December 2008 Ethanol Producer Magazine

INSIDE: HOW WILL NEXT-GENERATION ETHANOL PLANTS BE FINANCED? DECEMBER 2008

Corn Prices Expected to Remain Strong, Future Looks Promising for Midlevel Blends, Automakers Prepare to Offer More FFVs, Debate Over Ethanol Tariff Heats Up

WWW.ETHANOLPRODUCER.COM

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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ARI supplies the Ethanol industry with the latest in rail car design and technology. With over a century of engineering and manufacturing experience, ARI has the rail cars and services to get your product to market. Our standard Ethanol tank car has a capacity of 30,000 gallons, and is designed to your individual loading and unloading specifications. ARI is a full service organization providing a wide array of customized services to support your growing industry from engineering and repair to fleet management and consulting.

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FAX: 636.940.6100 sales@ americanrailcar.com

WE BUILD AND SERVICE THE WHOLE CAR 4

Check out our “Online Services” section at www.americanrailcar.com ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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a n d

C o n s u l t i n g

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Chattanooga, Tenn. • Cincinnati • Dallas-Fort Worth • Minneapolis-St. Paul • New York • O’Fallon, Ill. • San Francisco • Wallingford, Conn. • Washington, D.C. • Wichita, Kan.

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

inside DECEMBER 2008 . VOLUME 14 . ISSUE 12

features 58 PROCESS Improving the Process Without Breaking the Bank

102 VEHICLES The Road Ahead for FFVs

EPM examines the often overlooked field of fermentation performance and the tools producers can use to improve the process and save money.

By Ron Kotrba

Automakers are increasing their flexible-fuel vehicle models in response to consumer demand. Now, it’s just a matter of making sure there are enough service stations across the country to serve FFV drivers. By Anna Austin

68 CORN Fundamentals Remain Strong

110 WORLD Raising Cane

Corn prices may have taken a tumble in response to the flagging stock market, but the supply/demand situation suggests the market will recover.

By Susanne Retka Schill

Where will the European Union get the ethanol it needs to meet its renewable fuels goals? Importing ethanol from Brazil seems to be the cheapest, but does that country’s sugarcane-based ethanol meet the EU’s tight sustainability criteria? By Ryan C. Christiansen

Page 68

Page 94

Page 102

78 CELLULOSE Building Blocks to Biofuels Success

118 TRADE Politicos Seek to Harmonize Tariff, Tax Credit

The federal government has developed a plan to fulfill the new renewable fuels standard. EPM takes a closer look at the National Biofuels Action Plan and the seven areas where the government will be taking steps to help the biofuels industry grow and evolve. By Jerry W. Kram

The tariff on imported ethanol is a topic of concern for the ethanol industry as some lawmakers have called for it to be eliminated or modified.

By Frank Zaworski

86 POLICY Carbon as a Commodity Ethanol producers who incorporate technology to reduce energy inputs may earn carbon credits once the United States enacts a mandatory carbon emissions reduction program, which many experts say is inevitable.

By Kris Bevill

126 FINANCE Bankrolling the Next Generation Where will the money to build commercial-scale cellulosic ethanol plants come from? Financial analysts and companies in the process of building cellulosic ethanol plants agree that the fundraising process will be quite different than it was for corn-based ethanol plants. By Bryan Sims

94 INDUSTRY The Future of Midlevel Blends The New Year is expected to ring in good news for midlevel ethanol blends, including UL certified pumps and favorable tax legislation. Testing of midlevel blends and the E20 waiver request are still in the works. By Erin Voegele

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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© Novozymes A /S · Customer Communications · No. 2007-35469-02

Get more out of your corn - with Spirizyme® Ultra If squeezing the last bit of ethanol from your corn is important to you, your options have now improved. Spirizyme Ultra is a new, premium glucoamylase designed to deliver consistently higher ethanol yields and smoother plant performance. Have you been getting the most from your corn? Contact us today to see what you’ve been missing.

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Together with customers across a broad array of industries we create tomorrow’s industrial biosolutions, improving our customers’ business and the use of our planet’s resources. Read more at www.novozymes.com.

Novozymes North America, Inc. 77 Perry Chapel Church Road · Franklinton, NC 27525 Tel. +1 919-494-3000 · Fax +1 919-494-3485 fuel-ethanol@novozymes.com · www.novozymes.com

inside DECEMBER 2008 . VOLUME 14 . ISSUE 12

contributors 134 CORN OIL

Ethanol Producers Face Key Considerations When Assessing Corn Oil Extraction

departments

Extracting corn oil at ethanol plants and using it as a feedstock at biodiesel plants benefits both industries. There are a number of ways it can be done and several different aspects to each. By Mark Warren

10 On the Web 11 Advertiser Index

140 PROJECT DEVELOPMENT

14 The Way I See It

Proposed and existing ethanol facilities face capital-intensive projects. The first step toward success is completing a feasibility study. By Ken Wenninger

By Mike Bryan The Real Tie Between Food, Fuel Prices

20 Business & People 24 Commodities 26 View from the Hill

By Bob Dinneen Year of the Rat, or Perhaps the Scapegoat

27 RFA Update 30 Industry News & BIObytes

Feasibility Studies 101: What It Takes to Achieve Commercial Goals

146 FERMENTATION

FTIR Offers Push-Button Fermentation Control Fourier transform infrared technology is being tested in U.S. ethanol plants and gaining interest as a routine monitoring and control solution for fermentation.

By Richard Mills

152 DISTRIBUTION

Family Transport Business Expands in Midwest As the third generation of the Kane family drives Kane Transport into the future, ethanol will continue to play an integral role in the fuel distributor’s success.

By Tom Stone

40 Plant Construction List 52 Finance

By Donna Funk Pumping Up Profits With Retail Ventures

54 Legal Perspectives

By Todd Guerrero California Courts Reconsider Ethanol-Related Greenhouse Gas Issues

170 Events Calendar 172 EPM Marketplace

158 UTILIZATION

Emerging Waste/Coproducts Optimization Opportunities for Ethanol Facilities New production technologies are providing new coproducts for the ethanol industry.

In addition, new applications for existing coproducts are creating additional marketing opportunities. By Philip A. Marrone, Kenneth R. Liberty and David J. Turton

164 ECONOMY

Renewable Energy, Energy Efficiency Will Be Key to Economic Recovery As the world economy slides, a variety of experts are pushing renewable energy as a remedy. Some officials compare it to a “green energy gold rush.” By Bill Eby

Ethanol Producer Magazine: (USPS No. 023-974) December 2008, Vol. 14, Issue 12. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

BPA Worldwide Membership Applied for October 2006

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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ON THE

web BLOG

PODCAST

TAKINGSTALK

Second-Generation Enzyme Logistics

What was Your Favorite Ethanol-Bashing Moment?

Contributions Editor Dave Nilles discusses how the recent economic downturn has given the ethanol industry a temporary reprieve in the faulty debate over food versus fuel.

To view this blog and others, visit www.ethanolproducer .com/takingstalk/archive.jsp.

Senior Staff Writer Ron Kotrba provides an in-depth look at the challenges to manufacturing and distributing cellulase and hemicellulose enzymes in his November EPM feature, “Second-Generation Enzyme Logistics.” Three major enzyme-makers discuss the advantages and disadvantages of producing enzymes on-site.

To listen to this podcast and others, visit www.ethanolproducer.com/podcast.

TOP 10 WEB EXCLUSIVES

Biomass, Midlevel Blends and an Economic Downturn EthanolProducer.com’s most-read Web exclusive news stories for October

1

Industry addresses N.Y. Times article

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ICM lays off more employees

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Iogen ships cellulosic ethanol to Shell

4

Biomass conference focuses on cellulosic ethanol

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Pacific Ethanol starts up Stockton plant

Ethanol industry stakeholders quickly refute an Oct. 1 New York Times article that some ethanol supporters say inaccurately reflects an article in Science Magazine.

Due to sluggish markets, Kansas-based design/builder and process technology provider ICM Inc. lays off 73 employees, marking its second staff reduction of 2008.

Canadian cellulosic ethanol producer Iogen Corp. ships part of a 47,000-gallon order of cellulosic ethanol to Royal Dutch Shell PLC. The two companies have collaborated since 2002.

The Northern Plains Biomass Economy conference draws more than 100 people to Fargo, N.D., and discusses cellulosic ethanol incentives and how states can take advantage of them.

Despite recent financial losses, Pacific Ethanol Inc. opens its fourth ethanol plant, this time in California.

► For up-to-date Web exclusives, visit www.ethanolproducer.com 10

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ABW: Creating markets for advanced biofuels

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USDA, DOE plan promotes midlevel ethanol blends

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Volatile economics hurt ethanol producers

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Shell contracts with Jacobs to help with European biofuels program

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The Advanced Biofuels Workshop & Trade Show provides a platform for constituents to discuss options for meeting the renewable fuels standard with advanced biofuels.

The USDA and DOE’s new National Biofuels Action Plan reiterates the agencies’ push for nationwide E10 while also promoting midlevel blends.

A handful of bankruptcy filings, including those from producers in Ohio and Kansas, show that the ethanol industry isn’t immune to the current economic downturn.

Royal Dutch Shell PLC grants a three-year contract to Jacobs Engineering Group Inc. to develop and implement the installation of Shell ethanol and biodiesel blending facilities throughout Europe.

Shipworm enzyme could produce cellulosic ethanol Scientists receives $4 million from the National Institutes of Health to determine if an enzyme found living in certain species of clams can be used to produce cellulosic ethanol.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

AdIndex 48 2009 International Biomass Conference 156 2009 Canadian Renewable Energy Workshop 67 2009 International Fuel Ethanol Workshop & Expo 42 ABENCS 90 Adams Building Contractors 53 Afton Chemical Corp.

32 Agra Industries Corp.

136 Agri-Systems 109 American Petroleum Institute 4 American Railcar Industries Inc. 56 American Stainless & Supply 6 Anhydro Inc. 34 Antioch Intertnational Inc. 104 Aqua Power Inc. 77 Aquatech International 153 Australian Department of Resources, Energy & Tourism 83 Barr-Rosin Inc. 117 BBI International Community Initiative to Improve Energy Sustainability (CITIES) 76, 84 & 150 BBI Project Development 72 Best Energies Inc. 105 BetaTec Hop Products Inc. 144 & 161 Bioenergy Australasia 66 & 157 Biofuels Canada 46 & 100 Biofuels Recruiting 29 & 168 Biomass Magazine 132 Brock Grain Systems 114 Brown, Winick, Graves, Gross, Baskerville & Schoenebaum 93 Buckman Laboratories Inc. 5 Burns & McDonnell 116 Calbrandt 65 Caldwell Tanks 128 Centrisys Corp.

99 Cereal Process Technologies LLC 61 Check-All Valve Mfg. Co. 37 Christianson & Associates PLLP 142 Clifton Gunderson LLP 57 Cover-All Building Systems 154 Crown Iron Works Co. 74 Crown Iron Works/Harburg Freudenberger 125 Davenport Dryer LLC 124 dbc SMARTsoftware Inc. 22 & 23 Delta-T Corp.

47 & 138 Distillers Grains Quarterly 148 Duratech Industries International Inc. 139 Eclipse Inc. 141 Eisenmann Corp.

133 & 182 ethanol-jobs.com 85 Ethanol Promotion & Information Council 129 ETS Labratories 151 Faegre & Benson LLP 3 Fagen Inc. 149 Farms Technology LLC 143 FCStone LLC 62 Federal Equipment Co. 145 Fermentis 82 Flottweg Separation Technology 12 Gavilon ETHANOL PRODUCER MAGAZINE DECEMBER 2008

162 16 & 17 50 & 51 2 28 44 108 33 18 131 123 75 36 35 43 38 130 73 60 98 92 113 115 39 147 155 122 8 165 63 45 55 15 184 107 Insert 91 106 121 81 159 49 183 163 137 80 166 160 64 31 135 167 96 & 97 19 120 88 169 101 89 70 71 112

Genencor International Inc. GreenShift Corp.

Hydro-Klean Inc. ICM Inc. Indeck Power Equipment Co. Interstates Cos. Intersystems Inc. Kennedy & Coe LLC Lallemand Ethanol Technology Larox Corp.

Louis Dreyfus Maas Cos. Mapcon Technologies Inc. Martrex Inc. McC Inc. Metso Automation Midland Scientific Inc. Midwest Towers Moyno Inc. Natural Resource Group Inc. National Ethanol Conference Natwick Associates Appraisal Services Nestec Inc. New York Blower Co. Nexen Marketing USA Inc. North American Bioproducts Corp.

North American Safety Valve Novozymes Ortman Ethanol Water Resources Paul Mueller Co. Peters Machine PhibroChem Pioneer Hi-Bred International Inc. Poet LLC Pro-Enviornmental Inc. Pursuit Dynamics R&R Contracting Inc. R.J. O’Brien & Associates RailWorks Track Systems Inc. Resonant BioSciences LLC Rev Tech LC Renewable Fuels Association Robert-James Sales Inc. Robinson Industries Inc. Romer Labs Inc. Ronning Engineering SafeRack LLC Salco Products Inc. Seneca Waste Solutions Smar International Corp.

Strongform Nationwide Industrial Builders Sturtevant Inc. Sulzer Chemtech USA Inc. Syngenta TDC Dryers U.S. Water Services Univar USA Inc. Vaperma Inc. Victory Energy Operations LLC Vogelbusch USA Inc. Volkmann Railroad Builders Inc. WINBCO 11

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

EDITORIAL

ART

PUBLISHING & SALES

Jessica Sobolik Managing Editor jsobolik@bbiinternational.com

Jaci Satterlund Art Director jsatterlund@bbiinternational.com

Mike Bryan Publisher & CEO mbryan@bbiinternational.com

Dave Nilles Contributions Editor dnilles@bbiinternational.com

Sam Melquist Graphic Artist smelquist@bbiinternational.com

Kathy Bryan Publisher & President kbryan@bbiinternational.com

Rona Johnson Features Editor rjohnson@bbiinternational.com

Elizabeth Slavens Graphic Artist bslavens@bbiinternational.com

Joe Bryan Vice President of Media & Events jbryan@bbiinternational.com

Ron Kotrba Senior Staff Writer rkotrba@bbiinternational.com

Jack Sitter Graphic Artist jsitter@bbiinternational.com

Tom Bryan Vice President of Communications tbryan@bbiinternational.com

Jerry W. Kram Staff Writer jkram@bbiinternational.com

Matthew Spoor Sales Director mspoor@bbiinternational.com

Susanne Retka Schill Staff Writer sretkaschill@bbiinternational.com

Howard Brockhouse Sales Manager, Media & Events hbrockhouse@bbiinternational.com

Kris Bevill Staff Writer kbevill@bbiinternational.com

Clay Moore Account Manager cmoore@bbiinternational.com

Erin Voegele Staff Writer evoegele@bbiinternational.com

Jeremy Hanson Account Manager jhanson@bbiinternational.com

Anna Austin Staff Writer aaustin@bbiinternational.com

Chip Shereck Account Manager cshereck@bbiinternational.com

Ryan C. Christiansen Staff Writer rchristiansen@bbiinternational.com

Tim Charles Account Manager tcharles@bbiinternational.com

Bryan Sims Staff Writer & Plant List Manager bsims@bbiinternational.com

Chad Ekanger Account Manager cekanger@bbiinternational.com

Hope Deutscher Online Editor hdeutscher@bbiinternational.com

Marty Steen Account Manager msteen@bbiinternational.com

Jan Tellmann Copy Editor jtellmann@bbiinternational.com

Marla DeFoe Advertising Coordinator mdefoe@bbiinternational.com

Megan Skauge E-Media Coordinator mskauge@bbiinternational.com

Jessica Beaudry Subscriptions Manager jbeaudry@bbiinternational.com Jason Smith Subscriber Aquisition Manager jsmith@bbiinternational.com Christie Anderson Administrative Assistant, Sales canderson@bbiinternational.com Nicole Zambo Receptionist nzambo@bbiinternational.com

HOW TO REACH US

LETTERS TO THE EDITOR

We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to jsobolik@bbiinternational.com.

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

SUBSCRIPTIONS

Ethanol Producer Magazine is now 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 and Mexico.

To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

You can also fax a subscription form to (701) 746-5367.

CUSTOMER SERVICE AND CHANGE OF ADDRESS

For service, please use our Web site at www.EthanolProducer.com. You can also call (866) 746-8385, or write to: Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203.

BACK ISSUES AND REPRINTS

Select back issues are available for $3.95 each, plus shipping. To place an order, contact Subscriptions at (701) 746-8385 or subscriptions@ethanolproducer.com. Article reprints are also available for a fee. For more information, contact Christie Anderson at (701) 746-8385 or canderson@bbiinternational.com.

COPYRIGHT Š 2008 by BBI International

ADVERTISING

For advertising rates and our editorial calendar, visit www.EthanolProducer.com or call (866) 746-8385.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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The Way I See It The Real Tie Between Food, Fuel Prices

A

n interesting phenomenon has occurred.

We have always had more than

While U.S. ethanol production continues

enough grain. This year’s corn

to rise, the price of corn and other com-

crop will be the second-largest

modities followed oil’s downward trend in

in history. Countries around

the wake of Wall Street’s marked October setback. Mean-

the world are anxious to pro-

while, food prices haven’t budged.

duce corn and other crops,

This is more proof that the allegation about corn-

but need to have high-enough

based ethanol driving up the price of food has been noth-

market prices to be able to ef-

ing more than a hoax of gigantic proportion promoted by

fectively do so. They have the

the Grocery Manufacturers Association.

land, labor and technology, but

It’s all been a farce, a marketing strategy of criminal

the market price is too low.

proportion that has allowed the greed of the GMA to

The grocery industry was able to convince Congress

encourage grocers across the country to raise consumer

and others that higher commodity prices were starving

prices and blame fuel-grade ethanol. Farmers have always

people and causing human catastrophes of epidemic pro-

been somewhat trapped between rising fuel/fertilizer costs

portion. The true fact is that those high commodity prices

and the greedy grocers who spend millions on packaging,

were the only global bright spot for agriculture. It’s an op-

marketing and transportation and then blame commodity

portunity lost for countries around the world to improve

prices. This has been one of the few times in American

their self-sufficiency by cultivating millions of acres of ar-

history that the farmers have actually been able to make a

able land that now lies fallow because of low prices.

decent return on their investment, and the GMA has portrayed them as villains While grocery prices remain high, we have ships loaded with grain for export backed up in harbors because many

Perhaps a good slogan for the GMA would be, “Why do you need farmers when you have all these grocery stores?”

That’s the way I see it!

of the importing countries don’t have the ability to pay.

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Today Pioneer is driving new opportunities to help industry become

Delivering high-output products is only one piece of the

more profitable by delivering high-quality grain, proven expertise

equation. Pioneer also is developing new ways to profit from

and innovative services to meet growing demands from the biofuels,

our products by using innovative tools. Pioneer MarketPoint ®

livestock and food production industries.

resource will help buyers identify and buy the grain best

Several key Pioneer® brand hybrids have been developed for

suited for their business, and Pioneer QualiTrakSM system

end-use markets: High Total Fermentable (HTF) hybrids provide more

assists processors and growers in evaluating and understanding

ethanol per bushel. High Available Energy (HAE) hybrids contain

quality variations of incoming grain.

more digestible energy for pork and poultry producers. Food-grade corn hybrids offer food processors higher milling quality corn.

To learn more about these products and services and our commitment to American agriculture, visit www.pioneer.com/enduse

®, TM, SM

Trademarks and service marks of Pioneer Hi-Bred. purchases are subject to the terms of labeling and 2008 purchase documents.

ETHANOL All PRODUCER MAGAZINE DECEMBER © 2008 PHI INDSL010514P238AVC

15

Take advantage of GreenShift’s turn-key Corn Oil Extraction and Biodiesel Production capabilities and chose between extracting oil for conversion at our new fully operational biodiesel facility or extracting oil and producing biodiesel onsite at your facility.

Generate over $8 million in additional income for a 50 million gallon per year facility and over $12 million for a 100 million gallon per year facility.

Capitalize by purchasing our Corn Oil Extraction System and Co-located Biodiesel Production to receive the greatest return on investment while increasing your renewable fuel production.

Removing oil from your DDG can also be expected to enhance dryer operation while reducing drying costs, reduce emissions of greenhouse gases and to enhance the marketability of your remaining DDG.

GreenShift is the original inventor and industry pioneer of Corn Oil Extraction technology.

With over 40,000 hours of operational run time on our systems and years of know how integrating extraction technology into corn ethanol plants, GreenShift has established its technology leadership and proven its reliability.

Participating in GreenShift’s corn oil extraction program is guaranteed to bring you the highest return, on the shortest lead time, at the lowest risk, and for the least amount of capital deployed.

16

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Established Technology Leadership.

Proven High Yields. Consistent Production. Fully Automated.

Contact GreenShift for more information about the future of Renewable Fuel production.

GreenShift Corporation 1 Penn Plaza, Suite 1612 • New York, NY 10119 phone: 1 888 ETHANOIL • email: sales@greenshift.com

www.greenshift.com ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

We’re on the right path.

Step ahead with us. We’re hiring.

As a world leader in agriculture and plant science, Syngenta is uniquely positioned to help the renewablefuels industry reach its full potential. If you’re interested in joining a team dedicated to shaping the future of our industry, we want to hear from you. Syngenta is now hiring to fill numerous positions in its expanding renewable-fuels program. Visit www.syngentacareers.com for more information and to apply online today.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

© 2008 Syngenta, Inc. The Syngenta logo is a registered trademark of a Syngenta Group Company.

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BUSINESS&PEOPLE

Business&People Ethanol Industry Briefs

Business Telvent acquires DTN

Manly Terminal launches online trading service Iowa-based Manly Terminal LLC has launched an Internet-based ethanol and multi-products trading platform, allowing buyers and sellers of various commodities to easily and anonymously post trade offers anytime. The service is free of charge to registered users looking to make transactions, and matches buyers and sellers each business day between 8 a.m. and 4 p.m. Though ethanol was the first commodity to be introduced, the company plans to add more commodities in the future, according to Manly Terminal President Lee Kiewiet. “We are only letting registered people view or use the site so that we don’t have it work against them in any way,” he said. “This gives buyers just another outlet to purchase their product.” EP

Florida company to purchase Wanzek Fargo, N.D.-based ethanol plant contractor Wanzek Construction Inc. is being acquired by MasTec Inc. for $215 million—$200 million in cash and $15 million in assumed debt, according to the Florida-based company. The transaction is expected to be complete by the end of the year. In the meantime, MasTec is reviewing various funding options, including what the company called “equity and equity-linked alternatives.” MasTec’s purchase of Wanzek would include 500 pieces of heavy equipment, including several specialized cranes for erecting wind turbine towers. Wanzek employs 1,100 skilled workers and tradesmen. In the past, Wanzek has worked with Poet LLC, Glacial Lakes Energy LLC, Abengoa Bioenergy Corp. and Verasun Energy Corp. Wanzek is currently acting as general contractor for Tharaldson Ethanol LLC in Casselton, N.D. EP 20

Range Fuels receives innovation award International growth consulting company Frost & Sullivan awarded Broomfield, Colo.-based Range Fuels Inc. with its 2008 North American Fuels Technology Innovation Green Excellence of the Year Award on Sept. 17 at the Green Excellent Awards Banquet in San Francisco.

The award is presented to companies that have demonstrated superior technological advancement in the green energy field, and whose technologies are aligned with sustainable and environmentally conscious objectives. Range Fuels’ technology converts biomass into ethanol without the use of enzymes. The company broke ground on its first commercial-scale cellulosic ethanol facility in November 2007 near Soperton, Ga. The first phase of construction, which will reach a 20 MMgy production capacity, is expected to be complete in 2009. EP

Share Your Industry Briefs To be included in Business & People, send information (including photos or illustrations if available) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to jsobolik@ bbiinternational.com. Please include your name and telephone number in all correspondence.

Telvent GIT SA has acquired DTN Holding Inc. for $445 million, a move that will increase the Spain-based information systems provider’s presence in North America and provide DTN with a platform to expand globally. DTN will maintain its employee and service base that provides commodity information and specialized weather forecasts. In the energy sector, DTN tracks the buying and selling of various refined fuels, providing pricing information to the industry and handling credit authorizations. Telvent will explore ways to add DTN’s weather forecasting to its automated control systems, and add the agricultural sector to its business. Telvent is a sister company of biofuel producer Abengoa Bioenergy Corp. EP

Syngenta receives award for beet development Switzerland-based agribusiness company Syngenta AG has been recognized for its work in developing a sugar beet variety than can be grown in tropical conditions. Syngenta received the World Business and Development Award because its new beet variety can be grown for sugar and ethanol production with significant advantages for farmers and the environment. The sugar beets require less water than sugarcane and grow faster, allowing farmers to grow a second crop every year.

Syngenta spent 11 years developing the tropical sugar beet variety, which it first introduced in India in 2007. The company is conducting adaption trials in many countries. The award was presented by the United Nations Development Program, the International Chamber of Commerce and the International Business Leaders Forum. EP

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

BUSINESS&PEOPLE

Sponsored by

People Mascoma names GM exec to scientific board Andreas Lippert, director of global energy systems for General Motors Corp., has been appointed to the scientific advisory board of Boston-based cellulosic ethanol deLippert veloper Mascoma Corp. The addition of Lippert to the board is part of the continuing cooperative agreement between the two companies to develop cellulosic ethanol for commercial use. EP

Janssens joins Greenfield Project Management Ireland-based Greenfield Project Management Ltd., an investment and project management company that specializes in biofuels, recently announced the hiring of Marc Janssens as director of marketing. He brings to Greenfield international experience as an account executive for companies such as McCann Erickson and United States Container Lines, and has led trade missions for the regional government of Flanders. At Greenfield, he will have a central role in marketing and sales activity for the company’s ethanol blends. EP

Range Fuels hires vice president Colorado-based Range Fuels Inc. has announced the hiring of Robert McDonald as vice president of applied engineering. He will be responsible for the detailed engineering function that will implement the company’s biomass conversion process for its commercial-scale cellulosic ethanol plants. Most recently, he served as business leader of synthetic gas and biofuels at Stone & Webster, a subsidiary of The Shaw Group Inc. EP

US Ethanol adds to board

Ceres names new CFO

Dongho Kim has been appointed to the U.S. Ethanol LLC board of directors to complete the term of Bong-Sik Min, who recently resigned. Kim holds a doctorate degree in microbiology from the University of Texas at Austin. He has founded pharmaceutical companies in the United States and Korea. EP

Paul Kuc has been named the new chief financial officer for Thousand Oaks, Calif.-based energy seed and crop company Ceres Inc. In his new role, he will Kuc oversee Ceres’ capital management and financial systems. Previously, he worked at pharmaceutical company Eli Lilly, and held domestic and global finance positions at Monsanto Co. EP

NCGA names new president Bob Dickey became president of the National Corn Growers Association on Oct. 1. He owns and operates a farm in Nebraska that grows corn and soybeans, and Dickey raises swine and cattle.

He has been a member of the Nebraska Corn Checkoff Board for 11 years, also serving as chairman. He was chairman of the U.S. Grains Council and a state senator in the Nebraska legislature from 1999-2001. EP

Aventine appoints Butz to board Theodore “Ted” Butz has taken a seat on the board of directors for Aventine Renewable Energy Holdings Inc. He will be a member of the Aventine board’s audit, Butz and nominating and corporate governance committees. He is also vice president and general manager of the specialty chemicals group at Philadelphia-based FMC Corp. EP

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Algenol hires Schlicht, Denman Florida-based Algenol Biofuels Inc. announced the appointment of two new employees Sept. 15. Greg Schlicht has been named senior vice president of business development and general counsel. He will work with Algenol’s partners to commercialize the company’s process and oversee select corporate legal matters for the company. Previously, he worked for VeraSun Energy Corp. Dax Denman will serve as Algenol’s senior program manger. He will oversee the work being completed at Algenol’s labs and facilities. Previously, he worked for Amgen Inc., a California-based therapeutics company. Algenol’s technology uses algae to produce ethanol. The company’s first commercial-scale facility will be located in Mexico and produce 1 billion gallons of ethanol annually. Construction is expected to begin in 2009. EP

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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COMMODITIES REPORT Natural Gas Report

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

Is now the right time to buy?

Oct. 17—Natural gas prices have dropped dramatically in the past several months. The market topped out on July 3 at $13.58/ MMBtu and has generally dropped ever since. The prompt month natural gas price is now trading at $6.93/MMBtu. Is now the right time to buy since the market has dropped 49 percent in a little more than four months?

Not surprisingly, there is no clear-cut answer. On one hand, the forward 12-month NYMEX strip price ($7.61/MMBtu) is still 11 percent higher than the actual 2007 NYMEX monthly average settlement price ($6.86/MMBtu). On the other hand, prices are much more attractive than at any other time during 2008. During the first quarter of 2008, prices couldn’t break through $7.50/ MMBtu before the second and early third quarter rallies.

A useful tool we use to assess value is to look at where prices are relative to the long-term trend line. The chart shows the actual average annual price over the past five years and a forecasted price for the current and next two years based on current market prices.

We have “drawn” a long-term price trend line using all eight years of data.

There is clearly an upward trend in natural gas prices, albeit with a great degree of volatility around the trend line. If the trend

line is an accurate reflection of the long-term value of natural gas, then 2009 provides relative value compared to the trend line. In addition, 2009 natural gas values are considerably lower than 2008 values. Now may be a good time to consider partial hedges for 2009. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

By Jason Sagebiel, FCStone

Market faces downturn, volatility remains Oct. 21—The corn market experienced a rapid downward move in a short period. Within seven days the market traded from $5.63 to $4.53. At press time, the market rested at approximately $4 per bushel and volatility had faded somewhat, but remained high.

The sell-off in corn came with a sell-off in all commodities due to an entire financial meltdown.

