August 2009 Ethanol Producer Magazine

INSIDE: PROPOSED RENEWABLE FUEL STANDARD REQUIREMENTS AUGUST 2009

FEW Review 2009 International Fuel Ethanol Workshop & Expo Brings Industry Together in Denver

WWW.ETHANOLPRODUCER.COM

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September 13–18, 2009 A Tradition of Industry Education For 28 years, The Alcohol School has been educating fuel ethanol and distilled beverage producers in the science of alcohol production. The weeklong program is designed for lab, plant, and management personnel and is organized around lectures, laboratory demonstrations, seminars, and plant visits.

The program will cover the process of ethanol and beverage alcohol production from milling and mash preparation through fermentation and distillation.

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ETHANOL PRODUCER MAGAZINE

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ETHANOL PRODUCER MAGAZINE

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ETHANOL PRODUCER MAGAZINE

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contents

vol. 15 no. 8

features 44 FEW A Call to Action Speakers at the International Fuel Ethanol Workshop and Expo encouraged attendees to address industry challenges head-on and look to the future of ethanol.

–By Hope Deutscher and Erin Voegele 54 POLICY RFS2: Bridging the Gap to Advanced Biofuels While still supportive of the corn-based ethanol industry, the U.S. EPA’s proposed rulemaking for the second stage of the renewable fuel standard requires the biofuels industry to step up efforts to commercialize next-generation technologies.

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

–By Kris Bevill

76 FEEDSTOCK Covering Your Grass Unlike row crops, dedicated energy crops are not currently supported by crop insurance programs. EPM explores how this might affect cellulosic ethanol ventures seeking to use energy crops for feedstock.

–By Ryan C. Christiansen

86 CELLULOSIC The Cellulosic Ceiling The renewable fuel standard calls for 100 MMgy of cellulosic biofuel to be blended into the nation’s fuel in 2010, but will the U.S. produce enough to satisfy the mandate?

94

–By Ryan C. Christiansen

94 DUCKWEED Duckweed ‘Quacks’ Volumes of Potential Researchers are tapping into duckweed’s environmental benefits and potential as a starch-based feedstock for ethanol production.

–By Bryan Sims

102 CANADA Slow and Steady Wins the Race?

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

–By Hope Deutscher ETHANOL PRODUCER MAGAZINE

August 2009

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contents contributions

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116

departments 110 EQUIPMENT Sourcing Equipment in Developing Countries While Minimizing Risk Purchasing operating equipment out-of-country can save money, but it is necessary to take the proper steps to ensure a quality product.

–By Gregory T. Benz and Ling Du

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

–By Scott McDermott 120 WATER Common Mistakes in Design, Use of Reverse Osmosis Systems While relatively simple in components, there are several challenges in operating a reverse osmosis system effectively.

–By Wes Byrne

9 Advertiser Index 12 The Way I See It Take Back the Message

By Mike Bryan 18 Business & People 20 Commodities 22 View From the Hill RT @ethanolbob #Ethanol in Soc Ntwking

By Bob Dinneen 23 RFA Update 24 BIObytes 26 Industry News 38 Drive Repeal Indirect Land Use Clause

By Tom Buis 40 Legal Perspectives Ethanol Industry Financing Challenges Continue

By Michael L. Weaver 42 eBIO Insider The Global Ethanol Market

By Robert Vierhout 126 Events Calendar 128 Marketplace

120

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

Ethanol Producer Magazine: (USPS No. 023-974) August 2009, Vol. 15, Issue 8. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices.

POSTMASTER: Send address changes to Ethanol Producer Magazine/ Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

BPA Worldwide Membership Applied for October 2006

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August 2009

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AdIndex 114 & 115 2009 Fuel Ethanol Workhop Thank you 89 2009 Atlantic Bioenergy Conference 74 & 84 2010 International Biomass Conference & Expo 67 & 135 2010 International Fuel Ethanol Workshop & Expo 8 Afton Chemical Corp.

46 Agra Industries Inc. 60 American Railcar Industries Inc. 17 Anhydro Inc. 61 Ansul - Fire Solutions 119 BBI Engineering & Consulting 73 BetaTec Hop Products Inc. 124 Biodiesel Magazine 92 & 118 Biomass Magazine 72 Brock Grain Systems 71 Brown, Winick, Graves, Gross, Baskerville & Schoenebaum, P.L.C. 28 Buckman Laboratories Inc. 10 Burns & McDonnell 56 Centrisys Corp.

75 Cereal Process Technologies 104 CGB Enterprises Inc. 34 Check-All Valve Mfg. Co. 105 Christianson & Associates PLLP 85 CHS Renewable Fuels 49 Cloud/Sellers Cleaning Systems 98 Crown Iron Works Co. Inc. 39 DuPont Chemical Solutions Enterprise 101 E3 Energy Partners 100 ethanol-jobs.com 83 & 125 Ethanol Producer Magazine 47 EISENMANN Corp.

99 Encore Business Solutions 117 ETS Laboratories 3 Fagen Inc. 31 FCStone LLC 41 Fermentis 33 Flottweg Separation Technology 32 Freez-it-Cleen 59 Gamajet Cleaning Systems Inc. 112 GATX Corp.

13 Gavilon 57 GEA Barr-Rosin Inc.

ETHANOL PRODUCER MAGAZINE

August 2009

109 97 36 16 4 14 & 15 70 96 37 2 90 91 51 106 64 78 79 58 6 93 48 107 88 43 136 82 113 108 35 121 63 122 123 29 65 53 30 66 80 52 81 50 62 111

Genencor 速 - A Danisco Division Gusmer Enterprises Inc. Hengye USA Hydro-Klean Inc. ICM Inc. Inbicon Indeck Power Equipment Co. Interstates Cos. Intersystems Lallemand Ethanol Technology Maas Cos. Mist Chemical & Supply Co. MOR Technology, LLC Nalco Co. Natural Resource Group Inc. Natwick Associates Appraisal Services Nexen Marketing USA Inc. North American Safety Valve Novozymes PaceSetter Management Perten Instruments Inc. Peters Machine Petroleum Equipment Institute PhibroChem Poet LLC Pro-Environmental, Inc. R&R Contracting Inc. Renewable Fuels Association Resonant BioSciences Rev Tech Roskamp Champion/CPM Salco Products, Inc. SGS North America Inc. Spraying Systems Co. Sulzer Process Pumps Tranter Phe U.S. Tsubaki UOP VAL-FAB Inc. Veolia Water Solutions & Technologies - HPD Vogelbusch USA, Inc. W. Soule & Co. Wabash Power Equipment Co. WINBCO

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LETTERS TO THE EDITOR We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 4650 38th Ave. S. Suite 160, Fargo, ND 58104 or

EDITORIAL

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Kris Bevill Editor kbevill@bbiinternational.com

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e-mail to kbevill@bbiinternational.com.

Letters should include the writer’s full name, address and telephone number, and may be edited for purposes of clarity and space.

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To subscribe, visit www.EthanolProducer.com or you can send your

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ETHANOL PRODUCER MAGAZINE

August 2009

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The Way I See It Take Back the Message One might be forgiven for thinking ethanol is a scam if their only source of reference is mainstream media. Not very long ago, NBC news said ethanol is a hoax of gigantic proportions being perpetrated on the American public.

Reliable sources such as the Wall Street Journal, radio talk shows, and newspapers across the country have all targeted ethanol, usually with the word “boondoggle” somewhere in the lead.

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

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

Who is saying these things? The larger question is: what precipitated these negative stories and commentary?

Why has ethanol gone from a boom to a bust in the eyes of many?

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

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

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

Someone paid him for that study. Someone drove the message that ethanol has a negative energy balance. Someone coordinated with the grocery industry to create the food versus fuel “debate.”

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

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

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

That’s the way I see it.

Mike Bryan Publisher & CEO mbryan@bbiinternational.com

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ETHANOL PRODUCER MAGAZINE

August 2009

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Making The New Ethanol™ takes mechanizing the biomass.

To convert 460,000 tons of cellulosic biomass a year, you’ve got to handle 460,000 tons. Gathering, bundling, storing, trucking, unloading, stacking, and conveying it bale by bale using highly mechanized and computerized equipment, over and over, day in and day out. It’s a big, tough, complex job requiring specialized machinery, synchronized logistics, a reliable infrastructure, and a smart business model.

Relax. We’ve done this in Denmark for 14 years. Last year Inbicon’s parent company turned 1.6 million tons of biomass into green energy for generating electricity. Now we’re bringing all that expertise to North America to help jump-start your Inbicon Biomass Refinery. And put you years ahead.

We’ve engineered a scale-up of Inbicon conversion technology that will demonstrate commercializa-

tion at 55tph/20Mgpy. Figure 460,000 tons of corn stover or wheat straw.

We’ve invited old-ethanol plants to join us in producing The New Ethanol for North American markets. By integrating our operation with your 100Mgpy plant, we expect to self-generate enough green energy to drive our process 100%. And produce enough surplus to drive yours 50–100%, depending on your business model.

Get the full story from our North American team. Call Thomas Corle at 717.626.0557 or e-mail info@inbicon.com.

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Business&People Ethanol Industry Briefs

Florida-based biotechnolog y developer Dyadic International Inc. recently settled a U.S. Securities and Exchange Commission administrative proceeding without denying or admitting the SEC’s findings.

A cease-and-desist order was issued to Dyadic as part of the settlement, but no monetary penalties were applied to members of the company.

Additionally, litigation between Dyadic and Abengoa Bioenergy New Technologies Inc. has been settled and the companies have entered into a non-exclusive license agreement. As part of the agreement, Abengoa has been granted patent rights related to Dyadic’s C1 technology platform. Abengoa plans to use the technology rights toward its commercialization of cellulosic ethanol.

Codexis Inc., an industrial biocatalyst development company, has appointed David Anton as senior vice president of research and development and John Grate as senior vice president of science and innovation and chief science officer. Anton joined Codexis Bioindustrials in 2008 as the company’s research and development vice president.

Prior to that, he worked at DuPont for 25 years, most recently 18

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

Mark Lambert has joined the National Corn Growers Association as a senior communications manLambert ager. Lambert served as the communications director for the Illinois Corn Growers Association and the Illinois Corn Marketing Board for more than 20 years. In addition, Lambert has written numerous articles for trade publications, magazines and Web sites regarding corn’s contributions to the general economy, the agricultural industry, national security and the environment. In the newly-created role at the NCGA, Lambert will be responsible for public and media relations, advertising and marketing support services.

Ontario-based Collingwood Ethanol LP announced June 1 it has officially changed its name to Amaizeingly Green LP. The new name is designed to more accurately reflect the company’s diverse product lines, according to the company. In addition to ethanol, the company’s

52 million liter per year (13.74 MMgy) facility produces dried yeast, corn gluten meal, corn germ, corn fiber, distilled soluble water and a line of 100 percent natural corn gluten meal fertilizer for commercial and residential use.

EcoSystem Corp., a company involved in the innovation of new biological, chemical and physical technologies, recently announced it has executed a management services agreement with Global Ethanol LLC to provide corporate and plant management services to the company. In addition, Global Ethanol LLC founder and CEO Trevor Bourne has been appointed to EcoSystem’s board of directors.

According to the company, the appointment of Bourne is the first step in EcoSystem’s plan to expand its management team in the event it successfully acquires one or more of its targeted acquisitions. Founded in July 2006, Global Ethanol operates a 45 MMgy ethanol production facility in Lakota, Iowa, and a 45 MMgy production facility in Riga, Mich.

Lallemand Inc., a privately-held Canadian company specializing in the research, development, production, market-

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

Dick Andersonofficially left his post as chairman of The Andersons Inc. during the comDick Anderson pany’s annual shareholders meeting. He has been replaced by The Andersons President and CEO Mike Mike Anderson Anderson.

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

Mike Anderson began his career with the company in 1978.

He has held various positions

ETHANOL PRODUCER MAGAZINE • August 2009

Sponsored by

within the agriculture group, including grain buyer, grain purchasing manager, grain division manager and vice president and general manager of the grain division. He has also served as vice president and general manager of the retail group and was named president and CEO of the company in 1999.

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

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

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

Irvine, Calif.-based BlueFire Ethanol Fuels Inc., which has developed a concentrated acid hydrolysis technology process to convert waste materials into ethanol, has announced that Solazyme Inc. will test sugars produced through BlueFire’s conversion process for compatibility with Solazyme’s algaebased renewable oil production process. BlueFire Ethanol is currently developing its first ethanol biorefinery in Lancaster, Calif., which, when operational, will use post-sorted cellulosic wastes diverted from landfills to produce 3.9 MMgy of fuel-grade ethanol.

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

ETHANOL PRODUCER MAGAZINE • August 2009

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

Massachusetts-based biofuel company Qteros, manufacturer of the Q Microbe, has appointed Kevin Gray as the company’s chief technology officer. Anthony Tether has joined the company’s board of directors. Gray previously served as Verenium Corp.’s senior director of biofuels research and development. He has more than 20 years of experience in managing highlevel research at Verenium, Diversa Corp. and Energy BioSystems Corp. Tether recently served as director of Defense Advanced Research Projects Agency, the central research and development office for the U.S. Department of Defense. He retired from the position, which he had held since 2001, in 2009.

Hanover, Mass.-based Sturtevant Inc., an international process equipment manufacturer, has entered into an agreement as exclusive supplier of corn fractionation mills to Crown Iron Works, which has provided corn fractionation systems to facilities around the world. Sturtevant’s Simpactor Pin Mill was chosen by Crown Iron to play a pivotal role in the corn fractionation system because of its performance, economic operations and expandable income-generating end product.

“Our expertise in fractionation coupled with our ongoing dedication to exploring new ways to increase ethanol plant efficiencies and profits keeps Crown on the cutting edge,” said W. Sturtevant English Jr., Sturtevant’s president and CEO. EP

SHARE YOUR INDUSTRY BRIEFS To be included in Business & People, send information (including photos or illustrations if available) to: Industry Briefs, Ethanol Producer Magazine, 4650 38th Ave. S. Suite 160, Fargo, ND 58104. You may also fax information to (701) 373-0638, or e-mail it to kbevill@bbiinternational.com. Please include your name and telephone number in all correspondence.

19

COMMODITIES REPORT Natural Gas Report

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

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

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

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

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

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

The bottom line is, it is reasonable to expect continued market volatility as it becomes easier for money to move in and out of the natural gas marketplace and as a wider variety of investors start viewing natural gas as an asset class. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

By Jason Sagebiel, FCStone

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

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

One thing to note as July approaches is the planting intentions, 20

quarterly stocks and quarter end (impacted by the fund traders).

The adjacent chart illustrates the changes from the March to June planting intentions. The 2009 bar indicates an estimated reduction of one million acres from the March report. EP ETHANOL PRODUCER MAGAZINE • August 2009

COMMODITIES REPORT DDGS Report

By Sean Broderick, CHS Inc.

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

Several factors have been influencing the prices and volatility of distillers grains. A tight barge market in May left many buyers scrambling for product in the Gulf of Mexico as boats were scheduled to arrive. The acute spot shortage of product also pulled up the deferred markets, which drove the California and Southwest markets higher.

Once the barge issues were alleviated, that market dropped and the destination markets followed suit.

