August 2011 Biorefining Magazine

INSIDE: WASHINGTON FIREWORKS MORE DISTRACTION THAN DEMOCRACY AUGUST 2011

Cellulosic Biofuel and Next Year’s Mandate

Digging into EPA’s Proposed 2012 RFS2 Volume Requirements Page 20

ZeaChem Boardman, Ore.

KL Energy Upton, Wyo.

Fiberight Blairstown, Iowa

DuPont Danisco Cellulosic Ethanol Vonore, Tenn.

Fulcrum Bioenergy McCarran, Nev.

INEOS Bio Vero Beach, Fla.

KiOR Houston, Texas Terrabon Port Arthur, Texas

Plus

And

Page 34

Page 28

Biojet Fuel Advances as ASTM Approves Spec Annex

www.biorefiningmagazine.com

Recruiting Executives for the Biorefining Industry

KiOR Columbus, Miss.

OR on, TX

Blairstown, IA

Upton, WY

contents |

AUGUST issue 2011 VOL. 02 ISSUE 08

features

20

28

34

DuPont Danisco

FUEL RFS2: Working Toward 2012

BUSINESS Searching for Leaders

BIOJET Cellulosic Ethanol ASTM Approval

Where will cellulosic fuel come from next year?

By Erin Voegele

The hunt for biorefining executives is on

By Luke Geiver

Green-lighting hydroprocessed biojet

By BRYAN SIMS

Contents DEPARTMENTS 4

Editor’s Note

Major Growth

BY RON KOTRBA

KiOR Terrabon 10 Business Briefs Columbus, MS Port Arthur, TX

6

Advanced Advocacy

Washington’s Fireworks: More Distraction than Democracy

BY MICHAEL McADAMS

Vonore, TN

INEOS Bio Vero Beach, FL

INSIDE: WASHINGTON FIREWORKS MORE DISTRACTION THAN DEMOCRACY AUGUST 2011

People, Partnerships & Deals

12 Startup

Biorefining News & Trends

38

Advertiser Index

Cellulosic Biofuel and Next Year’s Mandate

digging into EPA’s Proposed 2012 RFS2 Volume Requirements Page 20

ZeaChem Boardman, Ore.

KL Energy Upton, Wyo.

Fiberight Blairstown, Iowa

DuPont Danisco Cellulosic Ethanol Vonore, Tenn.

Fulcrum Bioenergy McCarran, Nev.

7

Industry Events

Upcoming Conferences & Trade Shows

8

Legal Perspectives

Mergers & Acquisitions: Structure and Tax Basics

BY DEAN R. EDSTROM

INEOS Bio Vero Beach, Fla.

KiOR Houston, Texas Terrabon Port Arthur, Texas

Plus

And

Page 34

Page 28

Biojet Fuel Advances as ASTM Approves Spec Annex

KiOR Columbus, Miss.

Recruiting Executives for the Biorefining Industry

www.biorefiningmagazine.com

ON THE COVER: Among the many active U.S. cellulosic projects, the U.S. EPA mentions nine of them in its proposed 2012 RFS2 volume requirements as potential producers of cellulosic biofuel in 2012.

august 2011 | Biorefining Magazine | 3

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editor’s note

Biorefining Magazine is coming to Houston, the epicenter of the oil—and more and more the biorefining—industry, Sept. 14-16 for the International Biorefining Conference & Trade Show. Oil, gas and chemical

MAJOR GROWTH Ron Kotrba, Editor rkotrba@bbiinternational.com

refiners know their future lies in diversifying feedstock portfolios away from crude petroleum and into renewables, evidenced by the high volume of activity the oil majors are taking in biorefining investment, research, project development and scale-up. The conference’s general session, titled Oil Industry Perspectives on Biorefining, will discuss this very topic.

If you’re an oil person, you’ll want to be there to learn about the latest trends in biorefining and find out what your oil competitors are doing in this space. Biorefiners, Houston is becoming the place to be for your peers, as we find more biorefining companies headquartered in Houston than anywhere else. Shake hands and network with those in the oil business who may just be waiting for the right opportunity to come along. Investors, this is your chance to vet, in person, those companies you’ve heard so much about to make informed decisions on where your money should go in this sector. This is the time to get into advanced biorefining, while it’s young. Get in on the ground floor. For those who do not recognize how big a role advanced biofuels and biobased chemicals will play in our future, here are a few things to consider.

RFS2 mandates 36 billion gallons of renewable fuel by 2022, and only 15 billion of that will come from corn ethanol. Up to a few billion gallons of that will also be methyl ester biodiesel, maybe more. This leaves roughly 20 billion gallons of advanced renewable fuels to be refined in just more than 10 years. That’s essentially building out, in a decade, an industry the size and capacity of the U.S. corn ethanol industry that took nearly four decades to develop.

And it’s not only going to be cellulosic ethanol contributing to these markets, as largely thought when the legislation was passed. In fact, cellulosic ethanol capacity in 2022 may be a gross minority when positioned next to the other advanced biofuels—biojet, renewable diesel, green gasoline, various butanols, other nonethanol cellulosic biofuels—which are trending toward rapid development. And this only considers the U.S. mandated market. Virtually every region of the world will have advanced biofuel agendas, mandates or incentives. To fly into Europe in the future, planes will have to fuel up on blends of biojet to hit greenhouse gas reductions. The jet fuel market is huge. Biocrude from companies like KiOR and several others is a no-brainer replacement or supplement to crude petroleum that can be run through the existing refining industry.

for more news, information and perspective, visit biorefiningmagazine.com/BLOG/READ/BIOREFINING

ASSOCIATE EDITORS Luke Geiver writes “Searching for Leaders,” page 28, a feature on the biorefining industry’s search for experienced, qualified executives.

4 | Biorefining Magazine | august 2011

Erin Voegele covers the EPA’s recent volume proposals for next year’s federal mandate in “RFS2: Working Towards 2012” on page 20.

Bryan Sims authors “ASTM Approval” on page 34, an article about the organization’s recent annex to D7566 for hydroprocessed biojet fuel.

EDITORIAL EDITOR Ron Kotrba rkotrba@bbiinternational.com ASSOCIATE EDITORS Erin Voegele evoegele@bbiinternational.com Luke Geiver lgeiver@bbiinternational.com Bryan Sims bsims@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com graphic designerS Erica Marquis emarquis@bbiinternational.com Lindsey Noble lnoble@bbiinternational.com

PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com

SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com Nick Jensen njensen@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com Senior Marketing Manager John Nelson jnelson@bbiinternational.com

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Biorefining Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada or Mexico. To subscribe, visit www.biorefiningmagazine.com or you can send your mailing address and payment (checks made out to BBI International) to: Biorefining Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biorefining Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biorefining Magazine advertising opportunities, please contact us at (701) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Biorefining Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rkotrba@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Please recycle this magazine and remove inserts or samples before recycling TM

COPYRIGHT Š 2011 by BBI International

august 2011 | Biorefining Magazine | 5

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advanced advocacy

Washington’s Fireworks: More Distraction than Democracy As a slew of tax incentives approach final sunset, new solutions are needed on Capitol Hill

BY Michael mcadams

T

he crackling and colorful fireworks in Washington went well beyond this year’s Independence Day celebration on Capitol Hill and are proving to be more of a distraction to our nation’s progress, especially when it comes to transforming the energy policy of the United States to one of renewable, clean technologies like those of advanced biofuels. The political back and forth and uncertain future of public policies and regulations are leaving our country vulnerable to the steady progress of other nations and competitors like China.

A recent Pew Environment Group report, Who’s Winning the Clean Energy Race?, found clean energy investments in China reached $34.6 billion last year, more than any other country, almost doubling the U.S. investment of $18.6 billion. Now that’s something worth shooting off rhetorical fireworks in Washington rather than the political jabs we’re certain to see more of leading into a presidential election year.

Last month, members of the Advanced Biofuels Association met on Capitol Hill and were fortunate to get a glimpse of the thoughtful leadership our nation needs to fortify our technology and economic defenses against the Chinese and others. But even with the encouraging discussions we had with leaders and the pragmatic solutions offered, the domestic advanced biofuels industry still faces a near-term future of diminished policy support from Washington.

While lawmakers look at every program to slice and dice for cost savings, one of the most promising economic engines,

6 | Biorefining Magazine | august 2011

the domestic biofuels industry, could be in desperate need of a tune-up by the end of the year as numerous tax policies and incentives are set to expire along with a downward trend of policy support. You had better have a seat, because here is what I’m talking about: • • • • •

The renewable diesel credit it set to expire Dec. 31.

The biodiesel credit is set to expire Dec. 31.

The alternative fuels mixture credit is set to expire Dec. 31.

The advanced alcohol tax credits as part of the VEETC are set to expire Dec. 31.

In another year, the cellulosic biofuels production tax credit will expire on Dec. 31, 2012.

In other policy developments in Washington’s questionable support of our burgeoning industry, the House of Representatives recently passed legislation in support of a coal-to-liquids program, and there is a lack of funding for the reverse auction at the U.S. DOE, as well as a reduction in funding for the Biomass Program, Integrated Biorefining and ARPA-E at DOE. The verdict is still out on the fate of the Biomass Crop Assistance Program, which reduces risk for producers who volunteer to grow new energy crops, and should be reauthorized in the next Farm Bill.

The decisions Congress makes today on renewable energy will undoubtedly guide our nation for generations. Yesterday’s answers simply will not fit the new equation of the future. Now is the time for Washington to consider smarter investments based on performance, for example, not a lifetime of subsidized assistance.

Our transition to clean, renewable energy alternatives is well under way but our sluggish economic circumstances demand short-term and consistent policies that will encourage market certainty and ultimately accelerate the commercial deployment of advanced and cellulosic biofuels. So it is essential that Washington explore a new set of solutions for its next steps in renewable energy policy, one that provides short-term certainty, strengthens our economic security and puts folks back to work.

A new Gallup poll shows that Americans’ satisfaction with the direction the United States is going hit a two-year low in July, dropping from 20 percent in June to just 16 percent last month. Now is not the time for the distraction of political fireworks.

Bold leadership is needed to capitalize on the American ingenuity that will help drive a global revolution in clean energy using advanced biofuels technologies. The burden is on our industry to take a step back from the politics and come together to strategically reassess the appropriate role the federal government should play in supporting and further developing the advanced and cellulosic companies in the United States.

