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INSIDE: USDA TO REVISE BIOMASS CROP ASSISTANCE PROGRAM April 2010

Algae’s Allure Major Companies are Investing Millions in Algae Projects Despite Uncertainties Surrounding its Commercial Viability

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5 |2010 BIOMASS MAGAZINE 1

SERVICES: Detailed Design • EPC • CM • Studies • Owner & Bank Engineering CLIENTELE: Utilities • IPPs • Industry • Universities • OEMs • Banks/Investors PROJECTS: Biomass • Solar (Thermal & PV) • Wind • Simple & Combined Cycle • Fluidized Bed/PC/Stoker Boilers Biofuels • Landfill Gas • MSW • Gasification • Pyrolysis • Plant Improvements • Air Pollution Control Engine-Generators • CHP/Cogeneration • Energy Savings • Facilities/Buildings & Systems

3131 Broadway

Kansas City, Missouri 64111

President: Lou Gonzales

816.285.5500

www.bibb-eac.com

Business Development: Jason Moe, Holly Setter, Kevin Bibb

AB ĕĈĔĒĎēČěĊēęĘ ĎēĆēĈĎĆđĚĒĒĎę May 13, 2010 Flatotel, NY, NY This new conference will look at investment strategy as related to the algal biomass industry – from fuel to feed to nutrition. &RQÂżUPHGVSHDNHUVLQFOXGH ‡ -RKQ5DYLV7'1RUWKEDQN1$ ‡ 'RXJ.LUNSDWULFNIRUPHUO\ZLWK'$53$ ‡ -RKQ0L]URFKFXUUHQWO\:LOVRQ6RQVLQL*RRGULFK 5RVDWLIRUPHUO\'2( ‡ 'RXJ&DPHURQ3LSHU-DIIUH\ ‡ 'RXJ-DPLVRQ+DUULVRQ+DUULV ‡ %LOO/HVH%UDHPHU(QHUJ\9HQWXUHV ‡ &KULV&DVVLG\86'$ 3ULFLQJ $%20HPEHUV  1RQ0HPEHUV

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The Algal Biomass Organization promotes the development of viable commercial markets for renewable and sustainable commodities derived from algae. Please visit: www.algalbiomass.org for more information

INSIDE

APRIL 2010

VOLUME 4

ISSUE 04

FEATURES ..................... 32 INDUSTRY Biofuels or Bust What will it take to efficiently produce and convert algae into biofuels on a commercial level? While numerous companies, universities and government agencies have recognized algae’s potential, challenges remain and no timeline has been established for its commercial debut. By Lisa Gibson

38 DEBATE Open Ponds Versus Closed Bioreactors Debate over which is the most cost-effective, sustainable method for mass producing algae is still raging. Is it open ponds, closed bioreactors or a combination of both? By Anna Austin

44 POLICY BCAP Rule Revisions Several issues have surfaced since the Biomass Crop Assistance Program was launched. The USDA is now taking comments and making changes to the proposed rule, which was released in early February, and has frozen the program until the final rule is released. By Anna Austin

INDUSTRY | PAGE 32

DEPARTMENTS .....................

CONTRIBUTIONS .....................

06 Editor’s Note

50 WOODY BIOMASS The Business of Growing Eucalyptus for Biomass

Assessing Algae's Potential By Rona Johnson

07 Advertiser Index 08 Industry Events 09 BPA Update Biomass Power Improves Forest Health, Benefits the Environment By Bob Cleaves

11 EERC Update California Dreamin’: Dealing with Biosolids By Chris Zygarlicke

13 BTEC Update Biomass for Heat: The Forgotten Renewable? By Kyle Gibeault

Eucalyptus trees are a promising biomass feedstock for renewable energy production in the Southern U.S., as they can be produced and delivered at a competitive cost compared with the delivered cost of grasses and other hardwoods. By Ronalds Gonzalez, Jeff Wright and Daniel Saloni

54 ALGAE The Great Green Hope: The Corporate Love Affair With Algae The jury is still out on whether algae can live up to its hype, but its potential can’t be taken lightly as the federal government and several major companies are investing millions in algae-related projects. By Todd Taylor

56 INTELLECTUAL PROPERTY IP Pitfalls in Talking With Others Companies wishing to safeguard confidential information and protect intellectual property rights when reaching out to third parties to solve research and development issues need to know who they can talk to and under what conditions. By Richard B. Hoffman

15 Legal Perspectives Federal Regulation of GHG Emissions Continues to Grow By Anna Wildeman and David Crass

16 Business Briefs

INSIDE: USDA TO REVISE BIOMASS CROP ASSISTANCE PROGRAM April 2010

18 Biobytes Algae’s Allure

20 Industry News

Major Companies are Investing Millions in Algae Projects, Despite Uncertainties Surrounding its Commercial Viability

ON THE COVER Algae production in Solix Biofuels’ proprietary photobioreactors at its demonstration plant in southern Colorado PHOTO: SOLIX BIOFUELS

60 Marketplace

www.BiomassMagazine.com

4 |2010 BIOMASS MAGAZINE 1

5 |2010 BIOMASS MAGAZINE 5

editor’s

NOTE Powering Up With Biomass

T

his month’s issue is about biomass power and I believe there has been a positive shift in the way people view biomass power plants, mainly because of the industry’s potential for job creation. In Florida, the Senate Energy Committee passed Senate Bill 1186, which would ease the development of renewable energy. Although Florida doesn’t have a renewable energy portfolio, this is a step in the right direction in terms of stimulating project development. In Wisconsin, a bill passed in the Assembly would provide a tax credit for logging businesses that purchase heavy equipment that can be used to harvest woody biomass. At press time in Mid-April, this bill was on its way to the Senate. Hopefully it has become law by the time you read this. In New York, the New York State Energy Research and Development Authority and state Public Service commission awarded $204 million for renewable energy projects, including NRG Energy Inc.’s plan to cofire with biomass at its Dunkirk Generating Station. I should also mention that last year New York increased its RPS last year from 25 percent to 30 percent of electricity generated from renewable sources by 2015. In Washington, Gov. Christine Gregoire signed a bill that allows the Washington Department of Resources to provide five-year contracts for long-term biomass supply (see “Washington passes forest biomass contract law” on page 42). This is just a smattering of what’s happening in state legislatures and I’m sure there are several provisions and new laws that I’ve overlooked. This by no means gives biomass power projects the green light in some areas, however, as there are still pockets of resistance, which you can read about in associate editor Lisa Gibson’s feature “Facing the Vocal Opposition” on page 58. Even in the midst of intense opposition there is hope. In fact, I just read an opinion piece in the Wasaudailyherald.com in Wausau, Wis, in support of the proposed Rothschild, Wis., biomass plant, which has been hotly contested. I was especially please to see this written in response to residents’ pollution concerns: “The first is a fear of pollution. This has the simplest answer: It is a misplace feature. This plant would burn only woody biomass—not other, dirtier forms of biomass—and would do so according to co9ntemporary emissions standards.” This article was written by the newspaper’s editorial board after meeting with executives from the Domtar paper mill where the projects is being proposed and developer We Energies. This just proves that sometimes reaching out and making the case for clean-burning, jobcreating biomass energy to intelligent, open-minded, well-intentioned people works. As Brian Manthey, We spokesman, said in Gibson’s article when talking about providing information and answering questions posed by the public: “The burden of proof is on us.” If they can’t come to the project developers for information they will get it elsewhere.

Rona Johnson Editor rjohnson@bbiinternational.com

6 BIOMASS MAGAZINE 5|2010

advertiser INDEX

EDITORIAL

PUBLISHING & SALES

EDITOR Rona Johnson rjohnson@bbiinternational.com

CHAIRMAN Mike Bryan mbryan@bbiinternational.com

ASSOCIATE EDITORS Anna Austin aaustin@bbiinternational.com Lisa Gibson lgibson@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNERS Elizabeth Burslie bburslie@bbiinternational.com Sam Melquist smelquist@bbiinternational.com

ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Gary Shields gshields@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com

ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

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.

64

2010 Advanced Biofuels Workshop

63

2010 Fuel Ethanol Workshop & Expo

12

2010 Northeast Biomass Conference & Expo

2

2010 Southeast Biomass Conference & Expo

14

Advanced Trailer Industries

46

Agra Industries

40

Algal BIomass Organization

4

Amandus Kahl GmbH & Co.

28

BIBB Engineers Architects & Constructors BRUKS Rockwood

SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com

SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com

2010 International BIOMASS Conference & Expo

3 36

Buhler Inc.

43

Burns & McDonnell

60

Central Boiler

48

Christianson & Associates, PLLP

31

Continental Biomass Industries

29

Detroit Stoker Company

41

Energy & Environmental Research Center

10

EISENMANN Corporation

49

Ethanol Producer Magazine

51

Frazier, Barnes & Associates, LLC

37

Husch Blackwell Sanders, LLP

61

Indeck Power Equipment Co.

24

Industrial GHG Solutions Magazine

50

Morbark, Inc.

42

The NanoSteel Company

25

The Teaford Co. Inc.

34

Verdant Environmental Services

35

West Salem Machinery

47

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

5 |2010 BIOMASS MAGAZINE 7

industry events 5th International Congress Fuel Bioethanol-2010

2nd Algae World Europe

April 13-15, 2010

April 22-23, 2010

Moscow World Trade Center Moscow, Russia More than 300 participants from 20 countries attended this event in 2009, making it the premier event for any organization involved in the rapidly maturing biofuels markets in the former Soviet Union. This event will be hosted by the Russian Biofuels Association, and presentations will include new process technologies and feedstocks, cellulosic ethanol, biobutanol and other second-generation biofuels. +7 495 585-5449 www.biofuels.ru

Conrad Brussels-Ballroom AB Brussels, Belgium This conference focuses on the entire algae value chain and its commercial viability. The program takes a holistic approach and offers an exceptional broad view of algae’s diversity and end-products. The topics are carefully selected to give you a deeper understanding of the biology, engineering, marketing and financial aspects of algae commercialization. +65 6346 9114 www.cmtevents.com

2010 International Biomass Conference & Expo

2010 International Fuel Ethanol Workshop & Expo

May 4-6, 2010

June 14-17, 2010

Minneapolis Convention Center Minneapolis, Minnesota This Biomass Magazine-sponsored conference will unite current and future producers of biomass-derived power, fuels and chemicals with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policymakers. Future and existing biofuels and biomass power producers will be able to network with waste generators and other industry suppliers and technology providers as well as utility executives, researchers, policymakers, investors, project developers and farmers. (701) 746-8385 www.biomassconference.com

America’s Center St. Louis, Missouri The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. It is the largest, longest-running ethanol conference in the world. The event delivers timely presentations with a strong focus on commercial-scale ethanol production, new technology, and near-term research and development. (701) 746-8385 www.fuelethanolworkshop.com

Biomass ’10: Renewable Power, Fuels, and Chemicals Workshop

Northeast Biomass Conference & Expo

July 20-21, 2010

Westin Copley Plaza Hotel Boston, Massachusetts With an exclusive focus on biomass utilization in the Northeast U.S., this Biomass Magazine-sponsored event will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. (701) 746-8385 http://ne.biomassconference.com

Alerus Center Grand Forks, North Dakota In its eighth year, this workshop offers a cutting-edge two-day technical program and exhibit show with national experts who focus on biomass production (plant matter such as straw, corn and wood residue) and biomass conversion to power, transportation fuels and chemicals. The workshop will be geared toward industry, research entities, government, community and economic development corporations, financial institutions and landowners. Topics will include trends and opportunities in utilizing biomass, renewable policies and incentives, renewable fuels, financing biomass-related projects, biorefinery chemicals and products, biomass for heat and electricity, biomass feedstocks and algae. (701) 777-5000 www.undeerc.org/biomass10

August 4-6, 2010

2010 Farm to Fuel Summit

Gasification Technologies 2010 Conference

August 11-13, 2010

October 31-November 3, 2010

Rosen Shingle Creek Orlando, Florida This fifth annual summit will be an opportunity for industry leaders and stakeholders to learn, network and strategize to advance the development of renewable energy in Florida. Florida’s Farm to Fuel Initiative was developed to promote the production and distribution of renewable energy from Florida-grown crops, agricultural wastes and other biomass. More than 500 attendees from academia, industry and government participated in last year’s summit. (850) 488-0646 www.floridafarmtofuel.com/summit_2010.htm

Marriott Wardman Park Hotel Washington, D.C. The GTC is the largest gasification event in the world, attracting speakers and participants from the Americas, Europe, China and India. The GTC provides a single venue for participants to learn what is new in the gasification industry and why it is important. Speakers will address all aspects of the industry, from cutting-edge improvements in technology, through projects in development worldwide to updates on operations of plants based on coal, petroleum residues, biomass and secondary materials. (703) 276-0110 www.gasification.org

8 BIOMASS MAGAZINE 4|2010

B PA

UPDATE Biomass Power Improves Forest Health, Benefits the Environment Increasing America’s use of biomass power will improve the health of our nation’s forests and reduce the amount of greenhouse gases released into the atmosphere. On average, the biomass power industry removes 68.8 million tons of forest waste annually, improving forest health and dramatically reducing the threat of forest fires. This forest waste includes dead debris and brush left to rot on the forest floor. Clearing this debris is a part of regular forest maintenance and is frequently done by state forest services in the form of open burns. By using this waste to generate electricity, the biomass power industry is preventing the need for open burns and significantly reducing the risk and spread of forest fires. Waste byproducts from other industries and organic waste from the forest floor continue to be the only economically viable fuel sources for biomass power. Areas of the country that have robust forest-based industries often create the biomass necessary to operate and sustain a power plant. Biomass power facilities cannot operate at a loss. If there are not sustainable resources available in the surrounding area, biomass power plants will not be built. The decision is whether to allow these woody byproducts to decompose, or instead use them to generate clean, renewable electricity. A 2008 Pacific Institute study found electricity generated from woody biomass to be “carbon neutral” because the carbon that is released is already part of the atmospheric carbon cycle. For example, fossil fuels increase the level of carbon in our atmosphere because their carbon has been sequestered for centuries deep in the Earth. Biomass power taps into a fuel supply that is already actively releasing methane and carbon during the decomposition process. This carbon is already in the atmospheric cycle, and biomass power plants simply use it to create electricity.

Furthermore, by removing decomposing waste debris from the forest floor and using it to generate electricity, the biomass power industry eliminates the harmful methane that would have otherwise been released during this decomposition. Generating electricity from biomass power actually reduces the amount Bob Cleaves of greenhouse gases that would have president and been emitted if the material simply de- CEO, BPA composed on the forest floor. What’s more, the electricity generated from clean biomass will reduce demand for other dirtier sources of energy. In this way, biomass power is without question carbon neutral, and in many cases reduces greenhouse gases. The forest products industry plants trees as part of a continued devotion to forest health. By planting these trees, the industry is ensuring the forest will flourish and produce a steady supply of waste debris and other organic biomass in the future. Replanting trees, however, is not the reason that biomass power is carbon neutral. Biomass power is carbon neutral electricity generated from renewable organic waste that would otherwise be dumped in landfills, openly burned or left as fodder for forest fires. Increasing our use of clean, renewable biomass power by tapping into vast resources, particularly in the Southeast U.S., will reduce carbon emissions, improve forest health, and move America closer to energy independence. BIO Bob Cleaves is president and CEO of the Biomass Power Association. To learn more about biomass power, please visit www.USABiomass.org.

4|2010 BIOMASS MAGAZINE 9

R E G I S T R A T I O N I S N O W www.undeerc.org/Biomass10

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July 20–21, 2010 Alerus Center Grand Forks, North Dakota, USA

It’s All Here

iomass is no longer a long-range option for U.S. energy needs—it is a significant player. It has many near-term uses now, as seen in the alternative fuels and chemicals industry, and holds hope as the largest global sustainable and renewable energy resource. The Biomass ’10 Workshop will deliver an all-inclusive look at the most pressing topics circling around the biomass industry today. Join industry leaders this summer in the heart of biomass country for exceptional networking and educational opportunities! It’s all here!