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

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

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

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

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

REGION

SPOT

RACK

West Coast

1.795

1.9454

Midwest

1.7

1.8317

East Coast

1.8125

2.075 SOURCE: DTN

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

REGION

SPOT

RACK

West Coast

1.9993

2.2133

Midwest

2.0574

2.0913

East Coast

1.9849

2.0432 SOURCE: DTN

DDGS Prices ($/ton) LOCATION

JUNE 2009

MAY 2009

JUNE 2008

Minnesota

130

135

175

California*

174

185

230

Chicago

145

148

165

Buffalo, N.Y.

159

160

170

Central Florida

159

170

SOURCE: CHS Inc.

Corn Futures Prices DATE

Ethanol Report

205

*Central Valley

(Sept corn, $/bushel)

HIGH

LOW

CLOSE

June 19, 2009

4.15 1/2

4.06 1/4

4.07 1/4

May 19, 2009

4.38 1/4

4.30

4.35 1/4

June 19, 2008

7.52 1/4

7.32

7.41 3/4 SOURCE: FCStone

By Rick Kment, DTN Biofuels Analyst

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

This may continue through the summer months.

Ethanol prices remain mixed with

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

ETHANOL PRODUCER MAGAZINE • August 2009

Cash Sorghum Prices ($/bushel) JUNE 17, 2009 MAY 15, 2009 JUNE 12, 2008 Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

3.58 3.48 3.19 3.53 3.20 4.00

3.46 3.48 3.28 3.63 3.34 4.02

6.19 6.44 6.39 6.44 6.61 6.77 SOURCE: Sorghum Synergies

Natural Gas Prices

($/MMBtu)

JUNE 2009

MAY 2009

JUNE 2008

NYMEX

4.32

4.27

12.95

N. Ventura

3.32

3.83

11.72

Calif. Border

3.31

3.82

12.21

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production Output March 2009

640,000

February 2009

647,000

March 2008

530,000

(barrels/day)

SOURCE: U.S. Energy Information Administration

21

VIEW FROM THE HILL

Dinneen

RT @ethanolbob #Ethanol in Soc Ntwking Much to the chagrin of my children, I have reluctantly (though with increasing enthusiasm) entered the world of social networking. I am on Facebook.

I tweet (@ethanolbob is my Twitter handle) about events in Washington having an impact on ethanol.

Heck, I even became frustrated when technical difficulties didn’t allow me to tweet for two days while on my recent trip to Brazil.

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

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

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

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

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

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

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

Social networking will never take the place of old-fashioned shoe leather when it comes to informing lawmakers and shaping public opinion.

Bending a lawmaker’s ear while he or she is back in the district can never be replaced by a 140-character tweet. A cleverly produced YouTube video can’t hold a candle to a well-prepared in-person briefing. But in the time between such face-to-face opportunities, social networks allow our industry an avenue to keep our messages and our focus in front of policy makers and the American people.

For an old Washington dog like me, these are the new tricks that we all must learn. @ethanolbob: I’ll c u online.

Bob Dinneen President and CEO Renewable Fuels Association

22

ETHANOL PRODUCER MAGAZINE • August 2009

RFA UPDATE

w w w. e t h a n o l R FA . o r g

Government data proves ethanol does not impact food prices New data released by the federal government shows consumers are paying less for groceries today than they were just six months ago. This decrease comes amid increased production and use of ethanol, often the scapegoat of choice by food manufactures and meat processors when grocery prices rise.

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

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

In addition, the CPI for May found: Overall food prices (including food consumed both at home and away from home) decreased for the fourth consecutive month.

Prices for food and beverages have increased just 2.7 percent in the past 12 months, which is well below the 30-year average for annual food inflation and less than half of 2008’s oil-fueled food inflation rate of 5.5 percent.

USDA projects 2009 grocery prices will increase just 2.5 to 3.5 percent compared to 2008.

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

ETHANOL PRODUCER MAGAZINE • August 2009

ILUC concerns continue Leading agricultural and environmental academics and economists continue to raise concerns about the controversial theory of indirect land use change (ILUC) currently being applied to biofuels. Specifically, many believe that the policy has gotten far out ahead of the science and could be detrimental to the development of biofuels.

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

Major concerns about the inclusion of ILUC calculations include: The analysis is not transparent. Models to be used by the EPA are not publicly accessible.

Inconsistent modeling approach. Domestic and international land use changes are determined using different methods.

Models assume the future will behave like the past.

Much of the analysis relies on historical trends evaluation to project future behaviors.

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

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

23

BIObytes Ethanol News Briefs

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

The U.S. DOE Energy Information Administration predicts that worldwide energy demand will double by 2030, according to the administration’s annual International Energy Outlook. Developing countries, led by China, India and various countries in the Middle East, will drive the increasing energy demand. EIA international energy analyst Linda Doman said that consumption increases in developing countries will grow 73 percent by 2030 and will even-

tually drive oil prices to very high levels.

Because of the projected high oil prices, ethanol and biodiesel are predicted to play greater roles in supplying alternative liquid fuels to the world market. Particularly strong increases in biofuels consumption are expected in the U.S. and in developed areas of Europe. Parts of Asia, Central America and South America are expected to experience notable growth in the production of biofuels by 2030.

Researchers study microbes to develop cellulosic ethanol In an effort to eliminate the food versus fuel debate, researchers are experimenting with microscopic organisms to convert sugars from cellulosic materials into ethanol. Researchers are working with alternate biomasses, especially lignocellulosic feedstocks such as corn stover, for microorganisms to ferment into ethanol, said Tim Donohue, professor of bacteriology at the University of Wisconsin-Mad24

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

PHOTO: SÜD-CHEMIE AG.

World energy use to double by 2030

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

Pilot-scale cellulosic ethanol plant opens in Europe German manufacturer of catalysts and adsorbents Süd-Chemie AG and global engineering company The Linde Group began producing lignocellulosic ethanol at a pilot-scale facility on April 27.

The plant, which is located at Süd-Chemie’s research center in Munich, can produce up to 2 tons (64,000 gallons) of ethanol per year.

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

ETHANOL PRODUCER MAGAZINE • August 2009

2,000th US E85 station opens for business Griffin U-Gas in Davies, Fla., became the 2,000th E85 station to open in the U.S. The gas station, located north of Miami, celebrated its grand opening on May 28. The Griffin U-Gas station is one of 12 new E85 stations that have been built in Florida over the past several months.

U-Gas owns all of the current E85 stations in Florida. “For me personally, it feels really good when I fuel up to know that I’m not sending money to countries

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

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

SOURCE: U.S. DOE

PHOTO: BBI INTERNATIONAL

TransAtlas map shows spread of E85

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

Lack of DDGS guidelines prompts study In response to a lack of industry guidelines and recommendations on analytical test methods for the testing of distillers dried grains with solubles (DDGS), a study was conducted to evaluate the efficacy, applicability and the inter-laboratory variation of a number of methods for moisture, crude protein, crude fat and crude fiber in DDGS. The study was sponsored in part

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

ETHANOL PRODUCER MAGAZINE • August 2009

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

ities, and geographical flexible fuel vehicle density data. Users can customize the map by selecting the information to be displayed. The database for the TransAtlas map is maintained

by NREL, which obtains information about new fueling stations from trade media, Clean Cities program coordinators, and a submittal form on the AFDC Web site.

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

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

25

PHOTO: GABRIEL MILLOS

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

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

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

26

the Cauca River Valley in southwestern Colombia.

According to Leonardo Pinzon, agricultural specialist for the USDA, Colombia has a mandate to use E10 by 2010 and current production can supply 85 percent of the requirement.

In March, the Colombian government issued a decree According to a recent Gallup poll, conducted in 20 Latin American that, beginning in 2012, all and Caribbean countries, 47 percent of poll respondents have heard of ethanol. new vehicles sold in the country must be flexible SOURCE: GALLUP INC. fuel vehicles. Ethanol production dropped 6.1 percent in 2008 due to a sugarcane workers Ethanol produced in Uruguay is expected to strike, but production is expected to increase be exported to Brazil and Venezuela.

Meanwhile, according to a recent Gallup to a record high in 2009. The government poll, citizens in only a handful of countries is sponsoring research and feasibility studies for new feedstocks for ethanol production, in the Caribbean and Latin America have heard of ethanol, and only 47 percent of all including sugar beets and yucca.

In Uruguay, new investments in etha- poll respondents in the region have heard of nol production are expected to bear fruit in ethanol. In eight countries, including Brazil, 2009, with approximately 1.5 MMgy of etha- Costa Rica, Nicaragua, Uruguay, Paraguay, nol expected to be produced this year from Colombia, the Dominican Republic, and molasses, sugarcane, and sweet sorghum, ac- Panama, the majority of respondents have cording to Ken Joseph, agricultural specialist heard of ethanol; however, in Peru, Ecuador, for the USDA. Two additional projects, one Bolivia, and Mexico, less than 40 percent of backed by a French company and another by poll respondents have heard of the fuel. a U.S. company, are expected to be complete —Ryan C. Christiansen within five years to produce approximately 25 MMgy of ethanol each from sweet sorghum.

ETHANOL PRODUCER MAGAZINE • August 2009

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

Philippines, Japan work to meet ethanol demands Due to an ethanol blending mandate in the Philippines, there has been a high demand for the fuel, however, according to a USDA Foreign Agricultural Service Global Agriculture Information Network Report, the investments to establish ethanol production facilities have been insufficient. As a result, the report said that ethanol is being imported so that the country can comply with the Philippine biofuels law, which required local oil companies to begin blending 5 percent ethanol into the gasoline beginning in February.

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

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

the report, the shortage of local ethanol has not stopped some local oil companies from selling an E10 blend of gasoline in some of their pump stations. For now, domestic supply shortages are being filled mainly by imported Brazilian ethanol.

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

The Kyoto Protocol requires Japan to reduce its carbon dioxide emissions to 6 percent below 1990 levels by 2010. According to the USDA report, Japan’s limited agricultural production will make it difficult for

ETHANOL PRODUCER MAGAZINE • August 2009

Japan to produce enough biofuels to impact the domestic fuel market and greenhouse gas emissions without a major technological breakthrough, such as cellulosic technology.

Potential domestically-produced feedstocks include sugarcane, wood, rice, rice straw and rice hulls. A report issued by the prime minister stated that with appropriate technical development, Japan could produce approximately 1.6 billion gallons of biofuels by 2030. Furthermore, a target was set to produce approximately 13 MMgy of biofuels from molasses and off-spec rice by 2011 and 10 percent of domestic fuel from cellulosic materials by 2030.

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

—Hope Deutscher

27

IDGC: Distillers grains products markets grow Approximately 130 industry representatives and researchers attended the fourth annual International Distillers Grains Conference and Trade Show in Denver on June 15. The day-long event was hosted by BBI International. Topics discussed during the conference included the future of exports, expectations from the feed industry, the role of antimicrobials, regulations, fractionation, improving quality control and available drying technologies.

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

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

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

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

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

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

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ETHANOL PRODUCER MAGAZINE • August 2009

PHOTO: RYAN C. CHRISTIANSEN, BBI INTERNATIONAL.

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

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

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

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

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

—Hope Deutscher

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

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

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

PHOTO: RYAN C. CHRISTIANSEN, BBI INTERNATIONAL.

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

The RFS2 is one such factor that is expected to be a primary driving force behind domestic market growth for advanced biofuels in the near term. However, the RFS2 does more than simply increase the volumes mandates for biofuels use. It also specifies four categories of renewable fuels, each with its own definition and mandate.

According to Thurmond, since the RFS2 now specifies one of these four categories as cellulosic biofuel – rather than cellulosic ethanol – the market has been opened to allow the introduction of other alternative fuels. More specifically, Thurman said that various algae technologies will now be able to play a larger role in meeting the RFS2 mandate for advanced biofuels. “There are many alternative pathways to get the 36 billion gallon RFS criteria, and we should start thinking about evolution in the markets,” he continued.

One key component in the commercialization of any advanced biofuel technology is the ability to secure funding. John Herrick, senior counsel with Brownstein Hyatt, Farber and Shreck, spoke to attendees about trends and developments in the financing options for

ETHANOL PRODUCER MAGAZINE • August 2009

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

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

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

—Erin Voegele

31

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

According to Jim Flatt, executive vice president of research, development, and operations at Mascoma, scientists have modified the thermophilic bacterium Clostridium thermocellum to produce nearly 60 percent more ethanol from cellulose than the strain was capable of producing just a year ago. He said Mascoma has also modified yeast to produce 3,000 times as much cellulase enzymes, eliminating Candidate strains are tested in small scale fermentation bottles.

PHOTO: MASCOMA CORP.

32

ETHANOL PRODUCER MAGAZINE • August 2009

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

“The potential to express small amounts of cellulase enzymes in yeast had been demonstrated previously by several of our collaborators,” Flatt said, “but expression levels were relatively modest—it was significant from a scientific standpoint, but not particularly comJim Flatt mercially relevant.” executive vice Mascoma’s recent breakthroughs are bring- president, research, ing CBP closer to a commercial reality, accord- development and ing to Alan Belcher, senior vice president of operations, Mascoma Corp. operations for Mascoma, who spoke in June at the Advanced Biofuels Workshop in Denver. “All cellulosic ethanol conversion technologies are legitimate technologies,” Belcher said, “but CBP has been ‘pie-in-the-sky’ for the longest period of time.”

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

ETHANOL PRODUCER MAGAZINE • August 2009

solution for retrofit applications is that it’s very compatible with the existing equipment and infrastructure,” he said, “thereby minimizing any additional capital required to run the process.”

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

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

—Ryan C. Christiansen

33

Governors’ Biofuels Coalition pushes for E15 fuel waiver North Dakota Gov. John Hoeven, chairman of the Governors’ Biofuels Coalition, spoke with U.S. EPA Administrator Lisa Jackson to request that Jackson expedite the consideration of an E15 fuel waiver and increase the amount of ethanol that can be blended into gasoline from 10 percent to 15 percent.

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

President Barack Obama

comment period would be extended an additional 60 days, until July 20.

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

cember.

According to Hoeven, a move to E15 would help expand the market for domestically produced biofuels. On Feb. 17, he issued a letter to President Barack Obama, asking that he take action of five specific biofuels initiatives.

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In the letter, Hoeven requested that Obama articulate a vision for the nation’s biofuels future. “As convinced as the governors are about the value of biofuels, misinformation from entrenched interests has done a great disservice to America,” the letter stated.

“A continued, straight-forward message from your administration to the American people on the role of biofuels is necessary.”

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

In addition, the letter requested that Obama establish an interagency task force on life-cycle greenhouse gas emissions and transportation fuel, create new policy options that continue to increase the sustainability of biofuels feedstock production, and implement the nation’s first comprehensive biofuel market development program.

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

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

“My administration is committed to moving as quickly as possible to commercialize an array of emerging cellulosic technologies so that tomorrow’s biofuels will be produced from sustainable biomass feedstocks and waste materials rather than corn,” Obama wrote.

“But this transition will be successful only if the first-generation biofuels industry remains viable in the near-term, and if we remove long-standing artificial barriers to market expansion necessary for large volumes of advanced renewable fuels to find a place in America’s transportation fuels system.”

—Erin Voegele

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PHOTO: GREEN PLAINS RENEWABLE ENERGY INC.

GPRE becomes major industry player

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

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In May, Omaha, Neb.-based Green Plains Renewable Energy Inc. agreed to purchase two former VeraSun Energy Corp. ethanol production plants and, as a result, the relatively new ethanol producer has become the fourth largest ethanol producer in the United States.