Author: Michael McAdams President, Advanced Biofuels Association (202) 469-5140 Michael.McAdams@hklaw.com

events calendar |

International Biorefining Conference & Trade Show

September 14-16, 2011

Hilton Americas – Houston Houston, Texas The International Biorefining Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the rapidly maturing biorefining industry.

(866)746-8385 www.biorefiningconference.com

Northeast Biomass Conference & Trade Show

October 11-13, 2011

Algae Biomass Summit in Minneapolis 10/24

What more appropriate place is there for a conference about an aquatic feedstock like algae than Minnesota, the Land of 10,000 Lakes? The 5th annual Algae Biomass Summit will take place Oct. 24-27 at the Hyatt Regency in Minneapolis.

This event unites industry professionals from all sectors of the world’s algae utilization industries including financing, algal ecology, genetic systems, carbon partitioning, engineering and analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements, foods and more.

Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. The event is considered a world-leading educational and networking junction for all algae industries.

Educational tracks at the event focus on biology, engineering, analysis, commercial activities, policy and financing; but education is only one of several reasons to attend. The summit is where future and existing producers of algae products go to network with other industry suppliers and technology providers. It’s where project developers converse with utility executives, where researchers and technology developers network with venture capitalists, and where Fortune 500 executives and influential policy makers sit side-by-side with project developers.

The event is the largest, fastest-growing algae conference of its kind.

This year’s event is expected to draw nearly 900 attendees and exceed the previous year’s attendance by almost 20 percent. This growth is powered by the current strength of the industry and the positive outlook for future algae producers.

The summit will help you―algae industry stakeholders―identify and evaluate technical and economic solutions that fit your operation. Get your plane ticket, reserve your hotel room and register for the conference today.

Westin Place Hotel Pittsburgh, Pennsylvania With an exclusive focus on biomass utilization in the Northeast—from Maryland to Maine—the Northeast Biomass Conference & Trade Show will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. Register by Aug. 30 and save $200.

(866)746-8385 www.biomassconference.com/northeast

Algae Biomass Summit

October 24-27, 2011

Hyatt Regency Minneapolis Minneapolis, Minnesota Organized by the Algae Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all algae industries.

(866)746-8385 www.algaebiomasssummit.org

Southeast Biomass Conference & Trade Show

November 1-3, 2011

Hyatt Regency Atlanta Atlanta, Georgia With an exclusive focus on biomass utilization in the Southeast—from the Virginias to the Gulf Coast—the Southeast Biomass Conference & Trade Show will connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers.

(866)746-8385 www.biomassconference.com/southeast

august 2011 | Biorefining Magazine | 7

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LEGAL PERSPECTIVE

Mergers & Acquisitions: Structure and Tax Basics Knowledge, planning and professional assistance required to understand tax consequences from M&A transactions

By Dean R. Edstrom

M

ergers and acquisitions can be accomplished using a variety of structures that involve the acquisition by one party, the acquirer, of one or more business entities or lines of business of another party, the acquiree or target. Planning for a merger or acquisition requires consideration by each party of alternative structures for the transaction that will maximize the benefit to the party and its equity holders while retaining the attractiveness of the deal for possible merger or acquisition partners.

Typical reasons for choosing one or another structure focus on the tax consequences of the transaction, the preservation of tax or accounting advantages, the ability to selectively acquire a portion of the business, assets and liabilities of the target and the avoidance of the necessity to secure consents from third parties that have existing contractual or business relationships with one of the parties to the transaction.

The three principal structural alternatives for a merger or acquisition transaction are the statutory merger, acquisition of assets and acquisition of stock or other form of equity of the target.

Statutory Merger

A statutory merger is completed in accordance with the state laws that govern the organization of the parties to the transaction.

Whether the parties are corporations, limited liability companies, partnerships, cooperatives or other entity forms, most state laws are now flexible enough to allow two different entity types to combine by merger of one into the other or by merger of one with a subsidiary of the other.

A two-party or “simple” merger occurs when the acquired company merges with the acquiring company, typically with the sharehold8 | Biorefining Magazine | august 2011

Diligence review of all permits and contracts is essential to determine what new permits or consents are necessary. ers of the acquired company receiving stock or other securities of the acquiring company, cash or a combination of securities and cash. A “triangular” merger occurs when the acquiring company forms a subsidiary for the purposes of the transaction and the acquired company is merged with the subsidiary rather than into the acquiring company, but the shareholders of the acquired company still receive cash and/or securities of the acquiring parent. Schematically, the three parties and their relationships in the transaction form a triangle.

When the target merges into the acquirer or into a subsidiary of the acquirer, the merger is generally called a “forward” merger. Often, however, it is advantageous to structure the transaction as a “reverse” merger, where the acquiring company (at least from an economic standpoint) or subsidiary merge into the target.

A reverse triangular merger occurs when the subsidiary of the acquiring parent merges into the acquired company, the opposite of the forward triangular merger. The shareholders of the acquired company still receive securities and/or cash from the acquiring parent and the parent’s shares in its subsidiary are converted into shares of the acquired company, making the acquired company a subsidiary of the parent.

In the forward triangular merger, the subsidiary formed for the transaction is the surviving company following the transaction and the

acquired company is merged out of existence, with all of its assets and liabilities passing to the subsidiary. In the reverse triangular merger, the acquired company is the surviving company and the separate existence of the subsidiary disappears. In that case, the acquired company continues to hold its own assets and liabilities but it continues existence as a subsidiary of the acquirer.

Acquisition of Assets

In an acquisition of assets, the acquiring company purchases some or all of the business and assets of the target and may assume specified liabilities of the target. The acquirer generally acquires only those liabilities of the target that it specifically agrees to assume, subject to “successor liability” doctrines imposed by law and court decisions such as liability for preexisting environmental issues. Following an acquisition of assets, the target may sell any remaining assets, satisfy its remaining liabilities and distribute the cash or securities received in the acquisition to its equity holders. Or, it may continue business with the lines of business and assets not sold in the acquisition.

Acquisition of Stock, Other Equity Interests

If the transaction is structured as an acquisition of equity interests, the transaction is conducted with the owners of the target rather than the target itself. The consideration provided by the acquirer can be cash or securities, or a combination of cash and securities, but cash is the most common form of consideration in stock acquisitions. In the case of a closely held target, the acquirer might successfully negotiate the simultaneous purchase of all of the outstanding equity. Where the equity of the target is more broadly held, the transaction might be conducted as a friendly or hostile “tenderoffer,” in which the acquirer offers to purchase the equity of willing sellers, usually subject to a controlling percentage of the equity being

LEGAL PERSPECTIVE |

tendered for sale. If a minority interest remains after an initial equity purchase, the acquirer will often conduct a second-stage “squeeze-out” or “freeze-out” merger, subject to state law, by which it would eliminate the minority interest for cash.

Advantages, Disadvantages of Acquisition Forms

Other than tax considerations associated with the different forms in which a merger or acquisition can be accomplished, there are a number of reasons why one form may be preferred for a given transaction. An acquirer often prefers an acquisition of assets because it can pick and choose what assets it wishes to acquire and avoid assuming some or all of the liabilities of the target. Avoiding liabilities is particularly important if there may be unknown or contingent liabilities that could have an adverse effect on the acquirer after closing. In the case of a merger or purchase of stock, the acquirer or its subsidiary will have all of the target’s assets and liabilities after the transaction. The advantage of a merger or stock purchase is the assurance that all of the assets of the target will be acquired, even if not clearly identified.

A merger or sale of all or substantially all of the assets of a target will normally require the approval of the target’s equity holders, by majority vote or higher percentage specified by statute or the target’s organizational documents.

A simple merger will also usually require a vote by the equity holders of the acquirer. A triangular merger may avoid a vote by the acquirer’s equity holders unless the transaction is sufficiently material that organizational documents, applicable stock exchange rules or the necessity to authorize additional securities to be issued in the transaction make such a vote necessary. A direct purchase of stock of the target will not require a formal vote of the target’s equity holders, but may not result in the acquisition of sufficient target stock to successfully complete the transaction.

In an acquisition of assets, most governmental permits and any agreements with prohibitions on assignment will require the parties to obtain new permits and consents so the acquirer can continue the target’s business. Diligence review of all permits and contracts is essential to determine what new permits or consents are necessary. Consents are normally obtained prior to closing; permits sometimes cannot be obtained until after closing. In the case of a forward merger, whether simple or triangular, even though the applicable law normally provides that the surviving company in the merger succeeds to ownership of all assets and contractual rights, there may be permits and some contracts that treat a merger as a prohibited transfer; in that case, new permits and consents may still be required. In a reverse merger, however, since there is no change in the assets or liabilities of the acquired company, in most cases its permits, contractual relationships and the like will not be affected. In that case, unless there is a change of control prohibition or language that specifically addresses the situation, typically no new permit applications or consents would be required.

Tax Consequences of the Transaction

The tax consequences to the parties to a merger or acquisition and to their equity holders are major and often deciding factors in determining the structure and attractiveness of any transaction. The tax consequences will depend primarily on four principal variables: (i) the organizational form of the parties, which might be quite different; (ii) the structure of the transaction, which can be quite complex; (iii) the consideration to be exchanged in the transaction; and (iv) the pre-existing tax circumstances of each of the parties and their equity holders.

For entities taxed as corporations, Section 368 of the Internal Revenue Code, allows a transaction to be accomplished without an immediate recognition of gain or loss by eq-

uity holders in certain carefully defined circumstances, all of which involve the continuation of an equity interest in the resulting enterprise.

Often called “tax-free reorganizations,” these transactions actually defer tax on any gain at the time of the transaction, typically allowing capital gains treatment of tax on the gain when the equity is ultimately sold. If the equity holders receive cash, or if the transaction fails to meet the specific requirements for tax-deferred treatment, tax on any gain to the date of closing may be due, whether or not the transaction results in any cash distribution to the equity holders.

Because Section 368 does not apply to entities taxed as partnerships, including limited partnerships and limited liability companies, transactions involving such entities may have taxable or tax deferred consequences to their equity holders based on other rules and analyses. Forward mergers, reverse triangular mergers and asset purchases are subject to different analytical processes and the form of consideration, such as securities, cash or a combination of securities and cash will dictate different results.

The ultimate tax impact on equity holders will in large part be determined by the tax basis of their investment in the parties to the transaction. In the case of limited liability companies or partnerships, a transaction may also result in the recapture of losses previously recognized for tax purposes by the equity holders, the impact of which may differ among the holders.

An acquirer will also be interested in specific tax aspects of the transaction, such as the ability to step-up the tax basis of assets in an asset purchase and the possibility of preserving net operating loss carry-forwards of the target.

