide. Randy Hill, president of APT Advanced Trailer and Equipment LP and the University of Idaho are betting they can solve this issue by using Advanced Trailer’s agricultural drying trailers. Although prior testing has proven Hill’s trailers can do the job, he wants to be able to show biomass processors the benefits of using his trailers. To do this, he is providing a grant and the use of a trailer to the university so it can be tested in a real-world situation. After talking with the people at UI, Hill saw their interest as a perfect opportunity to develop the specifications he needed to get into the biomass industry. “We know it works, we know it removes moisture from product,” Hill says. “The question has been, is it feasible cost-wise for energy production to remove that moisture? We started these discussions last summer with the University of Idaho and initially the university was interested in just purchasing the equipment and putting it into use. But I saw that there would be value in using the equipment and having some research from professors who say here’s how you do it, here’s how long you do it and here’s what the benefits are.” UI took him up on his offer and has already developed plans to use the trailers. “The short-term goal is to look at how the technology of the trailer works,” said Darin Saul, sustainability coordinator for UI. “The long-term goal is to integrate the trailer into a larger system that uses the waste heat from the steam plant to pre-dry the chips before they are burned.” Initial testing will use natural gas to

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‘When we use these trailers in big applications with 100 trailers in one facility and build a ducting system that takes dry, hot, free excess heat and we put it into a fan, we are using our exhaust to dry our product before it goes into a burner. That’s what we see as the future, and the future is here today.’ Randy Hill, president, APT Advanced Trailer and Equipment LP

dry the chips, but the university believes that greater benefits will be realized when they are able to use their own waste heat. “My involvement in this is looking at how more affectively we can use biomass so we can further reduce our natural gas use on campus,” Saul says. “We do that by better utilizing our biomass boiler.” Mike Lyngholm, steam plant manager at UI, says they are still trying to get the process established by working with the utility company and the natural gas supplier, but he hoped to be using the trailers by the first week in May. The university has a wood-fired boiler that they use to heat 80 percent of the buildings on campus, he says. The problem is that Lyngholm has to have a huge stockpile of chips to keep up with the demand for heat in the dead of winter. The outside of that pile gets wet and freezes. “Right now I have a big wind-row of wet half-frozen fuel from the pile that we threw off to one side as we dug in,” he says. “I’ve looked at dryers to install at the plant to dry everything but the energy needed to dry all the fuel would be rather expensive and the equipment is quite expensive.” Lyngholm thinks he may be able to solve his dilemma by using one or two of the Advanced Trailers agricultural drying

PHOTO: ADVANCED TRAILER

EQUIPMENT

Hill would like to see his trailers used in the biomass industry to transport and dry wood chips.

trailers to haul and dry the wood chips in the winter and then park the trailers in the summer when they aren’t needed. Ultimately, Lyngholm wants to improve the efficiency of the boiler. “I’ve got some of the researchers here from the College of Natural Resources who are going to help me out and through the next 12 months run some

test loads, put some probes in the loads and tweak the trailers for dying wood,” he said. Those tests will determine how long the wood chips need to dry, what kind of temperatures are needed and if the process is efficient.

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EQUIPMENT From Peanuts to Wood Chips The idea to use his trailers to transport biomass wasn’t just a shot in the dark. Hill has been in the trailer business since the mid-90s, first working for GE’s Dallas Trailer Fleet Services (formerly Transport International Pool) and then forming Advanced Trailer, a semi-trailer storage rental and sales business. When he was working for GE, people would call asking for storage trailers, “but GE wasn’t in that business and wasn’t interested in that market,” Hill says. Storage trailers are outdated and retired 18-wheelers, which Hill buys and hauls to Texas where they are cleaned, painted and decaled. “I was the first guy in Dallas who