With the addition of the two facilities, the company has a total expected production capacity of 480 MMgy. GPRE paid $123.5 million for the 100 MMgy Central City, Neb. production facility and the 50 MMgy Orb, Neb. production facility.

The plants were purchased from a lender group led by AgStar Financial Services, which had previously taken control of the facilities through a VeraSun bankruptcy auction. GPRE committed $10 million towards its purchase; the remainder is being financed by the lending group. Jim Stark, vice president of investor relations at GPRE, said ethanol production at the facilities was expected to commence by the end of July and both facilities should be running at full capacity soon after start-up.

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

ETHANOL PRODUCER MAGAZINE • August 2009

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

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

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

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

ETHANOL PRODUCER MAGAZINE • August 2009

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

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

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

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

—Kris Bevill

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DRIVE Buis

Repeal Indirect Land Use Clause

By Tom Buis hen Congress expanded the renewable fuel standard (RFS2), its goal was to promote the expansion of biofuels in order to increase our energy and national security by providing an alternative to foreign oil, creating new green-collar jobs and protecting the environment. However, one clause threatens to derail the progress America’s ethanol producers have been making toward the production of cleaner, greener, more efficient biofuels.

A half-baked theory that is not based on sound science, called indirect land use change, could be used by the U.S. EPA in the calculation of ethanol’s greenhouse gas (GHG) emissions.

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

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

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

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

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

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

Tom Buis is the CEO of Growth Energy. Reach him at TBuis@GrowthEnergy.org or (402) 932-0567.

ETHANOL PRODUCER MAGAZINE • August 2009

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LEGAL PERSPECTIVES Weaver

Ethanol Industry Financing Challenges Continue

By Michael L. Weaver inancing of the nation’s ethanol industry continues to fluctuate months after VeraSun Energy Corp.’s bankruptcy sale of seven ethanol plants to Valero for $477 million in cash, or 61 cents per gallon.

Even AgStar Financial Service’s recent financed sale of two former VeraSun Nebraska plants at 82 cents per gallon of long-term debt, is well off the $3 to $4 per gallon (or more) highs of 2006. With positive operating margins continuing to elude many producers, ethanol companies whose capitalization was based on higher valuations are finding themselves out of covenant compliance and unable to earn or make principal payments. Although bankruptcy filings continue for some highly-leveraged plants, ethanol companies with more moderate debt levels (70 cents to 80 cents per gallon) are restructuring loans with existing lenders.

However, with Washington’s uncertainty over the second stage of the renewable fuel standard, the E10 blend wall and pending climate-change legislation, near-term financing challenges for many ethanol producers could prevent them from capitalizing on the next generation of renewable energy production in the U.S.

F

Loan Restructuring Considerations When restructuring your loan, keep in mind the bank’s perspective. Loan policies adopted by the bank combined with increased regulatory scrutiny by examiners means that your loan classification is at the top of your banker’s concerns. Once your loan starts climbing in classification, the hurdle to bring it back down is higher than it was going up.

With capital reserves for bad loans on the rise, your loan classification is a key issue for your bank. Ironically, a loan to a new borrower (on the same terms that you are requesting in your workout) is easier to classify as a performing loan than your restructured loan. This “clean-slate” analysis works against existing borrowers with troubled loans, and

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

You must also consider the financed sales taking place on former VeraSun or other bankrupt company facilities. Recent financed sales in the 80 cent- to 90 cent-per- gallon range means that write-downs or reclassifications of loans for existing borrowers to levels below that range are unlikely. With lenders also providing operating loans to buyers, buyers have purchased facilities with equity in the neighborhood of $5 million per 50 MMgy of production. Existing ethanol companies looking to restructure their loans will be well-served to keep in mind these bank perspectives and current sales and financings when formulating their own recapitalization plans.

Considering these factors, borrowers should view additional equity or other credit enhancement on the balance sheet as the key condition of a successful loan restructuring.

Further, existing management should focus on operational, marketing and other competitive strengths that they bring to the assets and ultimately to the repayment of the loan.

Armed with these tools, companies can approach lenders with forbearance requests, interest-only payments, covenant simplifications and adjustments, and excess cash flow and waterfall adjustments. Of course, strong working capital balances remain the cornerstone of any restructured loan and recapitalization plan. Lenders are looking for longerterm solutions to their ethanol loan portfolio. Be realistic in your objectives, keep your recapitalization plan simple, and offer them the long-term solution. You can turn lemons into lemonade in today’s ethanol industry financing market.

Michael Weaver is chair of Lindquist & Vennum’s Agribusiness and Energy practice, which has been involved in the financing and construction of 1.6 billion gallons of U.S. biofuel production. He can be reached at mweaver@lindquist. com.

ETHANOL PRODUCER MAGAZINE • August 2009

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eBIO INSIDER Vierhout

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

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

In 1998, Brazil exported a mere 3 million liters (800,000 gallons) of ethanol to the European Union. Last year, Brazilian ethanol exports to the EU totaled an overwhelming 1.5 billion liters.

Add to that the nearly 3 billion liters (800 million gallons) of Brazilian ethanol that entered the U.S. in 2008, and I would say that it is difficult to argue there is no global market.

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

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

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

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

A second political reality is that biofuel trades with the EU are only allowed if it can be demonstrated beyond any doubt that the biofuel supplied is produced in a sustainable way. One could argue that this is a non-tariff barrier. However, criteria in the European law apply to each batch of biofuel, whether produced inside or outside of the EU. Because there is a level playing field between all biofuels, whatever the origin, it is legally not a barrier to trade.

But this is not the real problem. Arguing against sustainability criteria because it hampers creating a world market makes it clear that one does not understand the crucial role of these criteria in bringing about a market at all.

The key to a global market is regaining public acceptance for the use of biofuels. European decision-makers felt so much public pressure from concerned society members last year that mandating biofuel use could only be justified by creating an environmental and social sustainability scheme. Without such a scheme, EU governments would not have mandated biofuel use whether the biofuel was produced inside or outside the EU. Brazilian producers need to understand and accept that compliance with these standards will eventually boost the market for biofuel use. And the more that biofuel can be used, the more export opportunities there will be, resulting in a greater opportunity for a global market. It is just a matter of time.

Robert Vierhout is the secretary-general of eBIO, the European Bioethanol Fuel Association. Reach him at vierhout@ebio.org.

ETHANOL PRODUCER MAGAZINE • August 2009

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ETHANOL PRODUCER MAGAZINE

August 2009

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A Call to Action Although the ethanol industry is currently facing numerous challenges in both public perception and economics, speakers at this year’s International Fuel Ethanol Workshop and Expo encouraged attendees to take action - address the challenges head on and look to the future of the industry and the potential benefits of cellulosic ethanol.

By Hope Deutscher and Erin Voegele

ETHANOL PRODUCER MAGAZINE

August 2009

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he 25th annual International Fuel Ethanol Workshop and Expo was held June 14-18 at the Colorado Convention Center in Denver. For the first time in its history, the event was co-located with the Advanced Biofuels Workshop and International Distillers Grains Conference. Together, the three events featured more than 200 speakers representing all aspects of the ethanol and advanced biofuels industries. More than 300 businesses and organizations participated in the 2009 FEW Expo, which attracted approximately 2,100 attendees.

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

public perception has played a role as well.

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

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

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

“This is extraordinarily humbling,” Madson said in his acceptance speech.

“I would like to salute all those who came before because you were my inspiration. Not only those of you who have received this wonderful award but all of you in the audience who inspired me in the industry every day by your actions and your dedication. There is one person that I simply must acknowledge for his inspiration to me, and that is Dr. (Raphael) Katzen, the founder of our firm and the one who really inspired me and helped me understand that excellence is its own reward.”

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

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PHOTO: RYAN C. CHRISTIANSEN, BBI INTERNATIONAL

Madson receives Award of Excellence

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

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

ETHANOL PRODUCER MAGAZINE

August 2009

PHOTO: RYAN C. CHRISTIANSEN, BBI INTERNATIONAL

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

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

Although some have said the industry was building too fast, Bryan dismissed the notion that a slowdown is positive. “Tell that to the hundreds of communities out there who desperately need new business,” he said.

Contrary to what many believe, Bryan said the market for ethanol is not saturated. “We have a 150 billion gallon a year gasoline market,” he said. “I don’t think we have reached market saturation with ethanol. We can build hundreds of more plants, and we ought to be doing that, and we ought to be doing that now.”

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

We need to take back control of our industry once and for all.”

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

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

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

Clark encouraged attendees to remember the vital role they play in America’s national security. “Let’s be honest,” he said.

“This is not really just about business. This is really about national security. That’s why I’m here. I’m a national security guy.”

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

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

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

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

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

Clark also spoke of the national security implications of climate change. Change in rainfall patterns, the melting of glacial ice, rising sea levels, crop failures and the outward spread of pests and disease from tropical areas all contribute to dislocation of the world’s population.

“Dislocation economically, dislocation socially, and dislocation politically means conflict,” he said. “And conflict means national security.”

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Bryan honored for passion for the industry BBI International President and Cofounder Kathy Bryan received the 2009 High Octane Award, in recognition for her significant contributions to the ethanol industry, during the International Fuel Ethanol Workshop and Expo.

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

Since the 1980s, Bryan has been a dynamic and prominent figure in the ethanol industry, beginning with operating a small ethanol plant in rural Minnesota, said Ralph Groschen, a senior marketing specialist at the Minnesota Department of Agriculture who has known Bryan since her early years in the industry.

“It was so easy to see her high octane enthusiasm, the ability to communicate and collaborate with people,” he said.

“She has it all.”

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

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

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

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the nation into the 21st century the nation forward into the 21st century, Clark said.

“But, to do it, we are going to have to take this fight to the public and we are going to show them how good this industry is - how good you are and how important we are to the future of the United States of America.

That’s the mission – that’s where we are going – and we need you.”

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

Despite the deepening economic downturn last year, Dinneen said the U.S. ethanol industry grew by 34 percent – opened 31 plants, added 240,000 jobs and produced more ethanol than ever before. “As the world and nation look at regulating carbon - through taxes, cap and trade or assigning a greenhouse gas profile to biofuels in the renewable fuel standard - Dinneen said the industry will need to ensure that “the bureaucrats get it right – that they recognize the carbon benefits of biofuels like ethanol and do not unfairly and with no scientific foundation penalize biofuels for the carbon footprint of other industries or other countries.”

Ethanol producers must work with scientists and environmentalists to answer the question of ethanol’s carbon footprint, he said. “We can’t legislate the criticism away, and we can’t ignore it,” he said. “We need to answer the critics with sound science and facts. And the facts are on our side. Our carbon footprint is improving with every new plant and each new technology.

[The oil companies’] carbon footprint is getting worse with every gallon of tar sands and every new deepwater well they dig. For that reason, carbon regulation need not be something to fear. It should be something to embrace. I suggest that every plant manager and every employee that cares about this industry should be thinking about ways to reduce their plant’s carbon footprint.”

While the industry may have troubles, Dinneen said it also has a great story to tell.

“If we stick together, do our work well, and stay focused on the future, our potential is ETHANOL PRODUCER MAGAZINE

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

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

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

August 2009

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

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

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

49

FEW

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

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

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

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

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

50

on greenhouse gas emissions,” said Dave Crass, partner at Michael Best & Friedrich LLP, referring to pending climate change legislation. However, even if federal lawmakers are unable to pass current legislation, Crass said the idea of a carbon cap-and-trade system is not going to die.

“If Congress can’t do it, [President Barack Obama’s] administration is going to,” he said. “Congress and the (U.S.) EPA are sort of in a little race to implement climate change regulation.”

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

panelists said. Pure and simple – political will and support is needed to further the cellulosic industry, said Neal Briggi, Global Head of Enzymes with Syngenta Biotechnology Inc. A U.S. energy policy will transform into investment that will move the industry forward, Vander Griend added. “If there is not a long-

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

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

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

Wes Bolsen, chief marketing officer and government affairs director for Coskata Inc., said political will is good for the country but the cellulosic industry is currently hampered by economics. “The biggest thing is the production costs,” he said. “When we can sell ethanol cheaper than a gallon of gasoline, even on a Btu basis, people will demand that product. We don’t need government involvement because we have a superior product.” EP Hope Deutscher and Erin Voegele are Ethanol Producer Magazine associate editors. Reach Deutscher at hdeutscher@ bbiinternational.com or (701) 3738046. Reach Voegele at evoegele@ bbiinternational.com or (701) 373-8040.

ETHANOL PRODUCER MAGAZINE

August 2009

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RFS2:

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

By Erin Voegele

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T

he U.S. EPA published its longanticipated proposed rule for the second stage of the renewable fuel standard (RFS2) on May 26.

In the proposed rule, the agency lays out its strategy for achieving the renewable fuel mandates required by the Energy Independence and Security Act of 2007 (EISA), which requires the use of 36 billion gallons of renewable fuel by 2022.

The current renewable fuel standard (RFS1) was adopted by the EPA in order to implement the Energy Policy Act of 2005.

EISA, which was signed into law two years later, required the agency to expand and revise the current program. The EPA was originally scheduled to issue a final rule for RFS2 by Jan. 1, 2009, but announced in July 2008 that the rulemaking would be delayed due to complex new elements that EISA added to the program. Nearly one year later, the agency was finally able to complete its proposal.

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

As directed by EISA, the proposed rule specifies four unique categories of renewable fuel, each with its own respective mandate.

In order to generate renewable identification numbers (RINs) that are used by obligated parties to meet these mandates, renewable

56

Proposed Standards for 2010 (shown as a fraction of a refiner's or importer's gasoline and diesel volume that must be renewable fuel)

8 7 6 5 4 3 2 1 0 Cellulosic Biofuel

Biomass-based Advanced Biofuel Diesel

Renewable Fuel

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

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

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

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Renewable Fuel Volume Requirements for RFS2 (billion gallons) Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+

Biomass-based Cellulosic Biofuel Diesel Requirement Requirement n/a 0.5 0.65 0.8 1 a a a a a a a a a a b

n/a n/a 0.1 0.25 0.5 1 1.75 3 4.25 5.5 7 8.5 10.5 13.5 16 b

Total Renewable Fuel Requirement

Total Renewable Fuel Requirement

n/a 0.6 0.95 1.35 2 2.75 3.75 5.5 7.25 9 11 13 15 18 21 b

9 11.1 12.95 13.95 15.2 16.55 18.15 20.5 22.25 24 36 28 30 33 36 b

(a) To be determined by EPA through a future rulemaking, but no less than 1.0 billion gallons (b) To be determined by EPA through a future rulemaking *Chart sourced from page 2 of EPA Fact Sheet: EPA Proposes New Regulations for the National Renewable Fuel Standard Program for 2010 and Beyond

A fuel’s life-cycle GHG emissions are defined as the aggregate emissions attributed to all components of fuel production and use, including feedstock production and distribution, fuel production, delivery, use and signifi-

cant indirect emissions from land use change.

The full life-cycle emissions level of a particular fuel is measured against a baseline fossil fuel in order to determine its GHG emissions reduction threshold.

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

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GHG emission-reduction threshold of 60 percent.

Advanced biofuel is defined as a renewable fuel other that ethanol derived from cornstarch. The advanced biofuel category can apply to a variety of fuels, including biomass-based diesel, biogas, butanol or other alcohols and fuels derived from cellulosic biomass. This may include ethanol derived from cellulose, hemicelluloses, lignin, sugar or any starch other than corn starch.