The October USDA corn supply and demand figures changed only slightly compared to the soybean supply and demand. The corn yield was 154 bushels per acre versus 152.3 last month. Carryout increased from 1.018 billion to 1.154 billion bushels. Corn demand for ethanol was reduced by 100 million bushels as gasoline consumption is expected to slow.

Livestock feed demand increased by 150 million bushels while other industrial use was lowered by 10 million bushels. Feed demand was increased due to lower grain prices and reduced availability of distillers grains. Worldwide corn inventories fell by 2.18 million metric tons from September to October. One component of that equation was an increase in world corn use for livestock feed. From a coarse grain perspective the world carry-out actually increased by 0.15 million metric tons.

With the 1.7-bushel increase in yield from the September to October report, one could estimate the yield from October to No24

vember should increase by approximately 1 bushel per acre. Therefore, corn yields would be 155 bushels per acre. This would increase production by 79 million bushels using today’s planted acreage figure.

However, with a slowdown in the U.S. ethanol industry, what does this mean to the demand side of the equation? EP

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

COMMODITIES REPORT DDGS Report

By Sean Broderick, CHS Inc.

Dollar’s strength impacts overseas trade Oct. 20—Distillers grains, along with every other market, has had its share of volatility in the past couple of weeks. After hitting a high of $190 delivered to California in the second half of September, we are now seeing $175 delivered with little to no premium for November and December. As Halloween approached, distillers grains has appreciated from the low 60s to the high 80s as a percentage of the price of corn, which is an impressive move in a year where the fall temperatures have been relatively mild.

The potential that ethanol plants may slow, or even shut down, production is keeping buyers concerned about supply, and the old-crop corn basis is keeping it in the rations.

At press time, the International Distillers Grains Conference and Trade Show was ongoing in Indianapolis. Exports are going to continue to be an important feature of the distillers grains market, and there have been some interesting things going on in this arena. First, the strength in the U.S. dollar is not only curtailing trade overseas, but is also directly influencing trade with Canada and Mexico. Last week, the dollar appreciated more than 10 percent against the Canadian dollar.

That hasn’t helped trade to the north, especially when the Canadian wheat and barley harvest was much better than past years’ averages. EP

Regional Ethanol Prices (Monthly averages in cents per gallon)

REGION

SPOT

BULK TRUCK (rack)

RETAIL

West Coast

280.724

217.67

247.574

Midwest

197.803

210.69

237.902

East Coast

206.901

----

242.280 SOURCE: OPIS

Regional Gasoline Prices (Monthly averages in cents per gallon)

REGION

SPOT

RACK

RETAIL

West Coast

252.902

269.804

356.094

Midwest

249.335

258.743

339.963

East Coast

229.796

253.815

350.605 SOURCE: OPIS

DDGS ($/ton) LOCATION

OCT. 2008

SEPT. 2008

Minnesota

130

140

95

California*

172

188

140

Chicago

125

120

105

Buffalo, N.Y.

150

147

114

Central Florida

150

176

126

*Central Valley

SOURCE: CHS Inc.

Corn Futures Prices DATE

Ethanol Report

By Sean Broderick, CHS Inc.

(December corn, $/bushel)

HIGH

LOW

Sept. 19, 2008

4.27 3/4

4.06 1/2

4.11

Aug. 19, 2008

5.64 1/2

5.35 1/2

5.58 1/2

Sept. 19, 2007

3.68 1/2

3.59

CLOSE

3.64 1/4

Demand questions loom large Oct. 17—The world changed with the meltdown on Wall Street following the failures of a string of big investment houses. Just as suddenly, worry over a weakening global economy helped slash crude oil prices as fears of faltering fuel demand took center stage at home and abroad.

In that environment, which generated crude futures losses to less than half its summer peak and cut nearmonth RBOB prices more than 30 percent from mid-September to midOctober, ethanol markets generally put buyers in the driver’s seat. Chicago ethanol trading on either side of $1.70 per gallon for near-term deals by late October ran nearly 44 cents cheaper than it left September.

Ethanol blending economics faltered some, but remained well in

positive territory. Ethanol production continued expanding to record highs, and there was growing concern that gasoline demand—down by doubledigits on a year-on-year basis by some marketer estimates—could weigh on ethanol blending growth. Anecdotal signs included ethanol backing up at some terminals as blending slowed and some credit issues that stunted trading.

The U.S. DOE cut its projected growth for biofuel blending next year, assuming a softer economy. Also, weekly DOE data had conventional gasoline blended with ethanol down 7.6 percent week-to-week, at 3.151 million barrels per day. While still 45 percent more than one year ago, it was the lowest level since late August. EP

SOURCE: FCStone

Cash Sorghum Prices ($/bushel) OCT. 17, 2008 SEPT. 19, 2008 OCT. 25, 2007 3.08 3.03 3.19 3.23 3.15 1.03

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

4.47 4.42 4.54 4.58 4.57 5.44

3.66 3.54 3.32 3.71 3.33 4.21 SOURCE: Sorghum Synergies

Natural Gas

($/MMBtu)

OCT. 2008

SEPT. 2008

OCT. 2007

NYMEX

6.83

7.50

7.37

N. Ventura

6.21

6.19

6.89

Calif. Border

4.90

5.70

7.03

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production Output July 2008

614,000*

June 2008

585,000

July 2007

421,000

*all-time monthly high

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

OCT. 2008

(barrels/day)

SOURCE: U.S. energy Information Administration

25

VIEW

FROM

THE HILL

Year of the Rat, or Perhaps the Scapegoat Chinese culture names each new year after an animal believed to best represent what that year will hold.

This past year (ending Jan. 25, 2009, according to the Chinese zodiac calendar) was the Year of the Rat. The rat is a revered animal, thought to be courageous, clever and bright. It is also believed that enterprises begun in a rat year may not yield immediate returns, but those who are patient will see success.

This is a fitting description of the year endured by America’s ethanol industry. Despite new beginnings— implementing a new renewable fuels standard, building increased ethanol infrastructure, moving to higher ethanol blends, developing new ethanol technologies—it will take time to yield returns. Patience is a virtue familiar to this industry.

I offer that 2008 could very easily be characterized by another mythical animal: the scapegoat. America’s ethanol producers have been blamed for everything from the rising price of food to global warming to the price of gummy bears in Germany.

Headline after headline and CNBC interview after CNBC interview proclaimed that ethanol was all hype.

They said it was little more than snake oil, delivering none of the benefits promised while making milk more expensive and starving children in Africa. Overheated rhetoric, dubious science, scurrilous accusations and even one claim that ethanol was a “crime against humanity” came to define the attacks from anti-ethanol voices.

Under such a relentless, well-funded and coordinated attack, lesser industries might have given way to the pressure. This industry did not.

Redoubling our efforts and steeling our resolve, America’s ethanol industry fought back against its detractors, pointing out their inaccuracies, exposing their tactics and calling them out when their hypocrisy became too much to bear. This industry went on the offensive to defend itself from these baseless attacks that were designed for the sole purpose of deceiving the public and turning Americans against farmers and ethanol producers.

American ethanol producers were not the only ones engaged in this fight.

Our friends in Canada, Europe, Brazil and even India have joined with us in defending the global future of this industry.

We would be remiss if we did not recognize the brave souls on Capitol Hill and in Washington, D.C., who stood steadfastly with this industry during the worst of the storm. Sen. Dinneen Chuck Grassley, Rep. Collin Peterson, Sens. John Thune and Tim Johnson, Rep. Stephanie Herseth Sandlin, USDA Secretary Ed Schafer and President George W. Bush all remained committed to America’s renewable fuels industry. Absent their unwavering support, this industry would be in far more dire straights.

To be clear, the fight isn’t over. Corn prices are down, but they won’t stay there forever. Concerns about water use, carbon emissions, food prices, eco-diversity and global warming will be areas of focus in the next Congress and administration. With the federal budget constraints that will likely be in place, tax incentives, tariffs and other public policies will come under increased scrutiny and attack.

As the Chinese believe and is true of this industry, the progress we achieved in the Year of the Rat will yield results, but will take some time. Whether you believe 2008 was the Year of the Rat or the Scapegoat, one thing remains certain: The success and future of America’s ethanol industry is directly associated with our ability to forcefully and coherently speak with the same voice.

Happy Holidays from all of us at the RFA!

Bob Dinneen President and CEO Renewable Fuels Association

26

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

RFA Update

RFA elects new officers The Renewable Fuels Association announced the election of officers and board of directors for the fiscal year 2009. Officers include: Chairman Chris Standlee of Abengoa Bioenergy Vice Chairman Tom Branhan of Glacial Lakes Energy Treasurer Nate Kimpel of New Energy Corp.

Secretary Chuck Woodside of KAAPA Ethanol LLC President Bob Dinneen of the RFA “The RFA is proud of the dedication and commitment of its members to assuring a vital American ethanol industry,” Dinneen said. “The opportunity this industry has to lead America into a new era of greater energy, environment and economic security is exciting.”

A list of the RFA’s board of directors is available at www.ethanolrfa.org.

Two ethanol industry veterans recently joined the RFA’s staff. Jim Redding has become the RFA’s vice president for industry relations. He joins the RFA after more than 20 years at Aventine Renewable Energy Inc. He will serve as the chief point of contact for RFA member companies and others in the industry.

Also joining the RFA as director of market development is Robert White. He brings years of experience as a liaison between the ethanol industry and its customers. Most recently, White served as the deputy director of the Ethanol Promotion and Information Council.

“Jim and Robert bring an unmatched level of expertise and experience to the RFA and will greatly expand the scope of issues the RFA addresses on behalf of America’s ethanol industry,” RFA Chairman Chris Standlee said.

Food prices aren’t following drop in grain prices Anti-ethanol interests from the livestock, poultry and food processing industries were quick to blame U.S. ethanol producers for rising grain and food prices in the first half of 2008. In fact, the premise was the basis for Texas Gov. Rick Perry’s failed renewable fuels standard waiver request.

However, as grain prices have fallen drastically from record highs, food prices haven’t fallen accordingly. A new report, “Will the Plunge in Grain Prices Mean Lower Food Prices at the Supermarket,” discusses the relationship.

“Without question, the plunge in commodity prices in the past several months was the dominant factor driving grain and oilseed prices higher,” the report concludes. “Ethanol production has continued to expand dramatically while the price of corn and other agricultural commodities has plummeted in the past four months. Still, food prices have continued to rise, undermining the assertion by ethanol critics that food prices and ethanol production are somehow strongly linked.”

The full report is available at www.ethanolrfa.org.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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

Redding, White join RFA staff

27

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29

INDUSTRYNEWS

BIObytes Ethanol News Briefs

Credit crunch Nebraska university updates energy efficiency stats The Nebraska Center for Energy Sciences Research, located on the campus of the University of Nebraska-Lincoln, has completed a new study that found the energy balance of corn-based ethanol is two to three times more favorable than previous estimates. The study, which has been submittedtotheJournalofIndustrialEcologyfor publication, also estimated that 13 gallons of ethanol are produced for every gallon of petroleum used in the production cycle of corn-based ethanol.

Wal-Mart funds research The Arkansas Biosciences Institute at Arkansas State University has received $369,000 from the Wal-Mart Foundation to complement a $1.48 million U.S. DOE grant to support research for growing corn hybrids that have cellulase enzymes within the germs of the kernels. ASU has been collaborating with Texas A&M University and the Applied Biotechnology Institute in San Luis Obispo, Calif., to develop this project. The researchers said they expect to have corn hybrids that are ready for market within three years.

Abengoa receives grant for proposed plant Abengoa Bioenergy Corp. has received a $4 million grant from the Illinois Renewable Fuels Development Program for a proposed $200 million, 88 MMgy ethanol plant in Madison, Ill. The new facility will be built by Abengoa on a 79-acre site. It will use 32 million bushels of “traditional cereal grains” per year as feedstocks and is expected to be operational by the end of 2009.

The recent global credit crunch and financial meltdown has been especially difficult for ethanol companies and other inventory-intensive businesses that need operating capital to stay running. “Biofuels is in a particularly bad place right now,” said Kevin Book, senior alternative energy and fuels analyst for Friedman, Billings, Ramsey & Co. Inc., an institutional brokerage, research and investment banking firm. “It’s an expensive way of making a product that’s becoming increasingly less desirable to its main market—transportation fuels.”

Commodity prices are suffering, as well.

“Recently, we’ve seen corn prices come down substantially, but the real problem is that gas demand has come down equally substantially—on a year-to-date basis between 6 [percent] and 8 percent,” Book said.

VeraSun Energy Corp. was hit especially hard this year by volatile markets and a risk management strategy that locked in highpriced corn futures when it looked like corn prices would remain high earlier this year. According to an 8-K filing with the U.S. Securities and Exchange Commission, that misstep could cost VeraSun $100 million in the third quarter of 2008. Asset manager Invesco Ltd. recently purchased nearly 16 million shares of VeraSun Energy, approximately 10 percent of the company. “Large public, first-generation producers look very attractive at the current share prices,” Book said.

Rick Eastman, chief executive officer of Pursuit Dynamics Inc., said what he and many in the industry may also be thinking: Consolidation is coming. “There are obvious indications with the pure-play public [companies] that some consolidation may very likely happen,” he said. “Is the ethanol industry going to go away? No, I don’t think so.”

The financial crisis is hurting all industry players, so companies looking to acquire additional assets must still come up with adequate leverage to do so. “Any transaction now is being deterred or inhibited by the transaction costs and the credit crunch,” Book said.

In early October, Aventine shares sank to an all-time low of $1.93, followed by Pacific Ethanol Inc.’s 20-cent-per-share loss, dropping its stock to $1.08 per share, and VeraSun’s 12.4 percent dip to $1.84 per share. Shares of agribusiness giant Archer Daniels Midland Co. fell 87 cents, nearly 5 percent of its value, to $17.65. In contrast for example, when the ethanol industry was in its prime in 2006 and VeraSun started publicly trading, its stock was selling for just over $28 per share.

What about second-generation projects?

Experts believe there’s a natural investor class willing to take the risk—either corporate strategic investors or venture investors such as Vinod Khosla. “My expectation is that earlystage projects will not change much,” Khosla told Reuters. “Oftentimes in a recession, we see these projects go up as big companies cut back their most advanced research projects to preserve capital, but those that are let go start new projects outside the company, so it’s a healthy environment for early-stage projects.”

—Ron Kotrba

DuPont Danisco breaks ground in Tennessee The University of Tennessee Foundation’s Genera Energy LLC and partner DuPont Danisco Cellulosic Ethanol LLC broke ground Oct. 14 on a pilot-scale cellulosic continued on page 32

30

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

www.smar.com

Smar International Corporation, Houston, TX, Ph: 800-762-7833, Fax: 713-840-2022, sales@smar.com

A preliminary midlevel Impact of Change in Biofuels Blends blend report released by the U.S. DOE in early October summarized how E15 and E20 blends affect emissions and performance in both vehicles and small non-road engines.

The vast majority of ethanol used in the United States is blended as E10, with less than 1 percent of ethanol consumed as E85 in 2007, the report said.

Given projected growth in ethanol production and the new federal renewable fuels standard (RFS) in the Energy Independence & Security Act of 2007, some analysts believe the E10 market will be saturated in the SOURCES: RENEWABLE FUELS ASSOCIATION AND U.S. ENERGY INFORMATION ADMINISTRATION next few years, possibly as soon as 2010. With only 7 percent of U.S. vehicles being replaced each year, a sig- slightly increased catalyst temperatures with nificant number of non-flexible-fuel vehicles E15 and E20. will remain on the road, restricting growth of Based on informal observations durE85 consumption. Given this reality, the pur- ing testing, drivability was unchanged. pose of the DOE test program was to assess In addition, 28 small non-road engines the viability of using intermediate blends to were tested, including lawn equipment and help meet the RFS. generators. When comparing E15 and E20 The DOE test program included techni- with traditional gasoline, the DOE found: cal expertise from the DOE’s National Re As ethanol content increased, regulatnewable Energy Laboratory and Oak Ridge ed emissions generally stayed within allowed National Laboratory. The initial group of 11 limits, and engine and exhaust temperatures vehicles was selected primarily to span the evo- increased. lution in emission-control-system technology, Commercial engines, as well as larger but focused on 2003 and 2007 models. Five non-handheld residential engines, exhibited additional vehicles were included because they no particular sensitivity to ethanol from a duwere likely to be sensitive to increased ethanol rability perspective. content. Results from 13 of the non-flex-fuel The effect of E15 and E20 on the vehicles were included in this first report. durability of smaller, less-expensive handheld When comparing E15 and E20 with tra- residential engines was not clear. ditional gasoline, the DOE found: The first report gave the findings from Tailpipe emissions were similar. the first stages of a much larger overall test Under normal operations, catalyst program. The second report of the series is temperatures in the 13 cars were largely un- expected in January. changed.

—Susanne Retka Schill When tested under full-throttle conditions, approximately half of the cars exhibited

Ethanol, Bio-Diesel, Nuclear Power, U.S. NAVY, Oil & Gas, Water & Wastewater, Food & Beverage, Pulp and Paper, Sugar…

DOE addresses midlevel blends

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INDUSTRYNEWS

31

INDUSTRYNEWS

BIObytes Ethanol News Briefs continued from page 30

ethanol plant at the Niles Ferry Industrial Park near Vonore, Tenn. The new facility, which is expected to be complete in late 2009, will have a production capacity of 250,000 gallons per year, using switchgrass, corn stover and other crop residues as feedstocks. The Tennessee Biofuels Initiative has researched switchgrass and begun contracting with farmers to raise the dedicated biomass crop for this facility.

Report tallies UK biofuel usage The United Kingdom’s Renewable Fuels Agency released its first quarterly report Oct. 7, which found that biofuels accounted for 2.61 percent of the country’s road fuel during the quarter, exceeding the European Union’s 2.5 percent goal. Ethanol accounted for 16 percent of the renewable fuel, while biodiesel accounted for 84 percent. The most widely used ethanol feedstock was Brazilian sugarcane, which accounted for 75 percent of all ethanol sold during the quarter.

Shell receives cellulosic ethanol from Iogen Iogen Energy Corp. delivered more than 100,000 liters (26,000 gallons) of cellulosic continued on page 34

Conference goers call for midlevel ethanol blends For advanced biofuels to enter the marketplace, the conventional ethanol industry must continue its aggressive pursuit of striving past an E10 “blend wall” and establish a market for higher blends. This Jennings was an overarching topic presented to attendees of the 2008 Advanced Biofuels Workshop & Trade Show in Minneapolis on Sept. 28-30.

The renewable fuels standard (RFS) in the Energy Independence & Security Act of 2007 requires the United States to consume 36 billion gallons of biofuel by 2022 and caps the required consumption of corn-based ethanol at 15 billion gallons. For 2009, the RFS mandates 10.5 billion gallons of conventional biofuel and 600 million gallons of “advanced biofuel.”

This new category consists of 500 million gallons of biomass-based diesel and 100 million gallons of undifferentiated advanced biofuel.

Ralph Groschen, senior marketing specialist for the Minnesota Department of Agriculture, discussed the importance of expanding

E85 and midlevel blend infrastructure nationwide. Blender pumps at gasoline retail stations could help in this regard. “Certainly, E85 has its challenges,” he said. “Blender pumps are a possible way of achieving a blend somewhere between E10 and E85 in combination with [flexible-fuel vehicles]. If there becomes a significant legal market for conventional vehicles, midlevel blends will require some sort of (U.S.) EPA waiver.”

Brian Jennings, executive vice president of the American Coalition for Ethanol, agreed with Groschen in regard to mid- to high-level ethanol blends. “We need the transition of midlevel blends,” he said, adding that the United States “cannot simply rely on the quantum leap from E10 to E85 to get the job done.”

He added, “I would make the case that if we don’t find this pathway and we don’t have a market for advanced biofuel, it will chill investment, stymie growth, and slow or delay for years the commercialization of advanced biofuel. This is not the corn-based ethanol industry’s problem; this is everyone’s problem.”

—Bryan Sims

INDUSTRYNEWS

More opportunities for E85 drivers Drivers of the nearly 7 milup to $200,000, according to the lion flexible-fuel vehicles (FFVs) company. in the United States can enjoy An E85 corridor has been increased access to ethanol as completed along Interstate 65. recent projects have resulted in The interstate runs 884 miles openings of E85 stations in varifrom Mobile, Ala., to Gary, Ind. ous locations nationwide, even Major cities along the way inan entire interstate corridor east clude Nashville, Tenn.; Louisof the Mississippi River. ville, Ky.; and Indianapolis. The In late September, a Midcorridor was a two-year project Atlantic Petroleum Properties funded in part by a $1.3 million station in Germantown, Md., U.S. DOE grant. Other partners celebrated its grand opening by in the project included the Ethaoffering VeraSun Energy Corp.’s nol Promotion and Information trademarked VE85 brand of E85 E85 is even more available to consumers across the United States through Council, General Motors Corp. for $1.85 per gallon for the first recent station openings and the completion of an E85 interstate corridor. and several state organizations.

185 minutes of sales. The staAccording to EPIC, just three tion is Mid-Atlantic’s seventh location to Hayward, Calif., in early October. The fuel years ago there were no E85 stations along begin selling VE85. Rick Eggebrecht, vice supplier planned to break ground on ad- the corridor. Now, motorists are never president of market development at Vera- ditional E85 stations in Beaumont, Perris, more than a quarter of a tank away from Sun, said the company was pleased to be San Jose, Carmichael and Sacramento, Ca- an E85 retailer. “This could not have been part of the partnership to expand VE85 in lif., later in the month. The company has a accomplished without the cooperation of Maryland, and the Washington D.C., area. unique plan that includes partnering with the federal government, automakers and “Expanding the availability of ethanol, gas station owners to install E85 pumps at our industry partners,” EPIC Executive in particular higher blends of ethanol, to virtually no cost to the station owner, so Director Toni Nuernberg said. “We look American drivers throughout the country long as they agree to fuel supply contracts forward to the continued expansion of is critical,” he said. with Pearson Fuels. In return, Pearson America’s flex fuel.”

San Diego-based Pearson Fuels was Fuels acquires all appropriate permits for —Kris Bevill responsible for the opening of E85 fu- the station and foots the bill for the pump eling stations in Carlsbad, Concord and installation, the sum of which can reach

IN AN EVER-CHANGING BIOFUELS INDUSTRY, IT’S EASY TO FEEL LIKE YOU’RE GETTING NOWHERE.

Creating biofuels is a complicated process. But managing the business end can be just as confusing. At Kennedy and Coe, we have years of biofuels industry experience that can help you make the most of your operation’s potential.

Our professionals can help you make sense of the confusing details and identify opportunities that can significantly impact your cash flow. So you can stop spinning your wheels and start moving forward.

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Not your average accountants.SM The “e” mark and the “stylized e” are registered service marks of the Ethanol Promotion and Information Council. Used with permission.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008 KAC.10442_EPM_Cir_7.5x3.375_4C 1

33 7/24/08 11:05:51 AM

INDUSTRYNEWS

BIObytes Ethanol News Briefs ethanol to Royal Dutch Shell PLC, its commercial business partner, in late September.

The fuel was the first part of Shell’s initial order of cellulosic ethanol from Iogen, which totaled 180,000 liters (47,550 gallons). Iogen said Shell purchased the fuel “for upcoming fuel applications.” Shell first gained an equity stake in Iogen in 2002, and in July 2008, Shell increased its shareholding in Iogen from slightly more than 26 percent to 50 percent.

Industry addresses Science article An October Science magazine article addressing cellulosic ethanol sustainability issues drew quick responses from concerned ethanol industry members, mainly because a New York Times news article said the Science authors “sounded a note of caution” about cellulosic ethanol production. Poet LLC stated the Times article “chose to focus on the potential environmental problems” of biofuel production, even though the Science article seemed fairly well-balanced.

The Science article will be addressed in more detail in the January issue of EPM.

continued on page 36

More than 140 foreign buyers, nutritionists and feed ingredient importers were among the 500 attendees at the 2008 International Distillers Grains Conference and Trade Show in Indianapolis on Oct. 19-21. The event was designed to allow international buyers to network with U.S. distillers grains suppliers. Presentations were translated into seven languages, and interpreters were on hand during the International Meet and Greet Reception prior to the grand opening of the trade show.

Although Mexico is expected to continue being the largest importer of U.S. distillers dried grains with solubles (DDGS), many other international markets are expected to increase imports of DDGS, as well. Presenters representing Canada, Central America, South America and Asia each described the specific needs and market conditions in their regions. In addition, most sighted the value of the U.S. dollar as one variable that will help to determine how much U.S. DDGS is imported into their respective regions. Educating foreign buyers on the benefits of DDGS, addressing safety concerns and working to ensure product consistency were all cited as ways to increase the use of U.S. DDGS in foreign markets.

“Distillers grains is the best value in the marketplace today,” said Steve Markham, a merchandiser at CHS Inc. “It’s the best value per unit of energy, and it’s the best value per unit of

PHOTO: ERIN VOEGELE, BBI INTERNATIONAL INC.

IDGC: Improving DDGS exports

continued from page 32

More than 500 people attended the 2008 International Distillers Grains Conference and Trade Show in Indianapolis in October.

protein.” Product quality and consistency were cited by many as the primary concern of DDGS purchasers. According to Ken Hobbie, U.S. Grains Council president, it’s imperative that U.S. DDGS suppliers inform customers of the nutritional details of their products. As production and consumption of distillers grains increase, it will become necessary to combine DDGS from a variety of ethanol plants to fill large orders.

“The better the whole industry makes their products, the higher the price they can all receive in the bulk export market,” Hobbie said.

More details regarding the IDGC will be printed in the first quarter 2009 issue of Distillers Grains Quarterly.

—Erin Voegele

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

INDUSTRYNEWS

DDGS export options available in Russia, China

PHOTO: U.S. GRAINS COUNCIL

port a substantial amount of feed.

U.S. activities related to the export of distillers dried grains with “U.S. feed grains look to be the No. 1 choice in an import situation,” he solubles (DDGS) are continuing to said. As the industry grows, Chinese raise awareness and create access farmers will especially start looking to markets, most recently in Russia at DDGS, he said. and China.

The U.S. Grains Council is To help bring DDGS overseas, North Star Container International, planning to conduct DDGS feed a full-service, non-vessel-operating trials with the Moscow and St. Pecommon carrier and subsidiary of tersburg, Russia, poultry industry Minneapolis-based North Star Rail as early as next spring, provided the Russian government certifies the Intermodal LLC, has opened an commodity for import. The USGC office in Chicago to provide marketing and overseas transportation hopes that DDGS can be exported to Russia as early as January, accordservices for grain products. North Thaler, left, stands with Ying Qian, co-owner of Henan Muyuan Farms, ing to Craig Coon, a researcher at a swine operation in Henan Province, China. The farm, the country’s Star’s rail operation offers ethanol producers an intermodal truck and the Center of Excellence for Poul- second-largest swine operation, is looking into distillers grains usage. try Science at the University of Artrain service, which allows them to kansas in Fayetteville, Ark. Coon was in Rus- Chinese swine industry is also interested in utilize the international container shipping DDGS, according to Bob Thaler, a swine system by loading DDGS into containers at sia the week of Sept. 14.

Russian poultry farmers primarily use nutrition expert at South Dakota State Uni- North Star rail terminals from either hopper sunflower meal and wheat for feed, but very versity. He was recently in China to evaluate trucks or railcars, or by loading directly into little corn, Coon said. Two feeding trials are the USGC Swine Technical and Managerial containers at the ethanol plant. The company has negotiated contracts with several major planned—for layers in St. Petersburg and Training program there.

Chinese producers plan to expand their shipping lines serving the Asian, European broilers in Moscow. The market in St. Petersburg alone would use 17,000 metric tons industry from approximately 650 million and Latin American markets. of DDGS annually, based on a 20 percent pigs per year to at least 730 million, Thaler —Ryan C. Christiansen said, and producers told him that the country DDGS diet, Coon said.

With modern operations similar in size is unable grow all of the grain needed for the and scope to those in the United States, the expansion. Therefore, China will have to im-

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

35

INDUSTRYNEWS

BIObytes Ethanol News Briefs

Mascoma furthers cellulosic ethanol plans

PHOTO: JH PHOTOGRAPHY

continued from page 34

Siouxland Ethanol LLC has begun selling carbon credits at its production plant in Jackson, Neb.

Siouxland sells carbon credits U.S. Energy Services recently helped Jackson, Neb.-based Siouxland Ethanol LLC to sell carbon credits garnered from the ethanol plant’s use of landfill gas for power. Siouxland had ICM Inc. redesign its thermal oxidizer to allow lower-energy landfill gas to be mixed with natural gas after Fagen Inc. completed construction of the production facility in December 2007, when landfill gas began flowing to the plant. U.S. Energy Services will help to manage Siouxland’s future energy use, as well. EP

Boston-based Mascoma Corp. continues its mission to produce cellulosic ethanol on a commercial scale with recent advancements in the lab and the finalization of a site for its first commercial-scale plant in Michigan.

Researchers at Mascoma and Dartmouth College’s Thayer School of Engineering in Hanover, N.H., have genetically engineered a thermophilic bacterium that can be used in a fermentation process to secrete ethanol as its only detectable organic product. The scientists found that the microorganism, which can grow at very high temperatures, may have the potential to significantly lower the cost of cellulosic ethanol production because it doesn’t need enzymes or yeast to produce ethanol. The Dartmouth/Mascoma study was published online in early September in the journal Proceedings of the National Academy of Science.

In early October, Mascoma received $26 million in funding from the U.S. DOE for the construction of its commercial-scale facility.

These funds are in addition to $23.5 million from the state of Michigan. The company first announced its intent to build the plant in July 2007.