Author: Dean R. Edstrom Partner Attorney, Lindquist & Vennum PLLP (612) 371-3955 dedstrom@lindquist.com

august 2011 | Biorefining Magazine | 9

business briefs People, Partnerships & Deals

EdeniQ Inc. and IKA Works Inc., a subsidiary of German firm IKA Werke GmbH Co. KG, have agreed on a mutually exclusive global agreement for the supply of biomass mixing and milling technology for the advanced biofuels and biochemical markets, and for the ongoing development of biomass milling process technologies. EdeniQ and IKA first formalized their partnership in 2009 with the signing of an exclusive manufacturing agreement for a proprietary milling device trademarked by EdeniQ as the Cellunator.

The Cellunator has been installed by EdeniQ at corn-ethanol plants across the country. As the collaboration evolved, both companies decided to formalize their ongoing research and development efforts with a focus on offering milling and mixing equipment specifically for biomass conversion. The development work with focus on EdeniQ’s proprietary pretreatment process, including an enhanced version of the Cellunator, is designed for processing cellulosic biomass under the development moniker Super Cellunator.

The U.S. DOE has finally made its first conditional commitment for a loan guarantee for cellulosic ethanol.

On July 7, the agency announced it is offering a conditional commitment for a $105 million loan guarantee to Poet LLC for the development of its 25 MMgy corn cob-to-ethanol facility, dubbed Project Liberty, at Emmetsberg, Iowa. Construction of the facility, which will be co-located with Poet’s 57 MMgy corn-based facility in Emmetsberg, is expected to begin in August, according to the DOE. Production is slated to begin in May 2013.The DOE has been heavily criticized for its lack of loan guarantee offerings to cellulosic biofuels projects.

Since the program’s inception in 2005, multiple applications have been filed by would-be cellulosic ethanol producers, but until now none have made it through the arduous application process successfully. The total project cost for 10 | Biorefining Magazine | august 2011

Project Liberty is $261.2 million, according to the DOE. Initially, ethanol produced at the facility is expected to cost approximately 50 cents more per gallon than gasoline, but those costs are expected to be reduced over time.

Cupertino, Calif.-based advanced biofuel producer AE Biofuels Inc. bolstered its technology portfolio by acquiring Zymetis Inc., a privately-owned biobased chemical and fuel developer headquartered in College Park, Md. As a result of the acquisition, Zymetis will continue as a wholly-owned subsidiary of AE Biofuels. Zymetis holds four granted patents and more than 10 pending patents centered on the core of its trademarked Z-microbe, a marine organism that was originally discovered to consume plant cellulose at a high rate in the Chesapeake Bay. The genome of the bacterium, Saccharophagus degradans, has been fully sequenced by researchers at the University of Maryland. Zymetis researchers have successfully engineered the microbe to produce approximately 90 enzymes to rapidly convert sugar, starch and cellulose into saleable biochemicals and biofuels via its Zymetis Integrated Process.

Royal DSM may have the tests to prove that the company’s yeast technology can convert 90 percent of hydrolyzed biomass in the cellulosic ethanol process, but that hasn’t stopped the life sciences company from strengthening its yeast technology. DSM has purchased the Netherlands-based C5 Yeast Co., for an undisclosed amount. Although DSM has created a microorganism that can convert both the C6 and C5 biomass sugars produced by enzymes in a typical cellulosic process, the company noted the importance of C5 Yeast Co.’s ability to specifically convert the difficult C5 sugar fractions. The move will increase the position of DSM in area of fermentation technology.

The area of second-generation biofuels is one that DSM believes will be huge in the U.S., with an expected market size of more than $1 billion by 2020, mostly related to the enzymes and yeast needed to convert agricultural residues and other wastes to biofuels.

OPX Biotechnologies Inc. raised $36.5 million in a Series C round of private equity financing to accelerate the development and commercialization of its first target product offering, a biobased alternative to acrylic acid, called BioAcrylic. The financing was led by US Renewables Group, which also included new investor DBL Investors. The round also saw strong participation from existing investors Mohr Davidow Ventures, Braemar Energy Ventures, Altira Group and X/Seed Capital.

During an 18-month pilot-scale program completed in February, OPXBIO demonstrated the scale-up efficiency of its proprietary Efficiency Directed Genome Engineering (EDGE) technology to make performance-equivalent BioAcrylic that is lower cost and more sustainable than petroleum-based acrylic acid.

In April, OPXBIO and Dow Chemical Co. signed a joint development agreement to prove the technical and economic viability of an industrial-scale process to produce BioAcrylic using a fermentable sugar (such as corn and/or cane sugar) as feedstock. OPXBIO anticipates full commercialization of its BioAcrylic within three to five years.

Dupont Danisco Cellulosic Ethanol, a wholly-owned subsidiary of DuPont, has entered into an agreement to purchase a parcel of land in Nevada, Iowa, adjacent to Lincolnway Energy LLC’s conventional ethanol plant. It is DDCE’s next step toward building one of the world’s first commercial-scale biorefineries to produce fuel-grade ethanol from cellulose, in this case stover—dried cobs, stalks and leaves left after grain harvesting. DDCE is successfully producing cellulosic ethanol at its precommercial facility in Vonore, Tenn., and is scaling up the process to globally license its

business briefs |

California-based Genencor, a division of Danisco A/S, has announced the release of a new enzyme product, Accellerase TRIO. The new project is designed to enable biorefinery companies to more cost-effectively manufacture cellulosic fuels from a wide range of feedstocks, including switchgrass, wheat straw, corn stover and municipal solid waste. The new product allows for low enzyme dosage to produce ethanol, which helps to improve the economics of cellulosic biofuel production. According to Genencor, Accellerase TRIO includes a cocktail of enzymes that breakdown the glucan (C6) and zylan (C5) found in cellulosic feedstocks into fermentable sugars, which increases the yield per unit of feedstock. Data indicates a two-fold lower dose of enzymes is needed when compared to the performance of Accellerase DUET. Forming partnerships continues to be the name of the game for Amyris Inc. as the Emeryville, Calif.-based biotech, and Asia-based agribusiness giant Wilmar International Ltd., plan to jointly develop and commercialize a family of surfactants derived from Amryis’s biobased farnesene, Biofene, for use in a range of products, including consumer packaged goods, personal care products and industrial applications. The proposed collaboration would engage in a feasibility study to complete the technical development of the surfactants, engage in testing activities to validate product

performance and customer acceptance and secure necessary regulatory approvals for manufacture and sale of the products. Upon completion of the feasibility study and subject to the execution of definitive agreements, Amyris and Wilmar anticipate forming a joint venture entity, through which they would manufacture the products to be marketed by Wilmar through its established channels. The joint venture may produce its own Biofene for captive use. Both companies expect that biobased surfactants will be effective replacements for nonylphenol ethoxylate surfactants (NPEs), the use of which is currently being phased out or severely restricted by regulatory agencies around the world due to health and environmental concerns. The current market for NPEs exceeds $1 billion annually.

PHOTO: WANKEI WAN

end-to-end production system. DDCE also is launching its 2011 Stover Collection Program to enable a cost-effective supply of stover for the biorefinery project. The company is working closely with local grain producers to obtain commitments and collect thousands of tons of stover from Iowa fields this fall. DDCE is collaborating with Pioneer Hi-Bred, also a DuPont Company, and Iowa State University, to establish best practices in harvesting, storage, and transportation, and assure the agronomic and environmental integrity of cornfields.

Algae Innovators Wankei Wan, professor of chemical and biological engineering, left, Darcy Small, graduate student and Adrianna Mika, undergraduate student, are in the University of Western Ontario’s department of chemical and biochemical engineering.

Wankei Wan, a professor of biochemical engineering at the University of Western Ontario in London, Ontario, discovered that exposing microalgae to static magnetic fields could be another viable route for optimizing growth rate and lipid production in microalgae.

According to Wan, his research team designed and built a lab-scale raceway pond featuring a paddle wheel that gently agitated the fluid, and they began growing a common species of single-celled algae called Chlorella kessleri. They then took a small side stream off the main reactor and passed it through a static magnetic field all the while measuring the growth rate and oil production of the algae. What Wan

observed, which will soon be published in a paper to be submitted in the journal Bioelectromagnetics, wasn’t short of being “an interesting phenomenon,” he says. By exposing algae to magnetic fields, Wan and his team were able to double the growth rate and double the lipid oil production, essentially economizing the overall process by four-fold. “It’s quite a significant improvement,” Wan says.

Biorefining firms like Genomatica and BioAmber recognize the impact their research and development activities will someday have, and so does the U.S. EPA. On June 20 in Washington, D.C., the nation’s environmental regulatory agency, in conjunction with the American Chemical Society, honored both companies with the Presidential Green Chemistry Challenge Award for their respective achievements in breakthrough technology development. San Diego-based Genomatica received an award for “Production of High-Volume Chemicals from Renewable Feedstocks at Lower Cost” under the “greener synthetic pathways” category. The award recognized both the breadth of Genomatica’s potential industry impact and the tangible commercialization milestones for its first target product offering, 1,4 butanediol (Bio-BDO) made from renewable sources. The global market for 1,4 butanediol is worth approximately $4 billion. BioAmber earned an award for “Integrated Production and Downstream Applications of Biobased Succinic Acid” under the small business category. BioAmber is recognized for integrated production and downstream applications of biobased succinic acid and for creating a portfolio of renewable chemicals and polymers that are derived from succinic acid. Its portfolio includes modified polybutylene succinate (mPBS), a novel, high-temperature biopolymer.

Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Industry Briefs, Biorefining, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

You may also fax information to (701) 746-8385, or e-mail it to rkotrba@bbiinternational.com. Please include your name and telephone number in all correspondence.

august 2011 | Biorefining Magazine | 11

startup

Biorefining News & Trends

Shedding Light on China Lux Research launches China Innovation Intelligence service China’s rapidly growing economy has a unique characteristic: its growth is occur­ring across all sectors. The country’s business environment can be overwhelmingly hard to navigate, however, particularly for foreign entities. “There is a level of confusion around the way China works and the level of innovation that exists in [the country],” says Chris Hartshom, vice president of research at Lux Research. “The need that we are serving is to uncover innovative ideas and potential partners in China that will allow companies to enter [the space] more effectively and also find technologies they can deploy in other parts of the world.”

“No other nation in the world shares China’s unique mix of strong R&D, vast manufacturing resources, supportive government policies and domestic market demand,” says Lux Research CEO Dennis Philbin.