Both advanced biofuel and biomass-based diesel must achieve a life-cycle GHG emission-reduction threshold of 50 percent.

Additional fuel used to meet the total renewable fuel mandate is required to meet a 20 percent GHG-reduction threshold.

The majority of this fuel is expected to be corn-based ethanol. Although new cornbased ethanol plants will be required to meet this reduction threshold in order to generate RINs, the proposed rule includes a component that allows many existing plants to be grandfathered. Under the proposed rule, any renewable fuel facilities that commenced construction on or before Dec. 19, 2007, as well as facilities that commenced construction in 2008 or 2009 and are fired with natural gas, biomass, or a combination thereof, are grandfathered. “We expect that a significant number of facilities out there would be grandfathered, and very likely the majority of them out there would be grandfathered,” says EPA Senior Policy Advisor Paul Argyropoulos. From a volume perspective, he says the EPA is expecting to grandfather approximately 15 billion gallons of ethanol production, and possibly more.

It is important to note that while EISA limits the participation of corn-based ethanol in the RFS2 to 15 billion gallons, there is not a mandated volume for corn-based ethanol. Excess RINs from cellulosic biofuel, biomass-based diesel and advanced biofuel can be used to meet total renewable fuel mandates in place of corn-ethanol RINs, Argyropoulos says. “Any of the compliant fuels can count toward the total renewable fuels standard.” continued on page 63

POLICY Industry, Lawmakers React to Possible Indirect Land Use Policy The inclusion of indirect land use change in the U.S. EPA’s proposed rule for the second stage of the renewable fuel standard (RFS2) has garnered heavy criticism from those in the ethanol industry as well as several Midwest Congressional members.

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

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

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

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

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

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

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

ETHANOL PRODUCER MAGAZINE

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

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

FASOM In order to estimate domestic land use changes and their associated emissions, the EPA relied on the forest agriculture sector optimization model (FASOM). The model, developed by Texas A&M University and others, tracks production possibilities for field crops, livestock and biofuels on private lands in the U.S. It also accounts for changes in carbon dioxide, methane and nitrous oxide from most agricultural activities and tracks carbon sequestration and losses over time.

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

GTAP Although the life-cycle emissions estimates included in the RFS2 rulemaking were not analyzed using the global trade analysis model (GTAP), the EPA is currently working to address shortcomings that have been identified with the model and will continue to evaluate how the model could be used as part of the final rule. One potential advantage of the GTAP model, which is maintained by Purdue University, is that it projects international land use change based on the economics of land conversion rather than using the historical data approach implemented by FAPRI and Winrock.

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

wabash

ETHANOL PRODUCER MAGAZINE

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Lifecycle GHG Emissions Changes for Various Corn Ethanol Pathways in 2022 Relative to the 2005 Petroleum Baseline Percent Change from 2005 Petroleum Baseline (100 yr 2%)

Corn Ethanol Production Plant Type

Natural Gas Dry Mill with dry DGs Natural gas Dry Mill with dry DGs and CHP Natural Gas Dry Mill with Dry DGs, CHP, and Corn Oil Fractionation Natural Gas Dry Mill with dry DGs, CHP, Corn Oil Fractionation, and Membrane Separation Natural Gas Dry Mill with dry DGs, CHP, Corn Oil Fractionation, and Membrane Separation, and Raw Starch Hydrolysis Natural Gas Dry Mill with wet DGs Natural Gas Dry Mill with wet DGs and CHP Natural Gas Dry Mill with wet DGs, CHP, and Corn Oil Fractionation Natural Gas Dry Mill with wet DGs, CHP, Corn Oil Fractionation, and Membrane Separation Natural Gas Dry Mill with wet DGs, CHP, Corn Oil Fractionation, and Membrane Separation, and Raw Starch Hydrolysis Coal Fired Dry Mill with dry DGs Coal Fired Dry Mill with dry DGs and CHP Coal Fired Dry Mill with dry DGs, CHP, and Corn Oil Fractionation Coal Fired Dry Mill with dry DGs, CHP, Corn Oil Fractionation, and Membrane Separation Coal Fired Dry Mill with dry DGs, CHP, Corn Oil Fractionation, and Membrane Separation, and Raw Starch Hydrolysis Coal Fired Dry Mill with wet DGs Coal Fired Dry Mill with wet DGs and CHP Coal Fired Dry Mill with wet DGs, CHP, and Corn Oil Fractionation Coal Fired Dry Mill with wet DGs, CHP, Corn Oil Fractionation, and Membrane Separation Coal Fired Dry Mill with wet DGs, CHP, Corn Oil Fractionation, and Membrane Separation, and Raw Starch Hydrolysis Biomass Fired Dry Mill with dry DGs Biomass Fired Dry Mill with wet DGs Natural Gas Fired Wet Mill Coal Fired Wet Mill Biomass Fired Wet Mill

Percent Change from 2005 Baseline (30 yr 0%)

-16% -19% -27%

+5% +2% -6%

-30%

-10%

-35%

-14%

-27% -30% -33% -36%

-6% -9% -12% -15%

-39%

-18%

+13% +10% -5% -13%

+34% +31% +15% +8%

-21%

-1%

-9% -11% -17% -25%

+12% +10% +3% -4%

-30%

-9%

-39% -40% -7% +20% -47%

-18% -19% +14% +41% -26%

*Chart sourced from page 317-318 of EPA's preamble to the proposed regulation

continued from page 58

Definition of Renewable Biomass As required by EISA, the definition of renewable biomass includes planted crops and crop residue, planted trees and tree residue, animal wastes, algae, and yard and food wastes. The definition, however, limits these feedstocks according to the management practices of the land they are produced on.

To qualify as renewable biomass, crops and crop residues must be harvested from agricultural lands cleared or cultivated prior to

Dec. 19, 2007. This land must be actively managed or fallow and non-forested. Feedstocks that do not meet this definition of renewable biomass cannot be used to produce fuel that complies with the RFS2.

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

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commercial thinning from non-federal forestland. In addition, biomass obtained from certain areas at risk for wildfire can be used. The definition does not reference municipal solid waste (MSW), only the yard and food waste components of it. According to Argyropoulos, the EPA is seeking comment on allowing greater flexibility in interpreting the definition of MSW. It is important to note that the regulation does not prohibit the production of feedstocks and fuels that do not meet these definitions and GHG emissions-reduction thresholds. It does, however, prohibit producers from generating RINs from fuels that do not meet these compliance standards.

Applicable Categories for Each Fuel Pathway: Ethanol (a) Fuel Type

Feedstock

Category

Ethanol

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

Process heat derived from biomass

Renewable Fuel

Ethanol

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

Dry mill plant Process heat derived from natural gas Combined heat and power (CHP) Fractionation of feedstocks Some or all distillers grains are dried

Renewable Fuel

Ethanol

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

Dry mill plant Process heat derived from natural gas All distillers grains are wet

Renewable Fuel

Ethanol

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

Dry mill plant Process heat derived from coal Combined heat and power (CHP) Fractionation of Feedstocks Membrance separation of ethanol Raw starch hydrolysis Some or all distillers grains are dried

Renewable Fuel

Ethanol

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

Dry mill plant Process heat dervied from coal Combined heat and power (CHP) Fractionation of feedstocks Membrane separation of ethanol All distillers grain are wet

Renewable Fuel

Ethanol

Cellulose and hemicellulose from corn stover, switchgrass, miscanthus, wheat straw, rice straw, sugarcane bagasse, forest waste, yard waste, or planted trees

Enzymatic hydrolysis of cellulose; Fermentation of sugars; Process heat derived

Cellulosic Biofuel

Ethanol

Cellulose and hemicellulose from corn stover, switchgrass, miscanthus, wheat straw, rice straw, sugarcane bagasse, forest waste, yard waste, or planted trees

Thermochemical gasification of bioomass; Fischer-Tropsch process

Cellulosic Biofuel

Ethanol

Sugarcane sugar

Process heat derived form sugarcane bagasse

Advanced biofuel

The Program in Action The EPA is proposing to implement the program beginning on Jan. 1, 2010. Under the proposed rule, the party that generates RINs would be responsible for verifying that the feedstock used to produce renewable fuels meets the definition of renewable biomass.

The EPA has outlined several processes that could be used to implement this requirement and is seeking comment on each of them.

The agency has also proposed that producers who do not generate RINs for their fuel will be required to provide documentation that their feedstocks do not meet the definition of renewable biomass.

In order for EPA to adequately imple-

Production Process Requirements

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

ment the RFS2 program, the agency says it will need to gather information on each

producer’s feedstocks, facilities and products. This will be accomplished through a

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

The proposed rule also specifies that all renewable fuel facilities will be required to have a third-party engineer review completed by a licensed professional engineer working within the chemical engineering field. In addition to completing this review for registration purposes, each facility would be required to repeat the engineering review every three years. Under the proposed rule, foreign renewable fuel producers who export fuel into the U.S. market would be required at minimum to meet the same compliance standards as domestic producers in order to generate RINs. While renewable fuels are required to meet GHG reduction thresholds to qualify for the RFS2 program, these life-cycle emissions are not determined for each individual facility. Rather, the EPA has determined life-cycle GHG values from specific combinations of fuel type, feedstock and production process. To date, the EPA has focused efforts on developing fuel pathways for fuels initially expected to be high-volume contributors toward the RFS2 mandates, Argy-

ropoulos says. “There are multiple pathways that have been identified,” he says. “There are other pathways that are being evaluated right now, between the proposal and the final [rule], so we expect that as new pathways are anticipated – especially to be commercialized – then we are going to need to assess all of those.”

The EPA has used a variety of models and data sets to complete these life cycle GHG emissions estimates, or fuel pathways. According to Argyropoulos, this is due to the fact that no one model can currently capture and calculate all of the relevant information that must be considered.

Although the ethanol industry has criticized the EPA’s inclusion of indirect land use in the life-cycle analysis of biofuels, Argyropoulos says the agency is simply doing what is required by law. “I think from our perspective, that’s the intent that Congress wanted – inclusion of indirect land use,” he says. “It’s written in the law, and we feel it’s important that we follow what Congress has intended for us to do. Therefore, we have done that.”

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

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

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

In order to implement the program, EISA does allow the EPA some limited flexibility to reduce the GHG thresholds for each category of fuel by up to 10 percent.

In the proposed rule, the EPA proposes adjusting the GHG threshold for advanced biofuel down to 44 or 40 percent. This would allow sugarcane ethanol to count as advanced biofuel and help ensure that the volume mandated for advanced biofuel could be met. EP Erin Voegele is an Ethanol Producer Magazine associate editor. Reach her at evoegele@bbiinternational.com or (701) 373-8040.

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A biomass conversion technology developer has created a plan for large, grain-based ethanol producers to host cellulosic ethanol facilities, and reap the energy rewards.

By Kris Bevill

ETHANOL PRODUCER MAGAZINE

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D

uring his speech at the 2009 International Fuel Ethanol Workshop and Expo, Renewable Fuels Association President Bob Dinneen cautioned producers to not think in terms of new ethanol and old ethanol. “Just as with any new generation, the new generation of ethanol needs an older generation before it,” he said. “Grain ethanol gives rise to the companies, the infrastructure, the trained and skilled workforce, the markets, the vehicles and even the public policies that are so essential for cellulosic ethanol.”

Leaders at Inbicon A/S, a biomass conversion technology developer and subsidiary of Denmark’s DONG Energy, wouldn’t argue Dinneen’s point. However, they believe the time has come for North American grainbased producers to begin producing “new” ethanol along with traditional ethanol and they believe they have created the technology to allow them to do it.

Early Experiments Inbicon’s beginnings date back to the 1990s when the Danish energy company Elsam began burning wheat straw for power production

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

Process Triumphs and Challenges Inbicon’s biomass-to-ethanol conversion process works in three stages: mechanical conditioning of the biomass, hydrothermal pretreatment and enzymatic hydrolysis. Biomass (primarily wheat straw in Denmark, but corn stover, sugar cane bagasse and other soft lignin biomass have has also been tested) is cut from large bales into small pieces before being conditioned and treated by continuously heating it to break down the lignin structure of the material. Enzymes are added and the biomass is liquefied in a reactor known as a free-fall mixer.

The mixer reduces the viscosity of the biomass so dramatically, according to Inbicon, that the resulting liquid can be pumped to fermenters that have traditionally been used only for grainbased ethanol production.

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

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

The company is in the process of completing a demonstration-scale facility in the Kalundborg port facility, which will serve to demonstrate Inbicon’s conversion process as well put to rest many technical and commercial uncertainties surrounding biomass-to-ethanol conversion, Morgen says. The $70 million demonstration plant is on-track to begin operations in December, although there is still a considerable amount of work to be completed.

“Commissioning this plant is every bit as big a job as a full-scale plant,” he says. “It has the same amount of instrumentation, tanks [and] vessels as a full-scale plant. In order to prepare ourselves for the task at hand, we have built one-quarter scale components in our pilot facility in order to test and operate them to get experience and correct design errors. So far, these

PHOTO: INBICON A/S

TECHNOLOGY

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

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

Crossing the Pond Inbicon’s next step is to incorporate its technology with 100 MMgy corn ethanol plants in North America. Well-known U.S. ethanol industry members Jeff Robert and Larry Johnson signed on with the company as G-team consul-

TECHNOLOGY

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

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

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PHOTO: INBICON A/S

tants in 2008 and are assisting Inbicon in North America. The team’s first mission was to locate potential “host plants.” The candidates? Any 100 MMgy grain-based production plant that is surrounded by ample amounts of corn fields, making it possible to co-locate a 20 MMgy cellulosic production plant. By mid-June, the company had formed general agreements with three specific clients, including Global Ethanol. Johnson says the G-team reviewed all of the ethanol plants in the U.S. and has compiled corn acreage data on each plant that they have an agreement with. “We will need to collect only about 25 percent of the available corn stover within

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

will produce 1 ton of corn cobs and 4.5 tons of stover per acre. Not all of the cobs and stover can be collected - some must be left in the fields for erosion control and to replenish nutrients, he says. But if Inbicon utilizes 2.5 tons per acre of stover and/or cobs, the company needs to have access to 200,000 acres to obtain the feedstock it requires.

Johnson breaks it down even further. “If we average 500 acres per farmer contract, that’ll be about 400 farmers we’ll have to contract to take their stover,” he says. “Just from a communication standpoint and a data collection standpoint, that’s a lot of effort, a lot of communication [and] a lot of contracts that will require time and effort.”

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

If we have a low price, we’ll be hard-pressed to sign up enough to guarantee delivery.” Inbicon will base its price-paid for stover on ETHANOL PRODUCER MAGAZINE

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TECHNOLOGY

conversion capabilities such as the cost of harvest, but there are still many unknowns and Johnson says there will need to be flexibility for the first few years of operation.

However, he believes that corn stover will eventually become a commodity, similar to corn.

Dong Energy has many years of experience in feedstock logistics and can provide some mentoring to Inbicon in that area.

Johnson says he saw first-hand the company’s ability to handle large amounts of biomass and was very impressed. However, Dong’s experience is based on wheat straw and in the U.S., corn stover is the feedstock of choice. Morgen admits that presents a challenge to the company. “We will bring our experience to the U.S., but farmers and equipment manufacturers will have to work together, and with us, to develop new harvesting techniques,” he says.

Johnson says U.S. equipment manufacturers see the switch to cellulosic feedstock harvesting coming and are already working to create new methods to harvest corn stover.