The company recently announced that after an extensive review process of various sites, Kinross township, Mich., was chosen because of support provided by the state of Michigan,

and the extensive availability of wood and agricultural waste as feedstocks in the Upper Peninsula.

Mascoma has partnered with Marquette, Mich.-based timber, mining and project management company JM Longyear to form a new company called Frontier Renewable Resources, which will own the plant. Additionally, Mascoma will collaborate with Michigan State University and Michigan Technological University to adjust the company’s technology to available feedstock supply chain options. Mascoma has also partnered with Associate British Foods PLC to develop advanced conversion methods.

General Motors Corp. and Marathon Oil Corp., investors in Mascoma, are also providing project support.

The 40 MMgy plant will use mixed hardwood chips and other nonfood biomass materials as feedstocks. A Mascoma spokeswoman said the company has targeted a construction start date of 2010, with a construction timeline of 18 to 24 months.

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MAPCON MAPCON “In my eyes, maintenance is equal to maximizing production.”

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

INDUSTRYNEWS

Wisconsin ethanol producers receive boost from state

Wisconsin, the ninth largest ethanol producer in the United States, has continued to invest in the future of alternative energy production within its borders by recently funding new technology for ethanol production and upgrading its transportation infrastructure that would help move ethanol to market.

Gov. Jim Doyle authorized the Wisconsin Energy Independence Fund to award up to $500,000 to five to 10 communities to help them create voluntary plans to derive 25 percent of their transportation and electrical energy from renewable sources in the next 25 years. Communities can obtain an application at http://power.wisconsin.gov before the Dec. 15 deadline. The grants will allow communities to hire an energy independence coordinator to create a baseline of information on the consumption of electrical energy, liquid fuels and potential feedstocks, or renewable sources of power, for future use.

The WEIF also allocated $600,000 for ethanol research in September. C5-6 Technologies Inc. in Middleton, Wis., will receive $350,000 to develop new enzymes to increase ethanol yields at corn-based eth-

anol plants. The company will isolate and commercialize thermostable enzymes that will recover more starch from ground corn than current enzymes. Also, Great Lakes Ag Energy LLC in Madison, Wis., was awarded $250,000 to perfect a pretreatment process for producing cellulosic ethanol.

Several other grants from the WEIF were announced in September, as well.

Grand Meadow Energies LLC in Stratford, Wis., received a $265,000 state grant to optimize ethanol production from whey wastes, using the ethanol plant’s byproducts to raise algae to produce biodiesel. American Science and Technology received a $150,000 grant to research the development of biofuels and industrial chemicals from woodchips, wood waste and switchgrass. Best Energies Inc. in Madison, Wis., received a total of $1 million, half in grants and half in loans, to develop and implement technology that will allow its facility to use corn oil from ethanol plants as a feedstock for biodiesel production.

The state will also spend more than $16 million to upgrade its rail lines, in part to handle increased transportation of ethanol.

Specialty Ingredients LLC in Watertown,

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Wis., received a $737,700 award to build a rail track and facility to more efficiently transport ethanol and other products. The funds will allow the company to construct a double-spur track with a load-out facility to serve other local companies shipping ethanol and other products. The project will reduce the number of trucks on state highways, and create savings in shipping costs for items including bentonite, ethanol, corn meal, distillers dried grains, sugar, salt and cement. In addition, River Valley Energy LLC in Beaver Dam, Wis., received a $3 million loan to construct rail yard facilities, and grain-based ethanol loading and receiving facilities at a new ethanol production facility being developed at Prairie du Chien, Wis. “Freight rail plays a critical role in Wisconsin’s transportation system, moving 150 million tons of commodities every year, and driving economic growth and strengthening our agricultural economy,” Doyle said. “The grants and loans will develop our freight rail capabilities, and allow great companies like Specialty Ingredients to retain jobs and grow right here in Wisconsin.”

—Jerry W. Kram

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Small valves can save you a small fortune.

Whether you are outfitting an existing or new ethanol plant, Metso Automation’s NELES R-Series control valves provide up to three and a half times the flow capacity of an eccentric plug valve, so smaller valves can be specified.And small is good when it leads to huge cost savings. Up to a $25K savings in control valves for a typical 115 million gallon ethanol plant. JAMESBURY® high-performance

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combine compact size with a higher flow capacity to significantly reduce processing costs and boost revenue. Their proprietary seat and sealing technologies deliver superior tight shut-off in a range of ethanol production applications. No wonder 2 out of 3 ethanol plants prefer JAMESBURY and NELES valves.

Intelligent Reliability leads to Intelligent Results.

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

39

Representing 2.8 Billion Gallons Annually

Ethanol Plant Construction New Project

Project Complete

Project Expansion

Expansion Complete

Lower Corn Prices Should Translate Into Sustainable Operations urrent ethanol producers have seen how the rise and fall of corn prices, especially brought on by late spring flooding in the Midwest, can affect their operations and ultimately their bottom lines. In July, corn prices skyrocketed to all-time highs, hovering at or above $8 per bushel. Unfortunately, some ethanol producers are still locked in at those high prices. Following this brief spike, corn prices then hit some of the lowest levels of the year, selling at or under $4 per bushel on the Chicago Board of Trade, down nearly 50 percent from midsummer.

On a positive note, this drastic downswing in corn prices may be a benefit for plants now coming on line, equaling healthy profit margins during the first few months of operation. Plus, these ethanol plants can hedge against futures contracts heading into winter.

At press time, corn futures for December rose 15.5 cents, or 3.8 percent, to $4.18 per bushel, according to CBOT. In this issue’s list, three plants completed construction: Bridgeport Ethanol LLC, a 50 MMgy plant in Bridgeport, Neb.; Southwest Georgia Ethanol LLC, a 100 MMgy facility in Camilla, Ga.; and Poet Biorefining-Marion, a 68 MMgy plant in Marion, Ohio.

Southwest Georgia Ethanol, the southeasternmost U.S. operating plant, began grinding its first batch of corn Oct. 10. It began

C

Appomattox Bio Energy Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date Synopsis of progress Preliminary dirt work is underway.

receiving corn Sept. 12, followed by a 90-car unit train that brought more than 300,000 bushels of corn on-site Sept. 21. “Our board, management team and employees have put in a tremendous amount of hours assembling all the pieces of this jigsaw puzzle,” said Murray Campbell, chief executive officer of First United Ethanol LLC, which owns the plant. “Projects this size don’t happen overnight. It takes a commitment from stockholders and supporters to see them through.”

Range Fuels Inc. and Appomattox Bio Energy are two of the newest additions to this list, and both will use a feedstock other than corn. Range Fuels is constructing a cellulosic ethanol plant near Soperton, Ga., where it will employ a proprietary thermochemical process technology to break down woody biomass. The plant will initially produce 10 MMgy but plans to build out to a maximum nameplate capacity of 100 MMgy after its scheduled start-up date in late 2009. Appomattox Bio Energy, an operating subsidiary of Osage Bio Energy, is building a 65 MMgy ethanol plant in Hopewell, Va., that will use barley as its feedstock. The project broke ground Oct. 3, and contractors have arrived on-site, according to Chief Operating Officer Joel Stone.

—Bryan Sims

Archer Daniels Midland Co. Hopewell, Va. Agra Industries Inc. Katzen International Inc. 65 MMgy barley Osage Inc. N/A N/A October 2008 second quarter 2010

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Cedar Rapids, Iowa undeclared undeclared 275 MMgy corn Archer Daniels Midland Co. undeclared undeclared June 2007 first quarter 2010

Synopsis of progress N/A

To provide updates to this list, contact Bryan Sims at (701) 738-4950 or bsims@bbiinternational.com.

40

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Bionol Clearfield LLC Columbus, Neb. undeclared undeclared 275 MMgy corn Archer Daniels Midland Co. undeclared undeclared July 2007 third quarter 2009

Synopsis of progress N/A

Clearfield, Pa. Fagen Inc. ICM Inc. 110 MMgy corn Bionol Clearfield Land O’Lakes N/A February 2008 January 2010

Synopsis of progress Outer scope of project is approximately 95 percent complete. Foundations for fermentors have been poured. Work on grains area is underway, along with excavation and foundation work for drum dryers in the energy center. Design for water treatment plant is initialized. Fire suppression system is being installed.

Aventine Renewable Energy-Aurora West LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Aurora, Neb. Kiewit Energy Co. Delta-T Corp.

113 MMgy corn Aventine Renewable Energy Inc. Aventine Renewable Energy Inc. undeclared September 2007 June 2009

Bridgeport Ethanol LLC Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Project Complete Bridgeport, Neb. ICM Inc. ICM Inc. 50 MMgy corn Poet Ethanol Products Colorado Agri Products undeclared September 2007 October 2008

Synopsis of progress According to a filing through the U.S. Securities and Exchange Commission on Oct. 6, the company has pushed back its target start-up date from March 2009 to June 2009. No further information was available at press time.

Synopsis of progress At press time, the company was running water tests throughout the plant, and boilers were operational. Corn was in silos in preparation for an Oct. 23 start-up date. Congratulations Bridgeport Ethanol LLC!

Aventine Renewable Energy-Mt. Vernon LLC

Cardinal Ethanol LLC

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Mt. Vernon, Ind. Kiewit Energy Co. Delta-T Corp.

113 MMgy corn Aventine Renewable Energy Inc. Aventine/Consolidated Grain and Barge

undeclared September 2007 first quarter 2009

Synopsis of progress Construction continues. No further information was available at press time.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Union City, Ind. Fagen Inc. ICM Inc. 100 MMgy corn Murex CHS Inc. N/A February 2007 October 2008

Synopsis of progress Plant staff training is complete. At press time, corn procurement was underway in preparation for start-up.

41

Cilion Inc. Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

E Caruso LLC Keyes, Calif.

Harris Construction Praj Industries Ltd. 55 MMgy corn Eco-Energy Inc. Western Milling N/A July 2006 November 2008

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Goodland, Kan. JMC Engineering LLC/Agri-Systems JMC Engineering LLC/Agri-Systems

20 MMgy corn undeclared undeclared N/A June 2006 first quarter 2009

Synopsis of progress At press time, the company was testing various equipment components. Complete plant staff is hired.

Synopsis of progress N/A

Clean Burn Fuels LLC

Ethanol Grain Processors LLC

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Raeford, N.C. Biofuels Design/Clean Burn Fuels LLC

Katzen International Inc. 60 MMgy corn undeclared Harris Crane Inc. Airgas May 2008 July 2009

Synopsis of progress Construction of fermentation tanks continues. Chiller building, cooling tower and grain-receiving building are complete. Work on distillation towers is underway. Dryers are on-site.

42

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Obion, Tenn.

Fagen Inc. ICM Inc. 100 MMgy corn Aventine Renewable Energy Inc. undeclared N/A December 2006 2008

Synopsis of progress N/A

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

GreenField Ethanol Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Hawkeye Renewables Johnstown, Ontario SNC-Lavalin Group ICM Inc. 200 MMly (53 MMgy) corn GreenField Ethanol Commercial Alcohols undeclared October 2006 December 2008

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Shell Rock, Iowa Fagen Inc. ICM Inc. 110 MMgy corn Hawkeye Gold LLC undeclared N/A July 2007 first quarter 2009

Synopsis of progress Construction is approximately 90 percent complete. Tests on various process systems and electrical components are being conducted. All buildings are erected.

Synopsis of progress Construction continues. No further information was available at press time.

Hawkeye Renewables

Highwater Ethanol LLC

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Menlo, Iowa Fagen Inc. ICM Inc. 110 MMgy corn Hawkeye Gold LLC undeclared N/A July 2007 fourth quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lamberton, Minn.

Fagen Inc. ICM Inc. 55 MMgy corn Renewable Products Marketing Group

CHS Inc. N/A November 2007 May 2009

Synopsis of progress Corn storage silos are complete. Rail construction continues. Energy center and process building are being enclosed. Tank farm and cooling tower are complete. Distillation tower is nearly complete. Construction continues on administration building. Natural gas lines are being installed. Work on electrical substation is underway. Installation of fire suppression system is ongoing.

43

Holt County Ethanol LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Kawartha Ethanol Inc. O’Neill, Neb. Adams Construction Vogelbusch USA Inc. 100 MMgy corn undeclared undeclared N/A July 2007 late 2008

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Havelock, Ontario Profab International Ltd. Delta-T Corp.

80 MMly (21 MMgy) corn undeclared Thompson’s Ltd. undeclared October 2007 February 2009

Synopsis of progress Fermentation tanks and distiller’s grains area are complete.

Homeland Energy Solutions LLC

Louisiana Green Fuels LLC

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lawler, Iowa Fagen Inc. ICM Inc. 100 MMgy corn Green Plains Renewable Energy Inc.

CHS Inc. N/A May 2007 March 2009

Synopsis of progress This project is ahead of schedule. Rail track is laid, and work on connecting to the main rail line is ongoing.

Lacassine, La. Praj Industries Ltd. Louisiana Green Fuels LLC 25 MMgy sugarcane/sweet sorghum undeclared N/A undeclared April 2008 mid-2009

Synopsis of progress N/A

1-800-827-1662 • www.interstates.com

ELECTRICAL CONSTRUCTION • ELECTRICAL ENGINEERING • AUTOMATION • INSTRUMENTATION 44

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

NEDAK Ethanol LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

One Earth Energy LLC Atkinson, Neb. Delta-T Corp.

Delta-T Corp.

44 MMgy corn Eco-Energy Inc. Frahm and Deitloff N/A June 2006 November 2008

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Gibson City, Ill. Fagen Inc. ICM Inc. 100 MMgy corn Eco-Energy Inc. Ag Motion Inc. N/A October 2007 March 2009

Synopsis of progress Testing is underway in preparation for start-up.

Synopsis of progress Concrete base for truck scales is being poured. Process building is being enclosed. Thermal oxidizer stack is erected. Rail yard, cooling tower foundation and water tanks are complete. Fermentation tanks are installed. Electrical and instrumentation work is ongoing in the distillation and fermentation areas. Work on substation is in progress.

Northwest Renewable LLC

Panda Hereford Ethanol LP

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Longview, Wash.

Makad Construction Corp.

Lurgi Inc. 55 MMgy corn U.S. Ethanol LLC Lansing Trade Group undeclared November 2006 second quarter 2009

Synopsis of progress N/A

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Hereford, Texas Panda Ethanol Inc. Thermo-Kinetics/Lurgi Inc. 105 MMgy corn Aventine Renewable Energy Inc. Panda Ethanol Inc. undeclared September 2006 first quarter 2009

Synopsis of progress N/A

45

Plymouth Energy LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Range Fuels Inc. Merill, Iowa Delta-T Corp.

Delta-T Corp.

50 MMgy corn C&N Cos. Plymouth Energy LLC undeclared May 2007 November 2008

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Soperton, Ga. undeclared undeclared 10 MMgy woody biomass undeclared N/A N/A November 2006 fourth quarter 2009

Synopsis of progress Commissioning activities and mechanical testing procedures are underway. Boilers in energy center are fired up. Air compressors are complete. Fire suppression systems are next to be tested.

Synopsis of progress The site has been excavated for the 100 MMgy maximum nameplate capacity eventually intended for this plant. Road and basic infrastructure work is in progress. Foundation for warehouse pad is poured, and steel is being erected.

Poet Biorefining-Marion

Route 66 Ethanol LLC

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Project Complete Marion, Ohio Poet Design & Construction Poet Design & Construction 68 MMgy corn Poet Ethanol Products Poet Nutrition N/A May 2007 October 2008

Synopsis of progress A grand opening ceremony was held Oct. 24. Congratulations Poet Biorefining-Marion!

46

Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Tucumcari, N.M. APS/United Stainless Process Technology United Stainless Process Technology

10 MMgy corn/milo undeclared undeclared N/A October 2007 early 2009

Synopsis of progress N/A

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Southwest Georgia Ethanol LLC (formerly First United Ethanol LLC) Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Project Complete

Camilla, Ga. Fagen Inc. ICM Inc. 100 MMgy corn Eco-Energy Inc. Palmetto Grain Brokerage LLC Airgas Inc. January 2007 October 2008

Tharaldson Ethanol LLC Location General contractor Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Casselton, N.D. Wanzek Construction Inc./Valley Engineering

Vogelbusch USA Inc. 120 MMgy corn Green Plains Renewable Energy Inc.

Verde Bioproducts Inc. N/A May 2007 December 2008

Synopsis of progress This plant began grinding its first batch of corn Oct. 10. Congratulations Southwest Georgia Ethanol LLC!

Synopsis of progress Electrical work is nearly complete. Grain-receiving functions have passed testing.

Southwest Iowa Renewable Energy LLC

VeraSun Janesville LLC

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location Design/builder Process technology Capacity Feedstock Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Council Bluffs, Iowa ICM Inc. ICM Inc. 110 MMgy corn Lansing Ethanol Group Bunge N/A November 2006 December 2008

Synopsis of progress Corn is arriving on-site. Final work on energy center is in progress.

Work on steam lines to power plant is underway.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Janesville, Minn.

Fagen Inc. ICM Inc. 110 MMgy corn VeraSun Energy Corp.

VeraSun Energy Corp. undeclared January 2007 fourth quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

47

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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:FINANCE

Pumping Up Profits With Retail Ventures

thanol plant managers should consider the following: What if my plant could make a few extra million dollars per year?

Would I like to take advantage of tax credits and incentive programs that, as a producer, may not be available to my business?

These questions can be answered positively if a plant enters a joint venture with a retail gas station to provide ethanol-blended fuel. With ever-tightening margins it is critical to gain the maximum value for a plant’s product. The spread in pricing between what plants currently receive for ethanol versus what consumers pay for gasoline at the pump is not going away. Entry into the retail market is one way to bring some of those dollars back to the plant. Establishing a joint venture with a local fuel retailer who has installed, or is interested in installing, blender pumps could be just the ticket to increasing profits.

E

52

By Donna Funk

For example, if a 40 MMgy plant sells ethanol for $2 per gallon and the consumer pays $4 per gallon at the pump, a $2 per gallon profit isn’t shared with the ethanol plant. An investment in that retail location would add dollars to the bottom line of every gallon of fuel sold.

The Internal Revenue Service offers a blender tax credit that is otherwise not available to ethanol production facilities. By partnering with a fuel retailer, a plant can share in the blender credit, depending on how the joint venture is structured.

This tax credit can be helpful to both new and operating plants by ultimately reducing federal income tax paid by the facility. Other incentive programs are available at the federal and state levels that can offset some of the cost associated with installing blender pumps.

ICM Inc. recently teamed up with a local fuel retailer to offer regular unleaded fuel as well as E10, E20, E30 and E85 at its pumps. The blender relationship was the brainchild of ICM Chief Executive Officer Dave Vander Griend, who wanted to provide a way for local consumers to use a higher blend of fuel in their car and ultimately increase the overall usage of ethanol.

ICM’s partnership with a fuel retailer means it and the station, TJ Convenience, will return the blender tax credit to the consumer.

The station purchases ethanol from a plant just over 60 miles away, which also keeps money in the area econoFunk my.

The 2009 blender’s credit of 46-cents-per-gallon means E10 is 4.6 cents cheaper at the pump than regular unleaded fuel. Thanks to the credit, TJ Convenience can blend the fuel itself, putting more money in its bank while consumers actually realize savings.

Many ethanol plants are considering additional profit strategies.

In most cases, it’s not a matter of if a blender relationship might benefit the plant but rather when the relationship might occur.

Donna Funk manages the biofuels division of Kennedy and Coe LLC. Reach her at funk@kcoe.com or (800) 303-3241.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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:LEGAL PERSPECTIVES 54

California Courts Reconsider Ethanol-Related Greenhouse Gas Issues

By Todd Guerrero n March, Time magazine published an article in which its author concluded that with respect to global warming, biofuels aren’t part of the solution but instead part of the problem. Time based its conclusions in part on a study by Tim Searchinger, published in February in Science. The study, titled “Use of Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change,” found that corn-based ethanol, instead of producing up to 20 percent carbon dioxide savings, instead nearly doubles greenhouse gas emissions over 30 years and increases greenhouse gas emissions for 167 years.

The theory in the study was that converting unused forest or grasslands to grow biofuel feedstock releases more previously stored greenhouse gas emissions than is saved on a life-cycle basis by replacing gasoline with biofuels. Reaction from biofuels supporters and experts was swift, including at least one point-by-point refutation and reference to other studies that raise serious questions about the assumptions used by Searchinger, et al.

EPM readers are of course familiar with this policy and scientific debate. But now it appears that the courts will soon be weighing in on the question of whether biofuels, and specifically ethanol, effect climate change.

I

In late September, oil refining giant Tesoro Corp. filed an action in Superior Court in Sacramento, Calif., seeking to invalidate and stay enforcement of the California Air Resources Board’s recent adoption of regulations that require refiners to increase the amount of ethanol in California gasoline.

At issue in the litigation is CARB’s adoption of amendments to the California Reformulated Gasoline Regulations. The new CaRFGs will require refiners to increase the amount of ethanol in California gasoline from the current level of 5.7 percent to 10 percent by Dec. 31, 2009.

In its petition, Tesoro makes essentially two claims. First, the company argues that in adopting any changes to CaRFG regulations, CARB must first assume that any new amendments “maintain or improve upon emissions and air quality benefits” achieved by previous CaRFG regulations. In adopting the new regulations, Tesoro argues that CARB failed to follow this standard because the additional ethanol blending required by the new amendments will result in additional ethanol production, presumably causing increased greenhouse gas emissions. As evidence that increased ethanol production will lead to negative greenhouse gas impacts, Tesoro cites as authority the same Searchinger study reported in the March 2008 Time article.

Tesoro further alleges that CARB also failed to evaluate the cost that the amendments will visit upon refiners and California consumers. Under

separate provisions of California law, before CARB can adopt or amend any standard relating to motor-vehicle fuel specifications, Guerrero CARB must determine the cost-effectiveness of the new standard. Previously, CARB had estimated it would cost $200 million to $400 million in capital improvements to make the refinery modifications required to bring gasoline into compliance with the new regulations. Citing a report from the California Energy Commission, Tesoro alleges that the estimated cost to consumers and businesses of the CaRFG amendments will be 4.2 to 5.6 cents per gallon, or $716 million to $1.1 billion per year.

A response from CARB is expected in the first quarter of 2009.

Todd J. Guerrero is an attorney practicing with the Agribusiness and Energy group at Lindquist & Vennum PLLP. Reach him at tguerrero@lindquist. com or (612) 371-3211.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

57

Improving the Process Without Breaking the Bank There are ways to boost a plant’s bottom line without intense capital investment. EPM takes a look at the options available for ethanol producers to do just that.

By Ron Kotrba

Lactobacillus bacteria under a microscope. Conventional methods to detect contamination only identify the metabolic byproduct of contamination─lactic acids─not the presence of the organisms themselves.

The proactive ability to detect the organisms can help avert bacteria contamination at an ethanol plant.

PHOTO: ETS LABORATORIES

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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PROCESS

T

he big ethanol process-design firms have done good work to help optimize plant operations in various ways, and they continue to make strides in increasing yields while decreasing ethanol refineries’ environmental footprint. Various fractionation packages are becoming more readily available, which allow producers more coproducts and choices, but fractionation requires some serious capital investment—and in the middle of what could end up being the worst financial crisis in history, it may be difficult to convince a plant or their financial institution that this is the way to go.

“Many of the points in the production process that relate to engineering have been optimized,” says Gordon Burns, president of ETS Laboratories. “And the industry continues to develop new technology to improve the process.” He tells EPM how Richard DeScenzo, a microbiologist with ETS, uses a black box at his booth during trade shows to represent the mystery of fermentation, which isn’t a new metaphor. Broin Companies, now Poet LLC, used a similar

A 1 MMgy side stream of ethanol from a 25 MMgy plant for ethyl lactate production via reactive distillation, could produce the same revenue in the specialized chemicals market as the remaining 24 MMgy of ethanol sold into the fuel markets.

prop at the 2006 International Fuel Ethanol Workshop & Expo, and then opened it to symbolize that they understood this important but mystifying step in ethanol production. Prior to that, EPM wrote a feature in January 2006 called “Unlocking the Black Box.” No, it’s not a new metaphor, but it is representative of some ethanol people’s understanding of fermentation. “At the trade shows, you hear people saying this all the time, ‘We have great engineers and we’ve optimized our process, but we don’t really have a handle on optimizing our fermentations,’” Burns says. “We hear that again and again. Fermentation performance is

an overlooked field for many in the ethanol industry. There are a lot of engineers and very good ones, and there are a lot of financiers, very good ones no doubt, and there are some microbiologists, but not in proportion to the importance microbiology plays in this whole process.”

DeScenzo tells EPM he’s been to six or seven ethanol-related conferences in the past year and only one of those shows, the FEW organized by BBI International, had a session on fermentation. “The focus was mostly on things like fractionation or maximizing distillation, and they’re doing stellar work in those fields, but you don’t hear

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

PROCESS

much about fermentation—and what you do hear on fermentation primarily focuses on antimicrobials.”

Since 1977, ETS has provided laboratory services to the fermentation industry—mostly wine, beer and spirits. “We’re not a startup,” Burns says. Some of the company’s beverage clients also have fuel ethanol production interests. The spoilage organisms that affect production of alcoholic beverages are the same ones that contaminate fuel ethanol plants. These microbes compete with Saccharomyces cerevisiae for vital nutrients, while their populations multiply exponentially, creating levels of acetic and lactic acids that can inhibit Saccharomyces growth.

ETS developed a microbiological tool kit called Scorpions, which detects the presence of the acid-producing bacteria and yeast in the mash instead of testing for their byproducts, or the acids themselves, like most conventional methods. “What

PHOTO: ETS LABORATORIES

Use a Surgical Laser, Not a Shotgun

ETS Laboratories uses a genetics-based approach to detecting the presence of spoilage organisms, and offers a turnkey solution for ethanol producers—including selection of laboratory equipment, in addition to setup and training.

we’re detecting is the organism—that’s the key difference—and what they’re detecting is the metabolic byproduct that has to build up in concentration to where they can actually detect it,” DeScenzo explains.

In other words, the Scorpions detection kit can actually identify the presence of these contaminate organisms long before they have produced enough lactic or acetic acid to be detected using conventional methods

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of analysis. “What we’re offering is an extraordinary technique that finds the beginning of the sickness if you will, and allows the plant to take proactive measures to prevent the illness, instead of finding out once they have an extreme problem,” Burns says.

DeScenzo says, “In order to have enough lactic or acetic acid to be detectable you’re looking at a population of 100,000 to a million cells per milliliter, but we can detect down to the 10-cellper-milliliter range.” Scorpions allows for the detection of bacteria in the incoming feedstock prior to milling and slurrying. “They can check feedstock as it’s coming in and while they’re building their yeast starters,” DeScenzo says. With a four or five hour turnaround time, results can be in hand and intervention methods can be in play before any undesired microbe populations get out of control.

A growing population of contaminate organisms gone undetected can cause batch fermentation time to increase nearly twofold, and in the case of continuous flow fermentation—not very common in dry-grind ethanol production because of the problematic issues with contamination—can reduce the alcohol content in the resulting beer. Either situation means money lost for the plant.

ETS offers two different service packages for ethanol producers. The first is more of a conventional forensics method using their novel microbiological approach, where plants can ship samples to ETS for a 24-hour turnaround time for results. The cost is $80 per sample to detect unwanted bacteria, and another $80 to detect contaminate yeast, like Brettanomyces. If both tests are requested, the cost is $140. There is another test available to detect Saccharomyces

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to make sure the population is growing as expected. The second service ETS can provide, and the proactive approach the company recommends for optimum effectiveness against contamination, is what Burns calls the turnkey solution.

ETS’s turnkey solution involves setting up the laboratory at an ethanol plant with the necessary analytical equipment and proprietary reagents to detect the presence of contaminate organisms early in the process. So, rather than a forensics approach to identify what went wrong, plant operators can detect contamination early on and intervene to prevent loss of yield. ETS doesn’t sell the required lab equipment but, if the ethanol plant doesn’t already have the necessary equipment, ETS will help the plant lab personnel select what is needed. To be fully automated, a robotic device is used to extract the DNA from the contaminate microbes in the mash, and an instrument called a real-time thermocycler is used to amplify the DNA. “We sell a kit that contains the molecular probes needed for doing the detection, the Scorpions reagents that are very specific, and the technical support and training,” Burns says. “If you started with nothing, the cost is about $120,000.” Then, the in-house cost for each assay is about $30 versus the $80 per assay ETS would normally charge.

A big advantage of knowing precisely which organisms are present is the ability to tailor the treatment to those organisms. DeScenzo calls this ability to tailor treatment a “data-driven decision.”

Not all bacteria can be effectively treated with the same antibiotics.

Dousing a plant with antibiotics using conventional testing meth-

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

PROCESS

ods detecting the presence of acids—especially when different microbes can produce the same acid—is akin to a doctor offering a single solution to different patients all exhibiting fevers. “It’s a shotgun approach instead of understanding what the problem is, and designing a solution,” Burns says. “It’s a very ‘un-engineer-like’ process to go after the problem with a shotgun rather than a surgical laser.”

“We want people to think of this as a preemptive screening tool,” DeScenzo says. If you can prevent these contaminate populations from getting to the point where it’s impacting your fermentation efficiency, then you’re saving money.”

More Effective Cooking The October EPM featured a story on Pursuit Dynamics Inc.’s ethanol reactor tower (ERT) titled “In Dynamic Pursuit of Efficiency.” Then it was too early for any real data from the first full-scale trial of the equipment at Pacific Ethanol Inc.’s 40 MMgy Columbia plant in Boardman, Ore. The ERT is a pretreatment device that is positioned on the side of the liquefaction tank through which slurry enters prior to liquefaction. Using highly atomized steam that impacts the slurry to cause more cell disruption and activate more starch than a jet-cooker at lower temperatures, thereby decreasing liquefaction time, reducing alpha amylase requirements by 50 percent, speeding up fermentation and ultimately producing higher ethanol yields.