“Consequently, foreign tech developers simply cannot afford to ignore its potential for commerce and open innovation, yet they will need reliable, up-to-date intelligence in order to proceed decisively and intelligently. That’s precisely what we designed the China Innovation service to provide.”

According to Hartshom, when his group first began looking into the Chinese mar12 | Biorefining Magazine | august 2011

ketplace, they weren’t exactly sure what they would uncover. “What we found is a tremendous amount of very interesting research and very interesting technology that is under development in China today, and that will be relevant on a global basis.”

While there is a perception that intellectual property (IP) in China is not valued and that the region is like the “wild wild west” when it comes to IP protection, Hartshom notes that a current legal battle taking place in the country seems to indicate otherwise. There are actually two biofuels companies currently engaged in a legal battle regarding IP protection, which demonstrates it might be time for some of those perceptions to change.

When looking to become engaged in the Chinese biofuels sector, Hartshom says it is important to note there have been some challenges in the past. While the country did establish a B5 mandate, that mandate didn’t translate into retail sales of biofuel. “Even though they had the infrastructure, the delivery mechanism and all the rest, the block they reached was key players,’’ he continues.

The key oil and gas players were just not engaging,” and unless big market players in the country engage with the policy and have “horse in the race” they tend to ignore some

of the guidance that is passed down by government. “There is a bit of a problem there in that you have to get the large players onboard for any of these emerging technologies to actually take off and start reaching the market, even if there are quality policies that are actually put in place,” Harshom says.

On the scouting side, Harshom says Lux Research and its products can help its clients to effectively engage in China, build market channels, forge strong partnerships and mitigate risk. The company also actively scouts technology developments coming out of China’s research institutions and universities.

For many companies entering the biobased industry in China, it will also be important to identify partners that have existing government relationships to leverage.

No matter how U.S. entities choose to engage with the biobased industry in China, it is incredibly important they do so, says Harshom. “For any company not engaged in China and is not actively looking for technology opportunities and technology-based partnerships in China—if you are not looking right now, you are falling behind,” he stresses.

—Erin Voegele

startup |

Alignment of Interests

Partnering with big-name chemical firms is only the beginning for Avantium Relying on the expertise and business savvy of large chemical manufacturers is a critical component for many emerging biobased chemical developers to introduce their product offerings to market as a supplement or replacement to petroleum-based counterparts. The same is true for Avantium as the Dutch biotech outfit, specializing in advanced high-throughput catalysis research and development of biobased chemicals and

furnanics-based hydrocarbon fuels from its “YXY” platform, locked up deals with two of the world’s leading chemical companies.

Avantium’s first agreement is a collaborative venture with Japanese chemical manufacturer Sekisui Chemical Co. that will allow Sekisui Chemical to access Avantium’s proprietary technologies and experts as part of the suite of tools used in its development of catalysts and process optimization. While the company couldn’t disclose the process or application, Avantium spokesman Anniek Gielkens confirms that the deal isn’t related to its YXY technology.

In a subsequent deal, Avantium entered into a multiyear partnership with Solvay Specialty Polymers to jointly explore the commercial potential of engineering plastics derived from high-performance polyamides using biobased feedstock, such as starches or sugars, on the basis of AvanSOURCE: EUROPEAN BIOPLASTICS/UNIVERSITY OF APPLIED SCIENCES AND ARTS HANOVER

SOURCE: EUROPEAN BIOPLASTICS/UNIVERSITY OF APPLIED SCIENCES AND ARTS HANOVER

tium’s YXY building blocks. Solvay will test the polyamides for engineering applications such as for nylons and Kevlar that can be used in automotive and electronic components.

“We expect that these new materials will be competitive in price and performance compared to petroleum-based products, but will have a significantly enhanced environmental footprint,” Gielkens says. In addition to exploring the market for biobased polyamides, Avantium is also focused on the development of biobased polyethylene furanoate (PEF), a biobased alternative to petroleum-based polyethylene-terephthalate (PET). —Bryan Sims

NABC’s Extra Credit The National Advanced Biofuels Consortium’s new Biomass Deconstruction team, led by researchers at NREL, wants to be right in the middle of biochemical conversion and thermochemical conversion. The team has a plan to maintain the selectivity achieved via enzyme use in a biochemical conversion process, and lower residence time associated with processes like pyrolysis or gasification all while converting both the carbohydrate and lignin fractions in the biomass.

For the carbohydrates, the researchers will work on solid, recyclable catalysts for acid hydrolysis of glycosidic linkages “that can operate at higher temperatures than biological catalysts can,” according to the NABC. The challenge with current catalysts, the NABC said in its explanation of the research, is that most are “inherently limited by interfacial contact between the catalyst and substrate.” The team will test a wide range of new catalysts, but the work won’t end there. —Luke Geiver

Biochemical Conversion

105 Residence Time [sec]

Forget about commercial-ready technology, this team cares about deconstruction

104 103 102

Pyrolysis

101 100 Gasification

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Temperature [ oC ] Happy in the Middle The NABC Biomass Deconstruction team is working on a crosscutting approach to biomass pretreatment that could affect a wide range of technologies.

Source: National Advanced Biofuels Consortium, and, Chundawat, Beckham, Himmel and Dale

august 2011 | Biorefining Magazine | 13

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Carbon-Neutral Solution Sustainability and energy efficiency took on a whole new shape for Blue Marble Biomaterials when the biobased specialty chemical firm based in Seattle opened its first commercial biobased chemical facility in Missoula, Mont. According to President and CEO Kelly Ogilvie, the new biorefinery is projected to produce more than 72 tons of fine and specialty chemicals annually from a variety of cellulosic and lignocellulosic biomass, such as agricultural residues, coffee grounds, spent brewery waste or wood waste, using a proprietary supercritical fluid extraction and fermentation-based technology developed inhouse by the company.

“The real value isn’t really in the equipment,” Ogilvie tells Biorefining Magazine, “it’s in the intellectual property of the microbes. The intellectual property of the company is bound up in the cell walls of the mircroorganisms

and the broad range of molecules they can express is what gives us that competitive advantage.”

Target product offerings for Blue Marble include carboxylic acids and esters, such as ethyl Commercial Ready Shown are Blue Marble Biomaterial’s lineup of vessels inside the Mont., biorefinery where the company produces specialty chemicals from butyrate for the food Missoula, biomass. and flavoring market, and propyl butyrate for the cosmetics and photobioreactor that contains algae for pufragrances markets. rifying wastewater and waste gases from its In addition to the suite of biochemical fermentation system. Solid waste from the offerings Blue Marble intends to produce, spent feedstock is dried and pelletized for use Ogilvie stresses the importance of how his in wood-burning furnaces and stoves. company will create value-added products “Our ultimate goal is to be completely from the waste produced at the facility, which off the grid and have zero waste coming out features novel recycling systems, such as a of that facility,” Ogilvie says. —Bryan Sims “With support from the County of Itawanba and the City of Fulton closer to and excellent work done

by Century Construction, the Fulton site is ready for facility construction,” says Arnold Klann, CEO of BlueFire Renewables, adding that the firm is working on “multiple pathways” for financing the project, including a pending loan guarantee application through the USDA. Coskata Inc. issued a letter of intent with Fagen Inc. and Harris Group Inc. for engineering, procurement and construction services for the construction of Coskata’s first commercial cellulosic ethanol plant located in Boligee, Ala., using wood biomass as feedstock.

“We are confident that together with Fagen and Harris Group, we will demonstrate the value potential and long-term benefits of the Coskata technology in this exciting project,” says William Roe, CEO of Coskata.

Nevada, Iowa, is the future home of DuPont Danisco Cellulosic Ethanol LLC’s 50 MMgy cellulosic ethanol facility, adjacent to Lincolnway Energy LLC’s corn-ethanol plant.

Dried cobs, stalks and leaves left after grain harvesting will be used as feedstock. DDCE is

Cellulosic Charge Advanced biofuel is getting becoming a reality With institutional lending and venture capital investment appearing to show signs of reemergence from the economic recession, coupled with a declared commitment by the U.S. government to support advanced biofuels development, momentum is certainly on the side for cellulosic ethanol developers as many achieved significant milestones this year in their respective projects.

BlueFire Renewables Inc. announced it had completed initial site preparation in June for its 19 MMgy cellulosic ethanol project near Fulton, Calif., which will utilize wood waste in the region as feedstock. Century Construction completed clearing and grubbing, placed geo-grid and fabric across the site, brought the site to grade level, and installed drainage structures prior to completion of final rough grading. Grass and mulch were applied to establish the necessary growth for erosion control until plant construction begins.

14 | Biorefining Magazine | august 2011

successfully producing cellulosic ethanol at its demonstration facility in Vonore, Tenn., and is scaling up the process to globally license its end-to-end production system. In addition to corn stover, DDCE’s process technology is capable of converting other cellulosic biomass, such as wheat or switchgrass, into ethanol.

Finally, the U.S. DOE made its first conditional commitment for a loan guarantee to Poet LLC, a $105 million loan guarantee to help cover the cost of its 25 MMgy corn cobto-ethanol facility, dubbed Project Liberty, at Emmetsberg, Iowa. Construction of the facility, which will be co-located with Poet’s 57 MMgy corn-based facility in Emmetsberg, is expected to begin in August, according to the DOE. Production is slated to begin in May 2013.

“Projects like [Project Liberty] show that our investments in next generation biofuels are paying off,” according to USDA Secretary Tom Vilsack. “This project is an important step in the Obama Administration’s effort to break our nation’s unsustainable dependence on foreign oil and move toward a clean energy economy.” —Bryan Sims

PHOTO: BLUE MARBLE BIOMATERIALS

Montana is home to world’s first zerowaste biorefinery

startup |

Ready for Take Off

task force had no objection to Gevo proceeding to jet engine testing, the Gevo progresses with ASTM biojet next phase in the certififuel testing as planned, on schedule cation process. Mustang Engineering LP will conThe aviation industry is ripe for the vert Gevo’s isobutanol to biojet fuel. The taking for biorefining firms to supply their engineering and consulting agreement with biofuels in commercial flights. Englewood, Mustang will focus on the downstream proColo.-based isobutanol developer Gevo cessing of isobutanol to biojet fuel for jet Inc. is on the fast track for seizing that op- engine testing, airline suitability and advancing commercial deployment. According to portunity.

In June, Gevo presented positive test Chris Ryan, president and chief operating results from “fit for purpose” testing of its officer, full certification of Gevo’s biojet biojet fuel to ASTM’s alcohol-to-jet task fuel is expected in 2013.