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

Robert says the progression to cellulosic ethanol production is an ongoing process and it’s important to remember that ethanol production has continuously evolved as technologies have become better understood.

“As we move away from the grain-based era ETHANOL PRODUCER MAGAZINE

into the cellulosic era, we’re not starting from scratch but we have to recognize that there’s going to be a significant shift in the metrics that we’ve all commonly utilized to measure performance, success and the efficacy of a particular technology,” he says. “As an industry, we need to be patient. Nobody is going to be able to introduce technology that is going to provide the best potential metrics that we will enjoy five, 10, 15 or 20 years from now. We’re at the beginning and, from a technological perspective, no one is close to the finish line.”

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

August 2009

ally the first step into the future - into cleaner energy. I really think that it’s the general direction that this whole industry is going. Trying to get the first 15 MMgy ethanol plants built [in the mid-1990s] was a huge challenge. Eventually, with enough hard work, we ended up getting it done. Now we’re just on a new phase and a new challenge and we’ll look back sometime and say ‘that wasn’t so hard.’” EP Kris Bevill is the editor of Ethanol Producer Magazine. Reach her at (701) 373-8044 or kbevill@bbiinternational.com.

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FEEDSTOCK

Some ventures to produce cellulosic ethanol propose using dedicated energy crops such as switchgrass and miscanthus as feedstocks. However, unlike row crops, dedicated energy crops are not supported by crop insurance programs.

What is being done to level the playing field?

By Ryan C. Christiansen

PHOTO: CERES INC

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s U.S. policymakers and regulators shift their focus from corn starch-based ethanol to lignocellulosic biomass-based ethanol the agricultural economy attempts to follow suit. Many sources of biomass are being identified as possible feedstocks, including dedicated energy crops such as switchgrass and miscanthus.

Of these two perennial grasses, switchgrass is receiving the most attention. According to the U.S. EPA, the USDA’s forest and agricultural sector optimization model (FASOM) indicates it is feasible to expect that nearly 1 billion gallons of ethanol per year will be produced from switchgrass by 2022.

The majority of the crop is expected to be grown in Oklahoma.

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

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

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Multiple types of dedicated energy crops designed for various agro-ecosystems will be required to obtain enough biomass for the large-scale production of biofuels.

SOURCE: U.S. DOE, 2006

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

Some in the agricultural and ethanol industry agree with the EPA’s assessment that dedicated energy crops will play a significant role. Last summer, more than 1,100 acres of switchgrass were planted in Oklahoma as part of a demonstration project that is being managed by the Samuel Roberts Noble Foundation Inc. The independent, nonprofit institute conducts plant science research in Ardmore, Okla. and recently received more than $1.2 million from the National Science Foundation and the Oklahoma State Regents for Higher Education through the Oklahoma Experimental Pro-

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

In Vonore, Tenn., Dupont Danisco Cellulosic Ethanol LLC is building a 250,000 gallon demonstration facility that will produce cellulosic ethanol from multiple feedstocks, including switchgrass. The University of Tennessee continues to enroll farmers in a state-funded incentive program to stimulate the establishment of switchgrass.

Another program, known as the 25Farmer Network, is coordinated through the Memphis Bioworks Foundation’s AgBio initiative and consists of 25 western Tennessee farmers who will plant five acres each of experimental crops, including switchgrass.

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

seed varieties and improved crop management techniques for the southeastern United States. In May, Ceres announced that, based on results from a nationwide network of field trials, switchgrass can produce substantially more biomass than previously reported, as much as 50 percent more than the government’s projected yields for 2022.

Also, farmers in Missouri, Kentucky, Illinois, and Kansas have signed production contracts with Agrosil Energy LLC to grow giant miscanthus. The company announced it will provide farmers with the rhizomes and specialized equipment necessary to plant a total of 20,000 acres in 2010.

Agrosil expects the crops will yield 15 tons per acre beginning with the first harvest in 2012 when custom harvesting crews and machines will harvest the biomass.

Managing Risk For farmers, being first in the field to plant dedicated energy crops can be risky.

According to the EPA, it takes 10 to 12 years to recover startup costs. It takes two years to

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PHOTO: CERES INC.

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

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

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

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

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

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

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

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

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

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

PHOTO: CERES INC

FEEDSTOCK

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

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

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

During the same period, the South Carolina Biomass Council urged its constituents

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to communicate with members of Congress about the need for crop insurance for dedicated energy crops, including for switchgrass and miscanthus, and at the very least to offer catastrophic insurance under the NAP. The testimony from Rath and others struck a chord and the 2008 Farm Bill included a provision requiring the Federal Crop Insurance Corporation to study developing insurance policies for dedicated energy crops, including annual and perennial crops that are grown as feedstocks for renewable biofuel, renewable electricity or biobased products and are not typically used for food, feed or fiber.

According to Shirley A. Pugh, director of public affairs at the Risk Management Agency, a study regarding a policy for switchgrass as a dedicated energy crop determined that “while the crop could be suitable for coverage under the existing pasture, rangeland, and forage concept, the industry did not appear to be mature enough for inclusion at this time.” In other words, unless some further action is taken outside of and before the 2012 Farm Bill, it appears that no insurance will be available for switchgrass as a dedicated energy crop for the foreseeable future.

Further details about the Risk Management Agency’s determination for switchgrass were not available at press time in mid-June.

Cause and Consequence The EPA notes that because dedicated energy crops have not been grown in agricultural sectors, they have not been extensively researched and developed for optimization.

This lack of data might be the biggest hurdle facing crop insurance proponents. “It could be a chicken-and-the-egg problem,” Sheppard says. “OK, there's not enough acreage out there; but there isn't enough acreage out there because crop insurance isn't available.”

Spain says to make up for the lack of insurance, the Tennessee Department of Agriculture is providing growers in the 25Farmer Network $500 per acre during the first year.

“We have (also) been providing the seed for them,” she says, “and so this kind of manages their risk. If something happens to the crop, it covers that.”

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

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

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

Sheppard says if a local market for Agrosil’s biomass doesn’t pan out, the company will take its feedstock elsewhere. “Our backup plan is that we will just export everything and deal with the people who understand stuff and know stuff and are dealing with reality.” EP Ryan C. Christiansen is the assistant editor of Ethanol Producer Magazine. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.

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THE CELLULOSIC CEILING

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

By Ryan C. Christiansen

ETHANOL PRODUCER MAGAZINE

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y 2022, the U.S. EPA expects the domestic biofuels industry to produce more than 32 billion gallons per year of renewable fuel. However, less than half of that fuel is expected to be corn-based ethanol. The majority, 16 billion gallons, will be cellulosic biofuel. The Energy Independence and Security Act of 2007 defines cellulosic biofuel as renewable fuel produced from any cellulose, hemicelluloses, or lignin that is derived from renewable biomass and has life-cycle greenhouse gas (GHG) emissions that are at least 60 percent less than the baseline life-cycle GHG emissions. The EPA predicts that, in the long run, those 16 billion gallons of cellulosic biofuel will be cellulosic ethanol. However, EISA’s definition for cellulosic biofuel leaves open the possibility that the mandate can be met by other fuels.

Federal Investments The goal of ultimately producing billions of gallons of cellulosic biofuel has a hefty price tag. Between 2002 and 2008, the U.S. DOE’s Energy Efficiency and Renewable Energy

Biomass Program, established to develop and demonstrate biomass feedstock and conversion technologies for integrated biorefineries and to ensure cellulosic ethanol can be produced costeffectively by 2012, was allocated more than $800 million in federal funding. Since 2007, the DOE has announced more than $1 billion in multi-year investments in cellulosic biorefineries and since 2006 the USDA has invested almost $600 million to develop biofuel technology.

The bulk of the DOE’s investments began in February 2007 when it announced plans to invest $385 million in six biorefinery projects over four years for a total cellulosic ethanol production capacity of 131 MMgy. Combined with the industry cost share, the projects equated to more than $1.2 billion in investments.

Projects identified for funding included an 11 MMgy Abengoa Bioenergy SA plant in Kansas, a 14 MMgy Alico Inc. plant in Florida, a 19 MMgy BlueFire Ethanol Fuels Inc. facility in California, a 30 MMgy Poet LLC plant in Iowa, an 18 MMgy Iogen Corp. plant in Idaho, and a 40 MMgy Range Fuels Inc. plant in Georgia.

In May 2007, the DOE announced it

would provide up to $200 million over five years to support the development of smallscale cellulosic biorefineries. The first $114 million was allotted in January 2008 for four projects. The companies identified for funding included ICM Inc., Lignol Energy Corp., Pacific Ethanol Inc., and Stora Enso Oyj. The remaining $86 million was allotted to RSE Pulp & Chemical LLC, Mascoma Corp. and Ecofin LLC in April 2008. In July 2008, the DOE announced an additional $40 million investment for two more companies - Flambeau River Biofuels LLC for its project in Wisconsin and Verenium Corp. for its demonstration-scale facility in Louisiana. Seven of the nine plants were funded for cellulosic ethanol and two for cellulosic diesel.

On the research side, both the DOE and the USDA also provided funding to companies and universities. In March 2007, the DOE invested $23 million in five projects to develop highly efficient fermentative organisms to convert biomass material to ethanol; the companies and organizations identified for funding included Cargill Inc., Verenium, E. I. du Pont de Nemours and Co., Mascoma, and Purdue

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CELLULOSIC

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

To close out the year, the DOE awarded $7.7 million in December 2007 to four projects to demonstrate the thermochemical conversion process of biomass-to-biofuels. Then, in February 2008, the DOE invested $33.8 million in four projects to develop improved enzyme systems to convert cellulosic material into sugars suitable for the production of biofuels.

The companies identified for funding included DSM Innovation Center Inc. (a partner with Abengoa), Genencor, a division of Danisco A/S, Novozymes A/S, and Verenium. In March 2008, the DOE and USDA awarded $18 million to 18 universities and research institutes to develop biomass-based products, including biofuels.

Finally, in May 2009, the DOE an-

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

SOURCE: U.S. EPA

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

search and development and to provide additional funding for commercial-scale biorefinery demonstration projects. Of the total, $480

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August 2009

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

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

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approximately 180 plants will need to be completed by 2022.

However, with only a few months to go before petroleum blenders must begin to use cellulosic biofuels, there are no commercial-scale plants ready to deliver the fuel. Since the DOE’s initial February 2007 funding announcement, very little money has actually been distributed to selected projects. Two of the first six companies to be awarded DOE money - Alico and Iogen - have dropped their applications. Lignol announced in February that it was discontinuing its project as a result of instable energy prices, capital market uncertainty and general market malaise. Meanwhile, subsidiaries of Pacific Ethanol filed for bankruptcy in May. Abengoa and Poet say they are on track to begin production, but not until 2011. Only Range Fuels, which received an additional $80 million loan guarantee from the USDA in January (the first-ever USDA loan guarantee for a commercial-scale cellulosic biofuels plant), expects to begin producing at near-commercial scale during 2010, with plans to complete the first phase of its planned 100 MMgy facility in Soperton, Ga., early next year.

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

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

Aldous says Range Fuels’ technology is unique. “It is proprietary technology,” he says.

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

Meeting the Mandate To help meet the 100 MMgy cellulosic biofuels target for 2010, the EPA says there will be 24 pilot- or demonstration- scale plants and seven commercial- scale plants producing cellulosic ethanol or cellulosic diesel in 2010. However, ethanol will satisfy only 28 percent of the total cellulosic biofuels mandate. The EPA says the only companies that will produce more than one million gallons of cellulosic ethanol during 2010 are Verenium, Western Biomass Energy LLC, Fulcrum Bioenergy Inc., RSE, Southeast Renewable Fuels LLC, and Range Fuels.

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CELLULOSIC

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

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

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

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

Imports to Meet Targets The EPA admits that because cellulosic ethanol production technology is still developing, production plants will be considerably more complex and expensive to build than corn starch-based ethanol plants, thus requiring much more capital funding as well as design and construction resources. “Although technologies needed to convert cellulosic feedstocks into ethanol (and diesel) are becoming more and more understood, there are still a number of efficiency improvements that need to occur before cellulosic biofuel production can compete in today’s marketplace,” the EPA renewable fuel standard report says. “Additionally, because cellulosic biofuel production has not yet been proven on a commercial level, financing of these projects has primarily been through venture capital and similar funding mechanisms, as opposed to conventional bank loans.”

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

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

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

Despite a slow start for cellulosic biofuels in the U.S., some in the industry are bullish about the future. “Advanced biofuel companies are ready to deploy their technology and begin meeting the requirements of the [RFS],” says Brent Erickson, executive vice president of the Biotechnology Industry Organization’s Industrial and Environmental Section. “Now that the rules of the program are finally moving forward and the Obama administration has demonstrated a firm commitment to the industry, companies are prepared to build the next generation of biorefineries.” EP Ryan C. Christiansen is the assistant editor of Ethanol Producer Magazine. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.

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DUCKWEED

Spriodela polyrhiza—a specific genera of duckweed—is shown in a flask after a week of growth under lab conditions. Beakers are seeded with one or two plants and grown under light and dark cycles. S. polyrhiza has a genome size of 150 megabases and is being sequenced by researchers at Rutgers’ Waksman Institute of Microbiology.

PHOTO: TODD MICHAEL, RUTGERS UNIVERSITY

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

By Bryan Sims

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PHOTO: ROGER W. WINSTEAD, NORTH CAROLINA STATE UNIVERSITY

T

he drive to develop sustainable nonfood, starch-based ethanol feedstocks and more efficient conversion processes is intensifying as the U.S. attempts to reduce ethanol’s carbon footprint by transitioning from corn to cellulosic ethanol. That has prompted researchers at North Carolina State University to take a closer look at plants, such as duckweed, that could be a potential feedstock for ethanol production.

Duckweed has traditionally been studied because of its inherently rich protein content at 30 percent to 35 percent on a dry-weight basis. The purpose was to explore whether duckweed could be a protein source for animal and human food.

A growing interest in sustainable ethanol feedstock development, however, has researchers exploring the plant’s starch content.

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

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

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

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

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

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

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August 2009

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

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

In the meantime, duckweed will remain of interest to scientists as a viable synergistic component to the renewable fuels/energy sectors, possibly even being used with corn in existing ethanol operations, according to Stomp. “We’re not saying we’re going to replace corn,” she says.

“It’s just another option out there for ethanol producers. It’s the idea that if we’re going to solve this energy crisis we’re going to need a bunch of ideas. One idea isn’t going to save us.”

ETHANOL PRODUCER MAGAZINE

PHOTO: TODD MICHAEL, RUTGERS UNIVERSITY

DUCKWEED

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

Water Purification Potential Propagated in agricultural and/or municipal wastewater, duckweed naturally extracts nitrogen and phosphate pollutants. This could benefit large-scale hog farms where animal waste is stored in large lagoons for biological treatment. Duckweed’s bioremediation properties allow it to capture pollutants and prevent their release into the air. The plant could save

August 2009

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

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

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to certain fish and added to poultry feed.

Duckweed can also assimilate small hydrocarbons such as glucose and sucrose and, as a result, perform heterotrophic growth from the wastewater. The nutrients can be removed permanently from the system as the plants are harvested.