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really aggressively approached that market,” he says. “I saw opportunity not only to build my own rental fleet but to sell to other companies in the rental business.” Shortly after he started his business, there was a change in the west Texas landscape that had a profound affect on his company. Peanut growers from central Texas started to see the area as a perfect place to grow their crop in a rotation with cotton. “The climate and the soil were perfect for growing peanuts and there was a good supply of water,” Hill says. “West Texas became a new frontier for the peanut industry.” There was only one hitch. The fields in central Texas were 65 to 300 acres, and in west Texas they

were 1,000 to 2,000 acres. “The problem was that when they harvested those big fields they didn’t have a piece of equipment that could handle it,” Hill said. At the time, peanuts were hauled out of the field using small wagons (16-to-20feet-long) pulled by pickups. The peanuts were loaded into the wagons in the field, brought back to a buying point where they were graded and tested for moisture content, which determined how long the peanuts would have to be dried before they could be stored in a warehouse. The wagons had been used for 50 years but were quickly becoming obsolete in areas with 1,000-acre fields. It just so happened that farmers in Lubbock, Texas, were helping with a Texas Tech study on the feasibility of using the wagons. “They came up with a concept that we should be able to haul and dry peanuts in semi-trailers and 18-wheelers,” Hill said. Then in 1996, a farmer from west Texas bought 100 semi-trailers from Hill with the intention of using them to dry peanuts. That purchase opened up a whole new market for Advanced Trailers. The farmers would buy Hill’s trailers and then convert them so they could be used with their stationary dryers. “And it worked—drying the peanuts in the semis worked,” he says. To accommodate the semi-trailers, the dryer maker manufactured a new dryer with a bigger motor, fan and heating element that could be used to push the hot air under the floor of the trailer, Hill said. News of Advanced Trailers’ peanut drying semi-trailers soon spread to the Southeast where 85 percent of the peanut crop is grown. Once it was determined that the trailers worked there, Hill was asked if he could develop a completed product so the growers didn’t have to convert the trailers themselves. “I called one of my customers in west Texas and asked if I could look at a trailer,” Hill said. “I brought in an engineer and we looked at the trailers— we looked at broken trailers, we looked at trailers that were operating—and we basically said here are the specific needs for the

EQUIPMENT trailer, and we designed and developed one that would do the job.” The first year he was in the peanut trailer converting business he sold 50 trailers. “The next year it was like we were the peanut trailer drying experts and these people started coming from Georgia. Our little market in west Texas had been going on for six or seven years, but now we were embarking on the big market—the Southeast.” In 2002, Hill sold his rental business but retained the company name, the sales business and his intellectual property. “I could see that there were other opportunities for this trailer and we were just starting to embark on this becoming something very special,” he says. In 2004, Hill opened a plant in Georgia so he could build the trailers closer to the customers. The plant produced 360 trailers in its first year and 670 the second year.

If you take that and you cut off one trailer load a day, just one, that’s a savings of $300,000 a year.” Hill was encouraged when he first arrived at UI and saw the system that the university had set up to fuel its boiler. “I drove to that facility and it was as if I was going back 12 years and driving into a peanut town because the facility, the equipment that they use in the process, the way that they unload the trailers everything was just like peanuts.” The testing at UI is important because it will determine whether it’s economically feasible to use the trailers for biomass. “In peanuts, we are talking about a load of peanuts that’s worth $35,000,” he says. “A load of wood chips is worth about $1,000. You

can’t afford to spend $200 to $300 drying a load of wood chips like you can with peanuts.” Hill would also like to see the benefits of using waste heat to dry the chips, which they will be testing at UI. “When we use these trailers in big applications with 100 trailers in one facility and build a ducting system that takes dry, hot, free excess heat and we put it into a fan, we are using our exhaust to dry our product before it goes into a burner. That’s what we see as the future, and the future is here today.” BIO Rona Johnson is the editor of Biomass Magazine. Reach her at rjohnson@ bbiinternational.com or (701) 738-4940.

Entering the Biomass Market Because of the seasonality of the peanut industry, Hill decided it was time to look into some new markets. Two years ago he received a phone call from the Herty Advanced Materials Development Center in Savannah, Ga. They wanted to try drying wood chips in one of his trailers. That was just the spark that Hill needed. “We kept hearing discussion about the need to remove moisture from biomass—there is a big market for that so I started looking into it a little bit further,” he says. “I started having a lot of discussions with the U.S. Department of Energy and different owners of biomass facilities around the country and we came up with the idea that this market could be 10 times the size of the peanut industry, especially with the popularity and the focus on carbon emissions and renewable alternative energy.” Hill also did some advertising, which led him to UI. “The university told me that if they can take that moisture content from 50 percent or 60 percent, which is common, to 30 percent their burning and Btus will be twice as efficient,” he says. “They are burning roughly five trailer loads a day.