“I can tell you that the data was perforce, a group that consists of technical experts from a variety of stakeholders in the fectly in line with a drop-in fuel product and aviation supply chain, including jet engine Gevo is excited about it,” Ryan tells Biorefinmanufacturers, government bodies, fuel ing Magazine.

In July, the aviation industry reached manufacturers, third-party testing laboratories, academia and airframe manufactur- a significant milestone with the approved ers. Upon reviewing the results of the test, revision of ASTM D7566, titled “Standard which was conducted by a nationally recog- Specification for Aviation Turbine Fuel Connized research and development laboratory taining Synthesized Hydrocarbons.” The and the Air Force Research Laboratory, the approved annex, called “Hydroprocessed

A Solid Bioenergy Partner

Esters and Fatty Acids” (HEFA), allows up to a 50/50 blend of biobased components derived from biomass such as camelina, jatropha or algae, with conventional jet fuel.

If approved, Gevo’s biojet fuel would fall under the same specification in an alcoholbased pathway as obutanol. Although not its primary target market, Ryan says he’s confident that Gevo’s alcohol-to-jet pathway will follow on the successful revision the latest HEFA component received.

“It’s one of the key markets we’re pursuing,” Ryan says. Gevo is also targeting drop-in ready isobutanol for the transportation and chemicals markets. Ryan adds that end-users of its biojet fuel have already expressed interest once certification is complete. Gevo signed a letter of interest with United Airlines to purchase its future biojet fuel once it becomes certified. “We’re working with United Airlines to convert that into a definitive agreement,” Ryan says.

—Bryan Sims

Pretreatment optimization leads to higher conversion with new Cellic CTec2J

All enzymes aside, time and investment mean the most Lignol Energy Corp. may someday be a leader in woody biomass to cellulosic ethanol production. The same might be said about Poet LLC and corn stover, and for wheat straw, Inbicon might already be there. Regardless of feedstock, there is, however, one constant that has helped each prospective company approach their bioenergy milestones. We know Novozymes, the enzyme cocktail supplier to all three companies. But for the research teams and company executives, the company from Denmark may be the best possible partner in the bioenergy industry to date. Sure, those enzyme cocktails are “uber” productive, but in an industry where words like testing, piloting and commercializing dominate, there might be nothing more valuable than a partner who has been there from the beginning, has the experience and

numbers and understanding of all that work, and above all, has just as much time and money invested into the industry as anyone.

As an example, No- The Numbers Don’t Lie Novozymes not only has the data to show its enzyme cocktails work, but also multiple partners who’ve tested its products. vozymes recentSource: Novozymes ly joined Lignol on the Vancouver-based firm’s industrial pleased” that Novozymes is committed to consortium, funded by the Sustainable De- the success of Lignol as the company “emvelopment Technology Canada. “In the past barks on the final stages of commercializatwo years we have made significant progress tion,” he adds. Fortunately for the biorefinwith Novozymes,” says Ross MacLachlan, ing industry, several other companies might president and CEO of Lignol. “We are very share that sentiment. —Luke Geiver august 2011 | Biorefining Magazine | 15

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Tragic Reason for an Extended Stay

Japanese researcher Koichi Tamano is not living in his home of Tsukuba, Japan, after the earthquake in March destroyed his lab, but he’s found a new home at the Pacific Northwest Laboratory. As a researcher at the National Institute of Advanced Industrial Science and Technology (AIST), Tamano also works at PNNL through a program called the Alternate Sponsored Fellowship.

During the earthquake and tsunami coverage that dominated the airwaves in March, Tamano could only watch the devastation thousands of miles away because his fellowship had brought him to Richland, Wash.

Fortunately for Tamano, his wife and young child were also in Richland at the time of the disaster. “My wife called her parents and confirmed their safety,” he says, adding, “two days after the earthquake, I received an e-mail from one of the AIST-lab members and knew no one was injured. But, I was informed the damage of the building and experimental facilities was terrible.”

After arriving in October, Tamano expected to return to Japan in March. Now, PNNL has extended an invitation to Tamano, allowing him to continue his work in Richland until January.

Scott Baker, a researcher at PNNL and coworker of Tamano’s says the ASF is a “fantastic program which allows PNNL the ability to effectively collaborate with other labs with common goals.” For Baker’s lab and Tamano’s lab in Japan, part of that common work deals with fatty acid production in aspergillus oryzae, a fungus commonly used in the production of soy sauce. “Our PNNL biotechnology group is focused on accelerating the generation of fungal cell factories that produce biofuels, renewable chemicals and enzymes,” Baker says, adding that in order to do that, his team “not only needs 16 | Biorefining Magazine | august 2011

PHOTO: PNNL

Earthquake separates scientist from Ja­pan, but not his research

Open Arms Japanese researcher Koichi Tamano is working at PNNL on an extended stay after this spring’s devastating earthquake and tsunami destroyed his lab in Japan.

to understand the basic biology underlying the pathways which produce these things,” but also the ability to perform a scale-up of production.

In Japan, Baker explains, koji processes (which use the fungi to inoculate the rice grain), “have been very impressively scaled up.” Much of the biology behind the fungi, Baker also says, was researched by Tamano’s lab led by Masauki Machida. “It was natural for us to think about collaborating so that we could leverage each research group’s capabilities for mutual benefit,” Baker says.

Along with Tamano, Machida is also in Richland working on the fungus. But, Machida was not in the same situation as Tamano was, miles from home watching the disaster with no way to help. Machida was actually in the lab when the earthquake hit but, along

with 3,000 other workers at the lab, escaped injury.

From Baker’s perspective, keeping Tamano on staff for an extended time won’t be a problem even though the lab in Japan is back online, albeit in limited capacity yet.

“Shortly after he (Tamano) arrived, we were able to have Kochi complete our comprehensive safety training and he very quickly started interacting with the rest of the group here,” Baker says of Tamano’s arrival in October.

“While Koichi’s home institution is AIST, we consider him a member of our research team as well.” Koichi shares the same enthusiasm for the lab. “I love the atmosphere at PNNL,” he says. —Luke Geiver

startup |

Thesis Chemistry partners with EPC firm to build first biorefinery Deploying technology from the laboratory to demonstration- or commercial-scale can be a challenge for any emerging biorefining firm, but Thesis Chemistry is finding that, with determination and calculated haste, the process is achievable. The Ohio-based biotechnology firm selected Smet Construction Services as its design/build partner for the construction of its future commercial biobased chemical biorefineries.

According to Chris Forslund, CEO of Thesis Chemistry, partnering with Smet was an ideal choice for his company because of Smet’s proven track record of executing large industrial projects.

“That’s a key for not just for a stand-alone biorefinery,” Forslund says, “but also [Smet] is a partner we can look to for the long-term as Tuning Concentrations of crude oxo-aromatic products undergo we build our first biorefinery and Fine testing at Thesis Chemistry’s laboratory in Cambridge, Ontario, also subsequent facilities thereaf- Canada. ter.”

Since 2007, Thesis Chemistry invested in is conducting its due diligence of site selection the development of cutting-edge technologies for its first biorefinery, and a site should be ofthat allow for the conversion of lignocellulosic ficially identified later this year. The facility is biomass into biobased chemicals, such as ben- projected to come online in 2013 with an estizenes, phenols and creosols that can be used mated annual chemical output of about 2,500 in the pharmaceutical, agribusiness, fragrance, tons once it achieves full production by 2014, plastics and food production industries. he says. —Bryan Sims According to Forslund, Thesis Chemistry

A Successful Soy-Based Polyol Handoff

According to Hegg, the team at Battelle needed to find a licensee “who was Battelle figured out the chemistry, Emery familiar and comfortable with using OleoChemicals will take it from there ozone in a chemical process.”

Battelle’s process that produces soy-based After seven years of research and development, Battelle’s bioproducts division had polyols started in 2004 and has since been patplans to license its patented process to produce ented, and involves the ozonolysis of a triglycsoy oil-based polyols (a chemical used to make eride or its derivatives containing unsaturated foams, coatings and adhesives typically made sites (double bonds) in the presence on an iniwith a petro base), but according to Richard tial polyol such as glycerin, according to Hegg.

Hegg, senior market manager for bioproducts So what does that mean? Ozone, or trioxygen, at Battelle, there was one major roadblock. is a much less stable version of oxygen that is also an effective oxidizGeneral Reaction Steps Involved in the Ozonolysis of ing agent. During BatSoybean Oil Double Bonds in the Presence of Glycerin telle’s process, the iniand Acidic Catalyst tial polyols reacts with HO OH R O O OH OH R O HOOO O OH RCHO H O the ozone intermediAcid Catalyst Acetal Acetal Aldehyde Hydrotrioxide (1,3-Dioxane) ates to create a finished O, RHC CHR RHC CHR Heat, product that is 25 to 40 Glycerin -O Soybean Oil Molozonide Acid Acid Double Bond Catalyst percent glycerin.

Catalyst, HO OH Reflux ~20 C OH O RCH O OH RHC O O To bring the R O OH -H O OH O OH OH ozonolysis process to Ester Polyol (Soybean Oil 1-MonoCarbonyl Alkoxy the commercial landglycerides) Oxide Hydroperoxide

scape, Battelle found

one of the world’s Figure 2. General Reaction Steps Involved in the Ozonolysis of Soybean Oil Double Bonds in the First-of-its-kind Chemistry Battelle started on the soy oil-to-polyol process in largest oleochemiPresence of Glycerin and Acidic Catalyst 2004. Emery OleoChemicals will attempt to make it commercial. cal producers, Emery source: Battelle Art Instructions: Please recreate the following image for the Polyol Startup piece.

3

3

O

O

O

2

2

In the image, please highlight the lower, far right of the graph “Ester Polyol (Soybean Oil 1‐ Monoglycerides).

Caption: First‐of‐its‐kind Chemistry: Battelle started on the soy‐oil to polyol process in 2004. Emery OleoChemicals will attempt to make it commercial.

OleoChemical LLC, manufacturing plants in North America, Germany and Malaysia. To this point, Hegg says testing is still ongoing in a number of applications including for flexible and rigid foams. And although the patented process hasn’t taken over the market yet, Battelle and Hegg have reason to be pleased with their licensee.

“Battelle searched for companies that had experience with ozone and that we thought would be interested in developing a new line polyols for commercial use,” Hegg says. “Emery OleoChemicals was the choice for us since their experience in ozone technology is more advanced than anyone else’s.” Emery will now have exclusive rights to produce the soy-based polyol in North and South America as well as Western Europe. In addition to foams, polyols are also used for polyurethanes and polyesters and, according to Battelle, as a starting point for high-performance ester lubricants.