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UPDATE California Dreamin’: Dealing with Biosolids At a recent conference in Texas, I was so impressed by a presentation on waste-to-energy that I’m setting aside my original idea for this column and reporting instead on what I learned in the presentation. California, as we all know, is the quintessential center of clean energy and environmentally sound practice. It’s also the setting for one of the Rolling Stone’s 500 greatest songs of all time by the Mamas & the Papas—California Dreamin’. So when the hauling of hundreds of truckloads of biosolids (type of sewage sludge) from Ventura, Calif., to a central California landfill (150 miles) became too problematic, the Ventura Regional Sanitation District decided to deal with the problem. Their solution: process the biosolids into a more benign fodder at a closer facility—using very little if any fossil fuel to accomplish the task. That’s dreaming. The solution involved four major elements: a closer existing landfill, two 80-ton per day batch dryers, nine microturbines, and $19 million. Sounds simple doesn’t it? It was determined that an old landfill closer to Ventura than the other “long-haul” landfill had enough inherent gas to sustain gas burners on the two batch dryers plus power nine 250-kilowatt microturbines for a total of 2.32 megawatts of electricity. Within two years, the gas extraction pipes, gas treatment systems (to remove water, sulfur and siloxane), blower/compressor units (to fire the burners and the turbines), batch dryers, and receiving hoppers were all installed. Southern California Edison and other entities provided incentives and a million-dollar grant, and the project was installed with likely payoff in about 10 years. The process seems fairly efficient. Biosolids are hauled to this closer facility and dumped into receiving hoppers where they are dried to a dirtlike material consisting of 70 percent solids and no pathogens. The U.S. EPA Class A recyclable solids are currently used as daily cover for garbage material entering the landfill. In the future, these

solids may also serve as fertilizer or biomass fuel. Water that is extracted is used as dust suppressant. About one-third of the electricity produced by the microturbines is used to power the facility. This project has taken a Chris Zygarlicke problematic biosolids waste senior research manager, EERC and turned it into a fuel for a money-making, renewableenergy-producing power plant. Greenhouse gases have been substantially reduced by converting biosolids- and landfill material-derived methane to carbon dioxide and by reducing transportation fuel consumption. Advances at the Energy & Environmental Research Center give this project an opportunity to push the economics even more into the black, especially for regions that don’t have southern California incentives. One way to improve on the cost return for this model might be to improve on the landfill gas cleanup technology. EERC has performed extensive research in gas cleanup systems and sees that technology as a developmental area. In short, this particular situation with the proximity of the existing landfill, southern California incentives, and financial backing may not be the same in other regions of the U.S. But the simple concept of using renewable energy to drive off moisture from wet “biomass-like” material is not only a concept worth dreamin’ about, it’s worth repeating. BIO Chris Zygarlicke is a senior research manager at the EERC. Reach him at czygarlicke@undeerc.org or (701) 777-5123.

4|2010 BIOMASS MAGAZINE 11

BTEC

UPDATE These members use the full range of biomass feedstocks, including wood residues, agricultural residues and purpose-grown energy crops. At the time of this writing, we have 77 members in 29 U.S. states and four countries. Our mission is to advance the Kyle Gibeault use of biomass for heat and other director, BTEC thermal energy applications, including combined heat and power. We advocate for public policies that recognize the energy savings and efficiencies that can be provided through these uses. Last year, one of our notable accomplishments was getting an amendment included in the proposed comprehensive Senate energy bill, the American Clean Energy Leadership Act. This amendment, introduced by U.S. Sen. Jeanne Shaheen, D-N.H., will establish telescoping renewable energy credits for the useful electric and thermal output of biomass facilities. If passed, this bill will create renewable energy credits for biomass energy that are directly tied to the efficiency of the facility. Our efforts are focused on directing biomass resources to their most efficient uses. Some of our other legislative initiatives include production tax credits for renewable thermal energy and the expansion of investment tax credits for biomass heating systems. We are also working to raise the profile of biomass thermal energy at U.S. DOE and USDA and their respective sub-agencies. We are beginning to engage in education, outreach, research and analysis on behalf of the industry. By raising awareness and improving the quality of market data, we aim to provide consumers, investors and policymakers with the information they need to make sound decisions regarding biomass thermal energy. Biomass thermal energy has enormous potential. The use of biomass for heating offsets imported fossil fuels, reduces GHGs, creates jobs and promotes the sustainable use of our natural resources. Instead of being the forgotten renewable, biomass thermal must be a key element in Americaâ&#x20AC;&#x2122;s energy future.

BTEC

Widespread use of biomass for heat in the U.S. would reduce greenhouse gas (GHG) emissions, decrease our dependence on foreign fossil fuels and create jobs in rural communities hardest hit by the recession. And yet, despite these benefits, biomass thermal energy has been largely overlooked in the discussion on how to address Americaâ&#x20AC;&#x2122;s energy challenges. Thermal energy, or heat, represents roughly one-third of total U.S. energy consumption. It is used daily by homes, businesses and industrial facilities across the country, most frequently for space heating, water heating or industrial processes. Biomass, ever versatile, can be an efficient source of renewable energy for all of these heating needs. For such a large end-use, it is astonishing how little attention thermal energy has been given in the U.S. To date, nearly all of the government grants and incentives for renewable energy support the electricity and transportation sectors. Renewable sources of thermal energy, such as biomass, have largely been forgotten. In spite of this policy disparity, a few more than 1 million U.S. homes, universities, hospitals and other organizations have installed biomass heating systems. The most advanced of these stoves, boilers, and furnaces convert biomass into useful thermal energy at up to 90 percent efficiency. Additionally, these heating systems typically offset fuels such as heating oil or propane, improving our nationâ&#x20AC;&#x2122;s energy independence while reducing GHG emissions. The story of biomass thermal industry is impressive, but the fact is that biomass resources will not be directed to their most efficient uses without technology-neutral energy policy. And the current reality is that less-efficient electricity and transportation end-uses for biomass are heavily incentivized at both the state and federal levels. Incentives in one sector impact the pricing of raw biomass materials in all other sectors. America needs a level playing field, where biomass thermal can compete on its merits with biomass power and transportation fuels. So why has this not happened already? Part of the reason is that until recently there was no organization to connect and coordinate the inherently disaggregated industry. The Biomass Thermal Energy Council was formed in January 2009 to fill this need. BTEC represents biomass producers, fuel refiners, appliance manufacturers, distributors, and other organizations in the biomass thermal supply chain.

Biomass Thermal Energy Council

Biomass for Heat: The Forgotten Renewable?

Kyle Gibeault is the deputy director for the Biomass Thermal Energy Council. Reach him at Kyle.Gibeault@ biomassthermal.org or (202) 596-3974, ext. 327.

4|2010 BIOMASS MAGAZINE 13

Visit www.biomassconference.com/southeast and: View interactive exhibitor map See conference sponsors and review sponsor benefits Register to attend Explore conference agenda And much more!

November 2 - 4, 2010 Hyatt Regency Atlanta Atlanta, Georgia

www.biomassconference.com/southeast

LEGAL

perspectives

Federal Regulation of GHG Emissions Continues to Grow By Anna Wildeman and David Crass Anna Wildeman attorney, Michael Best & Friedrich

B

iomass market drivers—such as renewable portfolio standards and the potential to generate carbon credits for greenhouse gas (GHG) emission reductions—are not getting much federal attention, but rather are ramping up on state and regional levels. In contrast, regulation of GHG emissions is getting attention at the federal level. Recently, federal agencies such as the Securities and Exchange Commission and the Council on Environmental Quality, have issued guidance that may require private corporations and the federal government to evaluate and report on potential impacts from climate change and GHG emissions. The most important federal action, however, is the U.S. EPA’s impending GHG regulation. In the first quarter of 2009, EPA issued a determination, known as the endangerment finding, that GHGs may reasonably be anticipated to endanger public health and welfare. EPA’s endangerment finding provides the foundation for EPA to regulate GHGs pursuant to its Clean Air Act authority. Although the endangerment finding has been challenged by industry groups and several states in U.S. Circuit Courts of Appeals and by Sen. Lisa Murkowski, R-Alaska, in Congress, it appears EPA will continue to develop a comprehensive GHG regulatory scheme until Congress acts to prevent such regulation. Since issuing its endangerment finding, EPA finalized the mandatory GHG monitoring and reporting rule, which required certain GHG sources to begin emissions monitor-

ing on Jan. 1 and requires subject sources to submit annual reports starting in March 2011. EPA has also proposed two rules that would regulate—within the existing CAA regulatory framework—GHGs from mobile sources and stationary sources. It is these two proposed rules that are generating the most concern. In February, EPA Administrator Lisa Jackson issued a letter responding to economic concerns of several U.S. senators and outlining the agency’s timeline for finalizing rules to regulate GHG emissions within the CAA framework. As indicated in its September 2009 proposed rule and reiterated in Jackson’s letter, EPA, in coordination with the federal Department of Transportation, intends to finalize the mobile source rule in late March. The EPA mobile source rule will set GHG emission standards for light-duty motor vehicles and the DOT standard will raise the nationwide fuel-economy standards for vehicles starting with model year 2012. According to EPA interpretation, finalizing the mobile source rule will trigger a requirement to also regulate GHG emissions from stationary sources under the CAA. EPA intends to finalize what is known as a “tailoring rule,” at the same time it finalizes the mobile source rule, to limit the number of stationary sources immediately subject to CAA regulation. If GHG emissions from stationary sources are made subject to the CAA without the tailoring rule, EPA estimates the number of facilities required to obtain CAA permits would increase by tens of thousands, paralyzing federal and state regulatory agencies charged with processing permit applications.

David Crass attorney, Michael Best & Friedrich

EPA has indicated that the final tailoring rule will not require any stationary sources to comply with CAA regulations until 2011, and then only sources that are currently subject to CAA permits will be required to account for GHG emissions. Between the end of 2011 and 2013, EPA expects to phase-in CAA permit coverage to “other large sources” of GHG emissions. It is unclear at this point what will be considered a large source, but Jackson indicated that, between 2011 and 2013, the GHG emission threshold to trigger CAA requirements will be “substantially higher than the 25,000 ton limit that EPA originally proposed.” The smallest sources of GHG emissions are not expected to be subject to CAA requirements until at least 2016. In President Obama’s proposed federal budget, EPA is slated to receive $47 million to implement GHG regulations; of that, $4 million will be allocated to implement the GHG monitoring and reporting rule; and $43 million will be allocated to implement the GHG regulations described above. So, unless Congress acts to prevent it, EPA regulations should be in full swing by 2011. Anna Wildeman is a member of Michael Best & Friedrich’s land and resources practice group. Reach her at ajwildeman@michaelbest.com or (608) 283-0109. David Crass is a leader in the firm’s renewable energy practice. Reach him at dacrass@ michaelbest.com or (608) 283-2267.

4|2010 BIOMASS MAGAZINE 15

business

BRIEFS GTE’s SC office awarded quality management system certification Gas Turbine Efficiency plc announced that the International Organization for Standardization (ISO) has awarded the company the ISO 9001:2008 certification for its Fuels and Combustion Facility in Duncan, S.C. With the ISO certification, GTE validates meeting international requirements for its total quality management systems, which are particularly important to engineering and technology companies. GTE’s South Carolina office is its third ISO 9001:2008 certified location, joining the Orlando, Fla., and Järfälla, Sweden, facilities. BIO

Biomass moisture meter ensures fair pricing Fast, accurate and easy to use, Electromatic Equipment Co.’s new Check Line BM2 biomass moisture meter measures the moisture content of wood chips, barks, wood, straw or miscanthus pellets, elephant grass, wood shavings and saw dust. It allows moisture-related machinery issues to be detected early before serious problems arise. It also helps biomass producers, suppliers and end-users ensure that they are not paying for excessive water content. To learn more, go to www.checkline.com. BIO

GTI and partners win transportation award Climate Change Business Journal, a climate change industry publication, awarded Gas Technology Institute and partners a Technology Merit award in the transportation category for the business achievement awards. Nominated by the climate change and environmental industry, winners were honored either for business performance in the form of revenue growth, or for gaining traction in new service practices, new technology or unique projects. GTI, Linde North America and Waste Management Inc. earned the award for building and starting up the world’s largest facility for converting landfill gas to liquefied natural gas, at the Altamont landfill near Livermore, Calif. The Altamont project was also recognized by the U.S. EPA as one of the Landfill Methane Outreach Program winning Projects of the Year for its innovation in generating renewable energy and reducing greenhouse gas emissions. BIO

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Cereplast hires sales, marketing veteran Cereplast Inc., a manufacturer of proprietary biobased, sustainable plastics, has appointed David J. Homyak as West Coast regional director, sales and marketing. He has been an executive level sales professional for more than 30 years. His numerous successes Homyak in the plastics industry include leading a 210 percent business growth over a four-year period while serving as western business region general manager for General Electric Plastics; the development of 20 million pounds of product growth in new market opportunities for PolyOne; and his efforts to put Spectra Color on a course to exceed its sales goals by $50 million by 2012. BIO

Terrabon relocates to accommodate growth Terrabon Inc., a waste-to-fuel conversion technology company, has relocated its corporate headquarters to 20329 State Highway 249, Suite 350, Houston, Texas 77070, in the Chasewood Technology Park. The company’s phone number will also change to (281) 803-5960. According to Terrabon CEO Gary W. Luce, the new offices will accommodate the company’s current staff and will enable further expansion for future growth. The company was formerly located at 20333 State Highway 249, Suite 200. BIO

Glycos Biotechnologies appoints CEO, expands management team Glycos Biotechnologies Inc. a biochemical company, appointed Rich Cilento as CEO. A venture adviser for DFJ Mercury and an executive chairman for GlycosBio, Cilento will now be responsible for the daily operations of the company. With more than Cilento 20 years of leadership and technical experience in the petroleum, alternative energy, information technology and biotechnology industries, Cilento has a proven track record of creating and managing successful businesses. GlycosBio also appointed Daniel J. Monticello, as vice president, research and development. Monticello will be responsible for directing the lab operations for GlycosMonticello Bio, including research, development and the overall efforts associated with scale-up and commercialization of GlycosBio’s proprietary microbe technology. In addition, he will be responsible for overseeing GlycosBio’s ongoing demonstration and commercialization efforts in Latin America. BIO

business

BRIEFS Qteros names Sawka VP of business development Qteros Inc. announced that Mick Sawka has joined the company as vice president, business development, to help accelerate the company’s technology and commercial initiatives in the worldwide cellulosic ethanol marketplace. Sawka’s 19Sawka year experience in the specialty chemicals industry includes negotiating and leading numerous large-scale strategic partnerships, alliances, and acquisitions as well as complex product introductions throughout the world. Additionally, he has been responsible for the development of numerous technology platforms and associated strategic business plans within both development-stage and large-scale specialty chemical organizations. BIO

Purolite, TransBiodiesel announce joint technology effort Purolite and TransBiodiesel announced a joint effort to manufacture and market enzyme loaded ion exchange resins to replace traditional transesterification processes. “Our enzyme loaded ion exchange resin replaces the use of sodium methylate and provides the simultaneous esterification of free fatty acid and transesterification of fats and oils,” said Don Brodie, vice president of operations at Purolite. The resulting biodiesel is easy to separate from crude glycerin because of the absence of emulsifying soaps. Crude glycerin is significantly free of contaminants and can be more readily refined. The use of low-grade oil feedstocks, especially those with free fatty acid higher than 3 percent and even up to 100 percent can now be employed. BIO

Veraventure, others invest in MHG Systems Veraventure Oy and a group of other investors have made a capital investment in MHG Systems Ltd., which produces bioenergy enterprise resource planning (ERP) systems. “The investment made by Veraventure and other investors will speed up the commercialization of MHG’s ERP solution in selected and rapidly growing target markets,” said Seppo Huurinainen, the managing director of MHG Systems. “The solution is already available in 13 languages. In addition to money, the new investors will also bring about new business know-how, which is required especially for achieving rapid international growth.” BIO

BinMaster appoints sales manager for Latin America, Caribbean BinMaster Level Controls has announced the appointment of Doris Sotelo as sales manager for Latin America and the Caribbean. She will be responsible for expanding BinMaster sales in the territory and growing and supporting BinMaster’s distribSotelo utor network in the region. Doris is multilingual and has almost 10 years of international sales experience in Latin America and Asia, where she has been responsible for developing dealer and distributor networks and providing sales support in the telecommunications industry. BIO

Evolugate announces advisory board appointments Evolugate LLC, a biotechnology company, announced the appointments of Russell J. Howard and Terrance J. Bruggeman to its advisory board. Howard currently serves as CEO of Oakbio Inc., and is on the boards of several leading companies and foundations in the biotechnology industry. He brings scientific and operational expertise having served as CEO of Maxygen Inc. Bruggeman’s experience managing biotechnology companies, including Diversa Inc. (now Verenium Inc.) will be an asset to Evolugate. He currently serves as executive chairman of BioTork, the spin-off company recently created from Evolugate, to capitalize on the biofuels opportunity. He also serves on a number of industry, corporate and nonprofit boards. BIO

MSU renames biomass center With a goal to move away from nonrenewable resources, the Michigan Agricultural Experiment Station has renamed its Escanaba, Mich., facility to better reflect its vision for the future. The new name, Michigan State University Forest Biomass Innovation Center, is closer to its overall mission, said Ray Miller, the MSU forest biomass development coordinator. The facility, where several types of renewable resources that could be used as an alternative energy source for Michigan are analyzed, was formerly known as the Upper Peninsula Tree Improvement Center. BIO

4|2010 BIOMASS MAGAZINE 17

BIObytes Biomass News Briefs

Converted Organics increases food waste processing

California coal plant PPA allows biomass conversion The California Public Utilities Commission has approved a 15-year power purchase agreement (PPA) between Pacific Gas and Electric Co. and Mt. Poso Cogeneration plant LLC near Bakersfield, Calif. The contract will allow the Mt. Poso plant, which is managed by Kern County-based Millennium Energy LLC, to be converted to a 44-megawatt biomass power plant that will be fueled with urban and agricultural wood waste. Mt. Poso has been operating as a coal-fired base load cogeneration facility since 1989. The conversion is scheduled to be completed by 2012.