6|2009 BIOMASS MAGAZINE 47

FEEDSTOCK

Spriodela polyrhiza—a specific genera of duckweed—is shown in a flask 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 University’s Waksman Institute of Microbiology. PHOTO: TODD MICHAEL, RUTGERS UNIVERSITY

48 BIOMASS MAGAZINE 6|2009

FEEDSTOCK

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 benefits, from desalinating wastewater to exploring its potential as a viable starch-based feedstock for ethanol production. By Bryan Sims

DUCKWEED

‘QUACKS’

VOLUMES OF POTENTIAL 6|2009 BIOMASS MAGAZINE 49

FEEDSTOCK

The U.S. DOE’s Joint Genome Institute announced in July that its Community Sequencing Program would support the genomic sequencing of Spirodela polyrhiza as one of its priority projects this year directed toward new biomass and bioenergy programs.

PHOTO: ROGER WINSTEAD, NORTH CAROLINA STATE UNIVERSITY

he drive to develop sustainable nonfood, starch-based ethanol feedstocks and more efficient conversion processes is intensifying as the U.S. attempts to reduce ethanol’s carbon footprint by transitioning from corn to cellulosic ethanol. That has prompted researchers at North Carolina State University to take a closer look at plants, such as duckweed, that could be a potential feedstock for ethanol production. Duckweed has traditionally been studied because of its inherently rich protein content at 30 percent to 35 percent on a dry-weight basis. The purpose was to explore whether duckweed could be a protein source for animal and human food. A growing interest in sustainable ethanol feedstock development, however, has researchers exploring the plant’s starch content. North Carolina State University researchers Anne-Marie Stomp, associate professor of forestry, Jay Cheng, professor of biological and agricultural engineering, and Mike Yablonski, postdoctoral 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 five 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 annual conference of the Institute of Biological Engineering in March in Santa Clara, Calif.

Stomp and Cheng examine various strains of duckweed at their pilot program at North Carolina State University in Raleigh.

“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 protein sources in grain and legumes. Back then, the prices of those grains and legumes were low and the market was fully supplied.” The one challenge that has impeded duckweed’s progress in becoming a sustainable, dedicated energy crop for biofuels production or being used as a bioremediator for farm or city wastewater treatment operations is the fact that it wasn’t domesticated. “The trick to domesticating duckweed 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 number provides a threshold for commercial viability,” she adds.

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

PHOTO: TODD MICHAEL, RUTGERS UNIVERSITY

Water Purification Potential

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

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

Propagated in agricultural and/or municipal wastewater, duckweed naturally extracts nitrogen and phosphate pollutants. This could benefit large-scale hog farms where animal waste is stored in large lagoons for biological treatment. Duckweed’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 equipment for their lagoons. “Duckweed is exquisitely 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 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 wastewater and produces a valuable protein-rich biomass as a byproduct, which can be fed to certain fish and added to

6|2009 BIOMASS MAGAZINE 51

PHOTO: TODD MICHAEL, RUTGERS UNIVERSITY

FEEDSTOCK

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 as shown here. Each year lawns along the Raritan Canal are fertilized and duckweed quickly grows to cover the canal until nutrients are depleted.

poultry feed. Duckweed can also assimilate small hydrocarbons 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 affinity for absorbing pollutants in wastewater, Stomp posed a hypothetical scenario where the use of duckweed by farmers could mutually benefit a city willing to provide wastewater effluent for fresh water reuse. For example, 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 flowering plants. Specifically, Lemnaceae is an aqueous monocotâ&#x20AC;&#x201D;sim52 BIOMASS MAGAZINE 6|2009

FEEDSTOCK ilar to grasses and palms—and is divided into five genera: Lemna, Spirodela, Wolffia, Landoltia and Wolffiella. Of these five 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 investigate duckweed’s potential for sustainable 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 Sequencing Program would support the genomic sequencing of Spirodela polyrhiza as one of its priority projects this year directed toward new biomass and bioenergy programs. Preliminary findings by the Rutgers research team found that, through highthroughput sequencing, specific duckweed varieties obtained from 50-year-old sterile duckweed cultures shipped from Switzerland are comprised of Bradyrhizobium—a nitrogen-fixing bacteria that forms nodules on host plants. Bradyrhizobium also have symbolic relationships with legume plants, which can’t live without the bacteria’s essential nitrogen-fixing processes, according to Todd Michael, a member of the Waksman Institute and an assistant professor of plant biology and pathology. “This was really surprising to us because we didn’t expect to find 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 affixing nitrogen for the Spirodela? This is a totally new relationship that we didn’t expect, but this Todd Michael could explain why the member, plant grows so fast.” Waksman Institute Michael said the of Microbiology research team is also developing methods to