While Hegg says Battelle has leaped the initial roadblock and found a capable licensee, he also said his team struggled with the long testing and qualification cycles to get new-tothe-world chemistry into commercial applications. But, it appears Hegg and his team won’t have to worry and can start on new projects, now that “Emery is currently in this phase of development.” —Luke Geiver

august 2011 | Biorefining Magazine | 17

PHOTO: THESIS CHEMISTRY

From Lab to Commercialization

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fuel

ZeaChem Boardman, Ore.

RFS2: KL Energy Upton, Wyo.

Fulcrum Bioenergy McCarran, Nev.

Early Producers In its 2012 renewable fuel volume proposal, the U.S. EPA suggests that a small volume of cellulosic ethanol or other biofuel from lignocellulosic material may be produced at the above locations to help fulfill RFS2’s cellulosic biofuel carveouts.

20 | Biorefining Magazine | august 2011

KiOR Houston, Texas Terrabon Port Arthur, Texas

fuel |

Working Towards Fiberight Blairstown, Iowa

2012

EPA’s proposed RFS2 volume requirements could increase the mandate for renewable fuels by 1.25 billion gallons

By Erin Voegele

In mid-June, the U.S. EPA issued proposed 2012 volume requirements for all four nested fuel categories defined by the RFS2 program, as well as 2013 volume requirements for biomass-based diesel. While

it remains to be seen if the targets for cellulosic fuel will be finalized at levels above and beyond the target set for 2011, representatives of industry agree that the agency is working diligently to ensure mandated volumes match up with actual production. If all four categories are implemented as proposed, the program’s 2012 volume requirement would increase the amount of renewable fuels that must be blended into our nation’s fuel supply by 1.25 billion gallons when compared to 2011 targets. Much of that increase can be attributed to the advanced biofuel category of the RFS2.

DuPont Danisco Cellulosic Ethanol Vonore, Tenn.

INEOS Bio Vero Beach, Fla.

KiOR Columbus, Miss. august 2011 | Biorefining Magazine | 21

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fuel

For 2011, the EPA proposed a cellulosic volume requirement in the range of 5 to 17.1 million gallons, with a final target set at 6.6 million gallons. Volume requirements for advanced biofuel, biomass-based diesel and total renewable fuels were proposed and finalized at the respective levels of 1.35 billion, 800 million, and 13.95 billion gallons. For 2012, the agency is proposing to establish a volume requirement for cellulosic biofuels in the range of 3.45 million to 12.9 million gallons. While the proposed range for the year is lower than what was proposed last year, the final mandated volume could demonstrate an increase over the 6.6 million gallon target set for 2011.

The industry will find out for certain after the public comment period ends and the agency releases final targets in November.

The proposed 2012 volumes for advanced biofuel and biomass-based diesel have been respectively set at 2 billion and 1 billion gallons, bringing the total proposed volume of renewable fuels to 15.2 billion gallons. In addition, the EPA has proposed to set the 2013 target for biomass-based diesel at 1.28 billion gallons.

The 2012 proposed volume range for cellulosic biofuels is not only lower than the range proposed last year, it also represents a significant deficit when compared with the 500 million gallon target set by the Energy Independence and Security Act of 2007, which established the RFS2 program.

According to the EPA, the agency will continue to evaluate the market as it works to finalize the cellulosic standard for next year, and remains optimistic that the commercial availability will continue to grow in the years ahead.

Brent Erickson, executive vice president of the Biotechnology Industry Organization, explains that the lower cellu-

‘ I just get the feeling that 2012 is going to be the year that a lot starts happening from a variety of people.’

- Craig Stuart-Paul, Fiberight CEO losic range for this year can be attributed to several elements, including the fact that the EPA has had to eliminate a few biofuels companies from its calculations due to the economic climate. “The recession, the lack of capital, and the unwillingness of institutional investors to tolerate risk associated with new technologies have really impacted the plans of cellulosic biofuel producers,” Erickson says. “However, EPA does predict a number of new companies will begin to produce measurable amounts beginning in 2012. USDA loan guarantees for the first commercial biorefineries will help to demonstrate the technology and reduce the perceived risk for investors. The overall to reducing risk for investors is maintenance of the renewable fuel standard.”

Erickson also notes that the goals for cellulosic ethanol production set forth by EISA are appropriately aggressive. It will likely take some time for the industry to catch up with those goals, however. “It would take a huge amount of capital to construct the biorefineries needed to hit [those] numbers,” he says. “Everyone expects that cellulosic biofuel production will expand rapidly, as long as the policy support remains stable at the federal level.”

Evaluating Cellulosic Potential

According to the EPA, it has researched all potential production sources of cellulosic biofuel that could be made available within the U.S. in 2012 by both company and facility. This includes more than 100 facilities that are still in the planning stages, have begun construction or are already producing cellulosic biofuels. However the agency also notes facilities that are primarily focused on research and development activities—and have no intention of marketing the cellulosic fuels that are produced—have not been addressed in its assessment. The final volume requirement set for 2012 will be based on actual volume of cellulosic fuel that is expected to be produced next year by the companies and facilities identified and assessed by the EPA. While it is possible that cellulosic biofuels could be imported into the U.S. from abroad, the agency has not considered these volumes in its estimates as those fuels are overwhelmingly likely to be used locally.

The EPA has identified eight companies, representing nine facilities, that are expected to produce cellulosic fuels in 2012.

DuPont Danisco Cellulosic Ethanol LLC, Fiberight LLC, Fulcrom Bioenergy Inc., INEOS Bio, KL Energy Corp., and ZeaChem Inc. are listed as expected producers of cellulosic ethanol. KiOR Inc. and Terrabon Inc. are listed as expected producers of drop-in cellulosic biofuels. If each facility and company produces at the rate expected, that would mean that 15.7 million gallons of cellulosic biofuels would enter the market next year. The agency stresses that none of the facilities on its list are currently producing at these levels, however, and that there are uncertainties associated with each facility’s projected volumes that could result in lower production in 2012.

2012 Volume Targets Cellulosic biofuel Biomass-based diesel Advanced biofuel Renewable fuel

Required Volumes in the Clean Air Act for 2012 500 million gallons 1 billion gallons 2 billion gallons 15.2 billion gallons

22 | Biorefining Magazine | august 2011

Ethanol Equivalent Volume 500 million gallons 1.5 billion gallons 2 billion gallons 15.2 billion gallons

Proposed Volumes for 2012 Actual Volume 3.45 -12.9 million gallons 1.0 billion gallons 2.0 billion gallons 15.2 billion gallons

Ethanol Equivalent Volume 3.55 -15.7 million gallons 1.5 billion gallons 2.0 billion gallons 15.2 billion gallons

fuel |

Cellulosic Biofuel 2012 Potentially Available Volume Company Name

Location

Feedstock

Fuel

Capacity (in Mmgy)

Earliest Production

DuPont Danisco Cellulosic Ethanol Fiberight Fulcrum Bioenergy INEOS Bio

Vonore, Tenn.

Corn Stover

Ethanol

0.25

Online

2012 Potentially Ethanol Available Volume Equivalent (in million gallons) (in million gallons) 0.25 0.25

Blairstown, Iowa McCarran, Nev. Vero Beach, Fla.

Ethanol Ethanol Ethanol

6 10.5 8

Online Late 2012 May 2012

3 0.5 3

3 0.5 3

KiOR

Houston, Texas

MSW MSW Ag Residue, MSW Ag Residue

0.2

Online

0.2

0.3

KiOR

Columbus, Miss.

Pulp Wood

10

Mid-2012

4

6.4

KL Energy Terrabon ZeaChem

Upton, Wyo. Port Arthur, Texas Boardman, Ore.

Gasoline, Diesel Gasoline, Diesel Ethanol Gasoline Ethanol

Wood Waste 1.5 Online 1 MSW 1.3 2012 0.7 Planted 0.25 2011 0.25 Trees * Data sourced from U.S. EPA proposed rule; Regulation of Fuels and Fuel Additives: 2012 Renewable Fuel Standards

Four new companies have been added to the EPA’s list of likely cellulosic producers since last year, while one has been removed from this year’s list. In other words, the number of companies that expected to reach commercial production has nearly doubled in the past year, which shows clear progress in the industry. Companies the EPA has identified as likely to produce in both 2011 and 2012 include DuPont Dansico Cellulosic Ethanol, Fiberight, KiOR and KL Energy. Fulcrom Bioenergy, Ineos Bio, ZeaChem and Terrabon are new companies that have been added to the list this year.

Although Range Fuels was identified by the EPA as a likely producer in its 2011 rulemaking, the company is not currently expected to produce cellulosic fuels in 2012.

According to the agency, the company started up its facility in January, but soon was forced to shut down in order to work through technical difficulties that had been experienced. The EPA notes that while it will continue to monitor development at the plant, no timeline has been provided for the facility’s restart. Therefore, the agency is not projecting the plant will produce any cellulosic biofuel in 2012.

In addition to the biorefineries that are expected to operate commercially next year,

Erickson also notes that the goals for cellulosic ethanol production set forth by EISA are appropriately aggressive. It will likely take some time for the industry to catch up with those goals, however. the EPA has also notes that EdeniQ’s enzyme technology is another possible source of cellulosic biofuel in 2012. Rather than build its own plants, the company intends to license its technology to third parties.

According to the EPA, the agency has not included volumes of the company’s fuel in its estimates because EdeniQ has yet to announce any licensing agreements. The EPA says it will continue to monitor the company’s progress and will include possible volumes from its technology in the final 2012

1 1 0.25

volume requirements if appropriate. The agency is also actively watching companies and facilities on track to commence cellulosic biofuel production in 2013, including Coskata, Enerkem and Poet.

A Bright Future

Fiberight CEO Craig Stuart-Paul says he thinks the EPA’s projections for cellulosic biofuel production are possible to achieve.

His company is currently working to finalize the design of its first commercial-scale plant, and will be breaking ground this summer. “We anticipate producing low levels of cellulosic ethanol by the end of this year,” he said, noting that depending on how the initial phase of production goes, the facility could conceivably expand quickly enough to fulfill the EPA’s current expectations for his company. However, he also notes that the cellulosic biofuels industry is defined by uncertainty. “As with everything in the cellulosic industry, it is an emerging industry,” he says. “It’s very hard to promise…but if everything goes well, we could do that amount.”