Ongoing trials at Pacific Ethanol’s Columbia plant taught Pur-

suit Dynamics something about its equipment the company hadn’t encountered before: The potential for buildup of “super beerstone.”

“We identified we were producing a deposit that was magnesium phytate,” says Richard Eastman, president of Pursuit Dynamics.

“For lack of a more technical term we call it super beerstone.” The design and low-temperature operations of the PDX array—the individual reactors in the ERT—offered the perfect temperature and mechanical activity not only for the deposit to form, Eastman says, but for it to drop out. “Then it would coat the inside of the PDX array, reducing the tunnel bore size and eventually impacting the flow rate,” Eastman explains.

What the company discovered through its full-scale trial at a 40 MMgy plant is that it needed the ability to clean in place (CIP), which meant adding one more array to its ERT. “While it takes two banks or two PDX arrays to run the 500-gallon-a-minute flow rate at Boardman, we added a third array and all the necessary controls,” Eastman says. This gives the plant the ability to automatically valve one bank out and perform a CIP with a commercial cleaning solution. “So you’re running a CIP cycle on each bank daily for one or two hours, and that eliminates the opportunity for buildup to take place,” he says.

Part of Pursuit Dynamics’ marketing strategy involves what Eastman calls creating “the greatest ease of entry possible,” and he says the reoccurring income model helps with that. “No one’s in love with the recurring revenue model, but all we’re asking for is a very small part of a large number,” Eastman tells EPM. The

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PROCESS

PHOTO: PURSUIT DYNAMICS INC.

Necedah, Wis., Marquis Energy LLC in Hennepin, Ill., and Iroquois Bio-Energy Co. LLC in Rensselaer, Ind. “The one common voice we’re hearing says, ‘We are more than interested in looking at technologies that would deliver us a 10 percent yield benefit,’” Eastman says. “Everyone’s situation is different, but 10 percent is 10 percent. And that could be the 10 percent that keeps your head above water.”

The company states it still expects to see a 50 percent reduction in alpha amylase use as a result of employing its ERT, which alone could amount to a savings of a half-a-million dollars a year.

Full-scale trials of Pursuit Dynamics’ ERT, shown above, taught the company it needed to install an additional reactor bank at the 40 MMgy Pacific Ethanol plant to allow for clean in place (CIP) on one bank at a time while not interrupting operations. CIP eliminates buildup of “super beerstone.”

company has already signed a four-plant commercial letter of intent with Babcock & Brown, and involves the Denco LLC plant in Morris, Minn., the Castle Rock Renewable Fuels LLC facility in

64

Atypical Product Diversification Efforts to perform back-end oil extraction or the more capitalintense front-end fractionation to diversify and enhance coproduct streams continue to move forward, but a project between the National Corn Growers Association and Michigan State University looked outside the box of conventional coproduct diversification. The project involved the production of ethyl lactate through the combination of lactic acid and ethanol downstream of fermentation in a relatively simple process called reactive distillation. “The intention of this project was to try and provide some diversity for products from starch-based feeds, so producers could have more products to sell,” says Carl Lira, MSU professor of chemical engineering and thermodynamics.

An ethanol plant could either outfit a small fermentation tank to produce lactic acid in a controlled manner on-site, or it could pur-

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

PHOTO: KURT STEPNITZ, MICHIGAN STATE UNIVERSITY

PROCESS

Lira works in his lab on bench-scale reactive distillation of ethyl lactate, an ester compound used in the electronics industry that could be produced at a dry-grind ethanol plant to diversify its coproduct stream.

chase lactic acid for reaction with the ethanol it already makes. Today ethyl lactate is predominantly produced in a complicated process by the petrochemical companies, and used in specialized market applications such as micro-circuit fabrication in the electronics industry, mainly because it’s a clean solvent.

Richard Glass, NCGA vice president of research and development, says a 1 MMgy side stream of ethanol from a 25 MMgy plant for ethyl lactate production via reactive distillation, could produce the same revenue in the specialized chemicals market as the remaining 24 MMgy of ethanol sold into the fuel markets. The researchers were also able to demonstrate the ability to produce ethyl lactate at a profit while selling it at half the market value petrochemical companies typically charge. Lira says the production costs were closely tied to the selling price of lactic acid, so if an ethanol plant where fermentation is already a critical function could ferment some of its simple sugars into lactic acid using Lactobacillus, for example, thereby lowering the cost of obtaining the organic acid, then even better economics could be gained. “We were able to obtain a 30 percent return on investment and sell it for half the price of current market value,” Lira says.

NCGA holds the license for this technology and is eager to discuss it with ethanol plants looking to diversify its coproduct stream in a manner unlike what’s commonly investigated today. Glass says his dream is the integrated biorefinery where limitations arise only by one’s own imagination and the ability to build the system. “You can make a lot of different value-added chemicals—glycols, epoxydes, ethers—everything but the oink,” Glass says. EP Ron Kotrba is an Ethanol Producer Magazine senior writer. He can be reached at rkotrba@bbiinternational.com or (701) 738-4942.

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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Fundamentals Remain Strong Market gyrations can temporarily obscure the fundamentals. Although corn prices dipped in response to the flagging stock market, demand for corn should continue to pressure supplies. Ethanol producers also need to track crude oil prices as they have an increasingly important impact on prices. EPM talks to Iowa State University economists who have been plotting the numbers.

By Susanne Retka Schill

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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CORN

T

he financial troubles on Wall Street affected the grain markets much like the weather does. Just as the June floods affected the market psychology and sent corn markets sky high last summer, the credit crisis put the commodity markets into a dive. Predicting such gyrations is impossible, but analysis shows the fundamental drivers of the corn market still indicate strong demand keeping pressure on supplies in the next few years. However, the corn market is increasingly influenced by crude oil’s relationship with ethanol demand.

Bob Wisner, an Iowa State University agricultural economist specializing in biofuels, expects the use of corn in the ethanol industry to grow and to keep the pressure on corn prices.

He has charted expected growth in the ethanol industry against the USDA supply and demand estiWisner mates using the Renewable Fuels Association’s numbers indicating 1.984 billion gallons of ethanol capacity are under construction in late 2008. Several of those plants are scheduled to come on line in the last half of the current corn marketing year.

Another major component of the expansion in the 2008-’09 corn marketing year will come from new ethanol plants that were operational for only part of the previous year. “I would ex-

pect that expansion in ethanol will give important support for corn prices and be an important factor encouraging the corn market to pull some acreage in from other crops.”

Wisner has plugged those demand figures into a spreadsheet built on the USDA’s supply and demand reports and includes scenarios for low, medium and high yields. (See chart on page 71). The chart shows the numbers for the 2008-’09 crop using the crop estimates from the October USDA World Agricultural Supply and Demand report. The 2007-’08 figures are for the marketing year that closed in September (for the crop harvested in 2007), and show the October USDA projections for total usage.

Wisner says the low, medium and high scenarios show varying yields based on yield trends, plus or minus two or three bushels on either side. The line for historical probability indicates how often the national average corn yields were above or below the trend line since USDA began tracking the national average corn yield. “One good year like 1994 or 2004 would take a lot of pressure off the corn supply,” he comments. “And conversely if we had a year with a drought like in the 1980s or the 1993 flood year, it would tighten the supplies dramatically.”

Crude Oil Impact The other big factor for corn ethanol use is the price of crude oil, Wisner adds. “We saw that last winter when the bidding war for acres

of corn, soybeans and wheat was fueled by a surge in crude oil prices,” he says. Prices of $71 a barrel at the end of June 2007 rose 41 percent to $100 per barrel in February. “That was an important driving force in the commodity market,” he recalls. At the same time, the Energy Bill was passed with increased mandates for corn ethanol and cellulosic ethanol, adding even more bullishness to the market.

Crude oil prices have a huge impact. Wisner’s chart in August, based on the prices at that time, projected a range of corn prices for the current marketing year of $5.10 to $5.90 per bushel. Adjustments to the USDA projections for corn supply from the October report, and the weakening of the crude oil market in early October, dropped the corn price range to $4.10 to $4.50.

Recalling last year’s bidding war for acres among corn, soybeans and wheat, Wisner says, “those prices looked very high at the time, but looking back after what we saw in early June and July they now look low to a lot of people.” There is still a need for the market to balance the acreage between soybeans and corn, but how intense the competition between the crops will be depends on several factors. The October supply and demand report showed sharply higher soybean supplies than expected, which would dampen the bidding. However, several other factors will be watched closely, Wisner says. “Crude oil prices will be very important. South American weather and final Continued on page 75

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

CORN

Ethanol Usage Projections & Corn Balance Sheet (mil. bu.)

(Med. 2008 crop production based on USDA October Crop Report) Updated: 10/13/2008 Historic 1

Year: (production/marketing) Yield (bu. per acre) Long-term Historical Yield Probability:

Projected 2008-2009

2004-05 2005-06 2006-07 2007-08 160.4 147.9 149.1 151.1

Projected 2009-2010 4

Projected 2010-2011 4

Low 152.0

Med. 154.0

High 155.5

Med. Low 148.0 157.5 18% 65%

High 162.0 17%

Med. Low 150.0 159.0 18% 65%

High 164.0 17%

Supplies: Planted acres (million) Harvested acres (million) Production (mil. bu.)

Beginning Carryover (mil. bu.)

Total Supply (incl. imports)

80.9 73.6 11,807 958 12,776

81.8 75.1 11,114 2,114 13,237

78.3 70.6 10,535 1,967 12,514

93.6 86.5 13,073 1,304 14,395

86.9 79.0 12,008 1,624 13,647

86.9 79.2 12,200 1,624 13,839

86.9 79.3 12,331 1,624 13,970

91.0 83.4 12,343 1,149 13,509

91.0 84.0 13,230 1,149 14,394

91.0 84.0 13,608 1,149 14,772

94.0 86.4 12,960 1,099 14,076

94.0 87.0 13,833 1,099 14,947

94.0 87.0 14,268 1,099 15,382

Total Usage: (mil. bu.)

Feed & residual Ethanol Food, ind. & seed Exports Total Usage

6,158 1,323 1,363 1,818 10,662

6,155 1,603 1,378 2,134 11,270

5,598 2,117 1,371 2,125 11,210

5,999 3,000 1,338 2,435 12,771

5,425 3,920 1,335 1,925 12,605

5,450 3,950 1,340 1,950 12,690

5,475 3,975 1,350 1,925 12,725

5,150 4,400 1,340 1,875 12,765

5,500 4,450 1,345 2,000 13,295

5,475 4,475 1,350 2,050 13,350

5,200 4,775 1,340 1,850 13,165

5,500 4,850 1,345 2,000 13,695

5,550 4,875 1,350 2,050 13,825

Ethanol Usage: 2 Ethanol usage (bu. corn) DDGS production (Mil. bu. corn equiv.)3 Ethanol usage (bu. per acre) DDGS production (bu. per acre equiv.)

Ethanol usage (% corn production) DDGS production ( corn equiv.% of crop) Mil. bu. increase in ethanol vs. prev. year

1,323 227 18 3 11.2% 1.9%

1,603 282 21 4 14.4% 2.5% 280

2,117 371 30 5 20.1% 3.5% 514

3,000 524 35 6 22.9% 4.0% 883

3,920 683 50 9 32.6% 5.7% 920

3,950 689 50 9 32.4% 5.6% 950

3,975 693 50 9 32.2% 5.6% 975

4,400 766 53 9 35.6% 6.2% 450

4,450 775 53 9 33.6% 5.9% 500

4,475 779 53 9 32.9% 5.7% 525

4,775 831 55 10 36.8% 6.4% 325

4,850 844 56 10 35.1% 6.1% 400

4,875 848 56 10 34.2% 5.9% 425

Ending Carryover: (mil. bu.)

Carryover as percent of supply Carryover, weeks of total use

2,114 16.5% 10.3

1,967 14.9% 9.1

1,304 10.4% 6.0

1,624 11.3% 6.6

1,042 7.6% 4.3

1,149 8.3% 4.7

1,245 8.9% 5.1

744 5.5% 3.0

1,099 7.6% 4.3

1,422 9.6% 5.5

911 6.5% 3.6

1,252 8.4% 4.8

1,557 10.1% 5.9

$2.06 $1.96 $0.30 $1.60 $1.98

$2.00 $1.95 $0.35 $1.40 $2.00

$3.04 $2.99 $0.00 $2.80 $3.15

$4.25 $4.20 $0.00 $3.30 $3.80

$4.50 $4.45 $0.00 $4.00 $4.60

$4.25 $4.20 $0.00 $3.75 $4.30

$4.10 $4.05 $0.00 $3.60 $4.20

$5.60 $5.55 $0.00 $5.20 $5.90

$4.35 $4.30 $0.00 $4.00 $4.60

$4.20 $4.15 $0.00 $3.75 $4.35

$5.40 $5.35 $0.00 $5.00 $5.70

$4.25 $4.20 $0.00 $4.60 $5.30

$4.15 $4.10 $0.00 $4.30 $4.90

25

43

75

119

122

4

4

53

7

4

34

11

4

6 363

11 -3

15 -557

34 401

38 -574 -9.6%

38 -549 -9.1%

39 -524 -8.7%

21 -300 -5.5%

22 50 0.9%

23 25 0.5%

40 -300 -4.6%

22 0 0.9%

22 50 1.8%

388

40

-482

519

-452

-544

-520

-247

57

29

-266

11

54

Prices: U.S. weighted avg. farm price Iowa weighted avg. farm price Counter-Cyclical Pmt. Harvest price (central Iowa) Dec. Futures Price (harvest avg.)

Other: Feed use % chg. Low-yield years vs. 2007-08 Mil. bu. domestic corn feeding replaced by increased DDGS 2 Mil. bu. corn exports replaced by increased DDGS Mil. bu. change in corn feeding vs. prev. year % decline in corn feeding vs. prev. year: Net change in domestic corn feeding (mil. bu.) vs. prev. yr., incl. DDGS

-9.6%

-14.1%

-13.3%

1 Marketing year starts at Sept. 1 of the production year and ends Aug. 31 of the following year.

2 DDGS substitution for corn feeding is based on 17 pounds of DDGS per bushel of corn. Assumed total DDGS consumption: 42.5% fed to dairy, 32.5% to beef, 5% hogs, 5% poultry and 15% exported in 2007’08 with gradually increasing future exports and a slightly decreasing percentage fed domestically.

3 Includes corn equivalent of DDGS exports 4 Medium yield approximately equals 1990-2007 trend yield.

1995-2007 yield trend is modestly higher, with two low years and one very high year tilting the trend line upward. Actual yield has been below the 1995-2007 trend all but one year (2004) since 2002. Actual yield has been below the 19902007 trend all except two years since 2004.

Key Balance Sheet Assumptions: 1. No changes in Conservation Reserve Program 2. Crude oil price stays in $75 to $95 per barrel range 3. U.S. ethanol mandates, blending credit and import tariff are unchanged and enforced 4. U.S. and world economies have gradual slowing of growth through 2010 5. U.S. dollar stabilizes relative to foreign currencies near Oct. 7, 2008 levels 6. U.S. biodiesel mandate is implemented for 2009 and 2010

SOURCE: ROBERT WISNER

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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CORN

Where Are the Profits Going?

Agricultural economist Don Hofstrand, co-director of the Ag Marketing Resource Center at Iowa State University, has plotted ethanol and corn prices along with ethanol production costs and farmer costs to develop the accompanying chart. With all prices converted to the dollar amount per bushel of corn in the chart, it gives a picture of the size and recipient of ethanol profits for the last three crop marketing years.

The chart shows that the initial beneficiaries of the corn ethanol expansion were ethanol producers, Hofstrand says.

They received large profits indicated by Hofstrand the spread between the corn price line and the ethanol price line (the maximum or breakeven price ethanol producers can pay for corn). However, these profits attracted new firms to the industry and ethanol production capacity expanded. As a result of the expansion, ethanol producers bid up the price of corn and profits shifted from ethanol producers to corn producers when the price of corn began to rise. However, the ultimate beneficiary of these profits over the long-run are not the corn producers, but the landowners, as the price of cash rent begins to rise as indicated in the bottom blue sections. “My premise is the blue area—Land Owner Return (rent)—will continue to expand because farm operators will bid these profits into higher land prices and rental rates, just as the ethanol producers bid their profits into higher corn prices.” However, a portion of these profits will be bid into higher input prices for necessities such as fertilizer and seed.

72

This is all based on ethanol prices staying high. If ethanol prices drop substantially, profits will be greatly diminished.

Although a long period of lower profits will eventually result in lower land values and rents, the initial profit squeeze will be shared by the ethanol producer, corn producer and production input suppliers.

Chart Explanation All values in Hofstrand’s chart are expressed in dollars per bushel of corn. For example, rather than expressing the price of ethanol per gallon, it is shown as the price of ethanol per bushel of corn.

Ethanol production costs are the tan-colored zone between the ethanol price and ethanol breakeven corn purchase price. Hofstrand has created a hypothetical ethanol plant that is used to track monthly ethanol profits. In addition to fixed and operating costs, he plugs in actual prices every month from the USDA and Energy Information Administration for ethanol, distillers grains and natural gas. The income from distiller grains sales is deducted from the production costs to compute the breakeven price the ethanol plant can pay for corn.

Similarly, farmer costs and breakeven corn selling prices are based on two hypothetical 1,000-acre-farms in north central Iowa using Iowa State University Extension Service crop budgets. One farmer owns all the land debt free and the other rents all the land. The two lines show the breakeven price each farmer needs for corn. The green section is the cost of production such as fertilizer, seed, labor and machinery. The difference between the two lines (the blue section) is the cash rental rate the tenant farmer must pay for the land.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

CORN

Allocation of Ethanol Profits

($ per bushel) (corn marketing years 2005 - 2007)

$10.00 Ethanol Price

$ per bushel

$8.00

Ethanol Breakdown Corn Price

Ethanol Cost (net of DDGS revenue)

$6.00

$4.00

Cash Renter Farmer Breakeven Land Owner Farmer Breakeven

Corn Price

Land Owner Return (rent)

$2.00

Production Inputs Cost (net of government payments)

N ov .

Ja n.

M ar ch M ay Se J p t u ly .( 20 06 ) N ov .

Ja n.

M ar ch M ay Se J p t u ly .( 20 07 ) N ov .

Ja n.

M ar ch M ay Se J p t u ly .( 20 08 )

Se pt .(

20 05 )

$-

Corn Marketing Years

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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CORN Continued from page 70

acreage actually planted there will help to determine how many soybean acres we need in the U.S. to meet growing world demand,” he says. “What we’ve seen so far is that the increased acreage in South American soybeans will be quite modest. We won’t be able to sharply reduce our soybean acres here to meet growing world demand.”

14,000

12,000

Bushels (mil.)

10,000

8,000

If Ethanol Use Hadn’t Expanded

6,000

4,000

2,000

0 2004-05

2005-06

2006-07

Production

2007-08

Total Usage

Projected 2008-2009

Projected 2009-2010

Ending Carryover

Projected 2010-2011

Wisner also has used his Ethanol Usage Projections and Corn Balance Sheet to run a “what if ” scenario.

Where would corn prices be if the ethanol industry hadn’t expanded to use 2.7 billion bushels more corn than it had in 2004? Taking into account the lower ethanol demand in his hypothetical scenario,

SOURCE: ROBERT WISNER

A NEW DIMENSION OF MECHANICAL PRESSING.

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CORN

Wisner adjusted several things in the model such as boosting average corn yield 2 bushels higher because there would be less marginal acres planted and less continuous corn planted. Total acreage was dropped and usage for exports and livestock feeding adjusted higher.

Plugging all that into the corn usage chart, he predicts the $2 per bushel corn prices seen in 2004 through 2006 would be even lower, at $1.60 per bushel U.S. average farm price in 2008-’09. “Our conclusion is without the expansion, U.S. agriculture would be struggling with large excess capacity, large carryover stocks, high program costs and low prices and much less volatility in prices, of course,” Wisner says.

In October, all eyes were on the financial markets, raising the question of what impact Wall Street’s crisis will have on the corn and ethanol industries. “I’ve been wrestling with that question,” Wisner says. “There’s a linkage, and with the extreme moves we’ve seen in the financial markets, I believe that linkage is going to be stronger than it has been in the past. The No. 1 connection is

that if you slow the world economy, you slow the growth in the demand for crude oil and that tends to put downward pressure on crude oil prices. That also causes liquidation by index fund investors in crude oil and other commodities. That affects crude oil prices and very directly affects ethanol. The potential impact on agriculture is larger than in the past because in agriculture we’re now producing for two markets, one for food and one for energy. The energy market is more sensitive to what happens in financial markets—more sensitive than the food markets.” At press time, Wisner says he believes there is some overreaction and panic that is depressing that market but over time that will subside. “There will be some moves by the U.S. government and some foreign governments to bring less volatility in those markets and, as that occurs, the commodity markets will begin to stabilize and focus more on longer term fundamentals—the need for corn land for ethanol, the need for soybean acres for growing food demand especially in China and other Asian markets, and the need for

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

vegetable oil for biofuels,” Wisner says. “I’m expecting by January or February these markets will show more stability than they have in the past couple of months.”

Iowa State University ag economists have launched a monthly newsletter at www .agmrc.org/agmrc/renewables. They are compiling data from USDA, the Energy Information Agency and other sources, along with analyses done by colleagues in Iowa and neighboring states. An ethanol profitability spreadsheet is included showing the impact of corn and natural gas prices and other variables on a model ethanol plant.

The spreadsheet allows ethanol producers to plug in specific values for overhead costs and debt service and see how the numbers play out. EP Susanne Retka Schill is an Ethanol Producer Magazine staff writer. Reach her at sretkaschill@bbiinternational.com or (701) 738-4922.

75

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Building Blocks to Biofuels Success Federal support for ethanol has been crucial for the growth of the ethanol industry as it expanded from a regional specialty fuel to an energy source of national importance. As the transition begins from first-generation to second-generation fuels, the government has created a plan to continue to help the industry develop new feedstocks and technologies to fulfill the new renewable fuels standard.

By Jerry W. Kram

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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CELLULOSE

E

thanol production is in transition.

The capacity of plants currently producing corn-based ethanol and those under construction is rapidly approaching the limit set by the federal renewable fuels standard. As the first generation of ethanol production reaches its limit, it will be up to new ethanol technologies based on cellulosic feedstocks to reach the goal of 36 billion gallons of ethanol production by 2022, as required by the Energy Independence & Security Act of 2007.

Currently, second-generation technologies are in their infancy. A few plants have come on line, but they are pilot-scale plants with limited capacity.

More pilot-scale plants are expected to come on line in 2009. But in order to reach the lofty goals set by the EISA, a significant investment in both research and implementation will be needed.

Much of the financing, of course, will come from the private sector. But the federal government will continue to have an important role in boosting the industry. The bulk of the support will come from programs administered by the U.S. DOE and USDA. These agencies have been at the forefront of promoting renewable fuels even when the price of oil was $10 per barrel—

dark days for the ethanol industry. Although energy prices have increased to the point where all biofuels seem to be a smart bet, federal support for new generation fuel sources through grants, loans and loan guarantees remains a vital part of developing this infant industry.

The level of support has been significant. In addition to the EISA, the 2008 Farm Bill included $1 billion in mandatory funding for renewable energy and energy efficiency projects, including $210 million in loan guarantees for cellulosic ethanol plants. Under the auspices of the Advanced Energy Initiative launched by the Bush Administration in 2006, the DOE has committed to investing more than $1 billion in partnership with industry and the research community to develop and deploy advance biofuels technologies by 2012. That funding includes up to $240 million for demonstration-scale projects, $400 million for bioenergy centers and up to $272 million for commercial-scale biorefineries.

Administering these programs is the Biomass Research and Development Board, which Congress created in 2000. The board coordinates biofuels and other biobased products research, development, procurement and implementation

among and within government agencies. Its goal is to maximize the benefits of federal grants and assistance and bring coherence to government planning. The board is co-chaired by senior officials of the DOE and USDA and has members drawn from several other agencies.

With an ambitious goal of more than tripling biofuels production in just 14 years based largely on cellulosic ethanol production, the board developed a clear vision of where the country’s biofuels strategy was headed. In September, the board released the National Biofuels Action Plan.

“Federal leadership can provide the vision for research, industry and citizens to understand how the nation will become less dependent on foreign oil and create strong rural economies,” says U.S. Secretary of Agriculture Ed Schafer. “This National Biofuels Action Plan supports the drive for biofuels growth to supply energy that is clean and affordable, and always renewable.”

Indentifying Priorities The plan identifies seven areas where the government will be taking steps to help the biofuels industry grow and evolve. Five of the priority areas are based on supply chain considerations,

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CELLULOSE

Biochemical Conversion Cost of Cellulose to Ethanol Value $6

6 5 Cost per gallon of ethanol

which include feedstock production, feedstock logistics, conversion, distribution and end use. The other two priorities are ensuring the sustainability of the biofuels industry and protecting the environment and the health and safety of workers and the public.

Each of the priority areas has an action plan outlining the board’s short- and long-term steps toward achieving that goal. The first of those goals is sustainability. In terms of biofuels, the EISA defines sustainable biofuels as those that will significantly reduce greenhouse gas emissions, not have adverse impacts on the environment and do not compete with food production. It also stipulates that the EPA must report to Congress every three years on the environmental impacts of biofuels systems. To ensure the sustainable production of biofuels, the board is requiring that a set of science-based sustainability standards be identified by the end of 2008. An interagency working group headed by USDA, DOE and the U.S. EPA will coordinate the application of these standards in the government and with industry. Two series of workshops are planned for both policy-makers inside the government and with outside stakeholders to evaluate the strengths and weaknesses

4 3 Value $2.25 Value $1.86

2

Value $1.33

1 0

2001 Status

2007 Status

2009 Target

2012 Target

SOURCE: DOE EERE OFFICE OF THE BIOMASS PROGRAM, MULTI-YEAR PROGRAM PLAN

of the guidelines and their application.

Feedstock production and logistics are the next action areas addressed. The board considers crop residue and timber waste as “second-generation” feedstocks while energy crops including pe-

rennial grasses and fast-growing trees are dubbed “third generation.” The short-term goals of the action plan are to create a long-term integrated feedstock research plan that will include an examination of the environmental impacts and finan-

CELLULOSE

Biomass Research and Development Board Statement on Intermediate Level Blends The interagency Biomass Research and Development Board, on behalf of its respective agencies, is committed to the president’s goal of reducing petroleum-based gasoline usage in the United States by 20 percent in the next 10 years (20-in-’10 initiative). Our national fuel infrastructure must accommodate the current and future growth of domestic biofuels production and delivery. As we develop the technology for the next generation of biofuels, it is essential that we enable both full utilization of increased biofuels production and nationwide retail access, while minimizing disruptions, cost and infrastructure challenges, and potential environmental, health and safety impacts. In addition to the present and projected growth of E10 and E85 sales, federal fuel registration and national market access for intermediate ethanol blends of gasoline (defined as blends between 10 percent and 85 percent ethanol, e.g., E12, E15, E20) that meet applicable statutory and regulatory requirements represent a critical pathway to meet the 20-in-’10 goal. The board will continue to monitor and closely assess issues regarding the development, availability, and potential impacts of intermediate ethanol blends of gasoline.

cial viability of feedstock production. The board will also look at what regulatory hurdles need to be overcome to encourage farmers and foresters to begin producing third-generation feedstocks.

The plan states that logistics—moving feedstocks from farm to plant—can constitute as much as 20

percent of the cost of cellulosic ethanol. Given the diversity of feedstocks and geographic variability, the action plan states that partnerships between agencies and private enterprises will be necessary to overcome the challenges of harvesting, storing, preprocessing and transporting feedstocks. The

board is in the process of developing milestones in its implementation of logistics system demonstration projects.

The fourth goal of the plan, conversion technology, has been an area where there has been a great deal of success even before the adoption of the action plan. Since 2001, the cost of biochemically converting cellulose to ethanol has dropped by nearly two-thirds, from $6 to about $2, according to the DOE. However, for cellulosic ethanol to compete economically, this progress has to continue. The immediate steps the board foresees to achieve this goal are continued research on enzymes and feedstocks to make them better suited to ethanol production, identifying better conversion technologies, developing marketable coproducts, optimizing technologies to use multiple feedstocks, and looking for processes and innovations in other industries that could be applied to cellulosic ethanol production.

Moving Biofuels Efficiently The U.S. Department of Transportation will take the lead in developing recommendations to address bottlenecks and barriers to the efficient distribution of biofuels. Steps in this process will

CELLULOSE

include examining the use of pipelines to transport biofuels, identifying and eliminating bottlenecks to transporting biofuels by barge, train or truck, and using Geographic Information System tools to give potential biofuels producers information on infrastructure, demand, feedstock availability, water and other resources.

As ethanol makes up more of the U.S. fuel supply, end users will need to be educated on the benefits of using more ethanol and have access to vehicles that can safely use higher level gasolineethanol blends. The DOE and EPA will begin a testing program to look at the impact of midlevel blends such as E15 and E20 on existing vehicles and small motors used in lawn mowers and offroad vehicles. If the testing shows no ill effects, the board would support the approval of those blends. The board is also planning to work with state and local agencies to continue the penetration of E10 blends in the market by resolving obstacles created by local regulations.

The final action area is protecting the environment and the safety and health of workers and the public. With ethanol’s 30-year history as a fuel, its risks are relatively well-understood. However, as new biofuels come into production, the risks

associated with using those fuels will have to be evaluated. The board will review existing safety and environmental information available on biofuels and use that information to conduct outreach to the public, industry and others involved in the biofuels economy.

The path to reaching the country’s biofuels goal has obstacles which must be overcome quickly. The goal of the National Biofuels Action Plan is having cellulosic ethanol production using second-generation feedstocks being cost competitive by 2012. Feedstock production needs to be evaluated to ensure sustainable practices are used and adequate supplies are available. Harvesting, collection and preprocessing technologies have to be perfected. Research is needed to drive the cost of converting cellulose to ethanol still lower.