exploit the Wolffia gene. “This would give us the potential to do things like enhancing the DNA of genes to uptake specific types of heavy metals or modulate how fast we control 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 specific duckweed varieties in sterile culture environments to determine what the ecol-

ogy of each looks like in different locations and the behavior of each with an array of other microorganisms. “We can then use that information to go back and maybe suggest specific varieties for different locations, and maybe utilize the genetic makeup we already have to target specific applications,” Michael says. BIO Bryan Sims is a Biomass Magazine associate editor. Reach him at bsims@ bbiinternational.com or (701) 746-4950.

6|2009 BIOMASS MAGAZINE 53

FINANCE By Sue Wyka

CONTRIBUTION

Biomass Project Financing Solutions in Todayâ&#x20AC;&#x2122;s Difficult Capital Markets Government grants and loan guarantees could be used to help fund biomass projects until the economy improves.

he biomass industry presents exciting new opportunities in renewable energy. As an emerging industry, there remains a lot of uncertainty around feedstock costs, supply and aggregation, technology and off-take contracts. Project finance is difficult in the best of times, but it is especially challenging in todayâ&#x20AC;&#x2122;s capital markets. The bright side is the

amount of money flowing from the federal government into renewable energy in the form of grants and loan guarantees. The American Recovery and Reinvestment Act, or the stimulus package, has allocated billions to renewable energy, and biomass is one of the key focus areas. By leveraging these grant, loan guarantee and tax incentive programs, as described in the table on page 55, it is possible to get

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

54 BIOMASS MAGAZINE 6|2009

a well-planned and organized biomass project funded today. These government programs will bridge the gap in funding biomass projects until the industry matures and traditional capital becomes available. The stages that projects go through in the financing life cycle and the types of capital available at each stage are shown in the project finance continuum table.

Predevelopment Capital The first phase in the life cycle of a project is predevelopment. Predevelopment capital or risk capital is the first dollar amount raised for a project and, in the overall scope of the project, is relatively small. These dollars are used to determine the feasibility of the project. This can be the toughest to find or the easiest. If

FINANCE By Sue Wyka

the founders have capital, are well-connected locally and/or the project has strong appeal locally, bringing in local investors can be less difficult.

Project Development Continuum of Capital Type of Capital

Pre-Development

Construction

Permanent Financing/ Operations

Grants Private Equity Strategic Partners

Grants Tax Equity Private Equity Strategic Partners

Debt

Construction Loan Traditional Bank Loan Bank Loan Guaranteed by USDA/DOE Equipment Leasing

Permanent Mortgage Traditional Bank Loan Guaranteed Bank Loan Bonds Line of Credit

Other

State Incentives – Matching Funds for Infrastructure

State Incentives – Workforce Training

Equity

Friends & Family Angels Grants – Fed & State

Development Capital Development capital is used for business planning, land acquisition, engineering, contracting with vendors and contractors, etc. The same attributes that bring in predevelopment capital can make raising development capital easier. Most project developers find it very difficult to raise development capital as the dollar amount is larger (up to several million dollars depending on the size of the project) and the risk is still high. In stronger economic times, investors and agricultural producers were willing to fund renewable energy development efforts locally. Friends, family and local/regional angel investors are still the most viable capital alternative at this point in the development cycle. Strategic investors with a reason to invest such as off-take or supply arrangements are worth pursuing as well. With the amount of federal dollars available under the Farm Bill, Energy Bill and stimulus bill, grants are worth pursuing to fund predevelopment and development tasks. Federal grants that are available to renewable energy projects include Section 9008 grants (joint USDA and U.S. DOE) for advanced biofuels (noncorn cellulose) research and development, and demonstration plants. The deadline for the initial round for these grants has passed, but it is ex-

Stage of Project Development Friends & Family Angels Grants – Fed & State Strategic Partners

Risk

Availability of Capital

High

Low

High

pected that additional grants will be announced this year. Other DOE and USDA grants, such as biomass research and development, Renewable Energy for America Program grants and value-added producer grants, have been or will be announced. It is important to monitor funding announcements at www. grants.gov and state programs at http://www.dsireusa.org.