Due to its high affinity for absorbing pollutants in wastewater, Stomp posed a hypothetical scenario where the use of duckweed by farmers could mutually benefit a city willing to provide wastewater

PHOTO: TODD MICHAEL, RUTGERS UNIVERSITY

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

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

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

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

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The duckweed family, or Lemnaceae, is a family of flowering plants. Specifically, Lemnaceae is an aqueous monocot—similar to grasses and palms—

ETHANOL PRODUCER MAGAZINE

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DUCKWEED

and is divided into five genera: Lemna, Spirodela, Wolffia, Landoltia and Wolffiella. Of these five genera, Spirodela is the largest and Wolffiella is the smallest.

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

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

Preliminary findings by the Rutgers research team found that, through highthroughput sequencing, specific duckweed varieties obtained from 50-yearold sterile duckweed cultures shipped from Switzerland are comprised of Bradyrhizobium—a nitrogen-fixing bacteria that forms nodules on host plants.

Bradyrhizobium also have symbolic relationships with legume plants, which can’t live without the bacteria’s essential nitrogen-fixing processes, according to Todd Michael, a member of the Waksman Institute and an assistant professor of plant biology and pathology.

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

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

ETHANOL PRODUCER MAGAZINE

potential to do things like enhancing the DNA of genes to uptake specific types of heavy metals or modulate how fast we control growth rate,” he says.

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

August 2009

array of other microorganisms. “We can then use that information to go back and maybe suggest specific varieties for different locations, and maybe utilize the genetic makeup we already have to target specific applications,” Michael says. EP Bryan Sims is a BBI International associate editor and is currently on military leave. Questions or comments on the article can be directed to EPM Editor Kris Bevill at (701)373-8044 or kbevill@ bbiinternationalcom.

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CANADA

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

By Hope Deutscher

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n the U.S., the ethanol industry has experienced tremendous growth over the past few years. Some would argue it built beyond current demand, creating an environment where some producers are being forced to declare bankruptcy or sell. By contrast, the Canadian renewable fuels industry has experienced steady incremental growth. With approximately 1.4 billion liters (approximately 370 million gallons) of current production capacity, Canada’s growth has been characterized as being built out in a cautious manner. Industry leaders say it has been an intentional growth, driven by government, industry and partnerships with oil companies.

“Clearly we’ve experienced some very important growth in the ethanol industry in terms of plants that have come on line but we haven’t been overly ambitious to build production capacity out ahead of government policies and programs,” says Gordon Quaiattini, president of the Canadian Renewable Fuels Association. Since 1984, CRFA has promoted the use of renewable Gordon fuels for transportation through consumer Quaiattini president, awareness and government liaison activities.

Canadian “The industry values partnerships and the Renewable Fuels relationship we have with government, both Association federally and provincially, and in doing so, I think there has certainly been an intelligent way that the industry has been built out in an effort to not get into some of the challenges that are being faced on the U.S. side,” Quaiattini adds.

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

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

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

Provincial Government Support In part, Canada’s success was driven by the initial efforts of provincial governments to bring renewable fuels into the country’s marketplace, Quaiattini says. Saskatchewan was the first province to pass a law requiring ethanol to be blended into its gasoline. A mandate requiring fuel distributors to blend 1 percent of ethanol into their gasoline became effective Nov. 1, 2005. On Jan. 15, 2007, the blend was increased to 7.5 percent.

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

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

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

When Ontario set a renewable fuels mandate, the federal government began to look at it from a national perspective.

“That became the tipping point in which the federal government, in partnership with the industry and this association, moved forward on bringing in a national renewable fuels mandate to govern the whole country,” Quaiattini says.

The other factor that helped start Canada’s ethanol industry, he adds, was the determination by government to meet certain oxygen levels in gasoline and the banning of methyl tertiary-butyl ether (MTBE) as a blending component in order to meet those standards. “When that happened the oil industry was looking for alternatives and some turned to ethanol as a good blending fuel to help meet those requirements. That allowed for the first ethanol plant to be built, followed by the second facility.

It was done in a very measured way and now we’ve come full circle,” he says. “We now have a national mandate that’s coming into effect in 2010, and that has allowed the industry to build out. We have 20 years of ethanol experience in Canada but it’s because of the MTBE ban and subsequently provincial standards that came into effect that sort of got us off in a measured incremental way.”

Federal Government Support Today, Canada’s industry consists of 15 operating plants producing 1.4 billion liters of ethanol production capacity. Two of those facilities are planning expansions which, when completed, will add another 600 million liters (approximately 158 million gallons) to the nation’s total capacity. In total, the indus-

ETHANOL PRODUCER MAGAZINE

August 2009

PHOTO: GREENFIELD ETHANOL INC.

CANADA

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

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

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

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PHOTO: SUNCOR ENERGY INC.

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Fund to assist with the commercializa- provides a payment of about 10 cents tion of next-generation technology. per liter of produced ethanol. It’s a proOne of the ethanol companies to ducer payment, not a blender credit,” utilize government funding support is Gallant says. “The actual payment is GreenField Ethanol Inc. The company, based on the average industry profitpreviously known as Commercial Al- ability and that’s determined on a quarcohols, built its first ethanol plant in terly basis so it’s variable – if the indusTiverton, Ontario, in 1989. try is doing well, there’s less GreenField Ethanol negothere, if the industry average tiated the first fuel ethanol shows that margins are too supply contract in the countight for sustainability then try and, two years later, built the program kicks in.”

Canada’s first large-scale In Ontario and Quebec, ethanol facility. Today, the similar programs exist. For largest ethanol producer in example, the Ontario Ethanol Canada operates four plants Growth Fund which provides Bob Gallant in Tiverton, Chatham, and president and operating support of up to 11 Johnstown, Ontario, as well CEO cents per liter is in place until GreenField as Varennes, Quebec. When Ethanol Inc. the end of 2016. Gallant says the market allows, the comthe formula for accessing that pany is planning to build a money reflects fluctuations in fifth facility in Hensall, Ontario. the price of corn, ethanol and crude oil.

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CANADA

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

Gallant says the economy has been tough, but with a current installed capacity of 1.3 billion liters and a future mandate of 2 billion liters – the supply and demand ratio is good, allowing the industry to weather the current economic climate. The ethanol industry has further been helped by the establishment of take-or-pay agreements with the oil industry. Under the multiyear contracts, ethanol producers must supply an oil company with ethanol; and an oil company must take the ethanol or pay for it.

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

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

ETHANOL PRODUCER MAGAZINE

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

The CRFA expects to see the partnerships between government and the industry continue as the volumes of renewable fuels required in the Canadian market place increase. “We would continue to look to the government to be a partner in investing, not only in the production capacity that’s being built out now but more importantly the commercialization of advanced renewable fuels like ethanol. And that’s certainly the next step,” Quaiattini says. “In the absence of government policy and programs being in place, the investment would continue to likely happen in the U.S. and then you would simply import the fuel to meet these mandates.” The provincial and federal governments understand the value of having the investment and production capacity in Canada – and the economic investments and activities that occur when a facility is built, he says.

The provincial mandates were a great start. However, Quaiattini says the biggest step for the industry is moving from provincial mandates to a federal mandate. “Ultimately we needed a national footprint for renewable fuels. This blending needs to happen in all regions of the country and, therefore, having the federal government see the value of bringing a renewable fuels strategy to Canada on a national basis is a big step. It would be pretty hard for the industry to have been viable simply with a patchwork of different provincial standards in place.” EP Hope Deutscher is an Ethanol Producer Magazine associate editor. Reach her at hdeutscher@bbiinternational.com or (701) 373-8046.

August 2009

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EQUIPMENT. BY GREGORY T. BENZ AND LING DU Contribution

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

T

he current global credit crunch has made it more difficult for biofuel producers to obtain financing for capital projects, which makes it more important than ever to look for ways to reduce capital costs. Moreover, a low capital investment is mandatory to assure

a reasonable rate of return in a time when reduced travel combined with low petroleum prices places a heavy downward pressure on biofuel selling prices.

Developing countries, in general, have lower quality manufacturers than those in the developed world. However, the top 2 percent to 5 percent of suppli-

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

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

Apprehensions There are many misconceptions about the conditions in the manufacturing facilities in developing countries. However, many of the top vendors are certified

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

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ETHANOL PRODUCER MAGAZINE

August 2009

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

Yet many people will still have uneasiness about buying from such companies. How does one really know that a company will deliver a quality product?

Some American companies, such as Cargill Inc. and CPC International Inc., have done their own investigations before buying. For most companies, it

is better to enlist the help of experienced professionals who can guide you through the process of vetting new potential suppliers and recommend those they have already investigated. Such professionals can also aid you in writing specifications to modify the vendor’s standard product to meet typical U.S. standards as well as your own unique requirements.

Cultural Minefields When dealing with developing countries, miscommunication is a potential problem due to language and cultural differences. Most communication is done less directly than in Western countries. Direct probing of a company’s product quality can be taken as questioning the integrity of the company’s rep-

ETHANOL PRODUCER MAGAZINE

August 2009

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

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

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

Factors for Company Evaluation A number of factors can be investigated to properly vet a potential supplier. Among the quantitative and verifiable are: ISO certification as appropriate American Society of Mechanical Engineers code stamp or equivalent as appropriate Annual sales volume Mean time to prepare quote Typical manufactur-

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EQUIPMENT . ing/shipping time after release to manufacture American Gear Manufacturers Association ratings Energy consumption, efficiency as appropriate for product category Qualitative factors, which can be just as important as the above, are: Supplier’s reputation within its industry

Feedback from users of equipment, especially within buyer’s industry Flexibility to make product changes and adapt to local and buyer’s needs Specific experience in biofuel applications Ability to provide service and training at the customer jobsite Ease of communication/dedicated English-speaking account manager

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

Modifying the Product Most vendors make their products primarily for their home country. Their requirements may be very different from those in a Western developed country. The components they purchase for manufacture may be different from what is customary in the Western world. For a good result, the vendor must be flexible about making changes and the buyer must know what changes are needed. If the buyer does not know, the service of someone with experience in such matters is essential. Some examples: Material of construction. Some alloys readily available in the U.S. are not always available overseas. Usually, a suitable substitute may be specified.

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

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

ETHANOL PRODUCER MAGAZINE

August 2009

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

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

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

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

Gregory T. Benz is president of Benz Technology International, Inc. Reach him at (937) 289-4504 or benztech@ mindspring.com. Ling Du is vice president of engineering at Terrace International Inc. Reach her at (630) 242-5661 or infor@ terraceinternational.com.

Many Products are Safe Products that are believed to be acceptable to North American biofuel producers include: multiple effect evaporators; fluidized bed dryers; drum dryer/ coolers; rotary tuber bundle dryer/coolers; reactors, tanks, heat exchangers/evaporators with special metals; dewatering screw presses; bio-reactors/fermenters; ion exchange columns; filters; high speed solids mixers, and many others.

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

Getting the right product at an attractive price overseas is a challenge that can pay off handsomely, but the job is not done until it’s installed at your plant site.

For mundane items, such as pumps, there is no particular problem shipping from manufacturer to plant site. For large items, such as vessels and dryers, attention must be paid to transportation. Special equipment may be required for offloading the ocean vessel, and special permits and routing may be needed to get it from the arrival port to your job site. A full-service import/ export company can usually help with the shipping, permits and any other logistics issues you may encounter. Some may opt to use a separate logistics company.

Sourcing equipment from developing countries has the potential to have a huge impact on your return on investment.

However, to assure that operating costs are not negatively impacted by poor quality, ETHANOL PRODUCER MAGAZINE

August 2009

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CONSOLIDATION. BY SCOTT MCDERMOTT Contribution

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

T

he boom in ethanol over the past five years and subsequent stress over the past year are symptoms of a much bigger structurally changing world. Structural changes in global growth and energy, growing consensus on problems associated with greenhouse gas emissions and continued geopolitical volatility are causing some of the most dramatic changes

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

These structural changes will likely encompass new sources of nutrition and medicine; fuel for transportation,

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

The point of the discussion about structural change is to set

the context that the current cycle in ethanol is one of the first cycles (boom and consolidation) in this very different world. This doesn’t mean we can’t use history to give us an indication of how things might unfold in the future but we should be conscious about mixing past fundamental market and economic lessons with new rules, challenges and opportunities that present themselves in the future.

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

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ETS Learn by Example A review of some of the higher profile consolidation examples in the past 15 years gives a better understanding of how value was created and destroyed for shareholders. It is also important to discuss how the structural change may pose opportunity and risk. The first example is the consolidation of Aventine Renewable Energy Holdings Inc.’s core asset in Pekin, Ill. The 100 MMgy wet mill is one of the older plants in the ethanol industry and has had a number of owners over the years.

In the mid-1990s, Williams BioEnergy, a subsidiary of The Williams Company Inc., purchased the corn wet-mill plant for $167 million, or $1.67 per installed gallon. The company upgraded the plant and also purchased a majority stake in a 30 MMgy drygrind ethanol plant in Aurora, Neb. In 2003, Williams sold the ethanol assets as well as other company assets after having financial problems related to the impact of its telecom-related losses and the shock wave from the government investigations into energy marketing and trading practices. The assets were sold for $75 million, or approximately 57 cents per installed gallon, to Aventine, a company formed by Morgan Stanley Capital Partners to purchase Williams BioEnergy. Aventine was able to turn around and launch its initial public offering (IPO) in June 2006.

The $9.06 million share IPO raised nearly $390 million ($3.00 per installed gallon at the time of the IPO), which it used to pay down some debt and expand both locations a total of 107 million gallons.

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

ETHANOL PRODUCER MAGAZINE

Archer Daniels Midland Co. has been in the ethanol industry as part of its diversified agribusiness and food enterprise since ethanol’s introduction as a fuel additive. Corn wet mills are the core of ADM’s corn milling operations and the company is the largest corn wet milling company in the world. In 1997, ADM purchased 30 percent of the non-voting shares of Minnesota Corn Processors for $120 million after MCP expanded production capacity and debt in the 2005-‘06 corn price rally.

MCP was a successful farmer cooperative that operated two corn wet mills in Minnesota and Nebraska. However, negative margins in ethanol were at or below 20 cents per gallon for a year, which drained capital from MCP and forced the bank to call the note.

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

The final company review is VeraSun Energy Corp., which was one of the first companies to build a large 100 MMgy drygrind facility. The first plant was estimated to cost about $1 per gallon, with following plants and plant acquisitions costing between $1.80 and $2.20 per installed gallon of capacity. The company’s IPO in June 2006 raised a total of $450 million with 230 million gallons of capacity in production.

That was almost $2 per installed gallon in equity. The VeraSun liquidation of etha-

August 2009

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CONSOLIDATION .

Ethanol Margin Simulation at Different Installed Cost Levels Time Period

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

1990-1993

$0.07

2.4%

3.6%

7.2%

14.4%

1994-1996

($0.08)

-2.8%

-4.2%

-8.5%

-16.9%

1997-2000

$0.05

1.5%

2.3%

4.6%

9.3%

2001-2005

$0.29

9.7%

14.5%

29.0%

57.9%

2005-2007

$0.83

27.5%

41.3%

82.5%

165.0%

2008-Current

$0.20

6.7%

10.0%

20.0%

39.9%

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

118

50 cents to 84 cents per installed gallon.