Stuart-Paul also notes that he has found the EPA to be highly involved in what is going on the cellulosic biofuels sector. “They’ve taken the time to look into august 2011 | Biorefining Magazine | 23

fuel

it, they take the time to engage with us and they are very open with us if we have any questions,” he adds. “I think we are all learning together…This is very much a fledgling industry, and as every year goes by and as every additional plant gets built, we’ll get better at forecasting…but I can report that we think the EPA is doing its best to get an accurate score.”

While the economic situation has presented an enormous challenge to the cellulosic industry the past few years, StuartPaul says the future seems to be looking up. The one thing all cellulosic plants have in common is that they are expensive to build, and it became impossible to procure funding after the economic crisis hit. “[These plants] are risky, and raising the capital in this kind of funding environment has been very difficult,” he continues. “So many projects—including ours—that we would have hoped to be in full operation by now were delayed because we just couldn’t get the money.” However, that seems to be changing. Stuart-Paul notes that certain

PHOTO: TERRABON

|

Market Ready Terrabon, whose MixAlco green gasoline technology is demonstrated at the above plant in Texas, is one of a handful of companies the U.S. EPA expects to produce small amounts of cellulosic biofuel in 2012, to help satisfy RFS2 requirements.

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sources of funding, such as angel funds, seem to be getting back into the cellulosic space. “Providing that continues and there is not another financial meltdown, we think…more of these types of facilities will get built. I just get the feeling that 2012 is going to be the year that a lot starts happening from a variety of people.”

Dan Cummings, vice president of Ineos Bio, agrees that the cellulosic industry is showing promise. “You are starting to see projects like ours come online,” he says. As there is access to capital through programs like the USDA loan guarantee program, you are going to see an acceleration [of development] and additional projects break ground and start being constructed in 2012.”

Cummings also stresses how important the RFS2 program is to the cellulosic biofuel sector. “The volume requirements are important, and it gives expectation—along with rest of the programs out there—to build out the entire industry.” However, he notes that the RFS2 is only one component of the entire portfolio of federal policy that the industry needs to expedite its growth. “I think that short-term areas, like an extension of the production tax credit and additional authorization for money for the USDA loan guarantee program in the next round of the Farm Bill, will only help to improve and accelerate the market.”

Erickson agrees that the RFS2 program is key to ensuring the market for cellulosic fuels remains open, and notes that there are several other actions that can be taken to help expedite development of the cellulosic and advanced biofuels sectors. “Continued funding of federal loan guarantee programs will help get the first few biorefineries constructed and raise the confidence level of investors waiting on the sidelines,” Erickson says. “Extension of tax credits, ensuring that advanced alcohols such as butanol retain tax credits, and making other advanced biofuels, such as algae, eligible for them will help to move new advanced technologies along with cellulsoics.”

Michael McAdams, president of the Advanced Biofuels Association, says that the EPA’s proposal shows clear progress in the cellulosic and advanced biofuel sectors. “I think we’ve got plenty of gallons and it shows great improvement in a very quick period of time,” he says. “When you look at that contextually, it took the corn ethanol industry 20 years to deliver 2 billion gallons, so from a contextual standpoint for advanced biofuels to be able to deliver 2 billion gallons just four years after the statute was enacted would be a great accomplishment.”

Author: Erin Voegele Associate Editor, Biorefining Magazine (701) 540-6986 evoegele@bbiinternational.com

august 2011 | Biorefining Magazine | 25

|

business

Searching for

28 | Biorefining Magazine | august 2011

business |

Leaders

Could the quest for top executives reveal the growth path of the industry?

By Luke Geiver

If Steve Kyryk wants to get in touch, you’d better be ready to talk. As the vice president for Hobbs & Towne, a leading clean energy executive search firm based in Philadelphia, Kyryk’s list of clients sounds more like a directory of renewable energy companies than a Rolodex of past clients. The only letters missing in his list of energy and clean technology companies are J, X

august 2011 | Biorefining Magazine | 29

|

business

Even with a handful of companies already reaping the benefits of big name board members and the network of outside resources those big names bring, that situation isn’t the current norm in the industry, but it will grow, says Kyryk.

The Challenge

Kyryk’s company began recruiting and placing executive level employees soon after the corn ethanol boom ended, but, he says, the job wasn’t easy. It’s a lot harder to find someone to lead a team of researchers trying create a new approach to energy production than it is to, say, find a lawyer to represent you in a personal injury lawsuit.

The pool for attorneys is nearly as big as two oceans, but for companies in need of that senior vice president of manufacturing and processing of, for instance, a biobased chemical never used before, the pool of experienced recruits might only be as big as a mud puddle. “We began doing a lot of recruiting into those early stage ventures,” he says, “and it was difficult…it is a challenge when there is a very small population that can even spell some of the science.”

The short list of talent available to fill a biorefining company’s executive team isn’t the only challenge facing Kyryk and other companies like his. Andrew Cartland, managing director for Acre Resources, an executive recruitment and search firm based in London whose clients include everyone from Shell to Nike, specializes in environmental and sustainability type recruits. Cartland agrees with Kyryk on the difficulty of finding talent for a relatively new industry, but for Cartland it’s also about competing with other existing and semiparallel industries (petrochemical). “These established firms offer generous salary and benefit packages, which can be hard to compete against,” he says. And, in addition to the difficulty of matching a salary, “depending on the exact technology,” Cartland adds, “there is likely to be some perceived risk around accepting a position with the organization,” especially “if the technology is unproven in a commercial sphere, and this is the case for many new technologies.”

On top of all those difficulties is another hurdle Kyryk Global Perspective Andrew Cartland and has identified in the his Acres Resources process, one that acrecruiting team are based in London and tually stems from a work to staff teams all good thing. Kyryk over the world.

PHOTO: INEOS BIO JV

and Y. “We’ve been in the cleantech space as long as anybody,” he says. Those 14 years for Kyryk and his team have given them a “rather unique experience,” he says. A call from Kyryk could mean he’s looking for the next senior vice president of manufacturing and processing for a startup biobased chemical producer or an advanced biofuel firm. When he calls, Kyryk probably already knows all of your job history (including that lawn mowing gig) and probably, all of your future job aspirations. He’ll want to know everything from what time you set your alarm, to how well you mingle on the manufacturing or processing floor.

Biorefining Magazine spoke with Kyryk, and others in the field with similar experiences, not to find out what time senior executives at companies like Cobalt Technologies or Genomatica wake up in the morning but, instead, to find out how those senior executives earned their titles, where they came from before leading their respective cleantech ventures, and most importantly, what those “rather unique experiences” that Kyryk speaks about relating to the renewable energy industry mean for the growth of our own biorefining industry.

Think BP Nearly all of the Ineos Bio executives, some shown here at a February groundbreaking, are former employees of oil giant BP. 30 | Biorefining Magazine | august 2011

worked with several companies at once, all of which received their first round of funding and were excited about expanding their ventures, and needed that hire which is “so critical to the future success of the company.” The only problem with multiple companies receiving their funding all in a relatively short period of time, he says, is that it only squeezes the talent pool tighter.

But that was a few years ago. “What is challenging now,” Kyryk says, “is that the ventures that have survived and are moving ahead, and they are entering the first commercial technology deployment phase of their operation,” are still in need of recruits—but the pool is still small. And with the big energy houses beginning to take a more active role in renewables (more than just writing checks, he says), the commercial facilities need people who know how to build first-of-their-kind production facilities, “which, aside from in China, not a whole lot has gone on in this country.”

Staffing Executives

For both Cartland and Kyryk, their jobs may be difficult, and they are not only managing, but they are doing well. Sentiments from Cartland show why. “In startup companies,” he explains, “excellence is required.” From Cartland’s perspective, it is very difficult to get a new business off the ground with mediocre staff as that business is likely to be competing with more established firms that he says will have an advantage: more cash, an existing profile, more reputation and more clients. “The best people are often being actively retained by their current employer, and [they hold the] experience you may be looking for.” To find that exBusy Guy perience, mainstream Mark Niedershulte acts as Ineos Bio’s chief sources most likely operating officer, which won’t suffice. means both operations and business sides The process of report to him. finding the right person for a job, as many would assume, starts with the petrochemical industry. But there are other places to start, like the major chemical companies. Mark Niedershulte,

PHOTO: VIRENT ENERGY SYSTEMS

business |

Top Shelf Lee Edwards, CEO of Virent Energy Systems, found his chief financial officer through the recruiting services of Kyryk and his team.

chief operating officer of Ineos Bio, says that in addition to the petrochemical world (nearly the entire Ineos Bio team worked for BP at one time), his team has also looked to source new hires from the ethanol sector as well as the steel industry because of a frontend process Ineos Bio employs at its Florida facility that utilizes a high-temperature gasifying unit.

At Ineos Bio, there is a three-step approach to finding new hires. First, Niedershulte says, “We always look internal; sometimes we are surprised of the background of the people within Ineos. Some people,” he says, “have some very unique backgrounds and experiences that are relevant to what we are trying to do.”

Next, the company will try the public forums like Monster.com, and if neither of those work, he will bring in people like Kyryk, people who he says have sourced roughly 80 to 90 percent of their new hires.

For Kyryk and his team, the challenge of assessing a possible executive who can operate in a small, early stage environment is “a little science and a little art,” most of which comes down to personality, given that most applicants don’t have an overwhelmingly large advantage of experience.

He looks for the “intrepreneurs” (entrepreneurs already employed in a company), the recruits that have already worked on new projects in their current role, or volunteered for the “wacky” projects that no one else

wants to do in those big companies. “They understand how to bootstrap, they understand how to fight for resources,” he says.

“That stuff translates really well to fighting for resources at an early-stage venture and fundraising and managing revenue.” These things, he adds, “are things you can talk about and evaluate.”

To find the potential boot-strappers, Kyryk and his team perform a detailed review and series of discussions with a company’s search committee and stakeholders. The team goes onsite to get a sense of the company they will be hiring for, all to understand the Prime Time culture. “Do they like Steve Kyryk, partner to work hard and play with Hobbs & Towne, says he and his team hard, or, is it more like have the client list to a big company enviprove they know what they’re doing. ronment where it is expected to be 9 to 5,” he says. After that, they set out on their search.