Project Debt Financing Once the development equity has been raised, the next step is to find debt financing. One of the best alternatives in today’s market is to pursue federal government guaranteed loans. There are many programs that provide government guaranteed loans through the Farm Bill, Energy Bill and the American Recovery and Reinvestment Act. The U.S. government, through various agencies, provides the underlying guarantee; but loans are

made by private commercial lenders. The lender must underwrite the loan and present it to the government agency for its approval to provide the guarantee. Lenders set the terms but must work within program parameters. The process can be tedious and time consuming, but a limited number of lenders understand and are willing to work with these programs. Feasibility studies are generally required for all government loan programs. The government guarantees do not become effective until the project is complete and in operation; therefore, a construction loan must be procured. The major loan guarantee programs available for biomass projects are as follows: USDA Business & Industry Guaranteed Loans (B&I Loans) http://www.r urdev. usda.gov/rbs/busp/b&i_gar. htm USDA Renewable Energy for America Program

(REAP) Guaranteed Loans http://www.rurdev.usda.gov/ rbs/busp/9006loan.htm Biorefinery Assistance Program http://www.rurdev. usda.gov/rbs/busp/baplg9003.htm DOE Innovative Technology Loan Guarantee Program http://www.lgprogram. energy.gov/features.html The USDA B&I program has been around for many years and is well established. The purpose of both B&I and REAP loans is to assist farmer/producer owned and rural small businesses. Both loan programs require that the project be situated in a rural location—under 50,000 in population. The guarantees are on loans up to $25 million, and cover 60 percent to 85 percent of the loan amount depending on the size of the loan. Minimum tangible equity of 20 percent to 40 percent of the project cost is required, depending on the project. Re-

6|2009 BIOMASS MAGAZINE 55

FINANCE By Sue Wyka

newable energy is an area of interest for REAP loans. The B&I loans program is funded and available now, and REAP funding announcements are expected at any time. The Biorefinery Assistance Program, also known as Section 9003 of the 2008 Farm Bill, focuses on advanced biofuels. Funds must be used to build or retrofit commercial-scale biorefineries to produce advanced biofuels (noncorn cellulose). The technology must be established or demonstrated as a viable commercial technology. The guarantees are for qualifying loans up to $250 million, not to exceed 80 percent of project costs. The current deadline for the second half of 2009 was April 30, and the next funding announcement for 2010 was expected in the fourth quarter of this year. The DOE Innovative Technology Loan Guarantee Program totals $6 billion. The government wants rapid deployment and is expected to announce the application process in May/June 2009. The loan program will provide loan guarantees for renewable technologies and transmission technologies. The goal is to encourage early commercial use of innovative technologies in energy projects and to achieve substantial environmental benefits (reducing greenhouse gas emissions). The DOE can guarantee up to 100 percent of a loan as long as the loan does not exceed 80 percent of project costs, but DOE prefers lower guarantee amounts.

Other Federal Programs Other programs applicable to biomass developers worth monitoring and exploring include: Section 9004: RePowering Assistance—to encourage existing biorefineries to replace fossil fuel used during production Section 9005: Bioenergy Program for Advanced Biofuels—provides payments to ag producers to support and ensure expanding production of advanced biofuels Section 9009: Rural Self-Sufficiency Initiative—provides funding to enable rural communities to increase energy self-sufficiency (uncertain program timing/funding) Section 9011: Biomass Crop Assistance Program—provides support to establish and produce crops for conversion to bioenergy and to help with collection, harvest and storage Section 9012: Forest Biomass for Energy—to support research and development to facilitate use of forest biomass for energy-related applications

Project Equity Financing In conjunction with the senior debt, which can range from 50 percent to 70 percent of the project cost, depending on the lender and the guarantees, if any, sufficient equity must be raised the options for equity today are local investors, strategic partners, equity funds (not very likely) and tax equity. The abil-