The most obvious lesson learned is buy low and sell high, but market timing is not as

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

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

ETHANOL PRODUCER MAGAZINE

August 2009

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

Key Success Factors Many people will point to scale as a key critical success factor; however, this review points out that although important, what is more critical to creating or destroying shareholder value is what you pay to buy or build the plant. There is no magic number necessarily; however, this assessment points to current plant values well below $1 per gallon of capacity as being relatively low, and paying much above $2 per installed gallon can be problematic if the plant does not have

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

In the future, plants will need to position themselves for the structurally changing environment. Plants will need to make prudent business investments to strengthen balance sheets and improve plant efficiencies and competitiveness because the markets may get worse. Other opportunities for plants to create and protect shareholder value are to make investments to diversify or vertically integrate the business, acquire plants if possible, maintain capital to weather challenging markets or merge. The important test for these business investments is to determine if they will produce tangible economic benefits and not spread the company too thin. An example of the value of

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

The final crucial action for plants to focus on is lowering greenhouse gas life cycles, diversifying energy sources and making progress on lowering resource intensity profile for water usage and air emissions such as carbon dioxide. EP Scott McDermott is a partner with Ascendant Partners Inc. Reach him at (303) 221-4700.

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WATER. BY WES BYRNE Contribution

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

T

he most common cause of a complete failure of a reverse osmosis (RO) system is inadequate pretreatment of the RO feed water. RO systems must be protected from incompatible contaminants, from the potential for scale formation, and from excessive fouling.

Compromises made in the pretreatment methods, monitoring instrumentation, or quality of the equipment will usually result

in operational problems in the downstream RO unit.

For example, a common compromise is to use the same flow control orifice on a multimedia filter discharge line to control both the filter backwash flow rate and the rinse flow rate performed after a backwashing.

This method results in roughly the same flow rate being used for both steps. But where a backwash flow rate based on 12 gpm/ft2 of cross-sectional

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

has been reduced to the normal service flow rate. If this only occurs while the filter is in service, much of the solids shed by the filters will end up in the RO cartridge pre-filters and in the RO membrane elements.

Another common mistake with media filters is not installing individual flow meters on each of multiple filters in parallel. Without these flow readings there is no way to know if flow rates are balanced between

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

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the filters. If any particular filter starts to plug up with solids, more flow will divert to the other filters. If the media filter is not capable of providing water with a maximum silt density index (SDI) of five, as noted as a requirement on some membrane manufacturers’ element specification sheets, a fatal mistake is to inject a polymeric filtration aid directly prior to the media filters. This mistake is particularly devious in how it appears to dramatically improve the effluent quality of the filters.

What does not show up in the effluent turbidity or SDI analysis is the residual polymer breaking through the filter.

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

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

If media filters are not providing water of a sufficient quality, there are ways to improve their performance. A common misconception of pressurized filters is that they provide the best filtration at a flow rate of 5 gpm/ft2. Actually, filter performance will keep improving as the flow velocity is reduced until reaching the limits of the ability of the distribution laterals to prevent channeling.

It may be necessary to coagulate fine colloids upstream using a coagulant. If so, an inorganic coagulant should be employed, such as an aluminum product or ferric chloride. If these materials break through the media filter, they will also foul the downstream RO, but they can be cleaned. They should be used in a reaction tank of sufficient size to allow the reaction time necessary for the sus-

ETHANOL PRODUCER MAGAZINE

August 2009

pended solids to bind with the coagulant before getting to the media filters.

Chlorine Elimination The polyamide thin-film membrane commonly used in most RO systems cannot handle chlorine. Some membrane manufacturers have promoted that their membrane could tolerate free-chlorine equivalent to the exposure of 1 ppm over a period of 1000 hours before a doubling of salt passage would occur. This guideline has often been misinterpreted as meaning that it is acceptable to allow chlorine to occasionally contact the RO membrane as a means of reducing biological fouling.

But membrane damage will soon occur if it is exposed to any amount of chlorine and will be cumulative. The damage will be worse if iron or other transition metals have fouled out on the membrane.

Sodium bisulfite is often used to reduce the chlorine con-

centration going into the system.

But sodium bisulfite will also react with dissolved oxygen in the water and any excess bisulfite will tend to reduce the oxygen concentration, increasing the potential for increased anaerobic biological growth. These are the species responsible for heavy slime formations that can rapidly foul the systems. A definitive symptom of this is the sulfur dioxide, rotten-egg smell noted when membrane vessels are opened.

The optimum concentration of sodium bisulfite can be difficult to maintain. Sodium bisulfite present in the injection day tank or in chemical totes will degrade over time as it reacts with oxygen from the atWes Byrne mosphere.

If sodium president, CEA hypochlorite

121

WATER.

122

60 Hz and VFD Modified Pump Curves 400 350 300 250 Pressure

200 150 100 50

123

119

115

111

108

104

100

96.3

92.5

88.8

85

81.3

77.5

73.8

70

66.3

62.5

58.8

55

51.3

47.5

43.8

40

36.3

32.5

28.8

25

21.3

17.5

13.8

10

6.25

0 0

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

Oxidation-reduction potential (ORP) is a relatively inexpensive method of monitoring bisulfite dosage but its method may not directly reflect the residual chlorine concentration.

Other variables can also impact its reading, especially pH. When ORP is used to control bisulfite dosage on a continuously operating system, the results may be disastrous if the RO permeate returns back to an upstream feed tank when process water is not being demanded. During times of minimal usage, the increased concentration of RO permeate in the blended feed means that little alkalinity will be present. Added bisulfite will have an increased impact on the water pH and cause it to drop. The declining pH will cause the ORP reading to increase even if no chlorine is present. The control system will respond by adding even more bisulfate and the bisulfite injection pump will eventually max out on its dosage. All of the

Flow Rate Pressure w/VFD@47Hz

Pressure@60 Hz

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

SOURCE: CEA-ENCYCLOPEDIA OF WATER TREATMENT

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

Scale Inhibition The injection of a chemical scale inhibitor is typically the least expensive way to prevent scale formation in an RO system.

Chemicals work by binding with

the growing scale crystals, which reduce their particle growth rate.

The smaller scale particles are more likely to remain suspended and exit out of the RO system in the concentrate stream.

A ritual of rinsing supersaturated salts from the RO prior to shutdown is essential to the success of this mechanism.

The best method is to tee in

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

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

Applying Variable Frequency Drives A variable frequency drive (VFD) used to control the output of the high pressure pump can enable operation of an RO with an optimum permeate flow rate without wasting energy by having to throttle the pump outlet. However, if the pump is over-sized, a substantial reduction in the motor frequency may be needed to sufficiently bring down the output pressure. This shifts the pump curve well to the left, which means that too much flow will be going through the pump and it may be damaged.

The potential for this problem is magnified when two pumps are used in a series but only one is controlled by a VFD. Controls and Instrumentation RO systems that will not be well-attended by trained operators should have sufficient

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

Accurate flow rate and pressure readings are critical to monitoring the performance of the RO membrane elements.

Flow transducers must be installed with a sufficient length of straight pipe upstream and downstream of the transducer to meet the manufacturer recommendations. Otherwise, the meter may not perform under reduced flow conditions.

Flow meters should be calibrated based on an accurate measurement of the flow rate.

This may be difficult to accomplish with larger systems, but some method must be devised.

This may be as simple as timing

the rate at which a downstream storage tank fills. The incorporation of redundant flow meters will assist in noting when a transducer is not reading accurately.

Installation It is common for the RO concentrate stream to be plumbed to a discharge drain located beneath the highest point of the membrane pressure vessels. Unless an automatic isolation valve or a vacuum breaking valve is installed on the concentrate line, a siphon will be pulled on the RO while it is shutdown.

Water will continue to flow through the line after shutdown and will pull a vacuum on the RO system.

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

When an RO drains, the incoming air will carry bacteria

and fungi spores into the membrane elements. This may contribute to fouling of the membrane elements. When the RO restarts, water hammer may occur and can break the fiberglass wrap and plastic anti-telescoping devices on the end of the elements.

A check valve that uses a lightly weighted spring (1-2 psi) may be teed in the top of the concentrate discharge line to allow air to be sucked into the line under vacuum conditions. It should be directed or plumbed in a way that does not spit water at personnel whenever the RO starts up. EP Wes Byrne is the president of CEA, a water treatment consulting company, and is an adjunct professor at St. Cloud Technical College. He wrote this article as a consultant for US Water Services Inc. Reach him at (763) 553-0379 or wbyrne@ uswaterservices.com

GETTING ANSWERS FROM FIELD TO FUEL

ALTERNATIVE FUEL SERVICES CUSTOMIZED SOLUTIONS FOR INVESTORS, PRODUCERS, MANUFACTURERS, SUPPLIERS AND TRADERS

SGS is the global leader and innovator in inspection, verification, testing and certification services with over 55,000 employees and 1,000 offices worldwide.

Our broad range of services deliver competitive advantage by enhancing quality, reducing risk, improving productivity and ensuring compliance.

SGS Alternative Fuels Services business lines work together across industries covering supply chains, thinking globally and acting locally.

• Ethanol lab testing & certification to ASTM specifications (34 ISO labs in U.S.) • Field inspections for custody transfer • In-plant labor - railcar loading, switching, material handling, grading & weighing • Tank/pipeline inspection and calibration, flow monitoring & measurement consulting • Corrosion inhibitors/additives & cargo treatment services • On-site laboratory management • QA/QC program development & consulting • Sustainability/ISO/OHASA audits, training & certifications • Quality analysis of in-process components, DDGS & water • Industrial mechanical integrity management systems • Environmental analytical services & data management systems • Wood chip & pellet quality composition analysis & quantity verification

CONTACTS IN NORTH AMERICA Howie Nelson, Business Development Manager: 952-892-6372, howie.nelson@sgs.com Marla Fortner, Marketing Coordinator: 281-478-8234, marla.fortner@sgs.com GO TO OUR WEBSITE AND ENROLL FOR NEWS UPDATES FROM SGS

WWW.SGS.COM/ALTERNATIVEFUELS ETHANOL PRODUCER MAGAZINE

August 2009

123

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

(605) 334-3381

www.ethanol.org

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

(612) 492-7864

From Crude Oil to Biofuels: A U.S. – Brazil Energy Relationship September 9-10, 2009 Hotel Sofitel Rio de Janeiro, Brazil Session topics will include the future of ethanol in the Brazilian and global markets, biofuels sustainability, fuels market outlook, Western Hemisphere ethanol policy and new technology developments.

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

World Bioenergy – Clean Vehicles & Fuels September 16-18, 2009

The Alcohol School September 13-18, 2009

Stockholmsmässan Stockholm, Sweden This conference will focus on the practical implementation of bioenergy and sustainable transport systems. A variety of commercial examples from Sweden will be highlighted. Topics will include socio-economic drivers, impact of international trade in biofuels, emergence of bio-refineries, coproduction of fuels, chemicals, power and materials, and the development of markets for clean vehicles and fuels. Attendees will include delegates, officials, researchers, and visitors from Europe and beyond.

Montreal This course will educate fuel-ethanol and distilled beverage producers in the science of alcohol production. The program will cover the ethanol production process from milling and mash preparation through fermentation and distillation. Enzyme usage, yeast biology, bacterial contamination and control will also be discussed, along with other issues currently affecting both industries. Registration is limited, with preference given to fuel-ethanol and distilled beverage producers.

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

(800) 583-6484 www.ethanoltech.com

kbrandt@fredlaw.com

Sept

Aug

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

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

Biofuels Supply Chain Summit 2009 September 15-17, 2009 Ghent, Belgium All major issues within the biofuels industry will be discussed at this summit. Leading authorities from Europe and Brazil will showcase their experiences.

Discussions will cover the latest EU policies, legislations and economic effects, and the current developments and future initiatives for the transportation and logistics of biofuels. Attendees can also take part in 3 interactive panel sessions on: crucial evolution and recent developments of custom taxes and its impact on the European import/export market, current and future outlook of EU’s biofuels market, and exploring current country legislations and their influence on the future of biofuels trading, transportation and sustainability. +44 (0)20 7753 4268 www.vibenergy-events.com/biofuels/programme. htm

126

Atlantic BIOenergy Conference September 21-23, 2009 Delta Beausejour Moncton, New Brunswick The conference, hosted by BBI Biofuels Canada, will focus on growth and sustainability and renewable energy opportunities in Atlantic Canada. The conference will feature dynamic sessions and discussions on biomass-based energy generation, anaerobic digestion, waste management technologies, government incentives and more.

The conference promises lively debates, actionoriented discussions and world class presentations on the latest developments, applications and technologies in the bioenergy fields.

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

ETHANOL PRODUCER MAGAZINE

August 2009

Biomass & WtE: Waste to Energy October 28-29, 2009

Next Generation Biofuels Markets September 28-30, 2009 NH Grand Hotel Krasnapolsky Amsterdam, The Netherlands The 5th annual conference will address the latest developments in creating cost competitive, industrial scale production of next generation biofuels technologies. Topics will include commercial strategies and business models, how to make sustainable bioenergy a practical solution and advances in cellulosic ethanol and biobutanol. +44 (0)207 099 0600 www2.greenpowerconferences.co.uk/v8-12/ Prospectus/Index.php?sEventCode=BF0909NL

Shanghai, China Attendees will include producers of biomass, biodiesel, ethanol and cellulosic ethanol; local, municipal and provincial government representatives; enzymes and catalyst providers; and other industry experts. The conference will focus on power generations, cellulosic ethanol and biotechnology for fuels & chemicals, dedicated energy crops, agricultural residues, and energy from municipal solid waste.

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

Oct

Global Sugar Trade & Finance September 29-30, 2009

Air Quality VII October 26-29, 2009

Goodwood Park Hotel Singapore Specialists, producers, bankers and traders will share their insights set to alter direction of the global sugar market. The conference will focus on the uncertain times ahead for the world sugar industry and marketplace. Session topics will include risk management, political initiatives and price volatility.

Attendees will get insights from Brazil, the world’s largest sugar and ethanol producing country, and hear key industry members explore the dynamics of the sugar-ethanol equation.

Crystal Gateway Marriott Arlington, Virginia This event will be a forum for reviewing the current state of science and policy in conjunction with air quality, particularly as it relates to the energy industry. The focus will be on related air quality impacts regarding policy; markets; health and ecosystems; measurement methods; separation, capture, and storage; emission control and prevention; and atmospheric reactions and modeling.

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

Biofuels 2009 October 27-29, 2009 Budapest, Hungary Industry leaders from more than 50 countries and five continents are expected to attend this event, hosted by the World Refining Association. Session topics will include a global overview on the biofuels industry, strategies of refineries within the biofuels field, new supplies and processing for feedstocks, and a bioethanol market outlook. +44 (0) 20 7067 1800 www.wraconferences.com/2/4/articles/57.php

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

ETHANOL PRODUCER MAGAZINE

August 2009

127

EPM MARKETPLACE Seneca Companies 800-369-5500

Ag Products & Services

Yeast

Hybrid Corn

Ferm Solutions 859-402-8707

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

www.ferm-solutions.com

Hydro-Blasting

Fermentis-Division of SI Lesaffre 800-558-7279 www.fermentis.com

Hydro-Klean, Inc. 515-283-0500

Associations/Organizations

www.api.org/ace

Chemicals

Stabilized Liquid Yeast, Thermosacc,® Superstart™

PhibroChem 800-223-0434

www.lactrol.com

Anti-Microbial

Lallemand Ethanol Technology 800-583-6484 www.ethanoltech.com

Bio-Cide International.Inc 405-329-5556

www.bio-cide.com

MAXIMIZE Your Ethanol thanool Yield!