Distribution bottlenecks will have to be resolved.

In addition to all that, the plan states that by 2012 the market for E10 will be saturated. To absorb additional production, higher level blends of fuel will be necessary.

The final step in reaching the plan’s goals will depend on the private sector. After the initial research and development phase of the plan, it will be up to industry to build the hundreds

of plants needed to fulfill the 2022 RFS requirements. These new plants will need skilled technicians, builders and managers.

Creating the human capital to keep up with growth of biofuels capacity will be the final key to a vigorous and viable biofuels industry. “This plan is a strategic blueprint that shows us the way to meet the president’s goal of meaningful biofuels production by the year 2022,” says Secretary of Energy Samuel Bodman. “It also shows how to do it in cost-effective, environmentally responsible ways that utilize a science-based approach to ensure the next generation of biofuels that are made primarily from feedstocks outside the food supply that are produced sustainably.” EP Jerry W. Kram is an Ethanol Producer Magazine staff writer. He can be reached at jkram @bbiinternational.com or (701) 738-4920.

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ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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Carbon as a Commodity Chances are the United States will bring into play a mandatory carbon emissions reduction program sooner rather than later. In the second of a two-part series, EPM explores the domestic carbon trading market and what the future could hold for ethanol producers.

By Kris Bevill

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POLICY

A

s a noncomplier of the Kyoto Protocol, the United States is one of the last westernized nations in the world to employ some type of carbon emissions reduction program. The European Union’s mandatory carbon emissions reduction program is the largest in the world. Japan is in the initial stages of employing a nationwide carbon cap program. Australia and New Zealand are planning government-regulated cap-andtrade carbon reduction programs. Canada is similar to the United States in its adoption of voluntary programs, however, some provinces have decided to follow other international examples and pass mandatory reduction and trade programs. The most notable of these programs is in Alberta, where oil companies have been actively drilling the tar sands and are major customers of that mandatory carbon market. It is important to note the various international emissions reductions programs because greenhouse gas emissions affect the world no matter where the emissions occur and many believe that, ultimately, an international program will be needed to properly address the situation. Those countries already implementing emissions reduction programs will no doubt set the standard for others to follow.

Change is on the horizon for carbon emitters in the United States and ethanol producers need to be aware of their potential role to shape the nation’s carbon market. Ethanol producers, as they currently stand, are emitters of carbon dioxide. If no changes are made to the way ethanol is produced, most producers will find themselves competing with other industrial companies to buy carbon credits should some type of cap-and-trade-program become law. However, with a few energy-saving steps, the ethanol industry can “green” its image and become an example of a fuel production industry that earns credits rather Murphy than uses them.

“I don’t know if the ethanol industry is prepared for what might happen,” says Jim Murphy, president of Carbon Green LLC. His company specializes in working with

POLICY

What is it Worth?

The financial difference between carbon prices in mandatory markets and voluntary markets speaks volumes. At press time in mid-October, carbon credits, each credit equal to one metric short ton, were down just slightly on the European Climate Exchange board. December futures were selling for about $30 per ton. By contrast, credits on the voluntary U.S. market were selling for approximately $2 per ton.

biofuels companies to reduce their “carbon profile” in order to become carbon generators and then monetizes the credits on the U.S. voluntary market, namely the Chicago Climate Exchange. Murphy has been working in the carbon world exclusively for a few years now, and he admits that it is not easily understood. But one thing is certain, he says. Once ethanol producers begin to focus on carbon they automatically begin to focus on energy, and “ethanol plants need to focus on energy.”

Murphy believes many ethanol producers may not realize that they will be forced to reduce their emissions under a federal greenhouse gas emissions reduction program and it may come as an unwelcome surprise unless they begin to take steps now to reduce their energy use.

Pressure for Policy So what is in store for carbon as a regulated commodity in the United States? No one really knows. The number of proposed legislative measures that have been introduced regarding the reduction of greenhouse gas emissions is in the hundreds and no one seems to think that the government will agree on a program by the end of 2009.

At press time, the most recent document to be posed to Congress was a discussion draft on climate change legislation presented to members of the U.S. House of Representatives Committee on Energy and Commerce by committee Chairman John Dingell, DMich., and energy subcommittee Congress Chairman Rick Boucher, D-Va. In a memorandum to committee members, Dingell and

Boucher state, “Politically, scientifically, legally, and morally, the question has been settled: regulation of greenhouse gases in the United States is coming.” But even they say that it is unclear exactly what form of regulatory program will be adopted.

The draft proposed by Dingell and Boucher calls for a cap-and-trade-program which will gradually reduce greenhouse gas emissions until reaching a goal of 80 percent below 2005 levels by 2050. Major company types to be regulated under this proposal are power plants, producers and importers of petroleum, other fossil fuels and bulk gases and other “large industrial facilities,” which may very well include ethanol producers. Those producers not covered in the “large” category would then fall into the small source category, which includes all sources emitting less than 25,000 tons of carbon dioxide per year. The draft proposes those sources be held to industry-specific emissions standards, as should be determined by the U.S. EPA. The proposal given to energy committee members is a discussion draft, not a bill proposal. Boucher and Dingell say their draft is the result of nearly two years of committee work on climate change and that it should result in the passage of climate change legislation by the next Congress. However at the same time, their executive summary of the draft states, “Reaching a consensus on a national approach to addressing climate change will be difficult under the best of circumstances.”

Certainly the views of the next president will play a role in shaping the policy. Elections

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

POLICY

Cap-and-trade legislation to reduce the amount of greenhouse gas emissions in the United States is expected to be on the agenda in 2009. The country currently is one of the few remaining westernized nations that doesn’t employ some type of mandatory emissions program—and experts say ethanol producers need to begin reducing carbon dioxide emissions now in order to benefit later.

had not been held by press time, but Sens. Barack Obama, D-Ill., and John McCain, R-Ariz., have both stated their support for a nationwide, mandatory cap-and-trade carbon emissions reduction program. In response to a question posed to the candidates by ScienceDebate2008 .com regarding their positions on a cap and trade system, Obama said he planned to reduce emissions to 80 percent below 1990 levels by 2050.

McCain’s plan would reduce emissions to 60 percent below 1990 levels by 2050. Obama said his

90

plan is in line with reduction levels scientists have deemed as necessary. McCain said his approach would be easier on American businesses, specifically coal-fired plants, allowing them time to adapt to policy changes. Both candidates’ plans call for a more stringent baseline than the draft proposed by Boucher and Dingell, which serves as an indicator of all the specifics that need to be debated before a program can be put in place.

There’s much work to be done, but it is expected that no matter who takes office in January, a cap-

and-trade-program will be addressed within his first year of office.

One of the issues that will need to be addressed is: Who will regulate compliance of a federal program? The EPA is an obvious choice because it regulates the Clean Air Act and has been active in many of the greenhouse gas emissions programs and proposals thus far. However, the number of employees needed to conduct compliance check-ups may be more than the agency can offer. The Boucher/Dingell draft proposes that oversight responsibilities, including the prevention of fraud and manipulation, be handled by the Federal Energy Regulatory Commission, with the EPA playing a smaller regulatory role. It is one suggestion of many to be hashed out over the next Congressional session.

Also up for debate is whether a monetary value should be assigned to carbon. At a House energy subcommittee hearing earlier this year several private industry executives testified that assigning a dollar value to carbon would expedite investments by companies into energy-saving processes.

Producer Participation There are many options available to ethanol producers interested in reducing their energy use.

In January 2008, the EPA suggested that producers look at combined-heat-and-power-systems to create negative carbon emissions. Other choices include the integration of biomass gasification , such as the system Chippewa Valley Ethanol Co.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

POLICY

LLLP chose for its 46 MMgy Benson, Minn., facility. Frontline BioEnergy LLC produces gasifiers and is the other half of the CVEC project. Frontline general manager Norman Reese says his company can provide gasifiers for a variety of uses and that their products will aid producers in compliance with whatever type of emissions reduction program is finally decided on. He’s seen a lot of interest already from ethanol producers, although their No. 1 priority so far has been to reduce energy costs, he says. That’s fine, because when input costs are reduced, carbon credits can be a welcome secondary benefit to having the system in place.

“A lot of people have been watching this,” says Bill Lee, general manager of CVEC’s plant. A number of curious producers have visited the plant to see the system that will soon generate not only energy but carbon credits for CVEC. For now, Lee says producers are keeping an eye on both the carbon market and natural gas prices, but he predicts that more producers will soon begin altering their plants to save energy and join the carbon market. It might take a few years before the country gets a cap-and-trade-system up and running, he says, but as a credit generator he’s willing to wait and will be ready to reap the benefits.

The use of landfill gas may be a viable alternative for biorefineries located within close enough proximity to a municipal landfill.

Poet LLC reached an agreement earlier this year with the city of Sioux Falls, S.D., for the transfer of methane produced at the landfill to the company’s Chancellor, S.D., facility to be used as an energy source. They are just one example of this type of partnership.

Other producers might use Corn Plus LLLP as an example of how to reduce energy inputs and produce carbon credits. The company decided several years ago to install a fluidized bed boiler that could utilize leftover corn syrup as an energy source. At press time, Corn Plus was the only ethanol producer thus far to sell carbon credits on the Chicago Climate Exchange. They didn’t sell for much compared with Europe’s prices, but Keith Kor, Corn Plus general manager, says he and other company shareholders are betting that carbon credits will only become more valu-

able. Kor believes that the United States will adopt a market similar to Europe’s and that the next president will re-enact the United States’ participation with the Kyoto Protocol, which will then require the government to enact some type of program.

Producers should realize that it will take some type of investment on their part to become carbon credit generators. Lee says that a few years ago many believed that traditional ethanol production would be low in carbon emissions and would therefore qualify for credits. That’s simply not true. Producers need to reduce their energy

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

intake and greenhouse gas emissions to become credit generators. Installing some type of energygenerating system that reduces the need for natural gas is a sure way to not only reduce operating costs, but also add possible revenue by becoming a carbon credit generator. And there is no time like the present to get started. EP Kris Bevill is an Ethanol Producer Magazine staff writer. Reach her at kbevill @bbiinternational.com or (701) 373-8044.

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The Future of Midlevel Blends 2009 could be a big year for midlevel ethanol blends. UL certified E85 fuel dispensers and blender pumps should be available by the first half of the year. In addition, Congress is expected to address tax legislation that limits fuel retailers’ ability to claim credits for blender pumps distributing E85.

Testing of midlevel blends will continue, and an E20 fuel waiver request could be submitted to the U.S. EPA before the end of the year.

By Erin Voegele

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he nation’s first ethanol blender pump was installed in Britton, S.D., in March 2006. Less than three years later, the American Coalition for Ethanol lists more than 80 retail stations that have installed the pumps. That list continues to grow.

More station owners are expressing interest in installing the fuel dispensers, driven in part by the rising demand for midlevel ethanol blends.

The trend, which began in the Midwest, is beginning to gain traction in other areas of the country.

However, there are some important elements that must be addressed before widespread use of midlevel ethanol blends can be achieved. Most importantly, a midlevel blend must be approved by the U.S EPA for use in standard nonflexible fuel engines. This approval would significantly increase the market for ethanol-blended fuels. The lack of Underwriters Laboratory Inc. approved fuel dispensers is another issue that must be overcome before some retailers will consider installing E85 dispensers and blender pumps.

UL Certification UL certification is one issue that should be resolved in 2009. Gilbarco Veeder-Root and

Dresser Wayne have each submitted blender pumps for E85 UL certification. According to Scott Negley, Dresser Wayne’s director of product management for North America, the equipment his company manufactures has already passed UL’s required testing procedures for E85.

However, UL is requiring that a full fuel dispensing system be certified, which also includes the hose, nozzle, and other hardware elements that are attached, which Dresser Wayne doesn’t manufacture. “Until you get a full set of components certified, we are not allowed to put a label— a certification mark—on our dispenser because the system lacks certification,” Negley says. Many of those items have been submitted by their respective manufacturers and are going through the testing process. According to Negley, hoses will likely be the last element to gain approval.

Gilbarco is expecting its dispenser to be approved by UL during the fourth quarter of 2008.

In the meantime, the company is marketing the model it submitted to UL. According to Richard Browne, Gilbarco’s vice president of North American marketing, many fire marshals have approved the model for installation even though it currently lacks UL certification. “Our flexible-fuel unit has special material coating and elastomers

that will stand up to the aggressive/corrosive nature of high alcohol fuels,” Browne says. “Every component in the dispenser that comes in contact with the fuel has been upgraded.”

According to Browne and Negley, both companies are experiencing heightened interest in the fuel dispensers. Dresser Wayne has also designed a new piece of equipment that will be compliant with some state-specific regulations that have been enacted. “We are developing a blender [pump] that will allow blends from two hoses on one side of the dispenser,” Negley says.

Conventional fuels such as unleaded and E10 will be dispensed from one hose. Higher blends of ethanol, from E20 to E85, will be dispensed from the other. Negley says the new equipment is expected to be available in January 2009.

As UL-approved equipment becomes available, it is likely that each state will deal with previously installed E85 dispensers and blender pumps differently. Mark Buccelli, director of the Minnesota Weights and Measures Division, says the state is not going to require fuel dispensers already in operation to be replaced with a UL-approved dispenser. David Pfahler, director of South Dakota Weights and Measures, says the issue has not yet been addressed in South Dakota.

PHOTO: NATIONAL RENEWABLE ENERGY LABORATORY

INDUSTRY

Engine dynamometers are used to examine engines and fuels.

UL-certified dispensers are expected to spur growth in the availability of E85 and midlevel blends. “I know of a number of large companies that have expressed interest in installing E85 fueling systems,” says Phillip Lampert, executive

director of the National Ethanol Vehicle Coalition. “Given the risk management associated with not having a UL-approved dispenser, they have refrained from doing so.”

Robert White, deputy director of the Etha-

nol Promotion and Information Council, says that before UL certification was pulled for E85 dispensers, a lot of big box retailers were considering installing E85 pumps.

“When UL pulled their White certification, that removed some of the comfort level that those big box retailers had with the product and the dispensing of the product,” White says. When a UL certified pump becomes available, he expects those who have been sitting on the sidelines to jump back onboard. “On the E85 side, that could mean a lot of new stations almost as quickly as they can produce dispensers,” he says.

Ron Lamberty, vice president of market development for ACE, agrees that the pending UL certification has caused some stagnation in retail installations. “If marketers are looking at putting in E85 right now, most of them figure the smart thing is to wait out the UL-approval process,” he says. Since there is no history of reports or complaints of equipment failure, ACE would like to see a phase-in period established for UL-certified equipment.

INDUSTRY

a good sign. I think they recognize that this is the wave of the future.” Although not all retailers installing the UL approved E85 fuel dispensers will offer midlevel ethanol blends right now, having the equipment installed should ease the transition into midlevel blends in the event one is approved by the U.S. EPA for use in standard nonflexible fuel engines.

Midlevel Testing Grounds

PHOTO: AMERICAN COALITION FOR ETHANOL

Blending Tax Credits

Ethanol blender pumps allow consumers to select the ethanol content of their fuel.

“When the major pump manufacturers submitted pumps to the UL for testing, they submitted blender pumps,” Lamberty says. “I think that’s

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ment may also end up covering less of the total expenditure because it is often cheaper to install a blender pump than to break ground installing a new tank, hose and pipe for a dedicated E85 pump. Lampert says he expects the issue to be considered during the next congressional session in January 2009.

Lamberty and Lampert also agree that the industry must address income tax legislation enacted under the Energy Policy Act of 2005 that prevents retailers installing ethanol blender pumps from claiming a 30 percent tax credit that is available to those who install dedicated E85 fuel dispensers.

“We are leading the effort to ensure that blender pumps receive the benefits of the federal income tax credit,” Lampert says. “The way that credit has been interpreted by the Internal Revenue Service marginalizes the value of the credit for blender pumps.” For blender pumps to really make a positive impact on the industry, the federal income tax credit needs to apply to them, he says.

Lamberty says Gilbarco has been working on getting legislation passed that would increase the credit to 50 percent of the installation cost and apply it to blender pumps. “Frankly, right now, if all we did was get the 30 percent to apply to any pump that sells E85, I think there is the potential for much faster growth,” Lamberty says. He adds that by including blender pumps, the govern-

In October, DOE’s National Renewable Energy Laboratory and Oak Ridge National Laboratory released a preliminary report on midlevel blends testing. The results included data from testing E15 and E20 on 13 vehicles and 28 small nonroad engines. The report showed that most regulated emissions were within the normal test variations.

The report provided results available to date from the first stages of a large overall test program, which was initiated by the DOE in 2007 to evaluate the potential impacts of intermediate ethanol blends on a variety of engine types. The broad test program is intended to evaluate the effects of E15 and E20 on tailpipe and evaporative emissions, catalyst and engine durability, vehicle drivability, engine operability, and vehicle and engine materials.

“The DOE along with NREL and ORNL have approximately 20-plus projects either underway or in the planning stages, all related to different aspects of intermediate blends,” says Steve Przesmitzki, NREL’s senior project leader. “This [report] is just a first look. Things look promising,

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but it is a first look. It is not conclusive evidence that E20 or E30 will work.”

Przesmitzki estimates that testing will continue until 2010 or 2011. He expects a report on vehicle drivability to be released in 2009, as well as a first look at materials compatibility testing results. A project testing more than 30 different fuels on more than 20 different vehicles is also planned. “From what I’ve been told, it’s one of the biggest vehicle tailpipe emissions projects for research that EPA has ever undertaken, and they are doing it jointly with the DOE,” he says.

says. “So, we’ve bitten off a pretty big chunk here.

Thank goodness there are other people who want to see some progress in this area.” Under current regulation, the EPA must respond to a fuel waiver application within 180 days of receipt. To ensure the application is considered in time for the 2010 deadline, it must be submitted in 2009 or early 2010.

“EPA expects the industry to file the application,” Groschen says. “We hope to be a part of that application to show support, but they’re likely the ones that are going to be filing it.” Groschen says he hopes to see a waiver request submitted

to the EPA, but that will likely depend on the status of the midlevel blends testing. He also expects the application process to be impacted by world events. “There are times when, if the political will is there nationally, things happen,” he says. EP Erin Voegele is an Ethanol Producer Magazine staff writer. Reach her at evoegele @bbiinternational.com or (701) 373-8040.

Waiver Request According to Ralph Groschen, Minnesota Department of Agriculture’s senior market specialist, there are five different areas of data EPA requires along with a waiver request.

These data sets include drivability, materials compatibility, emissions, durability and health effects. The research projects being undertaken by the DOE should help provide this data.

“We are feeling very good that federal government and other agencies that deal with these testing and things are sinking a lot of time and effort into this,” Groschen says. “Those are the kinds of data and materials that we need to answer the broad range of questions.”

In 2005, Minnesota passed a law that Groschen replaces the state’s current E10 mandate with E20 by 2013. Under the law, the mandate will take effect unless 20 percent of the state’s vehicle fuel already consists of ethanol by 2010. Groschen says the implementation also depends on EPA certification of a fuel containing 20 percent ethanol. “The particular time when it’s determined whether or not the law will be implemented is Aug. 31, 2010,” Groschen says. If EPA has not approved a waiver for E20 by this time, the law expires.

“The implementation of our law depends on national certification of E20,” Groschen

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The Road Ahead for FFVs Automakers are expected to produce nearly 50 2009 flexible-fuel vehicle models, doubling their offerings from 2008. EPM examines the future of the flexible-fuel vehicle infrastructure and what each of these companies has to offer consumers who want to use ethanol blends.

By Anna Austin

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lexible-fuel vehicles (FFVs) have made a lot of headway in the past 10 years. Since 1998, the number of FFVs on America’s roads has increased from about 171,000 to more than 6 million.

When gas prices rocketed to new heights and consumers started to see the wisdom of reducing the country’s dependence on foreign oil, FFVs suddenly became more attractive. Automakers are gearing up to meet the demand as consumers scramble to exchange their vehicles for more fuel-efficient, environmentally friendly automobiles. Although miles achieved per gallon for E85 may be slightly above vehicles fueled with regular-unleaded gasoline, the price of ethanol blends has been considerably cheaper.

In March 2006, Chrysler LLC, General Motors Corp. and Ford Motor Co. pledged to convert 50 percent of each company’s fleet to FFVs by 2012, Lampert which is good news for consumers and the environment. According to the National Ethanol Vehicle Coalition, there are approximately 6 million E85 compatible vehicles on American roads today. The problem with this to date, however, is that there are less than 1,800 gas stations nationwide that offer E85 out of a total of 161,000. According to the Renewable Fuels Association, the majority of states host 25 or less E85 fueling stations, and five Northeast states, and Alaska and Hawaii, don’t have any.

Minnesota, Wisconsin and Iowa lead the nation with more than 100 stations each.

Phil Lampert, executive director of the NEVC, says much progress needs to be made to keep up with the vehicle manufacturers. “Obviously, we aren’t close to the amount of E85 stations we must have to make this move forward,” he says. “We need to continue to work on that infrastructure—there is no value to increase flex-fuel vehicle production unless this happens.”

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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The NEVC is a nonprofit membership organization that serves as the nation’s primary advocacy group promoting the use of 85 percent ethanol as an alternative transportation fuel. NEVC is composed of a wide range of organizations, including state and local interest groups, state and local elected officials, ethanol producers, vehicle manufacturers, agricultural interests, ethanol suppliers and others.

Lampert says vehicle manufacturers have stepped up to the plate in 2009, investing many resources toward the design, support and distribution of FFVs. “We can’t say enough positive things about them,” he adds, emphasizing that although incentives are clearly in sight, vehicle manufacturers have no obligations. “They are not required to build them, they don’t receive any money from the government—but they have found there is a demand,” Lampert says. “With the very high requirement levels in the renewable fuels standard, everyone realizes we have to have millions of FFVs produced every year, rather than hundreds of thousands.”

General Motors: Leader of the Pack General Motors leads the pack with a total of 18 different FFVs being offered in the United States in 2009, three more than in 2008. Models include: Buick: *Lucerne; Cadillac: *Escalade, *Escalade ESV and *Escalade EXT; Chevrolet: Avalanche, Express, *HHR, *HHR Panel, Impala, *Silverado, Suburban and *Tahoe; GMC: Savana, Sierra, Yukon, Yukon XLHummer: *H2 and *H2 SUT. (* indicates FFV option new in 2009) GM cars and trucks account for 3 million of the 6 million FFVs on U.S. roadways and the company produced more than 1 million FFV models in North America and Brazil last year.

Addressing the release of GM’s 2009 lineup, Beth Lowery, GM vice president of environment, energy and safety policy, says GM is on target to make 50 percent of its vehicles flexible-fuel capable by 2012, providing the infrastructure is in place. “We continue to believe that biofuels, specifically E85, is the most significant thing we can do in the near-term to

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offset future energy demands,” she says.

In May 2008, GM and Mascoma Corp. announced a strategic relationship to develop cellulosic ethanol focused on Mascoma’s single-step biochemical conversion of nongrain biomass into low-carbon alterna-

tive fuels to help address increasing energy demand. GM’s involvement with Mascoma will include projects to evaluate materials and other fuels for specific engine applications and collaborating on Mascoma’s efforts to expand its commercialization

projects globally, including promotion of increased biofuels distribution.

Chrysler’s Big 10 Chrysler offers 10 FFV models in the United States in 2009—the same number

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and models the company offered in 2008— an impressively broad range. The company has been making FFVs since 1998, longer than any of the other five automakers.

From a minivan to a convertible, chances are a consumer will find an FFV that best suits them. “As the price of fuel has risen, many consumers are looking for smaller engines in an FFV,” Lampert says. “The 2.7 liter Avenger and Sebring address that demand.”

Models include: Chrysler: Aspen, Sebring (convertible and sedan) and Town and Country; Dodge: Avenger, Dakota, Durango, Grand Caravan and Ram 1500; Jeep: Commander and Grand Cherokee.

This is the seventh consecutive year of E85 capability for the Chrysler Sebring sedan, the company’s veteran FFV. The Dodge Ram 1500 will enter its sixth consecutive year.

Dodge Avenger

Ford’s Lineup Offering more than double the number of FFVs than it did in 2008, Ford has made great progress towards its 50 percent E85 conversion goal in one year.

Ford models include: Ford: Crown Victoria, F-150, *E-Series Commercial Van, Wagon and Cutaway, *Expedition/Expedition EL; Mercury: Grand Marquis; Lincoln: *Town Car and *Navigator.

“Our big story for the coming year is

the all-new F-150, which has an FFV option,” says Ford spokesman Mark Schirmer.

“The 2009 F-150 goes on sale this month (October) and is another big step forward in our leadership story.” The new F-150 is categorized as a “superior fuel economy”

edition that the automaker says delivers 15 miles per gallon (mpg) in the city and 21 mpg on the highway. A considerable improvement compared with last year’s 5.4-liter V8 F-150, which achieved 13 mpg in the city and 17 mpg on the highway. This is the

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‘Now that the automakers are on track, the number of E85 stations available nationwide needs to increase greatly.’

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fourth consecutive year in which Ford is offering the F-150 with a FFV option.

Schirmer adds that there are no significant changes from carry-over models from 2007.

The Rest of the Pack: Mercedes Benz, Nissan and Toyota Mercedes Benz is offering one FFV in the United States in 2009—the Merdeces Benz C300 Luxury & Sport, its second year of possessing the FFV option.

Nissan Motor Co. Ltd. will continue its Titan for the fifth consecutive year and Armada for the third.

Toyota becomes the new kid on the block, introducing its first-ever FFVs in the United States—5.7-liter Sequoia and Tundra.

Now that the automakers are on track, the number of E85 stations available nationwide needs to increase greatly.

Because they require little or no additional expense to the consumer and carry the same warranties as regular-unleaded gasoline-powered vehicles, it is clear that FFVs will play a significant role in the future of the automobile industry. EP Anna Austin is an Ethanol Producer Magazine staff writer. Reach her at aaustin @bbiinternational.com or (701) 738-4968.

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Raising Cane Europe has an appetite for sustainable ethanol.

Brazil is hungry to supply the demand.

By Ryan C. Christiansen

PHOTO: ESKINDER DEBEBE, UNITED NATIONS

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ith the goal of reducing greenhouse gas emissions, the European Union continues to direct its member states to adopt measures that will increase the percentage of ethanol used in transportation fuel in those countries. The EU has also said the ethanol must be produced with little impact to the environment or peopleâ&#x20AC;&#x2122;s well-being. Purchasing ethanol from Brazilian producers appears to be the least expensive way to increase ethanol consumption in Europe. However, there is skepticism about whether Brazilian-made sugarcane ethanol is being produced in a way that is sustainable.

European Targets More than six years ago, the EU and its member states ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which means the EU commits its member states to reducing their collective greenhouse gas (GHG) emissions at least 8 percent by 2012.

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During a plenary session to be held in December the 785-member European Parliament is expected to approve a codecision with the EUâ&#x20AC;&#x2122;s Council of Ministers to move forward with a directive from the European Commission (the executive branch of the EU) that by 2020, at least 10 percent of the energy used in road transportation in the member states should come from renewable fuels and that at least 40 percent of the renewable fuels should be from more sustainable sources, such as second-generation biofuels made from waste or algae, for example. The directive is expected to set an interim target of 5 percent by 2015 and to stipulate that the 10 percent by 2020 target be reviewed again in 2014.

Under the directive, member states would be required to adopt national action plans and targets to help the EU meet its objectives. The directive might also include language that says the European Commission will impose direct penalties on member states that fall short of targets.

Sustainability Requirements The EU directive will also tighten the sustainability criteria for ethanol. If the fuel is to count toward the target, it must save at least 45 percent of GHG emissions compared with petroleum gasoline. After 2015, GHG savings must be at least 60 percent.

GHG savings are not the only criteria for making ethanol sustainable. According to the European Biofuels Technology Platform, which is funded in part by the European Commission, ethanol production must not negatively affect the land where the feedstock is grown, including animal life and water resources for the land, as well as the landâ&#x20AC;&#x2122;s ability to sequester carbon dioxide. Ethanol must not be produced in a way that negatively affects the price and availability of food. The quality of life of those who live on or work the land must also not be impaired. GHG use and savings must be accounted for along the entire supply chain from the field to the fuel pump.

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The EU’s sustainability goals are subjective ones. How does the EU plan to move beyond subjectivity toward objective sustainability goals?

To objectively confirm that a specific quantity of ethanol has been produced in a way that meets sustainability criteria, the ethanol must be certified by an arbiter.

The EU and its member states will need to adopt a certification system.

According to Norbert Schmitz, a managing director for the Meo Consulting Team in Köln, Germany, there currently are no certification systems that can handle sustainability criteria and GHG calculations for the various feedstocks that are used to produce ethanol and the regions where it is produced. However, Schmitz and his consultancy—under the direction of the German federal government—are leading the way in helping the EU to establish a framework for certifying the sustainability of ethanol.

The consultancy’s International Sustainability & Carbon Certification project is based on a model that was developed

Ethanol Production (MMgy) - 2006 5000

4,491

4000

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2000

1000 251

74

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202

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30

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Sweden

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U.K.

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SOURCE: F.O. LICHT, RENEWABLE FUELS ASSOCIATION

by Meo in 2006-’07 with organizations from Europe, the Americas and Southeast Asia and with support from the Agency for Renewable Resources in the German

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Federal Ministry of Food, Agriculture and Consumer Protection. The two-year pilot project, which started in February, is developing a global certification process

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To meet the total demand, Brazil will need to have 246 ethanol plants in production, 114 of which are already producing or are under construction, and 23 of which are being planned and financed; this means that 109 more plants will be needed. that might become the model for the entire EU. “The overall intention is to set up a global system with participation from many countries outside Germany and Europe,” Schmitz says. “We concluded that, instead of preparing further studies, a real field test would be required to move things forward.”