Massachusetts-based Converted Organics Inc. will use additional manufacturing equipment at its Woodbridge, N.J., organic fertilizer manufacturing facility to boost food waste processing rates. The company is conducting new tests designed to enhance its ability to process food waste into fertilizer and soil amendments. Converted Organics currently processes approximately 100 tons of food waste per week at the Woodbridge plant, and expects to process approximately

175 tons per week by the end of the first quarter of this year. The company uses its proprietary High Temperature Liquid Composting system, a proven microbial digestion technology, to process various biodegradable food wastes into dry pellet and liquid concentrate organic fertilizers. Converted Organics sells and distributes its environmentally friendly fertilizer or biostimulant to the retail, turf management and agribusiness markets.

Ohio company expands product line

NatureFlex could help AD development

Ohio-based AdvanceBio LLC is increasing its product line to include a bench-scale biomass pretreatment system for production of next-generation cellulosic ethanol and renewable chemicals. The systems are designed with researchers in mind, according to the company. The target market for the product includes developers of next-generation microorganisms, enzymes, feedstocks and crops, according to AdvanceBio. The company expects

Innovia Films has achieved CarbonNeutral certification for its NatureFlex range of food packaging films, made of a transparent cellulose base manufactured from sustainable wood pulp. The announcement could help the development of anaerobic digestion, according to Innovia. Food packaging film is difficult to segregate and recycle economically. But packaging from a biopolymer can go into an anaerobic digester along

18 BIOMASS MAGAZINE 4|2010

the equipment will replace the batch steam guns currently used by researchers at universities and technology development companies. The inclusion of the system extends the size range of development equipment offered from bench scale (11 kilograms per hour) to lab (75 kg/hr), to pilot (190 kg/hr). AdvanceBio also offers systems up to 600 tons per day for companies planning industrial-scale facilities.

with the food waste, simplifying waste disposal for consumers, diverting biodegradable waste from landfills and providing renewable low-carbon energy, according to Innovia. By adding specially formulated biodegradable and compostable surface layers, Innovia is able to control the moisture permeability of these films to produce material suitable across a whole range of applications.

Companies further energy crop micropropagation technology Indiana-based White Technology LLC announced it will coordinate with affiliate Bianchi Energy Solutions to produce mass quantities of Miscanthus giganteus and Arundo donax (giant reed) plantlets for sale in a complete planting, monitoring, harvesting and transport package for the end user. White Technology has an exclusive license from the Uni-

versity of South Carolina for a micropropagation technology for miscanthus and arundo and other potential energy crops. Having researched farming techniques for the grasses, Bianchi Energy Systems has determined that certain cropspecific techniques are required to ensure productive yields and has developed a turnkey energy crop offering.

Advanced biofuel industry pushes for tax credit The advanced biofuel industry is urging Congress to grant an investment tax credit to help producers develop commercial-scale projects. Advanced biofuel producers are eligible for a federal production tax credit, but the incentive is unused because there are no operating commercial-scale facilities. Nearly 40 groups signed a letter pointing out that no

commercial cellulosic biorefineries will be commissioned before 2011 because of a lack of funding due to the economic downturn. Attracting private capital is virtually impossible, according to the letter, as conversion technologies for advanced or cellulosic biofuels are precommercial and most investors are unwilling to take technology risks.

Cereplast begins bioplastic production in Indiana Biobased plastic manufacturer Cereplast Inc. reported commencement of operations at its new production facility in Seymour, Ind., in the beginning of March. The company also announced the relocation of its corporate headquarters to El Se-

gundo, Calif., from Hawthorne, Calif. The new production facility occupies 110,000 square feet on a 14-acre site. It houses Cereplastâ&#x20AC;&#x2122;s bioplastic resin research and development operations as well as its state-of-the-art manufacturing equipment.

Philippines

Philippines signs 112 renewable energy contracts The Philippines Department of Energy signed 112 renewable energy contracts Feb.1, including 22 for biomass, for a total of about 2,260 additional megawatts. It was the third in a series of contract signings that will generate investments of about $1.5 billion. The DOE will raise $9 billion to $10 billion from renewable energy projects in the next 10 years and will raise the generating capacity of renewable energy sourc-

es to 9,000 MW to effectively address the need for additional power generating capacity and the effects of climate change, according to the DOE. During a Feb. 1 signing and announcement ceremony with Secretary Angelo T. Reyes, the Pricing Methodology and Rules of Qualified End-users for Net Metering were likewise endorsed to Reyes by the National Renewable Energy Board.

4|2010 BIOMASS MAGAZINE 19

industry

NEWS Sweet sorghum studies yield notable results Researchers in Maryland studied the effects of delaying the harvesting of sweet sorghum cane by one month and found it was beneficial in cooler climates. The group is halfway through an additional project to evaluate long-term storage of sweet sorghum, results of which may help pave the way for an ethanol plant to be built in Maryland. Last fall, Jeffrey Brenner of Solar Fruits Biofuels and researchers from Salisbury University, the University of Maryland at College Park, the Lower Eastern Shore Research & Education Center and local farmers collaborated to perform field trials to determine the effects of delaying the harvest of sweet sorghum cane by one month in cooler climates. In preparation for the study, eight different varieties of sweet sorghum were established on one acre on a farm in Wicomico County in southeastern Maryland. “We did a comparison of an early harvest in September, and then a month-late harvest,” Brenner said. “We did that because sweet sorghum is mostly grown in tropical areas where it can be harvested multiple times per year. But here (in the Northeast) and in parts of the country that see colder climates, you’re not going to have more than one crop per year because of the short growing season.” Generally, the research indicated that when comparing the harvests, the delayed harvest resulted in a decrease in biomass, a decrease in juice volume and a decrease in sugar content, Brenner said. “When you looked at the total sugar and alcohol yield, there was a reduction of 14.5 percent from the first harvest to the second, by delaying it approximately one month,” he said. However, when harvested early the researchers found that the sweet sorghum was much too wet, containing a moisture level of about 29.5 percent, significantly above marketable grain levels. “By waiting a month and leaving it in the sun to dry, moisture levels came down to 18 percent, which is usable,” Brenner said. “So by waiting a month you’ve lost a little of your theoretical alcohol yield, but you’ve gained 1½ to two times (the amount) of grain per acre to be sold—so it’s reasonable to delay it for a month.” The most recent study began in early November, and was performed mainly to investigate the “souring problem” of sweet sorghum, which happens when the crop is cut and left unprocessed for more than five days. “This occurs in tropical or hot climates—the same thing happens to sugarcane—where when you cut it, the sugar quickly disappears if you don’t get it processed and take the juice out.” When sweet sorghum is crushed it becomes coated in bacteria, which access the juice inside of the plants and quickly divide, replicate and eat up the sugar. “So delaying your harvest will bring in a crop that doesn’t contain a lot of sugar,” Brenner said. The researchers aimed to

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Researchers in Maryland determined that it’s reasonable to delay sweet sorghum cane harvest by one month to allow the crop to dry to marketable grain levels.

test the five-day premise in cooler temperatures in which bacteria don’t effectively grow. The researchers also wrapped 100-pound sweet sorghum bales in plastic, and plan to leave them for six months to compare with unwrapped bales. After three months, results indicate that there is no significant loss of sugar or juice in the unwrapped bales compared with the wrapped bales. “This indicates that if you are up north, you may be able to plant more than your capacity, cut it and stockpile it like lumber, instead of using it all up right away,” Brenner said. “In places such as Louisiana and Florida they can’t do this, but they can plant three or four crops a year and harvest year-round.” Overall, the group believes that if the remaining three months of data is consistent with the first three months, stockpiling of long cane sweet sorghum could extend the operation of an ethanol plant in the northern climates beyond four months, which is what is currently thought possible with one crop per year. Next year, the group will likely compare storing long cane sweet sorghum in billets (small chunks), different ways of making silage and temperature effects, Brenner said. —Anna Austin

industry

NEWS Mounting interest in agave as a biofuel feedstock could jump-start the Mexican industry, according to agave expert Arturo Valez Jimenez. Agave thrives in Mexico and is traditionally used to produce liquors such as tequila. It has a rosette of thick fleshy leaves, each of which usually end in a sharp point with a spiny margin. Commonly mistaken for cacti, the agave plant is actually closely related to the lily and amaryllis families. The plants use water and soil more efficiently than any other plant or tree in the world, Jimenez said. “This is a scientific fact—they don’t require watering or fertilizing and they can absorb carbon dioxide during the night,” he said. The plants annually produce up to 500 metric tons (551 tons) of biomass per hectare (2.47 acres), he added. Jimenez developed The Agave Project, which began four years ago when he was the national administrative coordinator at the National Confederation of Forestry Producers in Mexico, with a goal to explore and promote the potential of the plant. He is now developing the project separately from the agency, and said the project extends into all 17 agave regions of Jalisco State (Central-Western Mexico) and will soon become nationwide. Jose Luis Ortega, a local congressman, Juan Frias of Bioenergy Solutions, Juan Villalvazo, a professor at the University of Guadalajara, the Mexican Agavaceas Net and the State Council of Agave Tequilana Producers are also participating in the project, he added. Agave fibers contain 65 percent to 78 percent cellulose, according to Jimenez. “With new technology, it is possible to break down more than 90 percent of the cellulose and hemicellulose structures, which will increase ethanol and other liquid biofuels from lignocellulosic biomass drastically,” he said. “Mascoma (Corp.) is assessing such technology.” Mascoma research scientist Heidi Hau told Biomass Magazine that the company is currently evaluating agave as a potential feedstock, and has conducted some preliminary tests in-house that warrant further testing. “Although we are very much in the evaluation stage, we have not yet committed to a project,” she said. Jimenez said the Mexican Ministries of Economy and Agriculture are interested in having Mascoma visit Mexico for that purpose and are providing their assistance. Beyond Mascoma, the Energy Biosciences Institute at the University of Illinois is planning a small invitation-only agave workshop in Mexico. Researcher Sarah Davis said the institute may plan a larger meeting at a later date, depending on the outcome. Jimenez said he believes the workshop will be a leap forward in the research of agave for biofuel production. Jimenez is also working with Washington-based Clearsky Energy Systems Inc., which is exploring the possibility of building municipal electricity-generating facilities that run on syngas produced from the gasification of agave biomass. “They are also assessing a new technology for sustainable electricity generation that is cheaper than syngas, produces more energy and is cleaner,” he said.

PHOTO: KEITH MOLINEAUX

Agave shows potential as biofuel feedstock

Jimenez stands in front of agave plants, which can produce up to 500 metric tons of biomass per hectare.

Annually, Mexican agave could produce more than 5 billion metric tons of biomass, using only marginal land,” Jimenez said. “We have discussed producing huge quantities of biocrude and syngas in Mexico and to export it via PEMEX (Petroleum Mexico) to the U.S.” A biofuels director at a renewable energy laboratory in the U.S. indicated that agave biocrude could sell for the same price as oil, Jimenez said. “The Mexican government is very interested in biofuels production,” he added. “Mexican oil production at Cantarel fell 50 percent in just five years and production is decreasing at an alarming rate of 14 percent annually.” —Anna Austin

4|2010 BIOMASS MAGAZINE 21

industry

NEWS UBC to install biomass gasifier A combined-heat-and-power (CHP) biomass gasification system to be installed on the University of British Columbia campus in Vancouver will generate 2 megawatts of electricity, enough to power 1,500 homes. The UBC Bioenergy Research and Demonstration Project is a partnership with Vancouver-based Nexterra Systems Corp. and GE Energy. The project has two main operating modes. The first, a thermalonly system, will use Nexterra’s gasification technology to produce syngas, which will be used to produce 20,000 pounds per hour of steam, replacing natural gas to meet heating needs, according to UBC. The second mode, dubbed the “Demonstration System,” will use Nexterra’s gas conditioning system and GE’s high-efficiency gas engine to convert syngas to steam and electricity, satisfying up to 6 percent of the university’s electricity demand. The system will require two to three truckloads of wood fuel per day, as much as possible sourced locally from British Columbia Aboriginal and First Nations communities. It will include clean surplus wood manufacturing material, whole-tree chips from beetle-killed and nonmarketable timber, wood chips from saw mills and tree trimmings from the campus, according to UBC. Upon approval, construction on the $26 million project could start in the second quarter of this year and be finished within 15 to 18 months, according to UBC. The school will pay $5.5 million of that cost with the rest coming from industry, federal and provincial governments, including the BC Bioenergy Network, Natural Resources Canada’s Clean Energy Fund, Sustainable Development Technology Canada and FPInnovations, according to the university. UBC will recover its portion from reduced natural gas consumption, lower fuel costs and reduced

A CHP biomass gasification system will be installed on the University of British Columbia campus. SOURCE: UBC

carbon taxes. The 220-foot-long, 80-foot-wide and 4-story-tall building will be constructed using engineered wood products produced in British Columbia. The project also will provide learning and research opportunities for the school’s students and faculty. Research collaborators include the Institute for Resources, Environment and Sustainability, the Clean Energy Research Centre, the Centre for Interactive Research on Sustainability, the Faculty of Applied Science, the Pacific Insitute for Climate Studies, and the Sauder School of Business. —Lisa Gibson

Enerkem secures Waste Management as investor Canadian cellulosic ethanol producer Enerkem Inc. has attracted a new investor—North American waste and environmental services giant Waste Management Inc. Enerkem announced the closing of a new round of financing—$53.8 million Canadian ($50.9 million)—which comes from the company’s existing institutional investors Rho Ventures, Braemar Energy Ventures and BDR Capital, as well as first-time investors Waste Management and Cycle Capital. Waste Management stated that the investment will move the company toward meeting three of its sustainability goals: doubling its renewable energy production, tripling the amount of recyclables processed by 2020, and investing in emerging technologies for managing waste. Waste Management’s most recent renewable energy investment was in organic waste-to-biogas technology company Harvest Power. A portion of Enerkem’s new funds, along with a $50 million U.S. DOE grant, will be used to initiate construction of a planned waste-tobiofuels plant in Pontotoc, Miss., which will serve as the company’s U.S. ethanol industry debut. It will be Enerkem’s second ethanol production facility, however, as it began operations in January 2009 at its commer22 BIOMASS MAGAZINE 4|2010

cial-scale syngas-to-ethanol/methanol plant in Westbury, Quebec. The $250 million project will recycle and convert approximately 60 percent, or 189,000 tons, of the municipal solid waste at the Three Rivers Landfill, where the 20 MMgy facility will be built. Significant progress is being made on the development of the Mississippi project, according to Marie-Helene Labrie, Enerkem vice president of government affairs. “We have filed our state environmental permit and are working with DOE to finalize the paperwork to put the $50 million in funding in place,” she told Biomass Magazine. The company is also finalizing project agreements with tis partners, Labrie said. “The construction start date has not been decided upon yet as it is highly dependent on the completion, by DOE, of the review under the National Environmental Policy Act, a process of which we have limited control at this stage.” Dino Mili, Enerkem’s vice president of business development, will be speaking at Biomass Magazine’s International Biomass Conference & Expo in Minneapolis May 4 to 6. He will be participating in a panel discussion titled “One Person’s Trash: Liquid Fuels from MSW.” —Anna Austin

industry

NEWS Lignol and Novozymes team up

Vancourver-based Lignol Energy Corp. has signed a memorandum of understanding with enzyme giant Novozymes, and the two companies have established the framework of a multiyear collaboration agreement to optimize the latest generation of Novozymes’ enzymes for use in Lignol’s cellulosic biofuel process. The research on enzyme performance will begin this year at Lignol’s 100,000-liter-per-year (26,417 gallon) fully integrated pilot plant in Burnaby, British Columbia. Final designs will be developed for a commercial demonstration plant and Lignol plans to build large-scale biorefineries that will utilize its process with Novozymes enzymes, although no timeline has been established yet, according to Ross MacLachlan, Lignol president and CEO. The company is in discussions with the U.S. DOE about funding for a plant that would be completed by the end of 2012, he added. No location has been established, but Lignol expects it will be built in the Pacific Northwest. Lignol’s biofuel conversion process uses hardwood chips now, but will begin running softwood later this year, according to MacLachlan. “Essentially, we fractionate the biomass into cellulose, hemicellulose and lignin such that each of these clean streams can be suitable for downstream processing,” he said. The Burnaby pilot plant does not run on a full-time basis, MacLachlan said, as it is only used for test runs. Daily and weekly operation is meant to gather data for enhancements and provide information for engineering designs of commercial-scale plants. “We are excited about the opportunity to collaborate with the world’s leading enzyme producer to optimize their latest technology for Lignol’s unique substrate,” MacLachlan said. “In doing so, we are remov-

ing a critical barrier to the commercialization of cellulosic ethanol. This marks a major step for our industry in achieving the cellulosic biofuel objectives set out by various governments throughout the world. Our integrated pilot is perfectly suited for this type of collaboration in which our industrial process is coupled with Novozymes’ biological technology to make cellulosic ethanol a commercial reality.” Confirmation of affordable enzyme costs in an industrial facility is essential for commercial momentum, he added. —Lisa Gibson

British Airways, Solena Group team up for waste-to-jet-fuel plant British Airways and Washington, D.C.-based Solena Group Inc. have entered a joint venture to build a 16 MMgy waste-to-jet-fuel plant in eastern London. The plant will process 500,000 metric tons (551,156 tons) of municipal solid waste (MSW) into fuel each year, employing Solena Group’s plasma gasification technology and the Fischer Tropsch process to produce the jet fuel and bionaptha, an oil blending component and feedstock for the petrochemical industry. British Airways, which has a goal to reduce its net carbon emissions 50 percent by 2050, has signed a letter of intent to purchase all fuel produced at the plant to power part of its fleet. The Fischer-Tropsch process tail gas will be used to generate 20 megawatts of electricity, which will be exported to the national grid or converted into steam to be used in a district heating system. British Airways media relations associate James von der Fecht said the location of the plant is yet to be determined. “We have short-listed our site search down to four potential sites in the east of London,” he said. “We’re working very closely with the Greater London Authority on this project and they have been extremely supportive.”