Search Results

There is a lot to glean from the work that executive search firms like Hobbs & Towne or Acre Resources have done in the past few years. For starters, as Kyryk says, “everything is manageable.” From the sticky situation of a founder unwilling to relinquish august 2011 | Biorefining Magazine | 31

|

business

The only problem with multiple companies receiving their funding all in a relatively short period of time, he says, is that it only squeezes the talent pool tighter.

control of a company to the business building experts ready to move past startup stage into the commercial realm, to what at first glance appears to be a small pool of talent to run a biorefining based company. In fact, some companies are well past that point; already forming a board of directors with some exceptionally big names (Condoleezza Rice at Kior, former U.S. Sen. Byron Dorgan at Codexis or former New Mexico Gov. Bill Richardson at Abengoa).

But although some companies have found their CEOs and other executives and

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32 | Biorefining Magazine | august 2011

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have moved on to building the board of directors, there is still something to consider.

From Kyryk’s perspective, the industry is in an in-between stage. “We aren’t looking for this professional corporate board member because these companies aren’t established enough yet,” but, he says, “we are looking for active board members from the commercial sector,” a move he says will help to transition a startup’s board away from all investors.

Even with a handful of companies already reaping the benefits of big name board members and the network of outside resources those big names bring, that situation isn’t the current norm in the industry, but it will grow, says Kyryk, and there’s more. For all of the intricacies and details that executive search firms deal with everyday, there is a larger, more positive theme to their work that bears attention.

The talent pool may be competitive now, but listen to Niedershulte. “What we have found [in the hiring practice] is that there is a lot of interest in the biospace. There are people when we post these jobs,” he says, “that have contacted us and said they have been following us.” Those people have been waiting for the opportunity to work with a company like Ineos Bio, he says.

Cartland shares the same sentiment regarding the renewable energy space. Although not in the same volume of the oil and gas industries, he says “the jobs definitely exist,” adding that “we believe that there is an increase in the number of jobs within the renewable energy sector,” that although has happened slower than expected, will still happen.

But Kyryk might have the best perspective on the growth of the industry and the need for executive-level positions.

“We see it as an opportunity as the sector matures,” he says—a sector he believes is clearly doing so. “I think it will go mainstream and it will be kind of like the tide, there is a big sandy beach and then you turn back and look back and then the water is up to your knees.” Someday, he says, “You won’t remember how the water got there.”

Author: Luke Geiver Associate Editor, Biorefining Magazine (701) 738-4944 lgeiver@bbiinternational.com

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biojet

34 | Biorefining Magazine | august 2011

biojet |

ASTMproval Ap

Hydroprocessed biojet achieves a significant milestone toward commercialization

By Bryan Sims

Biobased jet fuel is poised for takeoff in the commercial market as the ASTM International Committee on Petroleum Products and Lubricants has approved the addition of an annex to the biojet fuel specification D7566. Titled “Standard Specification for

Aviation Turbine Fuel Containing Synthesized Hydrocarbons,� the annex will set fuel properties for hydroprocessed esters and fatty acids fuel derived from biomass feedstocks such as camelina, jatropha or algae, as well as production control criteria of the fuel for aviation use.

august 2011 | Biorefining Magazine | 35

biojet

The vote concludes the technical review process, and final issuance of the revised specification was released in early July.

Airlines can use a 50 percent blend of biofuel in their planes immediately.

ASTM’s decision to amend the jet fuel specification was welcomed by various stakeholders within the aviation fuel supply chain, most notably the Air Transport Association of America Inc., the industry trade organization for the leading U.S. airlines.

According to John Heimlich, vice president and chief economist for the ATA, it will take time for significant volumes of biojet fuel to enter the market due to competitive hurdles, petroleum price volatility and scarcity of financing for fuel production facilities and other factors, “but there are reasons to expect up to 1 billion gallons of biofuel to be in annual production by 2020,” he says in an email correspondence. Heimlich says that the worldwide airline industry is projected to spend approximately $176 billion on conventional jet fuel this year.

“A plethora of U.S. and non-U.S. airlines have worked tirelessly together and with the military to facilitate the development and deployment of alternative avia­ tion fuels,” Heimlich says. “That work has clearly paid off.”

While the latest ASTM certification will undoubtedly help end-users such as airlines to use a cleaner-burning fuel in their engines, it will also play an important role in opening the market for prominent biobased jet fuel producers and technology players.

Honeywell’s UOP, for example, has played an active role in supplying its fuel for testing by various original equipment manufacturers airlines, airports and other participating stakeholders for several years within the aviation fuel supply chain.

According to Jim Rekoske, UOP’s vice president for renewable energy and chemicals, UOP intends to continue its commitment of providing biobased jet fuel and of being proactive in addressing the demand by opening discussions with domestic and international parties interested in potentially licensing its technology to build, own and operate biobased jet fuel production facilities in North America, Asia, Europe and India.

“The demand signal is now coming 36 | Biorefining Magazine | august 2011

Ramsbottom contests that ASTM certification may somewhat weaken the barrier to entry for biobased jet fuels such as HEFA and other alcohol-based jet fuels. Long-term sustainable and economic production of the product remains in question, particularly when it comes to feedstock sourcing and price competition against crude oil.

from the backend of [the aviation fuel supply chain] and it’s now coming in force with the ASTM approval,” Rekoske tells Biodiesel Magazine. “What it’s going to take is some time for that demand signal to work its way forward into the front part of the chain so that the raw materials can be readily acces­ sible, the conversion facilities can be built and operational and so on. That’s really the lag we’re working with.”

More Competition?

With the ASTM approval, some in the biorefining industry may wonder if it will foster increased competition among existing participants, like UOP, within the aviation fuel supply chain. Rekoske believes it will, and he doesn’t think that is a bad thing and expects direct competitors to create new business opportunities and collectively establish a competitive market.

“We welcome the competition to be able to go after these markets together,” Rekoske says. “They’re big markets…there’s 55 billion gallons of jet fuel consumed an-

PHOTO: VIRENT ENERGY SYSTEMS

|

Eye on the Prize Jim Dudek analyzes samples for Virent Energy Systems, one of many companies planning to take the biojet market by storm.

biojet |

nually in the U.S. alone. That’s a lot of jet fuel and it’s going to take a lot of facilities, so I think there’s room for a lot of different technologies to thrive and succeed.”

Not only should it be a boon for companies like UOP, but it should also embolden other companies to move forward more quickly with their own certification efforts.

Companies, including Amyris Inc., Gevo Inc., Terrabon Inc., Virent Energy Systems and Solazyme Inc., target a biobased jet fuel product from different processes and molecules not covered under the latest ASTM approval. This is a promising sign as a collaborative effort is underway among airlines, engine and airframe manufacturers, airports, the Federal Aviation Administration, the military and others to certify and approve pathways for processes that convert sugars and lignocellulosic feedstocks to jet fuel.

According to Aaron Imrie, Virent’s commercial manager of fuels and lubricants, who also represents the company within the ASTM committee, the company is in the initial stages of getting its biobased jet fuel approved by independent thirdparty valuators. Wright Patterson Air Force Base is currently evaluating the physical properties of Virent's product from its pilot facility in Madison, Wis. “Once everyone is comfortable sharing the information, we’ll start to share that data as part of the ASTM body,” Imrie says. “That’s the final step.”

Gary Luce, CEO of Houston-based Terrabon says his company has been trying to get its alcohol-based jet fuel certified through ASTM for about a year and a half now. Terrabon’s cellulosic gasoline product, made at its demonstration facility in Bryan, Texas, is a viable drop-in renewable gasoline blendstock that looks similar to cracked gasoline coming off the fluid catalytic cracking conversion process, Luce says, a pathway commonly used by today’s petroleum refiners.

“So far, we’ve gone through 100-liter tests and, by next year, we’ll make about 6,000 liters that will be going into these further tests,” Luce says. Terrabon is currently working with Logos Technologies to help it get its fuel qualified with the military and other potential end-users.

Challenges Still Looming

The ASTM’s decision presumably sets a meaningful precedent on the world stage for incorporating biobased jet fuel into the fossil aviation fuel supply. In 2009, ASTM approved the now widely used FischerTropsch process under the alternative jet fuel specification, and no other company knows this better than California-based Rentech Inc. Rentech operates a demonstrationscale facility in Commerce City, Colo., deploying its synthetic fuels technology that has produced more than 40,000 gallons of biobased jet fuels. Last year, a commercial flight flew on a blend of RenJet (the company’s trademarked, renewable, certified jet fuel) and conventional Jet-A with no difference in performance when compared to conventional jet fuel, according to President and CEO Hunt Ramsbottom. Rentech employs a proprietary process based on Fisher-Tropsch chemistry that, together with gasification and upgrading, is capable of converting syngas from biomass and fossil sources into hydrocarbons that are subsequently upgraded with technology from a UOP alliance.

Not only should it be a boon for companies like UOP, but it should also embolden other companies to move forward more quickly with their own certification efforts.

Companies, including Amyris Inc., Gevo Inc., Terrabon Inc., Virent Energy Systems and Solazyme Inc., target a biobased jet fuel product from different processes and molecules not covered under the latest ASTM approval.

Rentech is heavily involved in deploying its biojet fuel process technology. Earlier this year, the company received approval by the Province of Ontario, Canada, to obtain a long-term supply of up to 1.3 million tons per year of Crown timber for the company’s planned biobased jet fuel project, Project Olympiad, located in the Township of White River, Ontario. Last year, Rentech forged partnership Solena Group Inc. to integrate its Fischer-Tropsch synthetic fuel technology platform in Solena’s proposed BioJetFuel project—called GreenSky—in the United Kingdom. Ramsbottom added that Rentech plans to produce biojet fuel from sugarcane bagasse and wood sources out of its demonstration unit located in Commerce City.

Ramsbottom contests that ASTM certification may somewhat weaken the barrier for entry by biobased jet fuels such as HEFA and other alcohol-based jet fuels. Longterm sustainable and economic production of the product remains in question, particularly when it comes to feedstock sourcing and price competition against crude oil.

“It all comes down to economics,” Ramsbottom says. “I think the airlines to date haven’t wanted to recognize the benefits of green fuels in terms of the pricing and I think they’re constrained through their economics on what they can pay for fuels. I also think there has to be, at some point, a meeting of the minds as to energy security and green attributes, and if it has to compete head on with the price of crude oil, it’s going to be a long day until there’s a supply of this product.” He adds, “For us being approved two years ago, we’re at that stage now where the entire supply chain needs to come together and move forward with increasing supply in order to satisfy the demand.”

Author: Bryan Sims Associate Editor, Biorefining Magazine (701) 738-4974 bsims@bbiinternational.com

august 2011 | Biorefining Magazine | 37

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