Meo has enlisted more than 80 organizations, including Brazilian, European, and U.S. ethanol suppliers and major oil companies to test various chain-of-custody models. Schmitz says he was not at liberty to name the participants involved.

One of the chain-of-custody models the ISCC project is testing is a “book-andclaim” system that certifies the sustainability of a quantity of ethanol for a producer.

The producer can then use the certificate to sell an equivalent amount of ethanol.

The buyer then receives the certificate and the ethanol and can claim sustainability.

However, the certificates and the actual product are not coupled, Schmitz says.

The system only guarantees that a specific amount of sustainable ethanol is produced and paid for. Schmitz says the book-andclaim system is well-suited for certifying ethanol because it is a bulk commodity and the traceability of specific quantities of the product is almost impossible.

GHG emissions for the ISCC project are determined based on calculations provided by the European Commission.

Brazil: Europe’s Ethanol Supplier According to the European Bioethanol Fuel Association (eBIO), the EU produced 468 MMgy of ethanol in 2007, mostly from wheat and raw alcohol, but consumed an estimated 687 MMgy. The EU’s top ethanol consumers are Germany, Sweden, France, Spain, Poland and the U.K. The demand in 2007 was satisfied with imports; 98 percent of the imported ethanol came from Brazil.

According to the Renewable Fuels Agency, an executive nondepartmental public body funded by the Department for Transport in the U.K., 79 percent of ethanol used in the U.K. from mid-April to mid-May was imported sugarcane ethanol from Brazil.

EU member states imported 32 percent of the ethanol they consumed in 2007, despite having an installed production capacity sufficient to handle demand.

Capacity in the EU is currently 1 billion gallons per year, mostly in France, Germa-

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ny, and Spain, with 1 billion gallons under construction, according to eBIO. According to ethanol producer Verbio Vereinigte BioEnergie AG in Leipzig, Germany, even though grain prices were lower in September than the previous year, the company still could not compete with the price of imported ethanol. Therefore, the company temporarily shut down its ethanol plant in Zörbig, Germany.

Brazil plans to be the world’s pricecompetitive ethanol provider. A United Nations Environment Program report entitled “Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World” published Sept. 24 said Brazil currently accounts for about half of all global ethanol exports and the country is planning to increase sugarcane production by 55 percent over the next six years. According to a report published in September by Brazil’s state-owned Energy Research Co. (Empresa de Pesquisa Energética), demand for ethanol in Brazil, where more than 75 percent of vehicles are flexible fuel will grow by 150 percent over the next 10 years from

6.7 billion gallons per year to 16.9 billion gallons. Meanwhile, the country expects exports will double in the next 10 years from 1.1 billion gallons per year to 2.2 billion gallons. To meet the total demand, Brazil will need to have 246 ethanol plants in production, 114 of which are already producing or under construction, and 23 of which are being planned and financed; this means that 109 more plants will be needed.

Brazilian Ethanol and Sustainability Because much of the agricultural land where sugarcane is grown in Brazil is converted grasslands or forests, concerns have been raised that much of the sugarcane ethanol that Brazil currently produces could not be certified for use in the EU. The Brazilian Sugarcane Industry Association dismisses such concerns, however, and says that most sugarcane that is grown for producing ethanol is harvested in south-central Brazil, more than 1,500 miles from the Amazon and primarily in degraded pastureland.

However, the EU also says that an ethanol producer’s supply chain must not impinge upon the human rights of the workers involved. At a minimum, the standards set by the U.N.’s International Labor Organization must be followed in the production of ethanol in order for the ethanol to be certified sustainable, Schmitz says.

According to the U.N., many Brazilian sugarcane plantation workers receive poor pay—a little more than $1 per ton for sugarcane cutters—and find themselves in debt to their employers due to exorbitant charges for transportation, accommodation and food. Work conditions are also deplorable and sometimes dangerous, the U.N. says. Workers experience crowding, poor hygiene, and poor nutrition and company security guards are sometimes violent with workers.

Meanwhile, Brazil’s Ministry of Labor and Employment (MTE) works to combat abuses through labor inspections and the labor courts. More than half of the 5,800 slaves rescued by Brazilian authorities in 2007 were found on sugarcane planta-

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WORLD

A transport truck delivers sugar cane from the fields to the Moema Mill sugarcane company in Orindiúva, Brazil.

tions, according to the U.S. Department of State’s 2008 Trafficking in Persons Report.

For example, in July 2007 MTE inspectors freed 1,108 forced laborers from a sugarcane farm producing cane for ethanol in Ulianopolis, Para, Brazil, according to the State Department’s 2007 Country Report on Human Rights Practices for Brazil.

Investments from multinational agribusinesses have helped to consolidate Brazilian sugar and ethanol production.

For example, Cargill owns the country’s

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biggest ethanol refinery, along with an associated 36,000 hectares (89,000 acres) of plantation, according to the U.N. In 2006, Cargill acquired a 63 percent stake in Central Energética Vale do Sapucaí Ltda., an ethanol mill located in Patrocínio Paulista, in the state of São Paulo, according to information on Cargill’s Web site.

It is not known if Cargill is communicating with plantation owners about labor practices. A request for a statement from Cargill was not returned. However,

Sekab, one of Europe’s leading ethanol suppliers based in Örnsköldsvik, Sweden, has worked with its Brazilian ethanol producers to develop sustainability criteria. In late summer, Sekab began receiving what it says is “verified sustainable ethanol” confirmed by an independent auditor. The company’s criteria have zero tolerance for child labor or forced labor and also the conversion of rainforest land into agricultural land. The company aims for its producers to have a fully mechanized harvest by 2014, which the company admits will replace 80 to 90 jobs for each harvesting machine, but plans to address the issue through job training and the expansion of production. The company said it has sustainability agreements with Brazilian ethanol producers LDC Bioenergia, Cosan, Guarani, Novoamerica and Alcoeste.

Sekab is also planning and preparing for large-scale production of ethanol in Tanzania and Mozambique and is working with those governments on sustainability criteria. EP Ryan C. Christiansen is an Ethanol Producer Magazine staff writer. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Politicos Seek to Harmonize Tariff, Tax Credit If the noise coming out of the Capitol in Washington, D.C., in late 2008 is any indication, the tariff on imported ethanol appears to be in danger, or at least subject to significant modification.

By Frank Zaworski

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t a time when the U.S. ethanol industry can least afford it, some political leaders want to either harmonize the tariff with the 45-cent blender tax credit, or eliminate the tariff entirely.

Sen. John McCain, R-Ariz., stated in his proposed “Lexington” energy plan that he believes alcohol-based fuels hold great promise, as both an alternative to gasoline and as a means of expanding consumers’ choices. McCain said during his recent presidential election campaign that he would like to abolish the tariff on imported ethanol to make the renewable fuel more accessible and affordable to blenders.

Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, “favors lifting the tariff and would likely vote that way if such a measure is ever introduced in Congress and brought up for a vote,” says Bingaman spokesperson Bill Wicker of Bingaman’s Senate Energy Committee office.

“We need to level the playing field and eliminate mandates, subsidies, tariffs and price supports that focus exclusively on corn-based ethanol, and prevent the development of market-based solutions which would provide us with better options for our fuel needs,” McCain said.

While Sen. Barack Obama, D-Ill., has not specifically addressed the tariff on etha-

‘For ACE to support harmonization of the tax credit, we need an ironclad commitment from Congress that they will extend the tax credit (volumetric ethanol excise tax credit) beyond 2010.’

nol, he has repeatedly voiced his support for renewable fuels. He told the National Corn Growers Association in September that he supports efforts to reduce the nation’s dependence on foreign oil by developing renewable energy, including biofuels, solar and wind energy. “Farmers are on the cutting edge of America’s path to energy independence,” he said. “We are already replacing millions of barrels of imported oil thanks to our successful biofuels program, and I recently established a goal to have 60 billion gallons of our fuel come from biofuels by 2022.

He continued, “I am a proud supporter of the renewable fuels standard and tax incentives for biofuels. I’ll invest $150 billion over the next 10 years in our green energy sector, enhancing farmer profitability, injecting capital into rural economies, and creating up to 5 million new jobs in the process—

jobs that pay well and can’t be outsourced.”

Meanwhile, Bingaman has signed on as a co-sponsor of a bill submitted in June

by Sens. Diane Feinstein, D-Calif., and Judd Gregg, R-N.H., that would reduce the tariff on imported ethanol to 45 cents. “The need for inexpensive and cleaner-burning fuels continues to grow,” Feinstein said in introducing her bill. “And yet, U.S. refiners are forced to pay a 54-cent tariff on ethanol imported from Brazil and other foreign sources. This bill would essentially level the playing field and ensure that U.S. refiners are able to purchase cheaper and more climatefriendly ethanol, no matter where it comes from.”

Feinstein said the harmonization of the tariff with the ethanol subsidy would ensure that foreign ethanol neither benefits from the ethanol subsidy nor is penalized by a 9-cent barrier to trade.

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U.S. Ethanol Industry Responds As expected, ethanol proponents oppose Feinstein’s bill. “She proclaims we need more biofuels from Brazil but she turns her back on biofuels from the United States time and time again,” says Brian Jennings, executive vice president of the American Coalition for Ethanol. “ACE believes the tariff works exactly how it was intended. It is not a barrier. When the situation allows, we can import ethanol when it makes the most economic sense.

“For ACE to support harmonization of the tax credit, we need an ironclad commitment from Congress that they will extend the tax credit (volumetric ethanol excise tax credit) beyond 2010,” Jennings says.

“We won’t entertain harmonizing the credit and the tariff to 45 cents without such a commitment.

“If the value of the tariff is dropped, it would send an absolutely chilling signal to companies, lenders, scientists and everyone else that our nation is not as committed to energy security as we say we are.”

Nathan Schock, director of public relations for Poet LLC in Sioux Falls, S.D., tells EPM that, “Eliminating the tariff would not result in one more gallon of ethanol being used in the United States because ethanol is currently in an oversupply situation. With an E10 base blend, ethanol is effectively capped at 10 percent of our fuel supply and

U.S. Oxygenates, Fuel Ethanol Imports (thousand barrels per day) Year Jan 1993 1 1994 2

Feb

Mar 2 1

Apr

1995 1996 1997 1998 1999

1 1 0 0 0

2000 2001 2002 2003 2004 2005 2006 2007 2008

May

0 1 0 0 0

2 2 2 1 0

1 1 0 0 0

1 1 0 0 0

0 1 2 2 4

0 3 1 0 5

0 1 1 0 5

0 0 0 2 6

13 4 35 16

0 22 36 17

7 29 23 12

3 30 24 48

Jun 2

Jul 1 1

Aug

Sep 1

Oct 2 2

Nov

Dec 0 2

2

2 0 1 0 0

2 0 0 0 0

1 2 0 0 0

0 2 0 0 0

0 0 1 0 0

2 0 0 0 0

1 2 0 0 0

0 2 0 0 18

0 0 0 0 11

0 1 0 0 22

0 2 0 0 13

0 1 0 0 17

0 0 0 0 12

0 0 4 3 0

0 1 0 0 3

7 22 21 28

52 31 52

3 85 49

6 100 51

2 76 20

22 66 32

23 46 13

19 39 7

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

with the plants we have in operation and under construction, we are already there.

“The American ethanol industry is in a constant state of technological advancement,” Schock says. “By allowing foreign ethanol to flood the market, it would slow technology investment and likely delay the development of cellulosic ethanol production because there would be no market for the product.”

In Washington, the Renewable Fuels Association voiced a similar sentiment.

“Calling for a repeal of the tariff is a solution in search of a problem, to paraphrase Senator Chuck Grassley,” says Matt Hartwig, RFA communications director.

“The tariff exists to prevent taxpayers from subsidizing foreign ethanol production. It is not a protectionist measure, nor is it a barrier to our markets for foreign ethanol.

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Last year, some 400 million gallons of ethanol was imported directly from Brazil. Hartwig says the RFA has supported parity between the tax credit and the secondary tariff. “Removing the tariff would send a chilling signal to an already cold investment market that we are not serious about developing a robust domestic ethanol industry complete with the emergence of cellulosic and other next-generation technologies,” Hartwig says. “It would mean American taxpayers would be subsidizing ethanol and job creation in foreign countries. Removing the tariff would be a mistake.”

Schock adds, “The U.S. would be far better off following the Brazilian model of encouraging domestic, renewable fuel production. Brazil protected their industry and increased the base blend so that ethanol could grow to be a significant part of their energy supply. Today, they are energy exporters and the U.S. continues to spend hundreds of billions of dollars on foreign oil.”

A study early in 2008 at Iowa State University in Ames indicated that eliminating the tariff on foreign ethanol would likely result in a decrease of U.S. ethanol production of about 7 percent as cheaper imports move in and grab market share.

According to the USDA, costs for ethanol produced from sugar in Brazil are about 81 cents per gallon. Domestic U.S. ethanol production costs were well over $2 per gallon in 2008.

Any reduction in demand for domestically produced ethanol would likely have a significantly negative impact on cornbased ethanol producers who struggled in 2008 with out-of-whack input costs.

Importer Advantage One company that could stand to gain from an adjustment to the ethanol tariff is Minneapolis-based Cargill Inc. According to its Web site, Cargill is one of the main exporters of Brazilian sugar. Cargill ships this commodity worldwide through its joint ventures Terminal de Exportação de Açúcar do Guarujá (TEAG) and the Terminal de Açucar Ensacado (T-33), both in the state of São

TRADE

The status of the ethanol tariff will likely be determined after a new administration takes office in January.

Until then, the U.S. ethanol industry will be keeping its fingers crossed.

Paulo. Cargill also exports alcohol through the Terminal Exportador de Álcool de Santos (TEAS), which is also in the state of São Paulo, in which the company has an equity stake.

In 2006, Cargill announced the acquisition of a 63 percent stake in Central Energética Vale do Sapucaí Ltda. (Cevasa), an ethanol mill located in Patrocínio Paulista, in the state of São Paulo. In that same year, Cargill also acquired a 43.8 percent stake in Usina Itapagipe Açúcar e Álcool Ltda., a sugar and ethanol mill in the state of Minas Gerais.

Cargill has taken the position that free markets are the best way to meet global renewable energy challenges. “Biofuels should be freely traded worldwide,” Gregory Page, Cargill president and chief executive officer, told the USDA’s 2007 Outlook Conference. ”Open trading arrangements for biofuels will provide flexibility to our domestic biofuels markets and greater cooperation and integration with our biofuels trade partners around the globe. Global trade in biofuels should comply with international trade rules and agreements by ensuring equity for all countries as well as industry and trade participants.

“Brazil is an increasingly important global player in ethanol production and ethanol exports, producing nearly half of all traded ethanol today. We currently charge a 54-cent duty on Brazilian imports. But then, we allow the purchaser of that imported ethanol to be eligible for a 51-cent credit when the imported ethanol is blended into our U.S. fuel supply.

“Rather than view global biofuels trade as a threat, we should view overseas sources as an opportunity to develop a diverse and global biofuels market that can take advantage of multiple points of origin. U.S. production of biofuels can help increase our energy security—but other kinds of renewable energy will increase our flexibility and improve our ability to help feed the world’s hungry, while improving the global and U.S. energy picture.”

The status of the ethanol tariff will likely be determined after a new administration takes office in January. Until then, the U.S. ethanol industry will be keeping its fingers crossed. EP Frank Zaworski is an Ethanol Producer Magazine freelance writer.

Reach him at fzaworski@gmail.com.

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Bankrolling the Next Generation The food-versus-fuel debate, high corn prices and the country’s economic crisis have taken a toll on the corn-based ethanol industry. Despite its difficulties, the development of cellulosic ethanol wouldn’t be where it is without its predecessor. Now it’s just a matter of getting the necessary financing to commercialize the industry.

By Bryan Sims

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orn-based ethanol has been companies that are already constructing faunder intense scrutiny this cilities such as Range Fuels Inc. and BlueFire past year. It’s been blamed for Ethanol Fuels Inc. numerous ills from high food “There is no one vehicle to get these prices to increased pollution in the Gulf of plants built to commercial scale,” says Mitch Mexico. If that weren’t enough, the industry Mandich, chief executive officer for Range has also been saddled with high feedstock Fuels. The Broomfield, Colo.-based compacosts and is not immune to the crisis in the ny is currently building a 100 MMgy cellulosic banking industry and the volatility on Wall ethanol plant near Soperton, Ga., that will use Street. woody biomass as its feedstock. The plant, Currently, developers looking to build scheduled to be in operation by late 2009, will new plants or even recapitalize to expand or initially produce 10 MMgy in its first phase. retrofit existing plants are hard-pressed to Production will be ramped up to maximum find lines of credit and/or debt to finance capacity shortly after its test phase. projects in the current economic climate.

“It’s going to come down to the size of Limited availability of working capital has those first plants in an effort to match the forced some plants to shut down operations corn-based ethanol industry,” Mandich adds. until market conditions improve.

“In my opinion, the industry will Even for proponents, cornhave to scale those plants along based ethanol was never the silver a continuum of size based upon bullet that would wean America capital needs and requirements. from its dependence on importIt’s unlikely that anyone in the celed oil. Today, the renewable fuel lulosic ethanol space will be able serves as a meaningful bridge to to raise commercial-level funding develop and eventually commerto build a 100 MMgy plant right cialize cellulosic ethanol. out of the chute.”

Mandich Thanks to the support of the Like the financial boost cornfederal government, private investors and based ethanol received four to five years ago the many people involved in research and by eager farmer-owned co-ops where equity development, the stage is set for cellulosic was the primary source behind much of its ethanol’s commercial-scale debut. The re- growth, the same exuberance may be seen newable fuels standard (RFS) in the Energy by venture capitalists as the first commercial Independence & Security Act of 2007, calls ventures come on line. for the use of 16 billion gallons of cellulosic “The next few years will be a very imethanol by 2022, with the near-term target portant time for the industry to demonstrate being 100 million gallons by 2010. Addition- that it can stand on its own,” says Paul Ho, ally, the RFS caps corn-based ethanol at 15 principal at Hudson Clean Energy Partners. billion gallons. At press time, there were 182 Ho joined HCEP in September and oversees operating plants with a combined capacity transactions in the biofuels and biomass secof 11.21 billion gallons. There were also 26 tors. “Nobody doubts that the technologies plants under construction with a combined will work,” he says. “The million-dollar-quescapacity of 2.49 billion gallons. tion is whether it can scale up economically Although it’s a work in progress, many to accommodate commercial production opcellulosic developers are actively engaged in erations. Until then, people are still going to pilot and demonstration phases to prove that view it with a skeptical eye, but as soon as the their process technologies can economically first company cracks the mold I think there operate commercially. So what will it take for will be a lot of interest in this space.” developers to obtain the financing necessary The current credit environment is tight, to propel their unique projects onto the com- but several large firms, backed by both govmercial stage? Many in the industry are taking ernment funds and private-equity investors, a wait-and-see approach to who will provide are going ahead with plans to test their techthe financial blueprint for others to follow. nology.

Those people will no doubt be watching the

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â

PHOTO: BLUEFIRE ETHANOL FUELS INC.

Lactobacillus ?

Pediococcus ?

Acetobacter ?

Brettanomyces ?

Klann, chief executive officer of BlueFire Ethanol, displays the different feedstocks the company will use to make cellulosic ethanol through the company’s Arkenol process.

Capital Concerns Cellulosic ethanol plant developers agree there is still substantial capital—whether it involves varying forms of debt and/or equity—flowing into the cellulosic industry in an effort to accelerate projects to commercial scale. “The capital markets perform when the structure is right and when there is a demand market for the end product,” says Arnold Klann, president and chief executive officer of BlueFire Ethanol. The company has broken ground on a 17 MMgy cellulosic ethanol facility near Palm Springs, Calif., and a 3.2 MMgy facility near Lancaster, Calif. Both would use wood wastes, waste plant material and other refuse-derived biomass. “It’s one of those situations where everyone is waiting to see if the equity markets are going to return to some kind of normalcy,” Klann says.

“You do have some equity funds today that have billions of dollars with no place to put their money at the moment.”

Another source of capital has been provided by the U.S. DOE in the form of federally funded loan guarantees. In March 2007, the U.S. DOE awarded several grants to cellulosic ethanol companies for technology enhancements and to reassess viable economics applicable to commercialization deployment

strategies. Range Fuels and BlueFire Ethanol are two of six companies that have received federal grant money toward their respective projects.

According to John May, managing director for St. Louis, Mo.-based Stern Brothers Co., the DOE federal loan guarantee program should be seen as a “lynchpin” for cellulosic ethanol developers looking to gain May financial footing and to scale up their projects. “I think [the DOE grant program] is an indispensible tool for the industry as it moves toward cellulosic ethanol,” he says.

BlueFire Ethanol was awarded $40 million and was the first company to draw down on the grant money. Range Fuels received $76 million to construct its Soperton facility. The company also received an additional $100 million of equity from a Series B round and $6 million from the state of Georgia.

The company is also backed by venture capital, including Vinod Khosla’s investment firm Khosla Ventures.

“With the DOE guaranteeing a portion

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Pictured is a schematic detailing BlueFire Ethanol’s conversion process using Arkenol’s concentrated acid hydrolysis process technology.

SOURCE: BLUEFIRE ETHANOL FUELS INC.

of that loan, it should allow us to bring additional investment banks to participate under that loan guarantee program,” Mandich says. “However, it will be based upon the risk of the technology, its ability to reach commercial scale and its ability to meet the right ‘pro forma’ that will give investors a solid return.”

Federal grant funds, or the federal loan guarantee program, typically cover about 80 percent of a company’s debt that would not otherwise be supplied by traditional “merchant-type” lenders. The remaining 20 percent would come in the form of venture capital, private and/or public equity entities.

“I think you’re probably two years away yet before the financial markets are actually mature enough to finance these projects,” Klann says.

Historically, lenders committed a 50/50 or even 60/40 debt-to-equity ratio to cornbased ethanol plants. This new combination of federal grant money, equity and/or venture capital could create a paradigm shift within the lending community, which experienced nominal risk in the corn-based ethanol industry due to its commercially proven technology. If and when these commercial cellu-

losic ethanol plants are operational, obtaining working capital to sustain operations will be another challenge, according to May. “I think the lending paradigm changes somewhat just because you’re applying project finance rules around risk mitigation to a different set of facts,” he says. “In the end, the same concerns about managing feedstock cost, reliability, managing technology risk and where ethanol prices will be going remains.”

Improving Technological Appeal Like the beginning of the corn-based ethanol industry, cellulosic ethanol is striving to establish a proven track record. Much of the debate over how cellulosic ethanol projects will get financed to commercial scale depends on what technologies lenders and investors perceive as the most feasible.

“You have a lot of technology confusion in the marketplace right now because the government has sponsored enzymatic hydrolysis for years and years, so everyone believes that’s the way to go,” Klann says.

“That’s added a lot of confusion and a lot of resistance. The banks are waiting to see which technology is better because they’ve

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PHOTO: BLUEFIRE ETHANOL FUELS INC.

FINANCE

Pictured is a 3-D preliminary design of BlueFire’s proposed 17 MMgy ethanol facility near Palm Springs, Calif.

heard all kinds of hype and have seen no performance on a commercial scale.”

BlueFire Ethanol holds the exclusive rights for a process technology developed by Arkenol Fuels LLC. Arkenol’s patented process utilizes a concentrated acid hydrolysis pathway, which is amenable to handling the wide range of feedstocks BlueFire Ethanol intends to use, according to Klann. BlueFire Ethanol determined that it could produce approximately 70 gallons of ethanol per dry ton of biomass.

As for Range Fuels, it will deploy a patented thermochemical process to convert woody biomass into ethanol at its Soperton facility.

The company has also partnered with Ceres Inc. to research, develop and commercialize energy crop feedstocks for ethanol production.

The two companies began working together during the 2008 spring planting season and plan to continue the collaboration for several years.

“The banks that are going to come forward with the funding and take the risk are still very concerned about developmental technology and how much money they will put into play in a debt market,” Mandich says. “The initial foray into a commercial plant will most likely need to be on a smaller scale as opposed to the mid-range or higher end because you won’t be able to get the financing.” EP Bryan Sims is an Ethanol Producer Magazine staff writer. Reach him at bsims@bbiinternational.com or (701) 738-4950.

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CORN OIL

Ethanol Producers Face Key Considerations When Assessing Corn Oil Extraction

By Mark Warren

T

he past year has been a volatile time in the renewable fuels industry. The increased demand for all commodities, including agricultural commodities such as corn and soybeans, has driven up prices affecting the profitability of renewable energy plants. As a result, business models not accounting for this relatively recent market pressure are struggling to keep pace in this rapidly changing environment.

Both start-up and mature companies must leverage their unique capabilities, reduce operating costs and diversify revenue streams in order to position themselves for market success. More often than not, this requires a customized approach for each business and an in-depth understanding of its business and relevant markets.

One option that could potentially increase shareholder profitability for ethanol plants is the extraction of industrial-grade crude corn oil from the ethanol process for use as an alternative feedstock for biodiesel plants. This solution has caught the eye of

many given that ethanol plants can further enhance and diversify their revenues with this relatively low capital-intensive “addon” asset while biodiesel plants can secure a less-expensive feedstock compared with the bulk of food-grade crude vegetable oils.

On the surface, this outcome looks to be a “win-win” for both the buyer and seller of the industrial-grade crude corn oil. The payback on the ethanol asset is often within a few years, and shareholders quickly see an uptick in enhanced returns to the plant.

At the same time, biodiesel plants have a new source of feedstock that isn’t solely dependent on the vegetable oil market and is priced at a discount to those traditional oils.

Even with all the positive attributes associated with this relationship, ethanol and biodiesel plants need to be thoughtful of business, financial, technical, marketing and ownership structure risks associated with the endeavor. Generally speaking,

two business models are evolving related to the selling of industrial-grade crude corn oil. One, for lack of a better term, is the “vertically integrated” model, while the other is the typical market-based supply model. Each model has its own strengths, weaknesses and dependencies.

Thus, an invesWarren tor should not only get comfortable with these attributes, but also, and more importantly, consider ways in which to mitigate the underlying risks associated with each approach.

Vertical Integration In the vertically integrated model, several ethanol producers form a new entity with the sole intent of producing biodiesel.

Often, the biodiesel plant is built to scale based on the volume of industrial-grade

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

All questions pertaining to this article should be directed to the author(s).

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crude corn oil that the participants can supply. Listed below are some of the attractive attributes of this business model: 1. The ethanol plants have aligned interests with the biodiesel plant.

With this model, those ethanol producers usually contribute equity into the biodiesel plant. Thus, those participating have “skin in the game.” Make no mistake, the ethanol producers are interested in capturing a nice return for their industrial-grade crude corn oil but won’t sacrifice the viability of the biodiesel plant to do so.

2. Often, the pricing for the industrial-grade crude corn oil is indexed off either biodiesel prices (product), animal fat prices (substitute) and/or other petroleum markets (indexed product) to ensure that the biodiesel plant secures a strong operating margin or crack spread between wholesale biodiesel prices and industrial-grade crude corn oil. Thus, as prices fluctuate, the biodiesel plant can remain competitive while generating a strong return for investors.

3. The biodiesel plant will usually collocate next to an ethanol plant that is an investor and supplier of the crude corn oil.

A collocated approach allows the biodiesel plant to reduce its capital costs for infrastructure (rail, storage, utilities, water/ wastewater), as well as capture other synergies from the ethanol plant (waste heat, staff, existing contracts for infrastructure).

4. Transportation costs of the feedstock are generally less expensive than the competition due to the close proximity of the ethanol plants to the biodiesel plant. Usually the investors will locate the biodiesel plant in an area most centrally located among all of the ethanol participants.

Although there is a lot of value in this vertically integrated model, there are several key considerations that should be fully considered in order to make an informed investment decision. Listed below are just a few of the many questions that should be explored before proceeding with the venture: Strategic issues: 1) What impact will this strategy have on the distillers grains prices and marketing options for the ethanol plant? 2) What impact might it have on future options such as corn fractionation or others? 3) Are the involved participants aligned in terms of return expectations, culture and value fit? and 4) How will the board address key strategic decisions (buy, sell, merge), and what impact does that have on each ethanol plant?

Business structure: 1) How will the board be structured (equity contribution, business line expertise, etc.)? 2) What are the issues regarding the transfer of ethanol ownership if the ethanol plant is sold? 3) What impact will that have on the biodiesel plant’s ownership structure and control? and 4) What steps can be taken at inception of the biodiesel plant to mitigate long-term business structure issues?

Contracts and risk management: 1) What are the risks of default and implications to the ethanol plant and biodiesel plant? 2) What is the contingency plan in case default occurs? and 3) What measures can be documented to minimize exposure?

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Pricing: 1) How will the price of industrial-grade crude corn oil be established (including length of contract, methodology, and timing and requirements for delivery)? 2) How will quality control of the product be measured? (What are the standards of the product? How are discounts established?) and 3) What is the contingency plan for policy issues? (Possible expiration of the biodiesel tax credit, and state incentives and grants?)

Technology and performance standards: 1) Will all the ethanol plants be utilizing the same corn oil extraction technology? If not, what are the performance risks (composition of the crude corn oil and yield conversion)? 2) Will there be any issues with pretreating and processing different compositions of industrial-grade crude corn oil at the biodiesel plant? and 3) What are the performance guarantees associated with the extraction technology?

(What impact does that have on the biodiesel plantâ&#x20AC;&#x2122;s performance or shareholder returns?)

Counterparty risk assessment: 1) What is the financial stability of other participating ethanol plants? 2) What is the debt exposure at ethanol plants? 3) What are the implications for securing funding based upon existing loan covenants and liens? and 4) What is the ability to secure funding for extraction technology?