Currently, waste disposal in London is paid for by local authorities through landfill taxes of about £40 (US $63) per metric ton, and will rise to £72 per metric ton between 2013 and 2014. The groups estimate the 500,000 metric ton waste requirement of the plant will save £36 million in landfill costs and could result in lower council taxes. The project coincides with London’s Foodwaste to Fuel Alliance, a project announced last year by Mayor Boris Johnson to jump-start the conversion of the city’s food waste into renewable energy and reduce landfill rates and emissions through the construction of anaerobic digestion and biodiesel production facilities. According to the mayor’s office, each year London generates 2.7 million metric tons of organic waste; the city landfills receive approximately 40 percent of it. The Solena Group is financing the building and subsequent operations of the plant, according to von der Fecht, which is estimated to cost $280 million. He said the groups anticipate construction to commence in early 2012. The plant will take about two years to construct and British Airways hopes to begin receiving the fuel in 2014. —Anna Austin

4|2010 BIOMASS MAGAZINE 23

industry

NEWS LS9 will produce biodiesel in Florida California-based renewable petroleum company LS9 has secured an existing fermentation facility in Okeechobee, Fla., that it will retrofit to produce its UltraClean Diesel and chemicals on a demonstration scale, followed by scale up to commercial production. “The beauty of this facility is that it’s scalable,” said Jon Ballesteros, spokesperson for LS9. “It already has the large, commercialscale equipment.” Using LS9’s proprietary one-step fermentation process, the demonstration facility will be producing 50,000 to 100,000 gallons of renewable transportation fuel by the end of the year, according to the company. After testing and demonstrations are complete, scale up can begin. The demonstration plant will initially run on sugarcane syrup provided by local suppliers, Ballesteros said, but will also be utilized in testing other feedstocks such as wood chips and agricultural waste. “We will test and optimize the use of sugars derived from cellulosic biomass,” he said. Ballesteros declined to release a cost estimate for the project. “But the facility has much of the equipment we need, so the retrofit will not require extensive capital outlays,” he said. The six-month construction process will create 30 to 50 jobs, along with 15 to 20

once operational, according to LS9. Purchase agreements for the biodiesel are still being discussed with a number of interested parties, he added. LS9 operates a pilot-scale plant in San Francisco with a 1,000-liter (264 gallons) fermenter. The company says its fermentation process has higher yields and removes additional production costs associated with the multi-step processes required with other renewable diesel technologies. LS9 genetically engineers microorganisms to precisely produce fuels with desired properties such as cetane, volatility, oxidative stability and cold-flow, while offering an 85 percent reduction in greenhouse gas emissions, according to the company. “The new facility will allow LS9 to demonstrate that our onestep manufacturing process is ready and capable of bringing lowcost, low-carbon fuels to market while creating and preserving jobs in the Okeechobee area,” said company CEO Bill Haywood. It’s a huge step for LS9 and represents a significant promise for the U.S. biofuels sector, he said. —Lisa Gibson

industry

NEWS GlycosBio technology nears commercialization Texas-based Glycos Biotechnologies Inc. is producing lactic acid and advanced ethanol in a pilot commercial-size facility with the capacity to produce 150,000 liters (39,600 gallons) of chemicals. It’s a major benchmark in the company’s quest to commercialize its microbial technology. The biochemical company is metabolically engineering microbial strains to consume nonsugar-based, low-value feedstocks for the production of chemicals and advanced ethanol. Those feedstocks can include multiple waste streams, such as glycerin from the oleochemicals industry or free fatty acids, according to GlycosBio CEO Rich Cilento. So many biochemical companies focus on sugar-based feedstocks that they build fierce competition and can hurt each others’ progress. “If a third of those companies are successful, it will really affect commodity prices for sugar,” he said. Not only does GylcosBio’s strategy eliminate the risks of sugaronly feedstocks, but it also provides product flexibility and a larger addressable market opportunity for producers, according to the company. In addition, the technology platform is cost competitive with the petrochemical industry, while maintaining 45 percent to 55 percent gross margins from plant operations. Initially, GlycosBio used the common lab microbe E. coli in its process, but expanded its expertise and has been operating its pilot plant in Hempstead, Texas, since November 2009. “We have a portfolio of microorganisms, both E. coli and non-E. coli,” Cilento said. “Our strategy

is to have a number of microorganisms that can create a portfolio of biochemicals.” The front end of the company’s process, which includes the microbe, feedstock and fermentation, is the same for any end product, although the microbe or feedstock will differ. But separation from the fermentation broth differs depending on the desired end products, Cilento said. The resulting specialty chemicals can be used as building blocks for a wide range of applications including biodegradable and non-degradable plastics, as well as for surfactants and fuels, according to the company. GlycosBio’s strategy is to develop joint ventures with companies that produce waste streams compatible with its technology platform. Instead of licensing its process, GlycosBio will leverage the partners’ expertise and integrate its own technology for a shared plant. The company has established one partnership and another is close to finalization, but Cilento declined to release details. About four other partnerships are in early discussion and Cilento hopes to have six to 10 ventures under construction or operating in the next 12 to 18 months. “People are confident in investing in our technology,” he said. “People with waste feedstocks are calling us and we’re at a point where we’re ready to help them make a product from their waste streams.” —Lisa Gibson

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industry

NEWS Genetic discovery may increase plant biomass Scientists at the University of Manchester have identified two genes that cause plants to grow outward and believe the research could be used to increase the biomass of trees used to produce bioenergy and for other purposes. Professor Simon Turner said the project, funded by the Biotechnology and Biological Sciences Research Council, began in 2003 with the initial intent of discovering how plants control the way in which cells divide. Turner and UM researcher Peter Etchells studied the plant Adrabidopsis, which has a vascular system similar to that of a tree, in order to investigate the growth in its vascular bundles. They found that genes PXY and CLE41 directed the amount and direction of cell division, and by overexpressing CLE41, they saw a greater amount of growth. “We found that overexpressing one gene gives more cells, but they were very disorganized and not useful because the orientation is affected,” Turner said. “By understanding how the two genes control both the amount of cell division and the orientation of division that allows us to manipulate it in a useful way.” Turner said it is difficult to quantify how much mass can be increased in Arabidopsis by gene manipulation, because some tissue un-

dergo cell divisions and radial growth that do not normally divide. “In vascular bundles, there are somewhere between two and three times as many cells,” he said. The team is now growing poplar trees in a laboratory to determine whether they fit the Arabidopsis model, and hope to use the results to develop a system to increase wood production. As far as applicability toward other crops goes, Turner said apart from trees, the researchers know the method works in tobacco, and although tobacco is not currently grown as a biomass crop, that fact has instilled confidence in the researchers that it will work in any dicot crop, such as soybeans or alfalfa. Dicots are flowering plants that have two embryonic leaves or cotyledons, while monocots have one embryonic leaf. “What will happen in monocots such as maize or switchgrass is less clear, but we are currently testing this,” he said. The research paper, called “The PXY-CLE41 receptor ligand pair defines a multifunctional pathway that controls the rate and orientation of vascular cell division,” was published online Feb. 10 in Development journal. —Anna Austin

Verdezyne proves adipic acid production process California-based Verdezyne Inc. has achieved proof of concept in developing a new biobased fermentation process for the production of adipic acid, and intends to partner for scale-up demonstration in the next year. Using proprietary technologies, the company discovered and is engineering a proprietary metabolic pathway that can utilize sugar, plant-based oils or alkanes, according to Verdezyne. “We have so far produced adipic from alkanes and fatty acids,” said Damien Perriman, vice president of business development for Verdezyne. “We are leveraging the same organism and pathway to utilize sugar as well. Our goal is to deliver a process that enables the operator to select the appropriate feedstock for their region to maximize their profit curve.” Rather than manipulating one pathway gene at a time, the company uses synthetic gene libraries to introduce diversity into a metabolic pathway, according to Verdezyne. Biological selection or high-throughput screening identifies the most productive combination of pathway genes. Verdezyne is still in discussions regarding a partnership for a pilotscale project, Perriman said. “We plan to select a partner with the expertise to work on fermentation optimization utilizing both alkane and sugar feedstocks,” he said. “The selected partner will determine location of facility, scale and timeline. Our proof of concept means we have

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produced small amounts of adipic and our next milestone will be to boost productivity of the organism before entering pilot scale.” The global adipic acid market was about $4.9 billion in 2009 with its two major applications being polyamides and polyurethanes. Adipic acid is an important engineering resin for markets such as automotive, footwear and construction, and is used in products such as carpets, coatings, furniture, bedding and automobile parts. Estimates from Verdezyne indicate at least a 20 percent cost of manufacturing advantage for biobased adipic acid, depending on the feedstock, according to E. William Radany, president and CEO of Verdezyne. The company anticipates the growing consumption of adipic acid will exceed capacity by 2015, leading to a necessary increase in production facilities. —Lisa Gibson

industry

NEWS Study: Federal RES would create thousands of jobs

A federal renewable electricity standard (RES) of 25 percent by 2025 would create about 274,000 more renewable energy jobs and a cumulative 2.36 million job years of work by 2025 compared with no national policy, according to a recently released study commissioned by RES-Alliance for Jobs. A federal RES would affect biomass, solar, hydro and wind power. “As tax credits expire, some of these industries will see job loss,” said Jay V. Paidipati, managing consultant for energy for Navigant Consulting Inc., which conducted the study. Therefore, a stable policy that looks at the long-term as well as the current is necessary. The study concluded that a 25 percent RES would double the size of the biomass industry alone, creating about 60,000 jobs in a country suffering from an unemployment rate that hovers around 10 percent. Most of that plant and job creation would happen in the Southeast because of resource availability including waste wood. “We think the Southeast is undoubtedly and unequivocally the future of biomass power,” Bob Cleaves, CEO of the Biomass Power Association, said during a Feb. 4 press conference. When the Public Utility Regulatory Policy Act was passed in 1978, the biomass industry grew significantly, he said. “Overnight, our industry was born and 100 power plants were built.” He added that it can happen again and will with a federal RES. “Biomass is really a job creator and it’s a job creator in the Southeast,” he said, adding that the BPA is supportive of a meaningful long-term RES. “Our plants last about 50 years and we really need a long-term policy to support that,” said Mark Pytosh, executive vice president and chief financial officer for Covanta Energy, a waste-to-energy company.

Covanta operates about 45 waste-to-energy plants worldwide and Pytosh said a long-term policy to support the capital-intensive industry and provide infrastructure is crucial. A 25 percent RES would require a $25 billion investment in waste-to-energy, but would mean the construction of about 60 new facilities and would double the industry, according to Pytosh. “We’re very excited and supportive of a long-term RES policy,” he said, adding that he hopes it comes through this year. Stakeholders in the wind, hydro and solar industries participated in the conference, as well, all agreeing that a meaningful RES is beneficial and important. “America owned this industry 20 years ago,” said Don Furman, senior vice president of development, transmission and policy for wind energy company Iberdrola Renewables. “We invented this industry and now we’re giving it away because we haven’t had a national policy to support it.” Furman said China has pulled ahead in the wind energy industry and also mentioned the benefits of PURPA, which seem to have dwindled. “It simply sets the goal and allows the market to work,” he said of an RES. The study can be found at www.res-alliance.org/res-jobs-study. —Lisa Gibson

Senate passes tax credit extension A one-year extension of the production tax credit for biomass power facilities is included in the American Workers, State and Business Relief Act, which was approved by the Senate on March 10. The fiveyear credit was originally included in the 2004 Jumpstart Our Business Strength Act and is crucial to the biomass power industry. Under the new bill’s provisions, the credit period, which expired at the end of 2009, would be extended through 2010 for open-loop electricity-producing facilities placed in service before Oct. 22, 2004, according to the U.S. Senate. It would also be retroactive to Jan. 1, 2010. The proposal carries an estimated cost of $105 million over 10 years. The same extender was cut from the original jobs bill in February, along with biodiesel credit extenders. Biomass Power Association President and CEO Bob Cleaves said the industry is glad to be included in the bill, but has been pushing for a full five-year extension of the credits. “Clearly, this is a short-term extension,” he said. It doesn’t solve the longer-term challenges of the industry and we will be seeking in 2010 a longer extension than one year, but we are very pleased to be in the bill. It’s a reflection of the support we’ve received in the Congress and we look forward to a swift passage of the legislation and extension of our benefits.”

More than 100 operating plants in the country count on the production tax credit, according to Cleaves. He has previously said that if an extension is not passed, it will have catastrophic consequences for the biomass power industry, which is responsible for about half of the renewable energy produced in the U.S. The $150 billion piece of legislation also includes an extension through 2010 of $1-per-gallon tax credits for biodiesel, renewable diesel and diesel from biomass, as well as an extension of the 10-cents-pergallon credit for small agri-diesel producers. The proposal comes at an estimated cost of $1 billion over 10 years, according to the U.S. Senate. The House of Representatives passed the Tax Extenders Act of 2009 in December, without provisions for biomass power. “There has to be a meeting of the minds between two pieces of legislation that are different in scope,” Cleaves said. “The bottom line is, there has to be a meeting between the House and Senate so that there is one bill sent to the President and hopefully signed into law.” The House and Senate versions of the legislation need to be reconciled into one bill that both chambers have to approve before it can be signed into law by President Obama. —Lisa Gibson

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industry

NEWS SG Biofuels unveils jatropha cultivar California-based SG Biofuels has launched JMax 100, a proprietary cultivar of jatropha optimized for growing conditions in Guatemala with yields 100 percent greater than existing varieties, according to the company. SG Biofuels is a plant oil company specializing in the development of jatropha as a low-cost, sustainable source of oil and has the largest library of jatropha genetic materials in the world. JMax 100 is the first elite cultivar developed through the company’s JMax Jatropha Optimization Platform, which provides growers and plantation developers with access to the highestyielding and most profitable jatropha, the sequenced genome and advanced biotech and synthetic biology tools to develop cultivars specifically optimized for their unique growing conditions, according to SG Biofuels. JMax 100 increases the profitability of jatropha to greater than $400 per acre, more than 300 percent above existing commercial varieties. That equates to more than 350 gallons per acre at $1.39 per gallon, according to SG Biofuels. “JMax 100 is the tip of the iceberg in the development of jatropha as a renewable energy crop,” said Kirk Haney, SG Biofuels president and CEO. He added that Guatemala has a head start, but the company anticipates advancements through the JMax platform that will further

enhance the profitability and productivity of jatropha for growers around the world. SG Biofuels will continue to work with partners and collaborators to optimize JMax for region-specific planting through the establishment of in-region technology centers, it said. In addition to its work in Guatemala, SG Biofuels is collaborating with the Hawaii Agriculture Research Center to develop a customized jatropha cultivar that can be used to the meet the demand for locally grown renewable fuel. Jatropha is a global market leader for fuel production and may be the only near-term solution for renewable fuel, Haney said. It can grow on marginal land and is limited only by a few factors, including its lack of tolerance for cold temperatures. But SG Biofuels’ research seeks to solve that problem, along with enhance other jatropha traits, such as oil content and seed size. The shrub is native to Central America and its seeds contain high amounts of oil that can be refined using existing technology to produce diesel fuel, jet fuel and specialty chemicals. —Lisa Gibson

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industry

NEWS ISU will stack algae traits A researcher at Iowa State University will use a $4.37 million grant from the U.S. DOE to stack traits in Chlamydomonas alga that will improve oil yield, growth rate and offer better thermal resistance. “The goal is really to develop it to be able to do breeding for microalgae,” said researcher Martin Spalding, professor and chair of genetics, development and cell biology, and a council member of ISU’s Plant Sciences Institute. His research will aim for treatment of the strain as any other terrestrial crop. A more immediate goal for the three-year project is developing one or more strains that can compete for commercial biofuels production. “The algae we’re working with currently are not competitive with other strains for biofuels,” Spalding said. More important, he’d like to have a platform breeding stock at the end of the project that can be used to respond quickly to biofuel needs that may arise. “We hope to bring this alga to the point where we can tailor it to meet the needs of the industry,” he said. Chlamydomonas alga is ideal for such research because it is the only type with a well-defined, mapped genome. “It’s an alga that’s been a model system used in biochemistry and genetics for years,” he said. “We have a sequenced genome, we understand the metabolism and we have the tools available to us to work with this alga.”