56 BIOMASS MAGAZINE 6|2009

FINANCE By Sue Wyka

ity for biomass-to-electricity companies to claim investment tax credits, production tax credits, bonus depreciation and accelerated depreciation opens up the door for tax equity investors. The tax equity market has shrunk significantly in the past few years due to the economic environment. As a result of this situation, a new program under ARRA has made it possible to get a grant from the federal government in lieu of the 30 percent investment tax credit for certain biomass projects. These grants are issued within 60 days of project completion. The grant details have not yet been released but are expected soon. With this grant, local equity and a loan guarantee, more project developers will be able to successfully fund their biomass projects. Another tax driven option is New Market Tax Credits. This federal program has been in existence for several years and funding was increased this year. It is difficult to meet the requirements but is worth the effort as the capital is treated as subordinated debt or equity. The first hurdle is that the project must be in a qualifying census tract that is distressed and being in a rural area is a positive. The census tract must be low income or with high net migration of population. Economic development and job creation are needed to qualify. The investor invests 20 percent to 25 percent of the project cost and gets tax credits against federal taxes (39 percent) over seven years instead of getting his capital returned from the project. The interest rates and fees on new market capital are 2 percent to 4 percent per year with no amortization. The structure is complicated and it is difficult to find lenders that can work within the structure. The project size that works best is in the $10 million to $40 million total cost range.

Conclusion In todayâ&#x20AC;&#x2122;s capital markets, there is scarce private capital beyond the developerâ&#x20AC;&#x2122;s own seed capital, making it a difficult environment in which to start and fund a new project. That being said, the emphasis on renewable energy in this country has never been greater and biomass is a high priority. Government is leading the way in encouraging new biomass projects, and grant and loan programs are being announced on a continuous basis. There are many requirements and procedures to navigate, and it can take a long time but is worth the effort if your project qualifies. The right business plan, the right partners and a realistic capital structure significantly improve the odds for success. BIO Sue Wyka is a partner at Ascendant Partners Inc. and Ascendant Financial Partners LLC. Reach her at swyka@ascendantfp.com or (303) 221-4700.

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Role of Biomass in Coal-to-Liquids The World Coal-to-Liquids (CTL) 2009 Conference held in Washington, D.C., in March truly lived up to its name, as representatives from six continents were in attendance. Several industry heavyweights presented updates on the latest in research and commercial development. To name a few, Shenhua Group, one of China’s largest coal producers, presented information on the recent start-up of the world’s first commercial-scale direct coal-to-liquid fuel plant in China. The plant will eventually be capable of producing 2,800 tons of synthetic fuels a day. ExxonMobil discussed its methanol-to-gasoline (MTG) technology that will be used in an indirect coal-to-liquids plant, which is slated to begin operation in China later this year. A common theme mentioned by nearly all of the presenters was the potential impact that coal can have on the environment. Carbon dioxide (CO2) emissions have become a social and political hot-button issue, and the media and various environmental groups have painted coal in a less than favorable light. This was especially apparent at the conference as it was interrupted for nearly half an hour by environmental activists, who were protesting the continued use and development of coal as a source of energy and fuel. These negative views are not entirely unsubstantiated, as historical CTL processes produced more than twice the amount of CO2 when compared with petroleum-derived fuel processes. A partial solution to mitigate the potential environmental impacts of coal is carbon dioxide capture and storage. While it can be technically feasible to capture nearly all of the CO2 generated by a CTL process, it may be most economical or practical to capture some portion of the CO2. The feasibility and economics of CO2 sequestration are highly site-specific as well.

Lignocellulosic biomassto-liquids (BTL) plants suffer from their own set of problems, not the least of which is the cost of transporting enough biomass to allow plants to take advantage of economies of scale. Cogasification of coal with biomass Tony Snyder engineer, may be the final piece of the research EERC puzzle to make BTL and CTL commercialization environmentally and politically palatable. A study by the U.S. DOE National Energy Technology Laboratory determined that as little as 8 percent based on weight of biomass cogasified with coal—combined with carbon dioxide capture and storage—can significantly reduce the CO2 emissions. A research report prepared by the Energy & Environmental Research Center in 2007 analyzed the potential synergies that can be found with the creation of domestic energy parks. The pulp and paper industry, which already processes coal and biomass, provide ideal sites for the integration of fuel, heat and electricity production. CTL fuel technology is rapidly being commercialized, particularly in China. If the social and political stigma currently placed on coal can be removed, perhaps CTL will be used to improve energy security in the United States and other nations as well. Biomass, along with carbon dioxide sequestration, may prove to be the key that unlocks the door. BIO Tony Snyder is a research engineer at the EERC. He can be reached at tsnyder@undeerc.org or (701) 7776123.

6|2009 BIOMASS MAGAZINE 59

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