As can be seen, a number of items need to be diligently explored. Only a handful of the key considerations have been discussed that ethanol and biodiesel board members should consider when exploring this business model. We recommend working closely with legal counsel, equity participants, banks, technology providers and the project developer/consultant to ensure there is alignment around these critical business issues.

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136

For biodiesel plants interested in sourcing industrial-grade crude corn oil, often the best way to secure the volume is to work directly with an ethanol plant.

There are several procurement approaches that a biodiesel plant can take

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

CORN OIL when looking to lock in the crude corn oil.

One approach would be to establish a long-term offtake contract with the supplier for a certain amount of volume.

The buyer and seller would need to work through many of the contracting issues previously mentioned in order to develop a healthy and sustainable business relationship.

Another option would be for a biodiesel plant to purchase the extraction asset for the ethanol plant. With this type of arrangement, the ethanol plant wouldn’t have to source the capital for the extraction asset but would likely be required to sell the industrial-grade crude corn oil at a discount to the biodiesel plant. Both parties would need to actively work with their banking relationships to ensure that all parties are comfortable with the risks and structure of the business relationship.

Lastly, a biodiesel plant could source industrial-grade crude corn oil on the spot market. This is likely not a strong approach given the lack of product available on the open market, minimal amount of price transparency/discovery in the market and the technical requirements that a biodiesel plant must plan for when utilizing this product. Ultimately, hinging one’s hopes on finding industrial-grade crude corn oil in the spot market is highly risky and not recommended.

The primary reason for the pricing discount for the industrial-grade crude corn oil is its composition. Compared with other vegetable and rendered oils, it has a high free-fatty-acid (FFA) composition (12 percent to 17 percent), as well as waxes and other chemicals that make it unsuitable for human consumption and a challenge to pretreat. With the high FFA content, many producers utilizing this oil resort to acid esterification as the most economical way to convert FFAs into triglycerides versus stripping out the FFAs and selling them for a steep discount to the purchase price of the oil. This level of pretreatment will require a retrofit for existing assets, but the payback can be quick if all works smoothly.

One should be cautious when selecting a technology provider for this add-on or first-time install and should utilize a

proven technology. Proper performance guarantees and liquidated damages will need to be clearly defined and agreed upon by the plant’s banker and shareholders alike.

Utilizing industrial-grade crude corn oil definitely has a number of advantages for a biodiesel producer. This competitively priced oil provides feedstock diversity and, in many cases, a vertically integrated business model.

Likewise, extracting corn oil has potential advantages for the ethanol producer.

Several operating plants are, or are in the

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

process of, installing equipment to extract corn oil.

With all its promise, investors should proactively address the existing and potential risks to protect their shareholders’ returns, as well as ensure alignment between the board, management, buyer and seller regardless of what business model is utilized. EP Mark Warren is a partner with Ascendant Partners Inc. Reach him at mwarren @ascendantpartners.com or (303) 2214700.

137

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PROJECT DEVELOPMENT

Feasibility Studies 101: What It Takes to Achieve Commercial Goals

By Ken Wenninger

B

efore undertaking a major capital project, a host of questions must be answered regarding the technical and financial viability of the project.

The questions are the same regardless of the type of project being contemplated.

How much will it cost? How long will it take to complete? How quickly will project owners and investors recover the investment? What is the return on investment? Which of the assumptions about the project are critical to its success?

The necessity of systematically addressing these topics leads many to utilize an engineering tool called a feasibility

study early in the projectâ&#x20AC;&#x2122;s development.

Essentially, a feasibility study provides an opportunity to clarify a business plan by enumerating and analyzing the risks and returns of a capital project.

The results of the feasibility study show how a business would operate under the given set of assumptions that led one to consider the project. The primary audience for the study includes potential investors, financiers, developers, upper management or anyone who will participate in deciding whether to proceed with the project. It is typical for a feasibility study conducted by a third party to be

required before any major investors or banks will make a funding decision.

Feasibility studies are frequently completed by an outside engineering firm in order to obtain an independent review of a companyâ&#x20AC;&#x2122;s business plan. A firm with experience in process development and banking requirements should be selected.

This often will be the first time that a new company interacts with a consulting engineering firm, and it is important to select one that can provide guidance in handling projects from research and development through construction and start-up. Without such experience, an engineering firm

By estimating the capital cost of a project and calculating operating expenses such as raw material consumption and labor, a feasibility study helps identify all the costs and revenues associated with the process.

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

All questions pertaining to this article should be directed to the author(s).

140

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

PROJECT DEVELOPMENT cannot accurately assess the risks and rewards of undertaking a major capital project.

If the project involves proprietary information, it is wise to ensure that the engineering firm hired to conduct a feasibility study has strong intellectual property protection procedures.

Consider entering into a non-disclosure agreement with any firm, even though there is no detailed technology transfer involved.

Issues Addressed At the root, a feasibility study addresses a specific set of technical, economic, legal and schedule topics. Primarily, it seeks to provide a thorough understanding of what it will take to execute a project prior to investing significant amounts of capital. On the technical side, a feasibility study answers the inevitable engineering questions raised once a company decides to scale up a process: What equipment is needed to operate the process at larger scales?

Is that equipment widely available, or is it highly customized?

Which utilities will the owners or investors need to provide, and are they available where the project will be built?

Are the required raw materials and labor available at the anticipated construction site?

How long will it take to get the process and ancillary equipment installed and operating?

What will the factory look like in the end?

What size property is needed to build this facility?

What permits need to be obtained, and which will take the longest to obtain?

What transportation networks are available, and which ones are needed?

A feasibility study will also help predict what will happen with a groupâ&#x20AC;&#x2122;s money. Know what the return on investment will be, what the first five to 10 yearsâ&#x20AC;&#x2122; worth of cash flow will look

PROJECT DEVELOPMENT

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Feasibility Study Results At the conclusion of a feasibility study, several key items will help guide further project decisions: Rough capital cost estimate, estimated

return on investment and internal rate of return Projected project timeline Key process equipment pricing and

delivery lead times Utility consumption estimate Identification of next steps to transition

Agribusiness Services Clifton Gunderson was founded in the heart of the Midwest and many of our partners and professional staff were raised in rural communities. Even though we have grown to become one of the largest CPA firms in the country, we continue to have a natural interest in and understanding of agribusiness.

In fact, many of our specialized tax consulting services benefit the ethanol industry by providing immediate cash flow benefits. Our fixed asset and cost segregation studies alone have uncovered additional current year tax deductions for numerous ethanol facilities of over $100 million.

In addition, we can provide solutions in the areas of – • • • • • • •

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to detailed engineering

like, and how long the payback period will be. This includes an analysis of tax rates and possible tax incentives for the project.

By estimating the capital cost of a project and calculating operating expenses such as raw material consumption and labor, a feasibility study helps identify all the costs and revenues associated with the process. Market assessment, internal rate of return, revenue and operating costs are all estimated to provide as full a picture as possible of the project’s viability.

Permitting and patent/licensing issues dominate the legal focus at the early stage of a project. Identifying the permits required for the project and building a timeline for acquiring those permits is crucial for the development of a project timeline. Patents and/or technology licensing will impact costs and revenue streams and should be included in return on investment calculations. Additional questions to consider at this phase include

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It is wise to spend considerable time ensuring an appropriate engineering firm is selected to conduct the feasibility study.

301 SW Adams, Suite 900 • Peoria, Illinois 61602 www.cliftoncpa.com 142

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

PROJECT DEVELOPMENT

possible markets for byproducts, disposal costs for waste streams, carbon credits for a â&#x20AC;&#x153;greenâ&#x20AC;? process, utility costs and evaluation of alternative technologies that might increase efficiency. These topics will not be exhaustively researched in this phase of a project, but they will be identified for future study based on their relevance to the overall project success.

None of the questions raised earlier will be fully answered at the end of a feasibility study, but the key decisions that need to be made early in the next phase of engineering will be identified.

The Limits of a Feasibility Study While a feasibility study covers a broad range of topics, it does not delve into great detail on any one of those topics. It will not provide a detailed equipment list nor a full heat and mass balance for a process. Nor will it provide enough information to obtain detailed bids on design and construction. Assuming the feasibility study finds that a project is viable and financing is secured, the next steps include front-end loading (preliminary engineering, site selection and permitting), followed by detailed engineering, equipment procurement, construction and start-up. Because all of those steps are contingent on the completion of a thorough feasibility study that carefully analyzes the risks and rewards of a project, it is wise to spend considerable time ensuring an appropriate engineering firm is selected to conduct the feasibility study.

Upon completion of the study, a good engineering firm should also be able to help with subsequent steps as well. EP Ken Wenninger is the corporate director of marketing for Harris Group Inc. Reach him at ken.wenninger@harrisgroup.com or (800) 488-7410.

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FERMENTATION

FTIR Offers Push-Button Fermentation Control

By Richard Mills

W

hile clouds of misinformed accusations swirl around the emerging ethanol industry, in the eye of the storm, producers are quietly getting on with the essential job of making sustainable fuel. What’s more, they’re improving the process all the time.

Advances in efficiency are being made across the board. The ability to predict yield and segregate corn at intake is just one example. Further into the process, fermentation is another area under development. While arguably the most critical part of making fuel ethanol, it is also the most vulnerable as infection with unwanted microbial activity can literally eat away at millions of dollars of production.

Although current methods based on high-performance liquid chromatography (HPLC) analysis provide a wealth of information, time-to-result, cost-per-sample and the need for trained laboratory personnel remain barriers to gaining the level of information needed for effective fermen-

tation control. Room exists for something faster, cheaper and easier, especially for those that don’t happen to have a premier laboratory on site.

Near infrared (NIR), so well known for applications such as testing grain, has been investigated by many. However, questions remain about its ability to detect infection indicators typically only present at low levels. The field of infrared analysis technology is not finished there. Another related technology has just the right credentials to fill the gap: Fourier transform infrared (FTIR).

FTIR is worth remembering for its proven benefits, including speed, low cost and simplicity. Results for several parameters are delivered in no more than two minutes. Unlimited analyses can be conducted at no extra cost, and anyone can perform the test. FTIR also appears to be particularly well-suited to picking up infection indicator parameters.

A prototype application of the technology has been tested at ethanol plants

in the United States and the concept is attracting significant interest as a pushbutton solution for routine monitoring and control.

Unlimited Testing For Brian Wrenn, research director at the National Corn-to-Ethanol Research Center in Edwardsville, Ill., the speed of the new monitoring option is especially interesting. He describes that with conventional testing there can be an eight- to 10-hour gap between tests and the actual test takes approximately an hour to deliver results: around 20 minutes for the test, plus the additional time for pulling the sample and setting up. “A lot can happen within an hour and it can be maddening to wait,” Wrenn says.

Antibiotics provide a solution, but operators want to avoid using more than absolutely necessary, both with respect to cost and the possibility of residues contaminating distillers grains. Rapid testing can improve monitoring and allow a more

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

All questions pertaining to this article should be directed to the author(s).

146

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

PHOTO: FOSS

FERMENTATION

FTIR measures all the regular parameters involved in fermentation control, plus it provides the sensitivity required to pick up parameters often discernable in low concentrations, such as acetic and lactic acid.

proactive approach to fermentation control where the use of antibiotics is minimized.

The ability to test as much as needed at no extra cost is another aspect of the FTIR option, says Mitchell Feldman,

laboratory manager at Abengoa Bioenergy of Nebraska LLC, an 88 MMgy in Ravenna, Neb. Since February, the plant has been testing a prototype FTIR unit called the BioFoss developed by Foss.

“With HPLC, the filters are at least a dol-

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147

PHOTO: FOSS

FERMENTATION

Measurements are simple to perform for anyone working in the plant.

lar per sample and the vials are at least 10 cents, so you are saving $1.10 with every sample you run,” Feldman says.

On a typical day, the laboratory at the 88 MMgy plant runs between 50 and 60 samples. However, if issues arise, they

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Equipped with an enclosed engine compartment that produces the lowest decibel reading in its class and the only self-cleaning air intake system on the market, the 9564 is a heavy duty “green” machine.

will run 100 or more tests depending on what needs to be measured. Although only occasionally required, the need to replace columns for HPLC systems also contributes to costs. “When you run as many samples as we do, it all adds up,” Feldman says.

FTIR analysis technology is available in an easy-to-use form and the test model used at Abengoa Bioenergy of Nebraska is a compact, simple-to-use instrument that is no more complicated than a vending machine. “Anyone can use it,” Feldman says.

The usability associated with FTIR analysis is also noted by NCERC Director John Caupert. “Training is a huge issue in the industry,” Caupert says. “Someone like me can use it and I am not a chemist or an engineer.

Caupert has testified to the U.S. House of Representatives on the need for improved training in what he sees as one of the few growth areas for the present U.S. economy.

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148

FTIR technology may be new to the ethanol industry, but it’s common to other industries where the need to monitor fermentation is by no means unique.

Winemakers can get just as many gray hairs as ethanol producers waiting for the outcome of fermentation. But in contrast, many have given themselves an edge in the form of analytical technology that can deliver results for key measurements whenever needed, effectively providing an early warning system for potential problems.

In simple terms, the FTIR method works by shining infrared light through the sample. This picks up the vibrational activity of chemical functional groups.

The information is then decoded usETHANOL PRODUCER MAGAZINE DECEMBER 2008

FERMENTATION ing a well known mathematical function (the Fourier transform). The technique has been in use for decades to test milk and was first used in 1999 in the wine industry.

FTIR measures all the regular parameters involved in fermentation control, sugars (maltose and glucose) and ethanol.

FTIR technology provides the sensitivity required to pick up parameters often discernable in low concentrations, such as acetic and lactic acids. In this way it offers a more powerful alternative to the better known NIR analysis method.

A common term in connection with FTIR is the “signature” left by a chemical component that can be picked up at specific areas of the infrared light wavelength. Corn mash provides many different signatures and the FTIR technology is ideal for sniffing out acetic and lactic acid among the mass of data. At the same time, studies indicate that it is also better at measuring the more prominent components. “NIR seems to work, but with FTIR it is more specific,” Wrenn says.

Feldman shares the interest in the ability to track infection indicators. “In measuring lactic and acetic acids the technology really shines in giving reproducible results,” he says. “They are very low level, so they are hard to measure with NIR, but we found that the FTIR instrument actually does a very good job of measuring these low level parameters.”

erence to the fact that an infection either consumes sugar or alcohol. Bacteria in the tank convert sugar and ethanol to something else: either lactic or acetic acid.

FTIR analysis simply makes getting the required control data quicker and more cost effective. “It would be the same with HPLC, but the biggest benefit with FTIR is the time and the cost, which are both excellent,” Feldman says.

At press time, the BioFoss unit is still being tested at Abengoa Bioenergy of Nebraska, where it is showing great promise.

It has also been tested at the NCERC and

at four producing U.S. fuel ethanol plants with positive results.

While the field tests add the finishing touches to the new fermentation monitoring solution, the potential of FTIR is already clear. As an accessible and rapid method, FTIR can help to reduce the use of antibiotics, ensure maximum yield and avoid nasty surprises during fermentation.

Above all, it makes testing by anyone in the plant routine. “Why not do tests every hour?” Wrenn says. EP Richard Mills is with Foss. Reach him at rim@foss.dk.

Same Procedure, More Information Infection control is especially important at facilities such as the Abengoa Bioenergy Nebraska plant where a continuous fermentation process involving eight tanks is used. “A small infection in early fermentation translates into a big problem by the time you get to the end of fermentation,” Feldman says.

He explains how, if they see a problem coming, they will take more samples to check that everything is heading in the right direction. At approximately 1 million gallons per tank, a big investment is involved given that 1 million gallons of corn mash is not cheap in today’s market.

Millions of dollars in grain are in the process.

“We don’t lose a whole tank, but you do lose yield,” explains Feldman with refETHANOL PRODUCER MAGAZINE DECEMBER 2008

149

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DISTRIBUTION

Family Transport Business Expands in Midwest

By Tom Stone

I

t’s not much of a stretch to say that the lifeblood coursing through the Kane family tree is motor fuels. Since its founding by Joseph Kane and his wife, Lucille, in 1949 in Sauk Centre, Minn., about two hours west of Minneapolis-St. Paul, Kane Transport has been a family-owned and -operated business. The third generation of Kanes now works to ensure that it remains one of the top carriers in the Upper Midwest.

Not only is the Kane Transport story one of a close family working together for the greater good, but it is an example of something that was thought to be nearly extinct in American business—the family-owned business that not only survives, but thrives—as corporate mergers and hostile takeovers have thinned the herd of businesses that used to have “& Son” tacked onto the end of their name.

“Kane Transport is very much so a family affair and we all get along togeth-

er,” says Pete Kane, Joe’s grandson and the company’s current vice president of Twin Cities operations. “We’re going on the third generation and we’re continuing to improve the business, which the odds say we shouldn’t be able to do.”

This commitment to the family name and company has deep roots in Kane Transport, providing the foundation for a company that could have called it quits long ago.

From Modest Beginnings Joe and Lucille Kane, with the help of Joe’s brother Louie, founded Kane Brothers in 1949 as a one-truck operation that delivered gasoline and fuel oil to customers in parts of Minnesota and North Dakota. When Joe passed away in 1968, the company had recently added a second truck and the business was still growing, so Lucille decided to keep at it. To lend a hand, Joe and Lucille’s four sons—David, Mike, Tom and Bob—joined their mother in run-

ning the business. In those days, the four sons handled all of the deliveries and a third truck was added to the fleet in 1972. Since then the company’s significant growth has met considerable challenges.

Tragedy struck in the 1980s when David, a firefighter by trade, was killed while fighting a fire. Mike then left the business in 1997 before Tom passed away of a heart attack in 1999, leaving Bob to run the business by himself from 1999 to 2006. At that time, he asked his three children—Pete, Angela and Patrick—to join the company, and they all agreed to buy equal shares with Bob still retaining majority control. A cousin, Paul Kane, is also involved as the company’s general manager.

During this time, the company emerged as one of the largest petroleum carriers in Minnesota with a fleet of approximately 180 tractor trucks and more than 250 transport trailers that pick up their supply from a network of 11

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

All questions pertaining to this article should be directed to the author(s).

152

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

DISTRIBUTION With an average load measuring approximately 7,500 gallons of product, approximately 525 million gallons of fuel are delivered by Kane trucks in a calendar year.

Kane Transport is able to deliver this type of volume and cover its widespread distribution area by employing a truck fleet that isn’t dedicated solely to one type of product. “Our company tractors kind of go where we need them to go,” Pete Kane says. “One day they’ll be hauling fuel, the next day ethanol, the next day asphalt. We like the versatility that we have to use the trucks to haul different products at different times.”

Green and Growing

company-operated terminals spread throughout Minnesota, Wisconsin, Iowa and Illinois. Besides gasoline, diesel and biofuels, Kane Transport also delivers asphalt, propane and anhydrous ammonia to a customer base that covers Minnesota, Wisconsin, Iowa, Illinois, North Dakota and South Dakota. In an average year, Kane Transport trucks and trailers deliver 70,000 loads.

While gasoline and diesel have been the backbone of Kane Transport’s distribution business, the company got in on the ground floor of the ethanol-distribution segment of the industry, thanks, in part, to Minnesota’s early acceptance of biofuels as an alternative to petroleum products. In fact, as of April 2007, Minnesota had 307 (26.9 percent) of the nation’s 1,143 E85 retail fueling stations, a number that was more than twice that of the state with the second-most E85 refueling sites, Illinois’ 149.

“We’ve been transporting ethanol for 20 years,” Pete Kane says. “It’s been

in the Upper Midwest, Minnesota specifically, for a long time. It’s just started to have more channels of distribution and with the pressure to find alternatives to foreign oil, it’s gained speed. In the past 10 years, we’ve seen significant growth in the area of alternative fuels transportation.”

Growth in Minnesota was boosted by a 1997 state mandate that required all gasoline to contain 10 percent ethanol. A mandate requiring 20 percent ethanol in all regular gasoline will go into effect in 2012. In 2005, the state also passed a mandate requiring all diesel fuel contain 2 percent biodiesel.

This increased emphasis on biofuels has resulted in upwards of 15 percent of Kane Transport’s deliveries consisting of biofuels, which can range from loads of E10 to E85 and B2 to B100.

Add that to the traditional gasoline and diesel, and the fringe products such as asphalt and propane, and the success of Kane Transport depends on the nimbleness of its fleet, as well as the ability to keep it running consistently as it criss-crosses its seven-state delivery territory.

Another Connection To keep its large and varied fleet on the road and out of the shop, Kane Transport forged relationships with reliable equipment suppliers. When it

PHOTO: BLACKMER

DISTRIBUTION

A Kane Transport driver is next to the three-inch sliding vane pumps standard on the company’s biofuels delivery trailers.

came to selecting the brand of transport pumps that would be used on their trailers, Bob Kane turned to longtime family friend Jim Determan.

The Kane and Determan families grew up together in the Sauk Centre area and, while the Kanes got into petroleum distribution, the Determans got into the supply of fuel-handling products, with Jim Determan founding the Determan Brownie Inc. distributorship in the 1960s. So when Bob Kane needed the right transport pump for his growing stable of delivery trailers, he knew where to turn.

Determan directed him to sliding vane pumps.

Since the mid-1980s, TX Series sliding vane pumps from Blackmer have been standard equipment on nearly all of Kane Transport’s 200-plus transport trailers. On the 25 or so trailers that have been specifically marked for the delivery of biofuels, TXSD3E Series (3-inch) pumps have been standardized.

A truck fleet as large as Kane Transport’s must follow a strict maintenance and replacement schedule. In general, Kane replaces its tractors after eight years of service with about 12 needing to be replaced each year.

The company has found, however, that while the tractors and trailers need to be replaced according to this schedule, not all of the replacement tractors and trailers need new transport pumps placed on them.

“We’ve had [situations] where we’ve removed trailers from our fleet, took off the old Blackmer pump, used a rebuild kit and put them back in service,” Pete Kane says. “Af-

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DISTRIBUTION

ter 15 years, we’ll throw a rebuild kit on the pump, slap it on another trailer and let it go for life. We abuse these pumps and they take a beating and they keep on going. Like my Dad said, ‘If the pump was run by a robot, you’d never have to touch it.’”

Kane Transport’s diverse customer base and product offering also means that it has some unique delivery challenges.

While traditional gasoline and diesel deliveries have relied on gravity drops instead of transport pumps, the growth of the ethanol side of the business has required the need for sliding vane pumps.

While every customer might be different, for the past 25 years Kane Transport has ensured that its products and deliveries come with the highest standard of quality, keeping the company at the forefront of the petroleum industry in the Upper Midwest. EP

PHOTO: BLACKMER

Tom Stone is the director of marketing for Blackmer. Reach him at stone@blackmer.com or (616) 248-9252.

Pete, left, and Bob Kane

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155

UTILIZATION

Emerging Waste/Coproducts Optimization Opportunities for Ethanol Facilities

By Philip A. Marrone, Kenneth R. Liberty and David J. Turton

I

n the past two issues of EPM, we presented several options for improving ethanol plant operation from process- and energy-related perspectives. This article, the third in a threepart series, focuses on waste and coproduct-related changes that can be made to improve the ethanol production process relative to the current standard processes (i.e., dry grind and wet mill).

Ethanol production has a unique advantage in the biofuels arena in that the waste products are not really â&#x20AC;&#x153;waste,â&#x20AC;? but rather valuable end products that require only a small amount of further processing.

In most cases, the end products become animal feed (e.g., distillers dried grains with solubles [DDGS]). However, there are other valuable fractions that can be extracted with the right technology. Once separated and removed, the fractions would increase the overall revenue at an ethanol production facility. Some of these fractions (e.g., oil, fiber, protein) are already removed upfront in the wet mill process, but other opportunities are missed. In addition to new

coproducts, there are also new applications for existing products to consider.

Most of the changes associated with waste/coproduct optimization options presented here have to do with identifying new markets or uses for existing coproducts, production of new coproducts, or new applications for coproducts that currently have little or no value (i.e., wastes).

The goal of all of these options is to increase the number and value of marketable coproducts that may be extracted from the fuel ethanol production process relative to that typically generated by the standard process in the United States today. This will increase revenue and expand plant diversity to better weather market fluctuations. All of the options presented here are available or under development, but not yet in widespread use or considered standard. A more detailed discussion of these and additional options can be found in the full-length version of this three-part series, available online at www.ethanolproducer.com/articles/ EmergingOptimizationOpportunities.

Generation of New Products/Coproducts Aside from DDGS and carbon dioxide, other marketable products can be derived from an ethanol production facility. The production of butanol via fermentation is similar to ethanol production, although an ethanol plantâ&#x20AC;&#x2122;s fermentation tanks and distillation columns would need to be retrofitted to support butanol production. Butanol, as a fuel, has several advantages over ethanol. Unlike ethanol, butanol can be a direct replacement for gasoline in an unmodified internal combustion engine with only a 10 percent or less loss in energy density. Butanol can also be blended with gasoline, much like ethanol, but does not have the same concerns as ethanol in regard to issues such as corrosivity or water retention. For these reasons, there is growing interest in biobutanol. Companies such as BP and DuPont are venturing into this market in preparation for expanding the concept of biofuels and reducing reliance on foreign oil.

Another type of new product that is

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

All questions pertaining to this article should be directed to the author(s).

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seeing increased attention is the synthesis of polymers or their monomer units from corn starch. The starch is typically separated by fractionation and then saccharified to dextrose as the starting material for polymer production. Examples of starch-derived compounds with production processes that have been developed and commercialized include polylactide and polyhydroxyalkanoate polymers and 1,3 propanediol monomer. These bioderived substances (to distinguish from petroleum-derived versions) can be used in plastic fibers, fabrics, films and resins.

Because of the ability of corn to rival petroleum as a viable yet renewable building block for many polymeric and organic species, the market for this coproduct may be significant. This particular option requires significant investment of resources, however, which may not be feasible for every ethanol facility.

Recovery and purification of proteins represents another area of new product interest. In particular, zein is a valuable protein derived from corn that is useful as an edible, water resistant, film-forming polymer. Currently, there is no cost-effective way to recover and purify zein protein.

However, efforts are under way to develop

a viable extraction procedure, which if successful, could open up a number of new markets.

Corn fiber gum, an alkaline extract of corn fiber, is a potential coproduct that can be generated from a variation of the wet mill process referred to as the sequential extraction process (SEP). In SEP, ethanol, instead of water and sulfur dioxide, is used to extract protein and oil components from corn, which can be recovered as coproducts along with the corn fiber gum. Corn fiber gum has value as a substitute for gum arabic, which is a key ingredient in many soft drinks, candy and pharmaceuticals. There are few domestic sources of gum arabic, which adds to the value of the corn fiber gum. However, the process is about double the cost of a conventional wet mill process.

The substances described above are just a few of the most promising examples of work being done on new product/ coproduct development in the fuel ethanol production process. Clearly, the more useful products that can be extracted from the non-ethanol producing components, the more value is generated for the plant, not only in new sales, but also in waste reduction.

Alternate Uses for Existing Coproducts If ethanol capacity and the production of traditional coproducts increases while the demand for these coproducts remains constant, normal market forces will drive down coproduct prices. Consequently, there is incentive to explore new uses and markets that may exist for these coproducts.

Many farmers are looking at DDGS as a feed for livestock other than beef cattle, such as swine and poultry. As is, DDGS may not be quite as competitive since there may be more inexpensive feeds on the market (depending on current prices). Fractionation, however, increases the protein content in the DDGS, making it more attractive as a feed for other livestock. Research is also being conducted to modify the composition of DDGS to make it more acceptable to other forms of livestock, such as horses.

There is also interest in utilizing DDGS for non-feed applications. Among

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159

UTILIZATION the alternative applications cited for DDGS are use as a de-icing agent, cat litter and lightweight â&#x20AC;&#x153;ag-fiberâ&#x20AC;? shipping containers.

There is also a potential use as nutraceuticals and subsequent incorporation in human food. One example of this is beta-glucans, which are polysaccharides found in DDGS (particularly from barley or other cereal grain feeds) that can be used as a source of soluble fiber and have been shown to have a number of beneficial human health effects, such as reducing cholesterol levels, reducing cancer risks and improving the immune system. Technology is available to separate corn oil downstream in the dry grind process from condensed distillers solubles. The oil, which is extracted via centrifuge during evaporation of the thin stillage, can then be utilized as feed for production of biodiesel (see below). Finally, stillage in any form can be used as fuel or lawn fertilizer.

Industrial applications for carbon dioxide generated during fermentation include use as a source of carbonation in the beverage industry, use in water treatment and chemical processes, and use as a refrigerant. Other proposed applications include use as a purge gas for extracting residual oil deposits from an existing oil field and as a feed for biomass growth, such as algae. The latter has the added benefit of sequestering carbon and avoiding the release of a greenhouse gas.

Coproduction of Biodiesel Corn oil extracted from the kernel or DDGS can be used for producing biodiesel. Biodiesel, which consists of fatty acid methyl esters, is made by combining the oil with methanol in the presence of a base catalyst. Ethanol can also be used instead of methanol to generate an acceptable diesel fuel replacement (although technically, fatty acid ethyl esters cannot be called biodiesel) and may be a particularly viable option for colocated plants.

Several companies are developing a strategy for coproducing biodiesel alongside their ethanol production. This has a significant advantage over traditional ethanol production facilities. The

feedstock for biodiesel is already in the plant, meaning there is no transportation cost for the feedstock input. In the traditional dry grind process, the oil normally exits with the DDGS as a lowvalue product, but separating the oil via fractionation and making biodiesel creates a high-value product. In addition, the DDGS can still be sold as a higher value coproduct as well, since the protein concentration increases. Most importantly, coproduction of ethanol with biodiesel allows an ethanol plant to diversify, giving added flexibility to deal with market fluctuations. The biodiesel produced can either be sold through the existing distribution network, or used as a fuel on site for diesel generators, boilers and heaters.