It’s also manipulable and scientists can create extensive mutant screens, from which they can select mutants that are able to produce more oil, Spalding said. “Rather than look for an alga that produces trait x or y and then trying to adapt each new strain to production, which is a very difficult process, we are manipulating Chlamydomonas to meet x and y,” he said. Spalding Genetic modification of algae does have its critics and Spalding said the fact that Chlamydomonas alga is well-understood most likely will not ease opponents’ fears. “This particular alga is neither more nor less of a concern for people with concerns about genetically modified algae,” he said, adding that it’s important to note his research will not be done in open ponds. “It will be well contained and well controlled.” The research will increase the number of favorable algae traits in the “toolbox,” Spalding said, and it will provide a more sustainable and flexible source for biofuel. “We see it as just the beginning,” he added. —Lisa Gibson

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industry

NEWS Biomass project proposed in Milwaukee Project Apollo, a 25-megawatt biomass power plant to be built in Milwaukee, should be operational in late 2013, producing enough electricity to power 20,000 homes in the Milwaukee area, according to developer Alliance Federated Energy. AFE plans to use Westinghouse Plasma Corp.’s plasma gasification technology to convert municipal and industrial wastes into syngas for energy. Several facilities around the world, such as in Japan, operate commercially with the technology, with several more in final design or construction phases, including in India and Turkey, according to Westinghouse. AFE, established in 2005, develops and finances renewable energy projects in the Midwest, and provides development services for projects led by third parties through a network of independent consultants and contractors. The $225 million Milwaukee plant, which will be built on a 25-acre industrial site, will be AFE’s first project and CEO Christopher Malo-

ney calls the plasma gasification technology the “ultimate in recycling.” The project will create more than 250 jobs during construction, along with another 45 full-time positions once operational, according to AFE. Badger Disposal of Wisconsin, one of the region’s leading industrial waste management services companies, has already committed to supply about 30 percent of the waste feedstock for the facility. AFE is in discussions with third parties for the sale of syngas and electricity. The first phase of the facility is expected to process about 1,200 tons of waste per day, according to the company. AFE partner CorValRyan, based in St. Paul, Minn., will design and fabricate the plant, and Los Angeles-based partner Aecom will provide technical, environmental and management support services for the project. —Lisa Gibson

Biochar technology company Dynamotive Energy Systems Corp. and environmental research company BlueLeaf Inc. have completed the second round of field trials testing various effects of commercialscale plantings of wood waste-derived biochar. For the past two years, the companies have investigated the effects of Dynamotive’s CQuest Biochar on certain basic physicochemical and biological soil and plant parameters, as well as the ability of biochar to retain moisture in the soil, the influence of biochar on crop and biomass yields, the influence of biochar on soil respiration, and the effects of a handling and application method of biochar on the soil at commercial farming test plots in Québec, Canada. The material used in the trials was produced in 2007 and kept in storage by Dynamotive until shipment to the trial site on May 16, 2008. The biochar was packaged at the production facility in 200-liter (55 gallon) steel drums, each containing approximately 55 kilograms (121 pounds) of biochar and shipped by truck to the farm trial site. The biochar was distributed on the plots using a commercial lime spreader at a rate of 1.75 tons per acre, accounting for wind losses of fine material of about 30 percent. Last year’s results showed a plant density increase of up to 41 percent using certain planting methods, with an overall average of a 24 percent plant density increase with biochar use, compared with the control plots. Among 2009 results was a 100 percent increase in biomass for a forage mixture, as well as increases in earthworm, nematode and mycorrhizal root colonization, which may suggest biochar could serve as a refuge for soil microbes. Other conclusions of the study included: Best management techniques such as wetting the material prior to handling must be developed because of large wind losses of the fine material. Soybean and forage yields were improved, although forage quality was slightly lower when biochar was applied. In the case of soybeans, the yield increase was brought about by greater plant population density, 30 BIOMASS MAGAZINE 4|2010

PHOTO: BLUELEAF INC.

Dynamotive, BlueLeaf complete two-year biochar trial

The biochar was spread on the fields using a lime spreader at a rate of about 1.75 tons per acre.

and not greater seed production per plant. Biochar reduced total soil phosphorus content, which requires further investigation given the soil is considered phosphorus-saturated and management is critical in the ecosystem. The application of 1.75 tons per acre did not produce measurable increases in total soil carbon or soil respiration, but statistical analyses could not be performed because of the lack of randomization and replication, therefore data must be considered preliminary and further field studies are required to fully understand the effects of biochar application on soils of this temperate region. The application rate used was low and greater rates along with different biochar materials must be tested. A copy of the full report may be accessed at www.dynamotive. com/assets/resources/BlueLeaf-Biochar-FT0809.pdf. —Anna Austin

industry

NEWS New alliance announces first biomass project The first project in a new alliance between John Deere and Adage—a joint venture formed by Areva and Duke Energy— will result in a 55-megawatt biomass power plant in Mason County, Wash. The $250 million plant will use woody biomass from local private forests, although Adage is still negotiating fuel supply contracts, according to Jarret Adams, media representative for Areva. Adage is in the process of finalizing those contracts, along with power purchase agreements, and expects to begin construction on the facility late this year, with an operation date in late 2013, Adams said. The output will be enough to power about 40,000 homes. “Most of it, of course, is going to the local community,” he said. In its first 2½ years of construction and operation, the plant will generate $100 million in economic activity and create 700 direct and indirect jobs across the county, according to Adage. Once permanently operational, it will create a new economic incentive for revitalizing Washington’s rural communities that will also help maintain forest health, according to the company. The Mason County region is heavily wooded, making it a great location for such a plant, Adams said. It will be the second Adage endeavor, but the first in the Pacific Northwest. Construction on Hamilton Biopower, in Hamilton County, Fla., will begin this year. The alliance with John Deere will allow Adage access to woody biomass harvesting equipment that has been used in Europe. “The alliance is to bring new technology and process innovation for fuel supply,” Adams said. The agreement allows Ad-

age to incorporate the 1490D Eco-III Energy Woody Harvester into this and any future biomass projects. “The Mason County project will be the first to use the harvester,” he added. Washington Gov. Christine Gregoire, Adage President Reed Wills, Jim Orr, director of worldwide marketing for John Deere Construction & Forestry, along with legislators and forestry professionals celebrated the alliance announcement Feb. 4 at an event in Olympia, Wash. “Our alliance with John Deere will bring new innovation to the forest, enabling more sustainable biomass to be brought out of the woods and put to beneficial use,” Wills said. “Expanding biomass utilization means healthier forests and new renewable energy, all while creating jobs in the forest.” —Lisa Gibson

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INDUSTRY

Biofuels

Algae show enormous potential as a biofuel feedstock, prompting numerous companies to further develop production and conversion systems. But some researchers remain skeptical as large-scale commercialization of reliable processes seems a distant goal. By Lisa Gibson

OriginOil Inc. has a comprehensive pilot plant system for algae growth and harvesting at its Los Angeles headquarters. PHOTO: ORIGINOIL INC.

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INDUSTRY

T

raits such as high oil content, carbon dioxide absorption, fuel efficiency and rapid growth make algae a favorable component of biofuels. But efficient processing, cultivation, conversion, logistics, affordability and other issues put large-scale, competitive production of algal biofuel on a timeline that raises questions about whether the feedstock will prove itself, or if it’s surrounded by too much hype. “I think this is the year of the pilots,” says Riggs Eckelberry, president and CEO of California-based OriginOil Inc. The company is one of several working to optimize algae production for biofuels and while Eckelberry recognizes that widespread production and competition with petroleum is 20 to 25 years away, he believes 2011 will bring about the first small-scale commercial systems. “Scaling up will require time,” he says. “It’s a lot of brick and mortar. I still see scale, commercial programs at three to five years out. I think 2011 is going to be a very good year for showing that we’ve got commercial systems.” Demand from existing infrastructure including CO2 emitters such as ethanol plants and biorefineries represents the low-hanging fruit for algae production. Cultivation systems can be attached to those polluters and function as a blended revenue stream, as it is not at the mercy of fuel commodity prices. “Before algae become as big as petroleum, we’ll have lots of algae being used beneficially to suck up CO2 and create local energy that can be consumed on the premises,” he says. “Algae production will be local. It will not be centralized.”

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INDUSTRY The Home Run for Algae Co-locating algae ponds at wastewater treatment plants would allow larger-scale growth, while providing more money to the plants, along with benefits such as waste energy, CO2 absorption and nutrient cleaning. “The fact is, wastewater is the home run for algae,” Eckelberry says, adding that it provides the most bang for the buck currently. Cultivating algae in a wastewater environment is 20 percent more profitable than other processes, he says. “Wastewater treatment plants have lots of nutrients,” he says. “So algae solves the problem by eliminating the denitrification stage.” Researchers at the University of Virginia recommended co-location with wastewater treatment plants in a recent study, “Environmental Life Cycle Comparison of Algae to Other Bioenergy Feedstocks.” Published in Environmental Science & Technology, the report found that algae cultivation (excluding conversion) consumes more energy, has higher greenhouse gas (GHG) emissions and uses more water than switchgrass, canola and corn. That environmental footprint, researchers concluded, comes primarily from upstream impacts such as CO2 demand and fertilizer, two major barriers to commercial and widespread production that can be alleviated by co-location at wastewater treatment plants or other areas that emit CO2. “We were surprised by what we found initially,” says Andres Clarens, assistant professor at the university’s civil and environmental engineering department and lead author of the paper. “At the end of the day, the main conclusions here were that algae cultivation, at least as it’s envisioned or was envisioned for much of the ’90s and recently, in terms of open ponds, has a big environmental footprint.” But terrestrial crop production has improved greatly with experience in the past 100 years and so can algae growth. “It’s a pretty clear upward trend,” Clarens says of other crops, such as corn. “I think we’re standing at the bottom of that hill with algae.”

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The message of the paper is there’s some low-hanging fruit in algae production, Clarens says. “If we’re serious about algae, we need to find a way to get nutrients from other sources, other than just dumping bags of fertilizer into the pond,” he says. “That’s never going to be a winner from the environmental standpoint and probably not from a financial standpoint, either.” The team set the high heating value of each of the four feedstocks tested as the basis for the study, instead of an equal weight measurement, and incorporated a sensitivity analysis to check findings. A cradle-to-gate boundary was applied and includes all product processes upstream of delivered dry biomass. Although algae’s life-cycle analysis showed disappointing results, it has significant advantages in eutrophication potential and land use, the latter being invaluable. “We can figure out ways to deliver waste nutrients or what have you,” Clarens explains. “Land we can’t really improve on and algae are more efficient.” In addition, algae yields four times as much biomass as the other crops. Eutrophication impacts emerge upstream as runoff from the nutrient factory, Clarens says, leaving room for improvement there, also. “If we’re talking about really expanding our agricultural efforts to be able to grow fuel, not just food, then doing it in a way that doesn’t have the same impact on waterways I think is key,” he says. Algae could also be cultivated using existing nutrients at power plants, confined animal feedlots and coal power plants. “Even if we took all the nutrients from all the people in the U.S., we wouldn’t be able to grow enough algae to offset our energy needs,” Clarens says. “So we’re going to have to think of other ideas.” Clarens acknowledges that plenty of hype surrounds algae and it’s not a silver bullet, but that doesn’t negate its potential. “One of the things we were thinking early on is if it’s as good as the claims floating around say, then we should quit our jobs and go do this be-

PHOTO: U.S. DOE

INDUSTRY

Sunrise Ridge Algae Inc.’s fifth-generation algae production technology project is located at the Hornsby Bend Wastewater Sludge Treatment Facility in Austin, Texas.

cause we could get really rich,” he laughs, adding that it doesn’t seem prudent without studies like this. “I’m optimistic and I think hopefully this paper will help start a conversation about where we should be focusing our efforts.” In response to the paper, Eckelberry says higher energy consumption by algae is not the fault of the organism, but the industrial process. “This study confirms our findings that a stand-alone algae production environment is not viable,” he says. “You can’t make algae in a vacuum.” The energy cost of oil extraction with big machinery is a nonstarter, according to Eckelberry. “You’re trying to squeeze the water out of the Kool-Aid,” he says, adding that OriginOil has developed an efficient process for extraction, as have other companies. As far as water use is concerned, Eckelberry believes the focus should not be on how much, but what kind. “I think we need to step back a little bit and say, ‘Algae is beneficial because it’s going to take the wastewater and the salt water and the brackish water nobody can drink and it’s going to remediate it.’” Eckelberry argues that algae are not inherently higher GHG emitters than terrestrial crops, but emit a similar or smaller amount of pollutants when taking into account tractors harvesting up and down fields. “There’s no question that algae aren’t a virtuous cycle on greenhouse gases,” he says. “It’s the hope of the future.” The study showed that a good portion of existing data for algae cultivation is extremely obsolete, he says, and a new, reliable model is needed. “It’s only a flag that says we didn’t know much before.”

A Productivity Model Through a multiphase project with the U.S. DOE’s Idaho National Laboratory, OriginOil has developed the Algae Productivity Model, which lays out a path for commercial production. It can

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INDUSTRY be viewed at the company’s Web site: www. originoil.com. Key variables of algae productivity identified include algae concentration at harvest, total volume available for algae growth, energy source, energy inputs, lipid content and lipid extraction efficiency. A partnership with London-based consulting firm StrategicFit will help further develop that core model. “Ours is just a bunch of spreadsheets and it works, but they can help turn it into modules,” Eckelberry says. Phase one of the Algae Productivity Model included a comprehensive mass-

36 BIOMASS MAGAZINE 4|2010

energy balance of OriginOil’s proprietary production process, which includes the Helix Bioreactor and live or single-step extraction. The model concludes that profitability requires co-location with beneficial site hosts and a focus on high-value coproducts. Subsequently, the pursuit of fuel will require continued process optimization at all stages and incentives such as grants, subsidies and policy. “The end game is to allow ventures to be financed based on reliable, bankable lifecycle analysis numbers,” Eckelberry says.

Besides this venture, the DOE has lent a helping hand to several algae endeavors. In January, it announced the recipients of more than $80 million in competitive federal funding for biofuels research and development, of which $44 million went to the National Alliance for Advanced Biofuels and Bioproducts for the commercialization of algae production, according to the DOE. The American Recovery and Reinvestment Act granted funds to Sunrise Ridge Algae Inc. in Houston, Texas, for the first research and design phase of a project at Hornsby Bend Wastewater Sludge Treatment Facility in Austin, Texas. If awarded funding for more project phases—detailed design, construction and operation—Sunrise Ridge plans to operate its system at a cement company in Buda, Texas. The DOE has had a long-term interest in algae because of its potential and productivity compared with land-based plants. The Aquatic Species Program was a precursor to the current Biomass Program within the DOE and studied algae for biodiesel. The University of Nebraska-Lincoln will use $1.9 million in federal funding to help revamp a portion of its Beadle Center greenhouse to accommodate an algal biofuels research facility that will address three important goals: identify the best strains for maximum oil production; identify optimal growing conditions; and modify the algae for maximum cell density, according to Paul Black, a lipid biochemist at the university. The team is currently working with a photobioreactor that is designed to increase cell density per unit volume from about two grams per liter to eight to 10 grams per liter, by exploring maximum light and carbon dioxide conditions, Black said. Black expects that after about 10 months the scientists should have some compelling data, although a timeline has not been established. Black and fellow scientists are working now with natural strains, but the possibility of genetic modification exists, depending on what genes are turned on or off by certain stimuli, such as light. “It depends on what we come across,” he said. “There’s a lot of serendipity in science.”