Cleaning Dryer Systems Hydro-Klean, Inc. 515-283-0500 Seneca Companies 800-369-5500

With MaxETTM a Non-Antibiotic Antimicrobial for Fermentation, Propagation, and CIP

Hydro-Klean, Inc. 515-283-0500

t 405.329.5556 www.bio-cide.com bi id d 405 329 5556

www.ferm-solutions.com www.lactrol.com

Hydro-Klean, Inc. 515-283-0500

Enzymes

Filter Media

Genencor 585-256-5249

BWF America, Inc. 800-733-2043

www.genencor.com www.novozymes.com

www.hydro-klean.com www.senecaco.com

Plate-Frame Hydro-Klean, Inc. 515-283-0500

Hydro-Klean, Inc. 515-283-0500

Water Treatment

Heat Exchanger

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

Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

www.hydro-klean.com

Railcar Spill Response

Fans Hydro-Klean, Inc. 515-283-0500

128

www.hydro-klean.com

Evaporators

Resonant BioSciences, LLC. 866-933-0408 www.puremash.com

Novozymes 919-494-3101

www.senecaco.com

Emergency Spill Response

Seneca Companies 800-369-5500

PhibroChem 800-223-0434

www.hydro-klean.com

Ductwork

Hydro-Klean, Inc. 515-283-0500

Ferm Solutions 859-402-8707

www.hydro-klean.com

Premium Plant Services, Inc. 218-929-2166 www.premiumplantservices.com

Trade API Credit Exchange 202-682-8192

www.senecaco.com

Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

www.hydro-klean.com

Railcars Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

www.bwf-america.com

Scrubbers www.hydro-klean.com

Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

Smoke Stack www.hydro-klean.com

Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

ETHANOL PRODUCER MAGAZINE

August 2009

EPM MARKETPLACE Insulation

Tank Cleaning Equipment Spraying Systems Co. 630-665-5000

www.spray.com

Tank Cleaning Services Hydro-Klean, Inc. 515-283-0500 Seneca Companies 800-369-5500

www.hydro-klean.com www.senecaco.com

Construction Buildings-Modular

Fabrication Agra Industries, Inc. 715-536-9584 VAL-FAB Inc. 877-482-5322

www.agraind.com www.valfab.com

WWW.STRONGFORM.NET

P.O. BOX 315, 208 BAKER ST. N. DEER CREEK, MN 56527 PHONE 218.462.2607 FAX 218.462.2508

SPECIALIZING IN

With all contact information placed in one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.

ETHANOL PRODUCER MAGAZINE

August 2009

www.petrocheminc.com

Management Marcus Construction Company 800-367-3424 www.marcusconstruction.com

Foundations

EPM MARKETPLACE

Petrochem Insulation 707-644-7455

structural concrete foundations rebar placement steel buildings structural steel erection anaerobic and aerobic digesters

Mechanical

Plant Construction Agra Industries, Inc. 715-536-9584

www.agraind.com

SERVICES TO INDUSTRIES INCLUDE alternative energy agriculture mining cement fertilizer food and beverage power and other industrial projects

EXCELLENT WORKMANSHIP ON AGGRESSIVE SCHEDULES TOP SAFETY STANDARD

Lipten 800-860-0790 Reimer Welding Inc. 218-773-0886

www.lipten.com www.reimerwelding.com 129

EPM MARKETPLACE Railroad Tracks

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Management Services

R & R Contracting, Inc. 800-872-5975

www.rrcontracting.net

Railworks 913-888-4091

Engineering Biomass Energy

www.railworks.com

Lipten 800-860-0790

Tanks Agra Industries, Inc. 715-536-9584

Caldwell Tanks 502-964-3361

Design/Build

www.agraind.com

ATEC Steel 620-856-3488

Agra Industries, Inc. 715-536-9584

www.atecsteel.com

Evaporators, Crystallizers, Distillation, Columns, Solvent Recovery, Heat-Exchangers, Process Engineering

www.winbco.com

7004 Boulevard East, Ste.28A Guttenberg, NJ 07093 USA Tel: 201.758.1577 Fax: 201.758.1522 info@Alaquainc.com

Consulting Central Energy Plant Lipten 800-860-0790

www.alaquainc.com

Process Design

www.lipten.com

ICM, Inc. 877-456-8588

Environmental Air Resource Specialists,Inc. 970-484-7941 www.air-resource.com ICM, Inc. 877-456-8588

Vogelbusch USA, Inc. 713-461-7374 Greenway Consulting,LLC 320-589-3085 www.greenwayconsulting.net

Granatus Consulting, Inc. 218-773-0005 www.granatusinc.com Harris Group Inc. 206-494-9422

www.harrisgroup.com

ICM, Inc. 877-456-8588

www.icminc.com

Lipten 800-860-0790

www.lipten.com

Project Development

Weaver Boos Consultants 888-645-5240 www.weaverboos.com

Harris Group Inc. 206-494-9422

Harris Group Inc. 206-494-9422

www.harrisgroup.com

www.proquipinc.com

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

Analytical Instruments Gusmer Enterprises, Inc. 847-277-9785 www.gusmerbiorefining.com

Robinson Fans, Inc. 724-452-6121

www.robinsonfans.com

Boiler Systems

Iowa Lakes Community College 800-242-5108 www.iowalakes.edu www.harrisgroup.com

Employment

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

Combustion Equipment

Recruiting McDermott & Bull-Energy Practice 415-722-8966 www.mbsearch.net 130

ProQuip, Inc. 330-468-1850

Blowers & Fans

Education Feasibility Studies

Equipment & Services

Air Pollution/Odor Control

www.pineng.com www.senecaco.com

www.vogelbusch.com

Agitation Equipment

Plant Optimization

Seneca Companies 800-369-5500

www.icminc.com

Process Engineering Associates, LLC 865-220-8722 www.processengr.com

www.icminc.com

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

Pinnacle Engineering Inc. 507-280-5966

www.agraind.com

Alaqua Inc.

www.caldwelltanks.com

WINBCO Tank Company 641-683-1855

www.lipten.com

Eclipse.Inc. 815-637-7213

www.eclipsenet.com

ETHANOL PRODUCER MAGAZINE

August 2009

EPM MARKETPLACE Computer Software

Distillation Equipment

Fractionation-Corn

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

SRS Engineering Corporation 800-497-5841 www.srsbiodiesel.com

Buhler Inc. 763-847-9900

Dryers-Fluid Bed

Cereal Process Technologies 217-779-2595 www.cerealprocess.com

Aeroglide Corporation 919-851-2000

www.aeroglide.com

Littleford Day, Inc. 859-525-7600

You produce fuel.

We fuel your success.

www.littleford.com

Dryers-Ring www.barr-rosin.com

Dryers-Rotary Drum Barr-Rosin,Inc. 630-659-3980

ICM, Inc. 877-456-8588

Emission Monitoring Systems MonitorTech Corp.

866-682-6771

www.monitortechgrp.com

Fermentation Monitoring ETS Laboratories 707-963-4806

www.etslabs.com

Fermentors

Conveyors–Mechanical

www.atecsteel.com

www.ustsubaki.com WINBCO Tank Company 641-683-1855

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

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

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

Heat Exchangers Munters - Des Champs Products 540-291-1111 www.deschamps.com

Insulator Industrial Construction & Engineering 636-970-1650 www.ic-e.cc

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

Laboratory-Supplies CHATA Biosystems 877-246-2428 customerservice@chatasolutions.com

www.phenomenex.com

Laboratory-Testing Services

www.fluideng.com

Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com

Loading Equipment Carbis, Inc. 800-845-2387

www.carbis.net

SafeRack 866-761-7225

www.saferack.com

Fire Suppression FLAMEX Inc. 336-299-2933

Corn Oil Recovery

www.winbco.com

Filtration Equipment Fluid Engineering 814-453-5014

Cooling Towers

www.agraind.com

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

ATEC Steel 620-856-3488

Conveyors–Pneumatic

www.icminc.com

Grain Handling & Storage

Phenomenex 310-212-0555

www.icminc.com

Revere Control Systems 800-536-2525 www.reverecontrol.com

ICM, Inc. 877-456-8588

Laboratory-Outsourcing

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

Control Systems

ICM, Inc. 877-456-8588

www.icminc.com

Dust Control Systems

Encore Business Solutions 204-989-4330 www.encorebusiness.com

U.S. Tsubaki 847-459-9500

www.icminc.com

Dryers-Rotary Steam Tube

© 2009 John Deere Agri Services, Inc.

ICM, Inc. 877-456-8588

www.barr-rosin.com

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

800.518.0472 JohnDeereAgriServices.com

www.crowniron.com

Agra Industries, Inc. 715-536-9584

ICM, Inc. 877-456-8588

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

Crown Iron Works 651-639-8900

MOR Technology, LLC 618-522-8324 www.mortechnology.com

Barr-Rosin,Inc 630-659-3980

Ethanol Efficiency.

www.buhlergroup.com/us

Maintenance Services flamex@sparkdetection.com

Joule’ Industrial Contractors bbosher@jouleinc.com www.jouleinc.com

www.icminc.com

ETHANOL PRODUCER MAGAZINE

August 2009

131

EPM MARKETPLACE Mechanical Solutions, LLC 515-332-7035

Pipe-Flanges Robert-James Sales, Inc. 800-666-0088

Maintenance Software ICM, Inc. 877-456-8588

www.rjsales.com

Pressure Vessels www.winbco.com

Process Control

Millwright

Separation Equipment

Harris Group Inc. 206-494-9422

www.harrisgroup.com

Pumps

Size Reduction-Shredders

PeopleFlo Manufacturing 847-929-4774

www.peopleflo.com

Laidig Systems, Inc. 574-256-0204

www.laidig.com

Structural Fabrication www.3Angstrom.com Agra Industries, Inc. 715-536-9584

www.agraind.com

Tanks www.icminc.com Agra Industries, Inc. 715-536-9584

www.agraind.com

www.vaperma.com

FOR SYRUP

Motors Trico TCWind, Incorporated 320-693-6200 www.tricotcwind.com

Paint & Protective Coatings Mongan / Bockman 260-748-7655 www.monganbockman.com

Parts & Services

MagneticallyͲcoupled gear pumps i ll l d designed to lower maintenance costs and eliminate environmental costs at an affordable price.

No Piping Changes – retrofits in place of common gear and lobe pumps.

ATEC Steel 620-856-3488 Brown Tank LLC 651-747-0100

www.atecsteel.com www.browntank-mn.com

Federal Equipment Company 800-652-2466 www.fedequip.com

MaintenanceͲfree Maintenance free – no seals or flush no seals or flush water.

www.icminc.com 10045 Pacific Ave. Franklin Park, IL 60131 USA

Pipe

847Ͳ929Ͳ4774 (phone, fax) info@peopleflo.com

www.peopleflo.com www.isco-pipe.com Valley Equipment Co. Inc. 423-753-3541 www.valleyequipment.com www.rjsales.com

Resource Recovery

Pipe-Fittings Robert-James Sales, Inc. 800-666-0088

DuraTech Industries / Haybuster 701-252-4601 www.haybuster.com

Storage-DDGS

Molecular Sieves

Robert-James Sales, Inc. 800-666-0088

www.fluideng.com

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

Molecular Sieve Desiccant

ISCO Industries 800-345-4726

Fluid Engineering 814-453-5014

VFTechnical Services, LLC 423-794-6747 www.vftechserv.com

Sartorius Mechatronies-Omnimark 800-835-3211 www.sartorius-omnimark.com

ICM, Inc. 877-456-8588

www.aesseal.com

www.agraind.com

Moisture Analyzers

Vaperma, Inc. 418-839-6989

Aesseal Inc. 865-531-0192

www.mapcon.com

CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com

ICM, Inc. 877-456-8588

www.truck-scales.com

Seals

WINBCO Tank Company 641-683-1855

Mills-Hammer

3 Angstrom 630-980-5205

Weigh-Tec Inc. 1-800-461-4153

www.icminc.com

Mapcon Technologies, Inc. 800-922-4336

Agra Industries, Inc. 715-536-9584

Scales-Truck

www.mecsol.com

Eco-Tec, Inc. 905-427-0077

www.eco-tec.com

www.rjsales.com

Scales-Software

132

John Deere Agri Services 800-518-0472 www.johndeereagriservices.com ETHANOL PRODUCER MAGAZINE

August 2009

EPM MARKETPLACE Paragon Trailer Sales 800-471-8769

Used Equipment

Water Treatment

Valves

Aquatech International Corporation 724-746-5300 www.aquatech.com

www.paragontrailer.com

WINBCO Tank Company 641-683-1855

www.winbco.com

Thermal Oxidizers

PROVEN RELIABILITY for VOC, CO & PM ABATEMENT EISENMANN Corporation Crystal Lake, Illinois 815.455.4100 es.info@eisenmann.com

Check-All Valve Mfg. Co. 515-224-2301 Pro-Environmental, Inc. 909-989-3010

www.checkall.com

North American Safety Valve 800-800-8882

www.nasvi.com

Fluid Engineering 814-453-5014

www.fluideng.com

Yield Enhancement

www.pro-env.com

Wastewater Treatment Services

EPM MARKETPLACE With all contact information placed in one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.

ETHANOL PRODUCER MAGAZINE

Biothane Corporation 856-541-3500x501 Hydro-Klean, Inc. 515-283-0500 ICM, Inc. 877-456-8588 UEM, Inc. 561-385-7515

August 2009

www.biothane.com www.hydro-klean.com www.icminc.com www.uemgroup.com

EdneiQ, Inc. 310-592-4158

www.EdeniQ.com

Ethanol Production Existing Producers Louis Dreyfus Commodities 402-844-2680 LDCommodities.com POET LLC 605-965-2200

www.poetenergy.com

Finance

Reach your customers Your Solution. Advertise Today.

EPM MARKETPLACE

Accounting Christianson & Associates PLLP 320-235-5937 www.christiansoncpa.com Eide Bailly LLC 605-977-2703

www.eidebailly.com

133

EPM MARKETPLACE Appraisals

Railcar Moving

Natwick Associates Appraisal Services 800-279-4757 www.natwick.com

Shuttlewagon, Inc. 816-767-0300

Due Diligence

Railcar Parts

Harris Group Inc. 206-494-9422

www.harrisgroup.com

Salco Products, Inc. 630-783-2570

Mergers & Acquisitions

Terminals & DSP

Kent Group, Inc. 715-358-7528

ERS Rail Transload 205-322-8312

www.kentgroupinc.com

Risk Management

Utilities

R.J. O’Brien 800-621-0757

Utility

www.rjobrien.com

www.shuttlewagon.com

www.salcoproducts.com

www.ersrail.net

Integrys Energy Services 608-235-2547 www.integrysenergy.com

Software-Accounting Encore Business Solutions 204-989-4330 www.encorebusiness.com

Your Ad HERE

Software-Commodity John Deere Agri Services 800-518-0472 www.johndeereagriservices.com

Your Solution. Advertise Today.

EPM MARKETPLACE

Legal Services Attorneys BrownWinick Law Firm 515-242-2400 www.biofuellawyers.com Faegre & Benson, LLP 612-766-6930

www.faegre.com

Reach your customers

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass.

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

www.BiomassMagazine.com

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With all contact information placed in one convenient location, Ethanol

Miscellaneous

Producer Magazine not only con-

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tains top editorial content but also a useful directory in each publica-

Transportation

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Marine

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of your business or a frequent display advertiser looking for added

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exposure, EPM Marketplace is the

For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com.

perfect solution.

ETHANOL PRODUCER MAGAZINE

August 2009

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