INDUSTRY An Unnecessary Risk While many researchers are working to optimize algal traits through genetic modification (GMO), others express deep concerns with the practice, including destabilization of ecosystems, death of beneficial species of natural algae, creation of toxic GMO algae species that can directly harm people, irreparable alteration of the environment, and many more. “Let’s remember that algae are responsible for half of the oxygen on this Earth,” says Gerald Groenewold, director of the Energy & Environmental Research Center on the campus of the University of North Dakota. “It’s a fantastic group of species that are very important to life on Earth.” Several thousand species of algae are thought to exist and humans understand little about them, he adds, including the extent of their interaction with the environment. “Therefore, changing that interaction through genetic modification creates a plethora of unknown consequences and probably some significant risks. We don’t know where we’re going with this. We’re driving blind.” An environmental risk assessment protocol for GMO algae does not exist, which Groenewold considers a worrisome reality. “In simple terms, I think what we’re doing is championing the creation of dangerous biohazards without having to address safety guidelines, because there is no guideline,” he says. The tremendous growth rate of algae makes genetic modification even more risky, as it would mean a “geometric spread” of any mistake, Groenewold explains. Furthermore, significant strides are being made in research with natural strains of the organism that are understood. “There is no necessity to pursue a far riskier GMO course of action when we’re having significant success pursuing natural breeding,” he argues. “This is a Frankensteinian exercise.” Genetic modification of algae needs to be critically discussed and evaluated to avoid a “biological nightmare,” Groenewold says. “It’s the most amazingly inappropriate thing, frankly, I have seen in years under the heading of science,” he

says of GMO algae. “It’s very bad science in my opinion.”

Roadblocks While technological barriers to largescale commercialization of algae production for biofuels still exist, researchers are making advancements and the next step is to bring them together in a best-of-breed technology, Eckelberry says. “I have no doubt that the technologies are out there,” he says. “They just need to be melded and put to work … There are process issues, of

course, but there’s no question it’s got the potential.” Black cites cell density, quality oil and oil extraction as major barriers. “I would say it will be five to seven years before we really get to a point of making it commercially viable,” he says. “We’ve got some blocks in front of us, but they’re not insurmountable.” BIO Lisa Gibson is a Biomass Magazine associate editor. Reach her at lgibson@bbiinternational. com or (701) 738-4952.

4|2010 BIOMASS MAGAZINE 37

DEBATE

Alpha cribs containing colonies of algae grow at the Colorado State University Engines and Energy Conversion Laboratory. PHOTO: COLORADO STATE UNIVERSITY

38 BIOMASS MAGAZINE 4|2010

DEBATE

OPEN PONDS VERSUS CLOSED BIOREACTORS There are pros and cons associated with the economic commercial production of algae using closed bioreactors and open ponds. Is one method superior, or is there room for both? By Anna Austin

4|2010 BIOMASS MAGAZINE 39

DEBATE

T

he U.S. DOE’s National Renewable Energy Laboratory concluded in 1990 in its Aquatic Species Program close-out report that open raceway ponds were the most viable solution for the mass production of algae for conversion into biofuels, but that it was much too early to determine whether open, closed or hybrid designs of growing algae would ultimately prevail. Generally, open ponds have been associated with contamination issues, excessive space requirements and limited location possibilities due to climate. At the same time, closed bioreactors have mainly been considered too expensive. There wasn’t much room for doubting the accuracy of NREL’s report, but have technological advancements in the past two decades leveled the playing field? Perhaps, but companies today pursuing either route still face the same hurdles their predecessors did. Whether it takes five, 10 or 20 years, the key to economic algae-based biofuel production is developing the most costeffective growth model possible. If light limitation is the main problem in achieving the commercial potential of algae in scaled commercial cultivation operations, Massachusetts-based Bodega Algae may have the solution, according to CEO Joseph Dahmen. In January, Bodega Algae and Bigelow Laboratory for Ocean Sciences in West Boothbay Harbor, Maine, received a sixmonth, $150,000 Small Business Innovation Research grant from the National Science Foundation to develop and test a prototype for growing high concentrations of algae for use as biofuel. More specifically, Bodega will use the funds to develop advanced photobioreactors, and is making “big advancements,” Dahmen says.

Case Closed One of the major issues in the cultivation of microalgae is light limitation, Dahmen says. “This limits the effective photosynthetic volume to basically the area within five centimeters of the surface of a pond,” he says. “Everything below that tends to be light prohibited because the top layer limits the light from getting in.” The same is true for photobioreactors, he adds. “So some people have tried various solutions like flat plates or hang40 BIOMASS MAGAZINE 4|2010

ing bags, and in effect, what they’ve done is limit the cultivation volumes in an attempt to drive up the surface area to volume ratio.” These small volumes allow light to penetrate better, according to Dahmen, but the problem is that it may lead to biofouling (the attachment of organisms to a surface in contact with water for a period of time) and the cost of pumping the algae around through the small volumes increases. “We’re bringing the light to the algae with some proprietary optics that are internal within the reactor,” Dahmen says. “We have cultivation volumes that are lit within, so that allows us to cultivate very efficiently—in effect, like three dimensions.” The bioreactors Bodega is currently experimenting with are bench units made of acrylic. In the long term, however, the company is looking at shipping containers and possibly petroleum dissolute storage tanks. Dahmen describes open ponds as a “first-generation solution” to growing algae. “They’re very land intensive because the effective cultivation area is limited to a very thin slice of growth medium, so the ponds have to expand, becoming very land hungry,” he says. “Also, if you look at the areas receiving high amounts of natural sunlight or insulation where ponds make the most sense, you run into tremendous problems with evaporation as well as cross-contamination of cultures. When you start talking about acres and acres of ponds 16 inches deep, you’ve increased the surface area to the point where land consumption is a huge problem.” Open ponds are relatively cheap to build compared with bioreactors, though, Dahmen says. “But what we’re seeing is a real need for cost-effective photobioreactors that can address the capital expense issues while offering efficient cultivation in large volumes.” Numerous other companies share Dahmen’s perspectives, but have approached bioreactors in different ways. Solix Biofuels, recently named a part of the U.S. DOE’s $44 million National Alliance for Advanced Biofuels and Bioproducts consortium, has attracted much attention in the past few years. Along with Colorado State University, Solix has developed specialized photobioreactor systems composed of long, closed plastic bags containing algae, which float in large

DEBATE water-filled metal tanks to control temperature and are injected with CO2 through tubing to optimize growth. California-based OriginOil, another bioreactor contender, has a cooperative agreement with the U.S. DOE’s Idaho National Laboratory for a multiphase algae research program. The company describes its Helix BioReactor as an advanced algae growth system that features a rotating vertical shaft with low-energy lights arranged in a helix/ spiral pattern, resulting in a theoretically unlimited number of growth layers. While these particular companies have focused on bioreactor development, some such as Washington-based Bioalgene Inc. have pursued both methods.

Open to Possibilities A few years ago, aircraft manufacturer Boeing hired Bioalgene to survey indigenous strains of algae—regional strains that grow fast and produce many lipids—in the Northwest U.S., according to Bioalgene CEO Stan Barnes. The company has leased a decommissioned wastewater plant where it is now testing selected strains. “These are natural strains that already have defense mechanisms against predators and disease and can thrive in this region,” Barnes says. Now entering phase two of its research project, Bioalgene will grow algae in larger, 220,000-gallon ponds on a five-acre tract at Boardman, Ore., to test variances in growing and harvesting methods. Barnes says early on, the company built three bioreactors at Seattle University, and though being able to grow pure strains was an advantage, capital costs to build, maintain and clean transparent systems didn’t seem to be an economic pathway to high-volume algae production. Using NREL’s research as a basis for the company’s decision to move forward with natural strains in open ponds, Barnes says Bioalgene utilized the already developed capabilities of algae to yield a simple system, rather than a complex system. “Evaporation is one of the things we’re concerned about though,” he tells Biomass Magazine. “The whole question of water management is a challenge, and I think you’ll have it anywhere. One big advantage a closed system has is no evaporation loss.” Adequate temperature and sunlight are only available in certain regions for limited periods of time, but Barnes says one of the benefits Bioalgene will reap by growing algae at a coal-fired power plant (besides using flu gas emissions to accelerate growth) is that the process heat allows growth into December by warming water that is fed to the algae. “As long as the water is warm, there is plenty of light energy to keep the algae growing,” he says. Although Bioalgene believes open ponds are the ultimate solution, it will utilize closed reactors as nurseries to grow inoculation strains in pure forms before introducing them to ponds. “Overall, the potential for volume, we see, is more economical (in open ponds) than in large closed systems,” he says. Bioalgene expects its systems to be able to deliver more than 100,000 tons of algae per year. But what if the algae are being produced for something other than oil? Jim Oyler, CEO of Utah-based Genifuel Corp., says the method of growing algae is relative to the intended use. Algae oil developers are looking to achieve the highest yields of oil possible

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DEBATE using specific strains, but oil yields aren’t important to Genifuel, as it is directly converting the algal biomass to natural gas via a gasification process developed by the DOE’s Pacific Northwest National Laboratory.

Room for Both Though Genifuel is focused on mass rather than oil yields, growing the material as cheap and quickly as possible is imperative. The company has open raceway ponds in Utah, which are currently shut down for the

winter months, but produced algae last year. “In our case, we’re interested in growing the most biomass possible per unit of area in our ponds, so our goal is different than the goal of algae oil producers,” Oyler says. “We like fast-growing species and in many cases these are tough, aggressive types of algae. Many of the oil producers, especially when they are genetically modified, can be somewhat delicate or vulnerable, and are easily taken over by weeds.” Most oil producers will make the case

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42 BIOMASS MAGAZINE 4|2010

that they can get faster growth in bioreactors, while at the same time avoid problems that arise from outdoor production, including susceptibility to parasites and the potential for aggressive species to take over. “The key question is, can you get enough additional productivity in bioreactors to offset the additional cost?” Oyler says. “There are some very clever designs being developed. Solix Biofuels has a design that’s not too expensive—more expensive than open ponds—but it reduces capital costs in a productive way.” Open ponds have not always been consistent, however, as they have peak productivities that aren’t maintainable or achievable in most climates over extended periods of time. “There are also some very clever designs that overcome some of those problems,” Oyler says. “But in order for bioreactors to pay off, they’re going to have to achieve something in the order of double or triple the productivity of an outdoor open pond. It’s yet to be proven that it can be done. Theoretically it might be possible, but no one’s actually demonstrated it at a commercial scale.” Another advantage of closed systems is that they open up sunny, dry areas such as the Southwest to biofuel production. Open ponds are unlikely to work in the Southwest because the water loss is going to be enormous, Oyler says. “Photobioreactors keep water enclosed, but thermal management is still needed, because if you put an enclosed system out in the desert it’s going to get really, really hot in there.” Although the problems of predators and weeds have been solved with bioreactors, such closed systems used to grow algae for other purposes have experienced problems with virus susceptibility and/or bacteria attacks, which can take the whole system down in a matter of hours. “There are ways to deal with that, but I don’t believe that it has ever been fully solved for long periods of time,” Oyler says. “Both ponds and bioreactors have advantages and disadvantages right now. There’s more experience with outdoor systems, but the closed systems have the promise of higher sustained productivity, but only if they can overcome associated problems, especially thermal management or diseases.” Al Darzins, principal group manager of NREL’s National Bioenergy Center, shares

DEBATE to make and maintain while isolating organ- really depends on whether we can produce it isms that are very productive, then it might cost effectively and sustainably, from the asmake sense to grow algae that way, especially pects of land usage, water usage and nutrient in more northern latitudes. On whether ge- usage; we just have to make sure all that can be netically modified organisms are productive done without competing with agriculture. We or not, Darzins isn’t sold. “We think Mother haven’t heard the last of this debate, that’s for Nature has been engineering biology for mil- sure.” BIO lions and millions of years and there are some very interesting organisms that we just need to Anna Austin is a Biomass Magazine asBack at It NREL is currently experimenting with discover,” he says. “Over the past four years, sociate editor. Reach her at aaustin@ bbiinternational.com or (701) 738-4968. two algae production systems—in 270-liter algal biofuels have captured the public and sciponds in a greenhouse, and small bioreactors entific communities attention and [its viability] that hold media to grow algae in artificial light with CO2. “When we start scaling both up to the commercial realm, though, that’s where the debate lies,” Darzins says. “It’s an argument that has been heated for the past several Quality pellets, guaranteed. For perfect pellets the entire production system years.” must work together flawlessly. Buhler enables total process control by When generating large amounts of algae providing a complete process design package and key equipment for outside in closed photobioreactors, convendrying, grinding, pelleting, cooling, bagging and loading. This, combined tional wisdom is that the materials that go into with Buhler’s integrated automation system, unrivaled after sales support making them are going to be cost-prohibitive and training provides a seamless solution, guaranteed. unless the fuel produced is cheap, according to Darzins. “If you’re making a value-added product that is worth a lot of money, then Visit us at the International Biomass Conference & Expo - Booth #408 it might make sense to grow the algae in a closed photobioreactor,” he says. “Right now, Buhler Inc., 13105 12th Ave N., Plymouth, MN 55441, T 763-847-9900 most people think the cost-effective way will buhler.minneapolis@buhlergroup.com, www.buhlergroup.com be open raceway ponds, but there are some companies such as Solix that are growing their organisms in kind of a hybrid cultivation technology. Solazyme is growing algae not with sunlight, but within closed fermentation tanks with sugar. Under those conditions you can get very high cell densities and very high amounts of oil produced, but the main questions are, will that be cost effective and can you scale it up to be meaningful enough to displace the 40 billion-odd gallons of diesel we use here in the U.S.? Where are you going to get your cheap sugars to let your algae grow?” Some believe once lignocellulosic ethanol technology is mature, the sugars extracted from corn stover and energy crops could be fed to bioreactors to reduce the cost of algae production. “That technology isn’t quite there yet either,” Darzins says. “There are a lot of different technologies that people are exploring but overall, the predominant method right now is open ponds.” The solution behind the solution. Darzins believes if someone can develop truly novel bioreactors that are inexpensive Oyler’s sentiment. During the past couple of years, algae research has enjoyed a resurgence at NREL, including projects with Chevron Corp. and the Colorado Center for Biofuels and Biorefining, and Darzins says in the extended future, both ways of producing algae will continue.

4|2010 BIOMASS MAGAZINE 43

POLICY

44 BIOMASS MAGAZINE 4|2010

POLICY

BCAP Rule Revision

The USDA released the proposed rule for the Biomass Crop Assistance Program in February and is now under pressure to make essential changes. Until the final rules are determined, program payments and applications have been frozen. By Anna Austin

4|2010 BIOMASS MAGAZINE 45

POLICY

T

he long-awaited Biomass Crop Assistance Program proposed rule seems to have revived some interest and enthusiasm in the program. At the same time, many are anxious for the proposed changes to be finalized, for further clarifications and for the current freeze on the program to cease. Among several new provisions of the rule is a possible prohibition on wood waste and residue on federal and nonfederal lands that otherwise might be used for higher-value products. Kent Politsch, public affairs branch chief for USDA’s Farm Service Agency, says the prohibition proposal resulted because of concerns from segments of the wood industry, specifically the pulp and pressboard/fiberboard manufacturers. “They say that the BCAP collection, harvest, storage and transport (CHST) matching funds were paying for forest items—chips, bark, excess wood, stumps and limbs that were knocked down in the forest and were generally cleaned up afterward—and therefore directly increasing prices and competition for a market that already was established, mostly the fiberboard industry,” he says. CHST funds allow matching payments to eligible material owners of $1 per $1 paid per ton by the biomass con-

46 BIOMASS MAGAZINE 4|2010

Forest residue such as stumps and tree limbs are utilized by the fiberboard industry.

POLICY ‘We support BCAP. It’s a great idea, but not if all that is really going to happen is that you’ll pay companies double for the materials they’re already selling to somebody else.’ Tom Julia, president, Composite Panel Association

version facility (BCF) to the producer, up to $45 per dry ton for a time limit of two years after the first payment is made. In the case of particleboard makers, CHST funds could essentially double the price they typically pay for the materials they use. As of Feb. 8, the USDA stopped accepting CHST applications until the final BCAP rule is in place. Politsch says the original intent of Congress allowing wood waste and residues to qualify for CHST funds was to appeal to the wood supply industry to clean up unwanted debris that they assumed had no or little market value. “The fiberboard industry responded by saying that was an incorrect assertion, and that there was already a market value for that stuff,” he says.

Tapping into Trouble Composite Panel Association President Tom Julia tells Biomass Magazine that the industry didn’t initially pick up on the BCAP program’s threat to its members, as the organization doesn’t track programs that come out of USDA because they usually don’t impact the wood products or forestry industries. “We understood BCAP to have a more agricultural orientation to foster new fuel sources, and we figured there would be a regulatory process before money was given out,” he says. The CPA and its members met with the Office of Management and Budget and USDA BCAP personnel last fall, Julia says. “At that point, the staff who put BCAP together quickly admitted their mistake. Knowing very little or nothing about the wood products or composite industry, they put everything they could think of on the eligible materials list without considering the implications. They never met with stakeholders or asked questions or did an environmental impact statement.” As CPA members understood it, the USDA was going to revisit BCAP criteria and request public comment before issuing funds, Julia says. At the end of November, a Notice of Funds Availability was released even though USDA was still sitting on the

regulations. “At that point, we intervened and met with members of Congress over the next month to warn them they were about to fail at what they wanted to accomplish,” Julia says. “We support BCAP. It’s a great idea, but not if all that is really going to happen is that you’ll pay companies double for the materials they’re already selling to somebody else. There’d be no incentives to go out and develop a new fuel source when someone can get double what they’re getting now by selling it to somebody else.”

More Changes Aside from a prohibition on certain wood materials, another proposed change in the rule is to increase the acceptable moisture content of the materials received. USDA reported that many respondents didn’t agree with the current system of measuring the moisture levels of biomass deliveries to meet the dry-ton measurement standard. A common industry practice is to measure in terms of green tons, which are generally assumed to possess a moisture level of 45 percent to 50 percent. In the rule, it is proposed to modify the requirement for moisture testing and adopt the industry standard. Currently, the BCF is required to figure out the green ton to dry conversion. “This

4|2010 BIOMASS MAGAZINE 47

POLICY ‘People are going to get upset along the way, but it will settle down and be a very successful program.’ Kent Politsch, public affairs branch chief, USDA’s Farm Service Agency

requirement may result in the need for facilities like our demonstration facility in Upton, Wyo., to purchase additional equipment or have facility personnel perform additional tasks,” says Steve Corcoran, CEO of KL Energy Corp. KL Energy has a qualified cellulosic ethanol demonstration facility in Upton that utilizes wood waste as a feedstock. He says he is supportive of the suggested woody biomass sampling methodologies that follow standard probability sampling of materials, and moisture analysis that follows standard test methods for wood fuels.

Chippewa Valley Ethanol Co., a 48 MMgy ethanol plant in Benson, Minn, uses wood waste and corncobs as a power source via a gasification technology. “There should be some type of allowable moisture to the program and we would certainly support moisture of around 30 percent,” says Chad Friese, CVEC commodities manager and biomass delivery coordinator. “Forty [percent] to 50 percent seems a bit high. We currently have to use a shrink in order to bring the tons in line with the zero moisture, and we’re doing that with a straight moisture correction shrink, not a shrink factor, as no studies that I’m aware of have detailed what a shrink factor would be for biomass,” he says. “Due to the low density and high moisture of biomass products, transportation is one of the biggest costs, so by shrinking excessively, we limit the value that can be offset to transport and reduce the effective draw area of a conversion facility.” Absolute specification on certain as-

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48 BIOMASS MAGAZINE 4|2010

pects of the rule also seems to be an issue of concern. “We’re concerned that there are still, even though it’s generally supportive of concepts we’ve enunciated, some that aren’t specific enough,” Julia says. “There should be some very bright lines for what materials are eligible for subsidy, and what are not. If the draft has too much ambiguity and subjectivity soon you’ll have people trying to take advantage of the system in a way they shouldn’t. Vagueness is a prescription for mischief. We don’t want to come back in three or six months and fight this battle again because someone has discovered a backdoor to access our materials.” Corcoran says though KL Energy doesn’t typically use wood materials that are used for higher value-added production, he believes there needs to be clarification of what is meant by “higher value-added production.”

Funding Freeze Without warning as of Feb. 8, the USDA terminated CHST payments and indicated new applications for the payments would not be accepted until the final rule is in place. “We didn’t press for that,” Julia says. “But I suspect this is becoming a concern for parties who are legitimate beneficiaries of BCAP. They stopped everything cold instead of just changing the eligible materials list, until they put out the final rule. It’s what should have done originally but beneficiaries anticipating this money aren’t getting it. There is a 60-day comment period, but realistically, there won’t be a final rule until middle of this summer so money won’t be flowing again for another four or five months.” Friese says that while it is understandable adjustments need to be made to the program, CVEC hopes they will get it done as quickly as possible to get the program back on line and the CHST payments reinstated. Beyond CHST payments there are establishment payments, which are a second aspect of BCAP funding and are more complicated to qualify for. Establishment payments, a part of BCAP that has not yet been initiated, would cover up to 75

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Establishment payments would cover up to 75 percent of the cost of establishing dedicated energy crops such as miscanthus.

percent of the cost of establishing eligible woody and nonwoody perennial crops, with annual payments for up to 15 years. To be eligible for these payments, production activities must take place in designated project areas—areas which may be proposed by BCFs or by groups of producers. Qualifying for establishment or annual payments requires a producer to provide a description of the eligible land and eligible crops to be grown there, including maps to show current land use, roads, railroads, rivers, barge access, cost of land preparation, and evidence of a need for sufficient equity. A letter of intent from a BCF indicating the facility intends to utilize the crops grown on the eligible land must also be provided, as well as solid evidence that the biomass conversion facility has enough equity to operate in the future if it isn’t in operation at the time of the proposal.

Although not definitive, BCAP does have an estimated cap. The USDA reported it intends to cap the cost of the BCAP program at $2.6 billion, including $2.1 billion for matching payments for biomass materials over the next four years, $306 million for crop establishment over the next three years, and $219 million for annual payments over the next 17 years. The public comment period for the proposed ruling ends at the beginning of April, and the USDA is confident the kinks will be worked out in the long term. “It will take some time, there will be some hills, valleys and bumps in the road,” Politsch says. “People are going to get upset along the way, but it will settle down and be a very successful program.” BIO

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Anna Austin is a Biomass Magazine associate editor. Reach her at aaustin@ bbiinternational.com or (701) 738-4968.

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WOODY BIOMASS By Ronalds Gonzalez, Jeff Wright and Daniel Saloni

PHOTO: RONALDS GONZALEZ

CONTRIBUTION

Wright, an adjunct professor at North Carolina State University, stands in front of 45-month-old eucalyptus trees being grown near Loxley, Ala., with a productivity of about 13 bone dry short tons per acre per year.

The Business of Growing Eucalyptus for Biomass Supplying biomass is a growing business, and rapid-growth eucalyptus in the Southern U.S. could be a source of low-cost delivered biomass.

T

he world is actively looking for ways to speed up the synergy in bioenergy from biomass. Research is being developed throughout the entire supply chain: growing, harvesting, delivery (freight and storage), and conversion of biomass into energy and delivery of the bioenergy produced to consumers.

Growing biomass and producing energy from it is a business. There are several wellknown advantages in using locally produced bioenergy in terms of the environment, local economic growth and reduced dependence from less than reliable foreign oil suppliers. However, bioenergy from biomass will speed up only when the business becomes more profitable.

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).

52 BIOMASS MAGAZINE 4|2010

Table 1 shows key variables considered as important financial and cost drivers in the production and conversion of cellulosic biomass into ethanol in a dilute acid process. For the economics of a fermentable processâ&#x20AC;&#x201D;as dilute acid pretreatment followed by enzymatic hydrolysis, fermentation [yeast] and distillationâ&#x20AC;&#x201D; the most important features

Eucalyptus is a forest genus that meets most of the desired features for low-cost delivered biomass. Eucalyptus is indigenous to Australia, Indonesia and Papua New Guinea and it is the most frequently planted fast-growing hardwood in the world.

WOODY BIOMASS By Ronalds Gonzalez, Jeff Wright and Daniel Saloni

Table 1. Key variables in ethanol production from biomass

Figure 2. Eucalyptus biomass delivered costs and component costs ($/BDT) at 6 percent IRR at 7.5, 10 and 12.5 BDT/acre /year for eucalyptus plantations in the Southern U.S. (BDSC scenario).

of cellulosic biomass are the cost per bone dry short ton ($/BDT) and $/BDT of fermentable carbohydrates. The delivered cost, $/BDT, is the cost of plantation/crop establishment and maintenance plus harvesting, freight, storage and profit. The $/BDT of carbohydrate is the ratio of the biomass delivered cost and the

carbohydrate content. Thus if the delivered cost is $65/BDT and the fermentable carbohydrate content is 60 percent, the $/BDT of carbohydrate is about $108.3. The main objective is to lower the $/BDT of biomass delivered and the $/BDT of carbohydrate (Table 1). Lowering the $/BDT of fermentable

carbohydrate is possible either by increasing the amount of carbohydrate content in the biomass (using genotypes with desired component properties) or by reducing the delivered cost of biomass. The $/BDT of delivered biomass is highly affected by biomass productivity (BDT/ acre/year), rotation length and

plantation/crop establishment and maintenance. Highly productive species (more BDT per unit of area) will decrease the amount of acres required to supply a specific volume demand, reducing the investment in land. Shorter rotation lengths in combination with high productivity will also result in reducing the production area. Short rotation lengths are a desired feature in biomass and hence the importance of fast-growing species. Plantation/crop establishment and maintenance costs will directly impact the cost per BDT. An increment in investment in land for production would increase the minimum selling prices of biomass to achieve targeted financial returns. A longer annual harvesting season would provide more flexibility in the harvesting activity, as well as labor and machine inputs, reducing costs. Harvesting costs of well-known species are an advantage with respect to bioenergy crops that are not well understood. Experienced contractors and supply chain stakeholders exist for wellunderstood species. Materials such as wood that are denser than grass contain more mass of cellulose and carbohydrates per unit of volume and would thus cost less in freight. Storage is an area in which more research is required. The current simulated storage costs of biomass for bioenergy ranges from $6 to $12 per BDT (for a 12 percent internal rate of return (IRR) in storage as a separate business unit).

4|2010 BIOMASS MAGAZINE 53

WOODY BIOMASS By Ronalds Gonzalez, Jeff Wright and Daniel Saloni

Figure 3. Eucalyptus biomass delivered cost ($/BDT) at 6 percent, 8 percent and 10 percent IRR and at 7.5, 10 and 12.5 BDT/acre/year for eucalyptus plantations in the Southern U.S.

Figure 4. Effect of productivity (BDT/acre/year) on plantable area and land investment for eucalypt plantations in the Southern U.S.

This is mainly true for agricultural biomass where harvesting windows are only two to three months per year. Thus, large volumes are required to be stored to ensure year-round supply. For instance, a facility

54 BIOMASS MAGAZINE 4|2010

processing 500,000 BDT per year, if fully supplied from, for example, switchgrass, requires more than 400,000 BDT of biomass to be stored. Besides the risk of fire, insurance and handling costs will increase

the facilitiyâ&#x20AC;&#x2122;s working capital. Open field or enclosed storage, which provides less degradation of biomass carbohydrates at a higher capital expenditure (CAPEX), are storage alternatives. The trade off between storage CAPEX and biomass degradation must be measured. In contrast, forest biomass from forest plantations can supply the required biomass year-round without major problems with well-known logistics and experienced supply chain players. Eucalyptus is a forest genus that meets most of the desired features for low-cost delivered biomass. Eucalyptus is indigenous to Australia, Indonesia and Papua New Guinea and it is the most frequently planted fast-growing hardwood in the world. In addition, it is the main hardwood raw material supplied to the successful pulp and paper industry in Brazil, Portugal, South Africa, Uruguay and other countries. Eucalyptus was introduced in the U.S. in the 1870s. Recentlty, genetic improvement has led to cold-tolerant, higher carbohydrate content and fastgrowing genotypes (Figure 1). Cold-tolerant Eucalyptus is currently growing in pilot scale trials in South Carolina, Florida, Alabama, Georgia and Texas. To better understand the business of growing eucalyptus for biomass, researchers have developed a simulation model consisting of a forestry division supplying a conversion facility. The main financial indicators presented are

Shorter rotation lengths, development of more freeze-tolerant seedlings, higher stand tree density together with other silviculture practices are being developed to improve plantation productivity. These outcomes indicate that eucalyptus is a promising biomass for bioenergy production in the Southern U.S.

IRR, net present value (NPV), $/BDT of biomass delivered. The cash flow of the project was based on establishment and maintenance costs obtained from forest managers currently in business. Harvesting costs and freight were obtained from harvesting contractors and freight/shipping companies. In the scenario presented, the biomass division supply chain (BDSC) land investment is not considered in the cash flow of the project. This article presents a summary of financial and technical analysis in biomass supply. Delivered costs of eucalyptus biomass ($/BDT) within 30 miles of the facility was back calculated for three biomass productivity rates per acre at 6 percent IRR. Figure 2 shows the delivered cost of eucalyptus biomass and component costs (within 30 miles) for three biomass productivity rates of 7.5 BDT/acre/year, 10 BDT/acre/year and 12.5 BDT/acre/year at 6 percent

WOODY BIOMASS By Ronalds Gonzalez, Jeff Wright and Daniel Saloni

Figure 5. Effect of percent covered area on freight costs ($/BDT) and delivered cost ($/BDT) in two scenarios ISC and BDSC evaluated at 10 BDT/ acre/year and back calculated at 6 percent IRR.

IRR in the BDSC scenario. Higher biomass productivity lowers the depletion cost. Harvesting is simulated to be constant. The delivered cost of eucalyptus biomass at three different productivity rates of 7.5, 10 and 12.5 BDT/acre/ year for three different internal rates of return (6 percent, 8 percent and 10 percent) are given in Figure 3. The lowest delivered cost resulted in the least costly option at 12.5 BDT/acre/year and 6 percent IRR at $50.3/BDT, while the highest cost is for 7.5 BDT/ acre/year at 10 percent IRR at $63.3/BDT. An important consideration is the effect of biomass productivity per acre (BDT/ acre/year) on the total amount of acres required to supply a specific amount of biomass. Figure 4 shows the amount of

plantable (net) acres required to supply 500,000 BDT/year. At 7.5 BDT/acre/year, the area required to supply that quantity is about 13,400 acres/ year for a total of about 67,000 acres given the five-year rotation. The investment in land for production may be as high as $67 million (at 7.5 BDT/ acre/year, assuming land value of $1,000/acre), while for higher productivities, an area of 8,040 acres to harvest each year for a total area of 40,200 acres decreases the land investment to $40.2 million. This difference in land investment impacts the delivered cost to achieve a specific rate of return, as the values used to calculate IRR and NPV are based on the free cash flow. Another important variable affecting delivery cost is the amount of acres growing the biomass/raw material

around the facility. The percent of covered area is determined based on the actual percentage of acres of that specific biomass with supply agreements between the biorefinery and the forestland owner(s) or biomass division(s). Figure 5 shows the effect of percent of cover area around the biomass facility on freight ($/BDT) and delivery cost ($/BDT delivered), assuming a productivity of 10 BDT/acre/year and annual supply of 500,000 BDT/ year. As presented in Figure 5, when the forest cover area increases from 5 percent to 25 percent, there is a dramatic drop in freight cost, ranging from $10 to $4/BDT. A direct consequence is observed in delivered price per BDT, ranging from $63.4 to $57.3/BDT in the investment supply chain scenario (where land investment is considered in the cash flow analyses), and from $54 to $48/BDT in the BDSC scenario (where land investment is not included).

In Conclusion Eucalyptus biomass can be produced and delivered in Southern U.S. at a competitive cost when compared with current biomass delivered costs of grasses and other hardwoods. Simulated delivered cost of eucalyptus biomass may range from $50 to $60 per delivered BDT (within 30 miles) depending on site productivity (without considering land investment) at 6 percent IRR. When land investment was included in the analysis, delivered biomass costs increase to

a range from $59 to $72 per delivered BDT depending on site productivity. Site productivity greatly affects delivered cost, which is why a highly productive crop/ plantation will reduce delivered costs with fewer acres to plant/harvest. Delivered cost of eucalyptus biomass growing at 7.5 BDT/acre/year (freight distance of 30 miles and 6 percent IRR, BSC scenario) is around $59.4/BDT while for a site growing at 10 BDT/ acre/year with the same IRR and without considering investment in land, the biomass delivered cost is decreased to $53.4/BDT. There are opportunities to reduce the delivered cost of eucalyptus biomass while achieving adequate IRR. Shorter rotation lengths, development of more freeze-tolerant seedlings, higher stand tree density together with other silviculture practices are being developed to improve plantation productivity. These outcomes indicate that eucalyptus is a promising biomass for bioenergy production in the Southern U.S. BIO Ronalds Gonzalez is a doctoral candidate working on cellulosic ethanol from various feedstocks at North Carolina State University in Raleigh. Dr. Jeff Wright is an adjunct professor at NCSU and Dr. Daniel Saloni is an assistant professor at NCSU working on supply chain and life-cycle analysis of woody biomass and biofuels. Reach them at rwgonzal@ncsu.edu, patula1@msn.com and danielsaloni@ncsu.edu.

4|2010 BIOMASS MAGAZINE 55

ALGAE By Todd Taylor

CONTRIBUTION

Great Green Hope: The Corporate Love Affair With Algae Algae may not be ready for commercialization yet, but the federal government and several large companies are investing in its potential as a drop-in fuel and for its use in the chemicals, feed, nutraceuticals and food industries.

T

he summer of 2009 was dubbed the “summer of algae” as industry, venture capital and the federal government committed more than a billion dollars to algae-related projects. Some may wonder why all this attention and whether it is deserved? If the interest of large oil, chemical and food companies is any indicator, the answer is yes. According to Mary Rosenthal, executive director of the Algal Biomass Organization, the leading algae industry advocacy group, major companies are interested in

algae as a long-term feedstock that is 100 percent renewable, feeding off of readily available nutrients, using nonarable land and nonpotable water. Algae provide companies a way to beneficially reduce their carbon footprint. Add to that the opportunity to grow green technology jobs and even a skeptic can see why the algae industry is important. The algae industry is focused on three areas: innovation, entrepreneurship and growth, and major companies want to tap those traits. Algae-oriented companies, from producers to end-users, are

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).

56 BIOMASS MAGAZINE 4|2010

now interested in working with large corporations because of their ability to provide funding and research, as well as access to and logistics for market, and goto-market strategies—in marked contrast to the early days of ethanol and biodiesel when Big Oil was viewed as the enemy. The largest share of the attention has been focused on algae biofuels as drop-in replacement fuels on a massive scale. There is also interest in the chemicals, feed, nutraceuticals and food industries, as the pathway to produce nonfuel algae-derived products may be simpler than fuels, the markets may be more readily accessible and the margins may be greater.

Investing in Algae Examples of corporate interest in algae abound. The largest single investment in any biofuel feedstock or technology came last year when ExxonMobil surprisingly announced it was working with Synthetic Genomics to jointly develop algae-based biofuels. Synthetic Genomics stands to receive up to $300 million in investments from ExxonMobil based on milestones. “This investment is an important addition to ExxonMobil’s ongoing efforts to advance breakthrough technologies to help meet the world’s energy challenges,” said Emil Jacobs, vice president of research and

ALGAE By Todd Taylor

development at ExxonMobil Research and Engineering Co. in a New York Times interview. “We believe that biofuel produced by algae could be a meaningful part of the solution in the future because of its potential to be an economically viable, low-net carbon emission transportation fuel.” For years, ExxonMobil has resisted investing in any form of renewable energy, its chairman famously comparing ethanol to moonshine. ExxonMobil chose algae as its feedstock due to its potential ability to achieve the scale needed to have a major impact in the transportation fuels market. “We literally looked at every option we could think of, with several key parameters in mind,” Jacobs said in the same interview. “Scale was the first. For transportation fuels, if you can’t see whether you can scale a technology up, then you have to question whether you need to be involved at all.” Valero Energy Corp. has invested in the recent $16 million financing for Colorado’s Solix Biofuels. Valero says it is “one initiative of many that we’re exploring.” Other biofuels initiatives include acquiring 10 corn ethanol facilities in an effort to own the production of the ethanol it is required to blend with its gasoline. Investing in an algae-to-fuels company gives Valero another option to meet any renewable fuels requirements, reduce exposure to possible carbon costs, and serve as a possible hedge against dwindling oil supplies. British Petroleum and Martek Biosciences Corp. signed a joint development agreement to work on producing microbial oils for biofuels applications. “As an alternative to conventional vegetable oils, we believe sugar-to-die-

sel technology has the potential to deliver economic, sustainable and scaleable biodiesel supplies,” says Philip New, CEO BP Biofuels. BP has agreed to contribute up to $10 million to this initial phase of the collaboration. Boeing has been heavily involved in algae related research and development, including participating in test flights for commercial aviation fueled in part by algae biofuels. Boeing was one of the founders of the ABO, seeing the vision for algal biomass as a long-term feedstock for jet fuel and knowing that it needed to be heavily involved in the development of this new industry. UOP, a subsidiary of Honeywell, has been participating as a key processing partner for many of the largest algae companies and projects. UOP has been involved in most of the test flights for commercial and military aviation and is a participant in both of the recent U.S. DOE algae consortium awards. Algenol Biofuels, whose algae excrete ethanol, is working with Dow Chemical to build a demonstration plant to produce up to 100,000 gallons of ethanol per year. Dow is interested in Algenol in order to use the ethanol as an ingredient for plastics to replace the use of natural gas. Algenol also has an agreement with Sonora Fields of Mexico to build an $850 million project that will deliver 1 billion gallons of ethanol for transportation fuel use per year.

Food, Feed and the Environment Mars Symbioscience Inc. is focused on a variety of technologies related to human and animal nutrition and health, as well as environmental initiatives related

to maintaining clean water and air. Its interest in algae relates to potential uses in animal nutrition, nutraceuticals and for its ability to remove carbon, phosphorous and other nutrients from contaminated water. Cargill Inc., one of the world’s largest agribusinesses, has worked with a number of algae enterprises, including UOP, Sandia Labs, Arizona State University, and the Defense Advanced Research Projects Agency. At a 2006 Cleantech panel, Luca Zullo, then director of bioenergy at Cargill, said that algae could help address “the 500-pound gorilla of the biofuel industry”— the moral and national security implications of developing crops for fuel, versus food. “I think we fundamentally need to look for feedstocks that can help with this issue, feedstocks that use underutilized water and underutilized land.” While Cargill has given no signs that it will enter the algae biofuels business, it seems apparent that its capabilities in logistics, commodities, energy marketing and worldwide reach mean that Cargill could be a significant player. An example of focusing on underutilized water for algae projects is the Metropolitan Council in St. Paul, Minn., pilot project for growing algae in a wastewater treatment plant. The project is intended to test whether the system can remove nitrogen and phosphorus from wastewater while growing algae suitable for biofuels production. Municipal wastewater treatment plants offer a promising option for algae companies as there is a ready supply of nutrients, carbon, heat and water. Algae could also help address increasingly stringent environmental regulations regarding phosphorous and nitrogen re-

moval, saving the council significant money in the future. Utilities are also investigating using algae for carbon capture. Great River Energy, a Midwestbased utility, has teamed with Minnesota’s Ever Cat Fuels LLC to open a pilot plant at a coal-fired power plant in western North Dakota to test how algae can be used to capture carbon and then process the algae into biodiesel using Ever Cat’s processing technology. Algae have also crossed over into the ethanol industry. Green Plains Renewable Energy, a Nebraskabased multi-plant ethanol company has teamed with BioProcessH2O, to build two pilot algae carbon capture plants to capture fermentation CO2. A number of companies have also investigated whether algae could be used as a supplementary feedstock for corn in fermentation-based ethanol production. There are many opportunities in the algae world today, but a note of caution is in order. Many highly qualified researchers caution that the widespread commercial use of algae for biofuels could be 10 years away. Even nonfuel uses for chemicals, carbon capture and nutraceuticals are problematic and not ready for commercialization. Issues such as energy balance, water usage, invasive species and land use must be addressed before algae can be the king of feedstocks. But it might not be a good idea to bet against so many of the world’s largest companies. BIO Todd Taylor is a shareholder in Fredrikson & Byron’s corporate, renewable energy, securities and emerging business groups. Reach him at ttaylor@fredlaw. com or (612) 492-7355.

4|2010 BIOMASS MAGAZINE 57

INTELLECTUAL PROPERTY By Richard B. Hoffman

CONTRIBUTION

IP Pitfalls in Talking With Others People in the renewable energy and clean technology fields regularly need to speak with others outside their company for solutions to ongoing research and development problems. For innovators working on a new invention who realize the need to safeguard company confidential information and intellectual property rights in their inventions, however, the question is: Whom can you safely talk to, when and under what conditions?

O

ften, innovators already have conceptual thoughts about how to solve a technical problem, yet they need to speak with a knowledgeable third party because given the multidisciplinary issues of a biofuel or clean technology innovation, for example, an innovatorâ&#x20AC;&#x2122;s organization simply canâ&#x20AC;&#x2122;t supply all the technical requirements internally. Some

common reasons that innovators reach out to third parties for help include: Putting the overall final process together (e.g., adding specialized high-throughput material handling equipment between a pretreatment process and a gasification process) Needing more information on one given technical point that eludes them (e.g., what catalytic material/process

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).

58 BIOMASS MAGAZINE 4|2010

is best used to solve problem X in the general situation Y)  Assistance from a technical expert, academic or consultant on just one portion of a multifeatured pyrolysis or special enzyme invention Testing services from a company having the facilities and

ment to test a biobyproduct or machine component Engaging an outside engineering concern or vendor for technical assistance and/or to spec Richard Hoffman out or build a pilotpartner, Marshall, scale prototype Gerstein & Borun  Discussions LLP at a trade show with equip- vendors dealing in the same

INTELLECTUAL PROPERTY By Richard B. Hoffman

biomass burner subject matter area Requirements for specialized performance/ability tests undertaken on a cellulosic ethanol prototype process Innovators are increasingly sensitive to the fact that they need to be careful about how much information they divulge when making third-party inquiries to preserve confidentiality and protect their invention. Their company must retain sole control of using and commercializing the overall final solution to the problem at hand, and must own all the related intellectual property (IP) rights in the invention, even against any third party the company may contact or engage.

IP Problems Each of the above scenarios presents varying degrees of potential IP problems. Such problems typically arise when dealing with: Academics: The need to collaborate with academics for help with your technical problem can run several risks. For example, are you dealing with a professor as an individual, his private consulting company, or with the professor’s university employer? Are you actually talking to the professor in her role as part of a third-partysponsored research program, perhaps funded by your archrival competitor? Clearly, care must be taken to identify with whom you are actually dealing and in what capacity as this will impact the type of IP rights that you are able to contractu-

ally obtain. A consulting agreement that specifically addresses confidentiality and ownership of resultant IP rights is vital to clearly delineate each party’s expectations and obligations. Outside experts, technical consultants and engineering concerns: When initially contacting any of these entities, care should be taken to use appropriate confidential disclosure agreements (aka nondisclosure agreements) directed towards protecting the innovator’s confidential information (CI). If you engage the services of such entities, other agreements may be necessary to ensure ownership of resulting IP, such as consulting, joint research and development, contract research, and engineering services agreements. With such agreements, one must ensure that any inventions created (i.e., novel solutions created by the third party to the technical problem at hand) are actually transferred over and owned by the innovator’s company, which is paying for the third party’s technical/engineering services. Such agreements should be in place early on, prior to any disclosures being made, and at a time when everyone is still enthused about working together to solve the problem, rather than later when the parties have perhaps fallen out, or when the product/process has become so wildly successful that each party has different views on who contributed what and when to make the invention work. Disclosures in these situ-

ations can be further complicated if the third party has specialized technical expertise, or owns pre-existing IP rights that it may bring to bear on solving the innovator’s problem. In this scenario, the third party will likely require that it retains the right to use such background knowledge and IP rights, as well as any new information gleaned from the project at hand, for future clients. However, even in this situation the company’s goal of getting what it pays for when hiring engineering and expert time is still attainable. That is, at a minimum, even if the company cannot get outright ownership of all IP rights, it can certainly try to negotiate a royalty-free, nonexclusive, transferable license to use the third party’s IP for the innovator’s own commercial purposes, and possibly even an exclusive license for its own field of use. The company may also be able to negotiate ownership of the resultant IP rights, subject to a nonexclusive grant back to the third party for its own use. Equipment builders, vendors and subcontractors: Disclosures made to these entities can be fraught with IP problems. Perhaps the innovator needs special biofuel processing equipment to be designed and built, for example, to solve a technical problem or to finally make his or her inventive product/process successfully work. In such cases, it is always best to also pay for any needed engineering time to solve the special problem, and

have any engineering services agreement or purchase contract indicate that the innovator’s company shall own the design and related IP rights. That way, the equipment builder/designer/vendor cannot then go and build the same equipment for your competitor. Sometimes, vendors help solve a given technical problem, for instance regarding how one of their machines or chemicals could be used by the inventor. In doing so, they might possibly become a joint inventor if they contribute to the conception of at least one claim of the resulting patent application. The default ownership position under U.S. law is that absent an agreement or obligation to the contrary, an individual inventor solely owns his patent rights, and joint inventors each own an equal and undivided interest in and to the patent rights without accounting to the others. Therefore, if the vendor is a joint inventor, then absent a contract that assigns the resulting IP to your company, the vendor may be free to go to other customers, including your competitors, to make, use or sell the inventive idea. Similarly, subcontractors who help solve a technical problem for an innovation during their work, may wish to be able to get out and commercialize that solution further to other biomass or renewable energy entities similarly situated to your company. Thus, in advance of any disclosures of CI to equipment builders, vendors and subcon-

4|2010 BIOMASS MAGAZINE 59

INTELLECTUAL PROPERTY By Richard B. Hoffman

tractors, use written contracts detailing among other aspects that resulting IP rights are exclusively owned by the inventor’s company in consideration for the funds paid for such services. Prospective joint venture/business partners and sales negotiations: Often CI must be disclosed during negotiations for a product sale, or even the sale of a business. However, IP issues often arise if the parties decide not to work or go into business together or otherwise do not consummate the deal. Therefore, the parties should enter into the appropriate mutual confidential disclosure, joint development, collaboration, or

other type of IP-based agreements that specifically address IP ownership and management of IP rights, confidentiality and nonuse obligations, and termination/winding down provisions (whom owns what if the deal falls apart). In appropriate settings, the third-party disclosures are sometimes made in stages, depending on how the negotiations are going. Also, so-called “no reverse engineering” clauses can be included in such agreements, commonly in the nonuse obligations to prohibit a receiving party (of the innovator’s CI) from reverse engineering or otherwise deriving the innovator’s CI or solution, and then separately using or commercializing the same.

Testing companies and repair technicians: IP related problems can arise with these entities, as they necessarily will obtain access to the innovator company’s ongoing processes and production capabilities during their work, and may become aware of a technical problem being faced by the innovator. Normally, the work of technicians (such as in merely assembling an invention, or in performing testing and experiments or repairs on it, i.e., as those whom do not contribute conceptually to an invention), does not result in joint inventorship. However, problems can arise when the innovator’s prototype still does not work, or needs improvement. Then,

while the technician is making the prototype, or doing testing or repairs, they may be the one to find a way to render the invention operable, and thus, may become a true inventor. The innovator here at a minimum needs to have binding confidentiality obligations and ideally obtain an assignment of the technician’s invention rights. Preferably, such an agreement is already in place when first retaining the testing agency or technician, and before any such technicians ever access the innovator company’s facilities and CI. Some companies may require that any visitor or service technician entering its premises sign an entrance form includ-

Way Beyond Don’t just let the chips fall where they may. Bring us on board for your next biomass project. All fuels. All technologies. All industries. All services. Together we will find your solution. Go to www.burnsmcd.com/bmcdbiomass to learn more.

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60 BIOMASS MAGAZINE 4|2010

INTELLECTUAL PROPERTY By Richard B. Hoffman

ing, among other provisions, confidentiality and IP obligations. Software developer: Problems here can arise under the patent and copyright laws, where absent any contracts the third party (outside software developer), who creates the needed software to solve a problem presented by the inventor, normally owns the resultant software IP rights. Special “work for hire” or software development assignment agreements need to be used, so the innovator’s company owns all the resultant IP rights. Also, if the software developer will be using, in large part, any pre-existing software or processes on your project

that they previously developed, then at a minimum the innovator’s company will want to get a nonexclusive license to use that new solution created by the software developer for the innovator company’s own needs and field-of-use, and ideally an exclusive license to the same if not outright ownership. For example, a problem can arise when a process control software consultant takes a specialized software product they distribute, and then further customizes it to suit your own special processing needs or problems. Customers and sales representatives: Customers are often the source of identifying real-life problems in one’s

industry, but they sometimes consider themselves joint inventors (or some other type of co-owner) of the innovator company’s solution. If possible, consider drafting any related patent applications on the innovator’s solution to exclude any technical input provided by a customer. A company’s own sales representatives can create IP problems. For example, once sales representatives learn about technical problems and new solutions created within their own organization, they are often eager to share that news with their customer base, trade press and the industry. But sales representatives can also provide valuable information

about what customers think are the current problems and needs facing the industry. In any event, sales representatives need to be carefully trained to reveal little, and listen well, when it comes to product/ technical needs and problems in their field and ongoing internal research and development efforts. BIO This is the first part of a twopart series on intellectual property rights. The second part will appear in the May issue of Biomass Magazine. Richard B. Hoffman is a partner at Marshall, Gerstein & Borun LLP. Reach him at Rhoffman@marshallip.com or (312) 474-6621.

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