Biorefineries A biorefinery is analogous to todayâ&#x20AC;&#x2122;s petroleum refinery; it is a broad term used to define a facility that integrates biomass conversion processes and equipment to produce fuels, power and value-added chemicals. An example of a biorefinery is a facility that produces ethanol and burns the waste product to generate power, produces biodiesel, develops protein-enriched meal for farm animals, creates synthetic oils, extracts monomers for plastics, and/or performs reactions to make dyes for inks.

Transforming an ethanol production facility to a biorefinery requires that a second process or facility be established in conjunction with the ethanol plant to produce at least one additional high-value product. Traditional dry grind corn ethanol plants usually produce DDGS as their main coproduct. Such a facility might consider other opportunities such as performing a fractionation step prior to fermentation so that only the starch undergoes fermentation while other fractions (oil, proteins, carbohydrates, etc.) can go toward other fuel products, plastics or dyes. Likewise, at the finishing end, extractive techniques can be employed to remove valuable proteins, oils can be captured for use as a fuel, cellulose can be recycled for producing additional ethanol, or the insoluble matter (e.g., lignins) can be burned to generate heat or electricity.

UTILIZATION The main advantage of a biorefinery is the inherent flexibility to react to market fluctuations and demands. For example, if the demand for ethanol decreases (lowering prices), the second high-value product (biodiesel, plastic monomers, etc.) will likely not be affected and revenues in that process remain steady. The downside is the significant investment and capital cost involved with the biorefinery transformation, although it may be possible to take advantage of funding opportunities available through the federal government to partially offset the cost. To date, the federal government has supplemented many biorefining endeavors with millions of dollars in grants; a practice that will likely continue in the foreseeable future.

Summary of Waste/ Coproduct Optimization Options In this article, we have presented several opportunities for alternate uses of wastes/coproducts from a corn-to-ethanol production facility. The investment required to incorporate these options into an existing plant range from relatively low (e.g., recycle of solid waste) to high (e.g., biodiesel production), but none are high enough to be impracticable. From an overall perspective, the point of all of these options is to extract as much usable product out of the same amount of feedstock, while at the same time, developing a diverse and stable product â&#x20AC;&#x153;portfolio.â&#x20AC;? However, while reusing waste can reduce costs and new products can generate new revenues, there is also revenue lost from the loss of former

products no longer generated. Thus, it is critical in all cases to perform a cost evaluation to examine the benefits of incorporating any new process variations compared to the loss of traditional products and/or markets, given the unique constraints associated with each production facility.

It should be clear that not every option is appropriate for every plant. Those options that increase overall plant flexibility (e.g., having the ability to utilize coproducts as either sellable commodities or fuel) will likely confer the most efficiency and savings.

Some options are more mature or will have greater impact on the industry than others. Almost every option has the hurdle of some initial capital expense to implement, which in some cases is significant. The greatest benefit, however, will come to those plants that are willing to continually invest in new technology to achieve long-term cost benefits. Significant advancements in technology over the past 30 years have led to considerable gains in plant efficiency and profitability, and this trend is expected to continue.

Those plants that do not continuously look to optimize and improve performance run the risk of achieving short-term profits today at the expense of future viability. EP Philip A. Marrone is a chemical engineer, Kenneth R. Liberty is a biochemical engineer and David J. Turton is a civil engineer with Science Applications International Corporation. Reach Marrone at marronep@saic.com or (617) 618-4686. Reach Turton at david.j.turton@saic.com or (443) 402-9209.

© 2008 Danisco US Inc. Genencor® is a registered trademark and MAXALIQ™ is a trademark of Danisco US Inc. or its affiliates in the United States and/or other countries.

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ECONOMY

Renewable Energy, Energy Efficiency Will Be Key to Economic Recovery

By Bill Eby

A

s world leaders and their financial chiefs scramble to find ways to shore up credit markets and rebuild confidence in the global economy, many analysts and government leaders say that now is the best opportunity to implement renewable energy and energy efficiency initiatives that can drive and maintain economic recovery.

Recent and numerous calls for the next Congress and administration to forge a comprehensive national energy policy take on a new urgency in troubled economic times, and underscore a longstanding recommendation from the National 25x’25 Alliance for a renewable en-

ergy and energy efficient future that will boost the economy, as well as enhance national security and improve the environment.

“Through the creation of a 25x’25 energy future, we can stimulate the economy and put hundreds of thousands of Americans back to work,” says Read Smith, co-chairman of the National 25x’25 Steering Committee. “Let’s not bury our heads in the sand during these very challenging times. We have solutions that we can bring to the economic recovery table.”

A national study undertaken by the University of Tennessee Department of

Agricultural Economics shows that if America’s farms, ranches and forestlands can meet 25 percent of the nation’s energy needs with renewable resources— biofuels, biomass, wind energy, solar power, geothermal energy and hydropower—an estimated $700 billion in new, annual economic activity would be generated, and 4 million to 5 million new jobs would be created.

The Tennessee study, commissioned by 25x’25, is said by its authors to be one scenario among many in meeting the 25x’25 vision. While the analysis includes forest waste from hazard-reduction programs and mill residue, there are numer-

‘The green economic recovery program addresses the immediate need to boost our struggling economy and accelerate the adoption of a comprehensive clean energy agenda.’

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

All questions pertaining to this article should be directed to the author(s).

164

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ECONOMY ous resources that are not taken into accountâ&#x20AC;&#x201D;woody biomass from managed forests, agricultural wastes (other than corn and wheat) and urban wood wasteâ&#x20AC;&#x201D;suggesting the economic benefits of a 25xâ&#x20AC;&#x2122;25 future could be even greater. Further, while the analysis includes the production of dedicated energy crops, some varieties of feedstocks currently under research in laboratories and universities, including energy cane, Miscanthus and hybrid willow, may not have been fully evaluated in the analysis, indicating even greater economic returns.

Another strong indicator of renewable energy developmentâ&#x20AC;&#x2122;s potential to strengthen the economy comes from the U.S. DOE, which looked at just wind energy and concluded that it is capable of becoming a major contributor to Americaâ&#x20AC;&#x2122;s electricity supply and economy over the next three decades. The DOE says that achieving a 20 percent wind contribution to the U.S. electricity supply would increase annual revenues to local communities to more than $1.5

billion by 2030 and support roughly 500,000 jobs in the United States.

Developing Recommendations When presented with those kinds of economic incentives, says 25xâ&#x20AC;&#x2122;25 Project Coordinator Ernie Shea, the allianceâ&#x20AC;&#x2122;s steering committee developed a set of recommendations for a national energy policy that will not only reduce the nationâ&#x20AC;&#x2122;s dependence on foreign oil and address climate change challenges, but will reinvigorate the economy and create new jobs. â&#x20AC;&#x153;The 25xâ&#x20AC;&#x2122;25 recommendations will lead to a comprehensive, long-term energy plan that will accelerate the production of all forms of renewable energy and create new renewable energy markets,â&#x20AC;? Shea says.

Among the 25xâ&#x20AC;&#x2122;25 recommendations that directly address the current economic issues are the establishment of a mechanism to create a market for carbon, a change in the way utilities are regulated to give them a real incentive to aggressively pursue cost-effective ener-

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gy efficiency, the expansion and extension of federal loans and loan guarantees for renewable energy production, the creation of incentives to accelerate the production and deployment of flexible-fuel and plug-in hybrid electric vehicles, and the modernization of the nation’s power grid.

The alliance also calls for an increase in federal research, development and deployment funding to accelerate the commercial implementation of renewable energy technologies.

Meanwhile, the Center for American Progress, a Washington, D.C., think tank and 25x’25 endorsing partner, says the United States can create 2 million jobs over two years by investing in a rapid “green” economic recovery program. In a recently issued report, the group says a $100 billion public/private investment package would create nearly four times more jobs, including a vast majority paying at least $16 per hour, than spending the same amount of money within the oil industry. It would also reduce the unemployment rate from the 5.7 percent recorded in July to 4.4 percent over two years.

The report, “Green Recovery: A Program to Create Good Jobs and Start Building a Low-Carbon Economy,” which was prepared by the Political Economy Research Institute at the University of Massachusetts-Amherst under commission by the Center for American Progress, also shows that the proposed green economic recovery package would boost construction and manufacturing employment. The report says the green recovery program, at the least, can restore some 800,000 construction jobs lost over the past two years due to the housing bubble collapse.

John Podesta, president and chief executive officer of the Center for American Progress, says falling home prices, foreclosures, bank failures, a weaker dollar, steep prices for gas, food and steel, and layoffs in the banking, construction and manufacturing sectors are all indicators of serious economic strain. “What’s more, evidence suggests the current downturn will continue for at least another year,” he says.

“At the same time, we face a growing climate crisis that will require us to rapidly

invest in new energy infrastructure, cleaner sources of power, and more efficient use of electricity and fuels in order to cut global warming pollution.”

Podesta says the time is now “for a new vision for the economic revitalization of the nation and a restoration of American leadership in the world” and “at the heart of this opportunity is clean energy, remaking the vast energy systems that power the nation and the world.” He says the economic opportunities provided by a fundamental change in the way energy is produced and consumed are vast.

The $100 billion package envisioned by the center would include $50 billion for tax credits, $46 billion in direct government spending and $4 billion for federal loan guarantees. By comparison, U.S. crude oil imports during the first eight months of 2008 totaled $251 billion, according to the U.S. Bureau of Economic Analysis.

“The green economic recovery program addresses the immediate need to boost our struggling economy and accelerate the adoption of a comprehensive clean energy agenda,” says Podesta, noting that combining tax credits and loan guarantees for private businesses along with direct public investment spending would retrofit buildings to increase energy efficiency, expand mass transit and freight rail, construct “smart” electrical grid transmission systems, and boost wind energy, solar power and advanced biofuels.

The report shows the vast majority of the 2 million new jobs would be in the same areas of employment that people already work in today, in every region and state of the country. For example, the report notes, constructing wind farms creates jobs for sheet metal workers, machinists and truck drivers, among many others. Increasing the energy efficiency of buildings through retrofitting requires roofers, insulators and building inspectors. Expanding mass transit systems employs civil engineers, electricians and dispatchers.

Investment Strategies for a Cleaner Environment On another front, The Apollo Alliance, a coalition of business, labor, envi-

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

ECONOMY ronmental and community leaders, and a 25x’25 endorsing partner, has released its own economic investment strategy the authors say will build a clean energy economy while cutting energy bills for families and businesses. Alliance officials say the plan will generate and invest $500 billion over the next 10 years and create more than 5 million “high-quality, greencollar” jobs.

“The New Apollo Program: Clean Energy, Good Jobs,” which the alliance says is a collaboration among several labor unions, environmental groups, businesses, industry associations and socially responsible non-profit organizations, is a strategy designed to be carried out through initiatives such as establishing a national energy efficiency commitment to reduce energy use in new and existing buildings by at least 30 percent by 2025, improve efficiency by 20 percent in existing power plants and industries by 2025, restore America’s manufacturing leadership to meet the demands of the clean energy future, establish a National Energy Innovation Fund to invest in the most promising new clean energy technologies emerging from our nation’s laboratories, and train America’s workers for the new clean energy economy.

The nation’s mayors have joined renewable energy advocates in their calls for a “green” overhaul of the nation’s economy. In a study from the U.S. Conference of Mayors Climate Protection Center, the U.S. economy currently generates more than 750,000 green jobs—a number that the report projects will grow five-fold to more than 4.2 million jobs over the next three decades. The report establishes a “Green Jobs Index” and is the first calculation of its kind to measure how many direct and indirect jobs are in the new and emerging U.S. green economy.

“This report proves that being green is not optional, it is necessary for a healthy and robust economy,” said conference President Manny Diaz, the mayor of Miami. “Creating green jobs is an investment we must continue to make.”

Prepared by Global Insight Inc., the report found that more than 400,000 of

current green jobs identified in the study are in the engineering, legal, research and consulting fields, highlighting the important role supportive or “indirect” jobs play in moving the economy toward energy independence. Renewable power generation maintains 127,000 jobs, while agriculture and forestry provides 57,500 jobs.

Under assumed scenarios and with government commitment and investments, the report projects green jobs could contribute 10 percent of all new jobs through 2038, representing the fastest-growing job segment in the U.S. economy. By 2038, the report forecasts that renewable electricity production will create 1.23 million jobs, alternative transportation fuels will give rise to 1.5 million jobs, engineering, legal, research and consulting will account for more than 1.4 million positions, and commercial and residential retrofits will generate 81,000 jobs.

While recent news accounts focus on the difficulties faced by national economies around the world, some encouragement is offered by news from the United Nations Environmental Program that an estimated $148 billion was invested in new wind, solar, biofuels and other alternative energy development around the world last year, a spike of nearly 60 percent increase more than the $92.6 billion spent on such projects in 2006. U.N. officials say the upsurge in investment, which they describe as a “green energy gold rush,” has been gaining speed the past few years because of rising concerns over climate change and energy prices. In 2005, some $58.5 billion in new money was invested. EP Bill Eby provides communication and media support for 25x’25. Reach him at beby@25x25.org or (512) 940-8990.

Corn Fractionation Mills Improve Ethanol Production Sturtevant Model No. 40 Fractionation Mill

■

Improve efficiency with higher starch fraction

■

Degerm for oil extraction

■

Increase value of DDGS

P O W D E R P R O C E S S I N G T E C H N O L O G Y: T H E S T U RT E VA N T S O L U T I O N .

www.sturtevantinc.com ETHANOL PRODUCER MAGAZINE DECEMBER 2008

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Univar has the size and strength to source the constant supply of chemicals you need for production. With annual sales in excess of $8 billion, we have the sourcing power and logistics excellence to get the attention of chemical manufacturers. Let us flex our muscles for you.

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| 1.800.325.5174 | biofuels@univarusa.com

Canadian Renewable Fuels Summit December 1-3, 2008 Hilton Hotel Lac Leamy Hull, Quebec Themed “Growing Beyond Oil,” the Canadian Renewable Fuels Association’s fifth annual event will continue discussion of the challenges and opportunities facing the Canadian and global biofuels markets. Agenda topics will include an international outlook, including Argentina, Brazil and North America; Canada’s political situation following its federal election in October; low-carbon fuel standards and carbon markets; second-generation ethanol; risk management and hedging; the U.S. renewable fuels standard; and eco-branding.

Waste to Energy: International Exhibition & Conference for Energy from Waste and Biomass December 10-11, 2008 Bremen Exhibition & Conference Centre Bremen, Germany This fourth annual event will focus on waste as a resource for the production of biogas, biofuels and more. Agenda topics will include material flow management, separation and sorting, residues, shredding and grinding, and power and biogas plants. A breakout session will address biofuels, ethanol in particular.

National Ethanol Conference February 23-25, 2009 San Antonio Convention Center San Antonio, Texas This event, themed “Growing Innovation,” will cover the ethanol industry’s impact on the U.S. economy, the environment, food prices and the international market. A record of nearly 2,500 people attended in 2008. An agenda will be available as the event approaches.

(202) 289-3835 www.ethanolrfa.org

+49-421-3505-347 www.wte-expo.com

(519) 576-4500 www.canadianrenewablefuelssummit.com

EVENTS

CALENDAR

African Biofuels March 30-April 2, 2009 Vodaworld Event Center Johannesburg, South Africa This fourth annual conference will focus on various biofuels, including ethanol, and the technology and movement toward second-generation biofuels. The event will showcase more than 40 speakers, panel and open floor discussions, mini workshops, and 16 case studies. A more detailed agenda will be available as the event approaches.

(011) 771-7000 www.africanbiofuels.co.za

170

Alternative Fuels & Vehicles National Conference + Expo April 19-22, 2009

International Biomass Conference & Trade Show April 28-30, 2009

Walt Disney World Swan and Dolphin Resort Orlando, Florida

Oregon Convention Center Portland, Oregon

This 14th annual event will represent all fuels, vehicles and technologies that provide an alternative to petroleum, including ethanol. Information will be disseminated via preconference sessions, a general session and concurrent breakout sessions. There will also be a ride-and-drive event, industry tours and niche market workshops.

More information will be available as the event approaches.

This event, sponsored by BBI International Inc., will address the latest technologies and business considerations for bioenergy projects, including biofuels. Breakout session topics will include cellulosic ethanol; feedstocks such as ag residues, wood waste and municipal solid waste; project finance; and permitting and project implementation. Attendees will also be able to tour the Cornelius Summit Foods ethanol plant.

(702) 254-4180 www.afv2009.com

(719) 539-0300 www.biomassconference.com

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

Renewable Energy Technology Conference & Exhibition February 25-27, 2009 Las Vegas Convention Center Las Vegas, Nevada This event will include a business conference, a trade show and several side events. The business conference will address the status and outlook of renewable energy. One breakout session in particular will focus on biomass and biofuels. It will address sustainability, feedstocks, financing, ethanol production technology, a global market outlook, engines and fueling stations, and nextgeneration facilities.

Canadian Renewable Energy Workshop March 9-11, 2009 Regina, Saskatchewan This second annual conference facilitates the continued development of Canada’s renewable energy industry. More information will be available as the event approaches.

(719) 539-0300 www.crew2009.com

World Biofuels Market March 16-18, 2009 Brussels Expo Centre Brussels, Belgium This is one of the largest biofuels events in Europe, and a key meeting place for industry experts looking to share best practices and attract new clients. Agenda topics will include conventional and cellulosic ethanol; international ethanol markets such as Asia, Brazil and Africa; infrastructure; and use. +44 20 7099 0600 www.worldbiofuelsmarkets.com

International Fuel Ethanol Workshop & Expo June 15-18, 2009

Ethanol Conference & Trade Show August 11- 13, 2009

Denver Convention Center Denver, Colorado

Milwaukee, Wisconsin

This will mark the 25th anniversary of the world’s largest ethanol conference, which was recently recognized by Trade Show Week magazine as one of the Fastest 50 events in the United States for the second consecutive year. More details will be available as the event approaches.

PHOTO: ERIN VOEGELE, BBI INTERNATIONAL INC.

(805) 290-1338 www.retech2009.com

The American Coalition for Ethanol’s 22nd annual conference will highlight public policy, technology and education in regard to the ethanol industry, among many other topics. A more detailed agenda will be available as the event approaches.

(719) 539-0300 www.2009few.com

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

(605) 334-3381 www.ethanol.org The 2008 Ethanol Conference & Trade Show was held in Omaha, Neb., in August.

171

EPM MARKETPLACE Ag Products & Services

Inland Waters 313-841-5800

Grain Origination Services Agnetic, LLC 317-696-2824

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

blog.agnetic.com

Filter Media

Hybrid Corn

Stabilized Liquid Yeast, Thermosacc,® Superstart™

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

Associations/Organizations Trade API Credit Exchange 202-682-8192

www.inlandwaters.com

Hydro-Klean, Inc. 515-283-0500

Lallemand Ethanol Technology 800-583-6484 www.ethanoltech.com North American Bioproducts Corporation 866-342-7026 www.na-bio.com

www.api.org/ace

www.hydro-klean.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Heat Exchanger Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

Ethanol Promotion & Information Council (EPIC) 402-932-0567 www.drivingethanol.org

Inland Waters 313-841-5800

Chemicals

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

PhibroChem 800-223-0434

Summit Industrial Products 800-749-5823 www.klsummit.com

www.lactrol.com

Anti-Microbial Ferm Solutions 859-402-8707

Hydro-Blasting www.ferm-solutions.com

Dryer Systems

North American Bioproducts Corporation 866-342-7026 www.na-bio.com

Hydro-Klean, Inc. 515-283-0500

PhibroChem 800-223-0434

Inland Waters 313-841-5800

www.lactrol.com

Hydro-Klean, Inc. 515-283-0500

Cleaning

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

Inland Waters 313-841-5800

www.hydro-klean.com www.inlandwaters.com

www.hydro-klean.com www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

CIP Univar USA Inc. 402-733-3266

www.univarusa.com

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

Desiccant Gordon Technologies 570-279-8086

www.gtsieve.com

Water Treatment Fremont Industries Inc. 952-445-4121

Inland Waters 313-841-5800

www.hydro-klean.com www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com www.fremontind.com

Yeast

Emergency Spill Response Hydro-Klean, Inc. 515-283-0500

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

Your Ad HERE Your Solution. Advertise Today.

EPM MARKETPLACE 172

www.inlandwaters.com

Inland Waters 313-841-5800

www.hydro-klean.com www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

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

www.hydro-klean.com ETHANOL PRODUCER MAGAZINE DECEMBER 2008

EPM MARKETPLACE Construction

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

www.hydro-klean.com

Insulation

Buildings-Modular

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Railcars Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Smoke Stack Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com www.inlandwaters.com

Mavo Systems 763-788-7713

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Mayes Coatings, Inc. 866-93MAYES www.mayescoatings.com

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

Miller Insulation Co, Inc. 701-258-4323 www.millerinsulation.com

www.spray.com

Mechanical

Tank Cleaning Services Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com www.inlandwaters.com

JIC

Fabrication Macomber Welding & Fabricating, Inc. 616-698-0819 www.macomberwelding.com

Professional Environmental Cleaning Services 402-212-0949 www.professionalECS.com Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

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

www.mavo.com

VAL-FAB Inc. 877-482-5322 W. Soule & Company 1-877-976-8531

www.valfab.com www.wsoule.com

Grain Storage Coverall Building Systems 800-268-3768

www.coverall.net

JOULÉ Industrial Contractors

OVER 40 YEARS OF PROVIDING QUALITY COST EFFECTIVE SOLUTIONS TO THE INDUSTRIAL INDUSTRY. We provide: • Experienced Supervision • Multi-craft Staff • Logistical Support For: • Plant Outages • Plant Construction and Expansion • Relocations • Capital Projects • On and off site pipe Fabrication To: • Ethanol and Alternative Fuel Plants • Pharmaceutical Manufacturers • Food Plants • Building Material Facilities Toll Free: (800) 445-6853 email-bbosher@jouleinc.com

JIC ETHANOL PRODUCER MAGAZINE DECEMBER 2008

173

EPM MARKETPLACE Mid-States Mechanical Services, Inc. 800-950-0279 www.mid-statesmechanical.com W. Soule & Company 1-877-976-8531

www.wsoule.com

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

www.agraind.com

Agri-Systems 406-245-6231 CYC Construction 402-333-1652

www.agrisystems.net

Mortenson, a leader in ‘green’ renewable energy construction, seeks individuals that can thrive in a culture built upon the pillars of ingenuity, expertise, and exceptional people.

Railroad Tracks

ENGINEERING, SUPERINTENDENT, & MANAGEMENT POSITIONS AVAILABLE NATIONALLY. We invite you to BUILD your career

at Mortenson. Contact us today! www.cycconstruction.com

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Innovative Benefit Programs Career Growth Opportunities Family-Owned Company Industry Leading Career Learning and Development Your Career Choice.

Please visit our website to fill out an application www.mortenson.com or call toll free 1-877-MORTENSON www.mortenson.com Mortenson is an EOE. Reimer Welding Inc. 218-773-0886

:fekXZk A?B <G: :XgXY`c`k`\j =lcc$J\im`Z\ @e[ljki`Xc >\e\iXc :fekiXZkfi J\c]$G\i]fid :`m`c :feZi\k\# D`ccni`^_k`e^# GifZ\jj G`g`e^ =XYi`ZXk`fe Xe[ @ejkXccXk`fe# KXeb <i\Zk`fe# Jk\\c <i\Zk`fe I`^^`e^

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www.reimerwelding.com

Wanzek Construction,Inc. 701-282-6171

wanzek.com

EPM MARKETPLACE

Railworks 913-888-4091

one convenient location, Ethanol Pro-

Tanks

ducer Magazine not only contains top

DCI, Inc. 320-252-8200 Eagle Tanks, Inc. 888-678-0698

rectory in each publication. Whether

Your Solution. Advertise Today.

a first-time advertiser wanting to raise

WINBCO Tank Company 641-683-1855

awareness of your business or a

Consulting

frequent display advertiser looking for

Business Plans

added exposure, EPM Marketplace is

ICM, Inc. 316-796-0900

the perfect solution.

Environmental

Your Ad HERE Your Solution. Advertise Today.

EPM MARKETPLACE

www.railworks.com

Volkmann Railroad Builders, Inc. 262-252-3377 www.volkmannrr.com

Reach your customers EPM MARKETPLACE

www.rrcontracting.net

With all contact information placed in

editorial content but also a useful di-

174

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

www.dciinc.com www.eagletanks.com www.winbco.com

www.icminc.com

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

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

EPM MARKETPLACE ICM, Inc. 316-796-0900 Inland Waters 313-841-5800

www.icminc.com

Plant Optimization

Risk Management National Fuel Marketing 303-996-6781 www.NationalFuelMarketing.com

www.inlandwaters.com

Education

Seneca Companies 800-369-5500 www.senecacompanies.com TKDA 651-292-4602

Iowa BioDevelopment 641-969-4167 www.iabiodevelopment.com

www.tkda.com

Iowa Biofuels Training International 641-969-4167 www.biofuelstraining.org

Feasibility Studies Harris Group Inc. 206-494-9422

www.harrisgroup.com

Groundwater Services Leggette, Brashears & Graham, Inc. 651-490-1405 www.lbgweb.com

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

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

www.harrisgroup.com

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

Employment Recruiting

Terratec Biofuels of Solutia 800-742-1476 www.TerratecBiofuels.com

Hobbs & Towne 610-783-4600x108

Project Development

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

Ethanol Productions 813-968-6867 Harris Group Inc. 206-494-9422

jim.plautz@verizon.net www.harrisgroup.com

www.hobbstowne.com

The Richmond Group USA - BioEnergy Search Division

804-285-2071

www.trgbioenergy.com

Engineering

Public Relations

Civil

Lanser Public Affairs, LLC 262-797-7876 www.lanserpublicaffairs.com

Antioch International, Inc. 402-289-2217 www.antioch-intl.com

Quality Assurance

TKDA 651-292-4602

Eurofins Scientific, Inc. 551-580-9140

www.eurofinsus.com

www.tkda.com

Control Systems

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Optimize the Value of Your Co-Products Â&#x2122; Â&#x2122; Â&#x2122;

Grading, sampling, mycotoxins, proximates, residues, GMOs. QA / QC Consulting: HACCP, GMPs, SOPs, NIR calibration Co-products: Quality assurance testing; Lot certiďŹ cation; Export assistance 504-297-4330 ethanol@euroďŹ nsus.com

Reach your customers Your Solution. Advertise Today.

EPM MARKETPLACE

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Regulatory

Bachelor Controls 785-284-3482

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

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

www.bachelorcontrols.com

175

EPM MARKETPLACE Design/Build

Centrifuges

Agra Industries, Inc. 715-536-9584

Westfalia Separator,Inc. 201-784-4322

www.agraind.com

Agri-Systems 406-245-6231

Combustion Equipment

www.agrisystems.net

Delta-T Corporation 757-941-0188

Eclipse.Inc. 815-637-7213

www.deltatcorp.com

ECE Design 312-235-6960

GS CleanTech Corp.

678-566-3588

www.gs-cleantech.com

dbc SMARTsoftware, Inc. 770-427-7633 www.dbcsmartsoftware.com Encore Business Solutions 204-989-4330 www.encorebusiness.com

ICM, Inc. 316-796-0900

www.icminc.com John Deere Agri Services 770-238-5100 www.johndeereagriservices.com

Wanzek Construction, Inc. 701-282-6171

wanzek.com Summit Software, Inc. 800-433-5724 x 181

Process Design

Control Systems Automation Alliance 205-271-9743 www.automationalliance.net www.chemsim.com

www.vogelbusch.com

Equipment & Services Agitation Equipment ProQuip, Inc. 330-468-1850

FeedForward, Inc. 770-426-4422

Analytical Instruments Anton Paar +1-804-550-1051 Perten Instruments, Inc. 801-936-8165

www.feedforward.com

Kahler Automation Corp.

507-235-6648 www.kahlerautomation.com www.anton-paar.com www.perten.com

SoftPLC Corporation 512-264-8390

www.softplc.com

Control Systems──Distributed

Blowers & Fans www.proquipinc.com

Air Pollution/Odor Control Ceco Abatement Systems, Inc. 630-493-0624 www.cecoenviro.com/Abatement ICM, Inc. 316-796-0900

www.summit-soft.com

www.agrisystems.net

Process Engineering Associates, LLC 865-220-8722 www.processengr.com Vogelbusch USA, Inc. 713-461-7374

www.johnzink.com

Computer Software jim.plautz@verizon.net

ChemSim 781-248-5057

www.eclipsenet.com

John Zink Company LLC 800-421-9242

www.ecedesign.com

Ethanol Productions 813-968-6867

Agri-Systems 406-245-6231

www.wsus.com

FlaktWoods 716-845-0900

www.flaktwoods.com

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

Boiler Systems www.icminc.com

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

Factory Sales and Engineering, Inc. 985-867-9150 www.fsela.com Rentech Boiler Systems, Inc. 325-794-5701 www.rentechboilers.com

Conveyors─Enclosed

Catwalks Lean Technologies LLC 701-352-9620 www.leantechnologiesllc.com

Grisley Components, Inc. 303-756-6474

www.grisley.com

Conveyors─Pneumatic

Centrifuge Repair Nosnhoj Services Inc. 317-887-6436

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

www.nosnhojinc.com

Blower Engineering 800-388-1339 www.blowerengineering.com Gusmer Enterprises, Inc. 847-277-9785 www.gusmerenterprises.com

176

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

EPM MARKETPLACE Cooling Towers

Fermentors

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

WINBCO Tank Company 641-683-1855

Decanters

Filters

www.winbco.com

Eaton Filtration 800-656-3344 ext 581 BruceCLaw@eaton.com Larox 301-543-1200

www.larox.com/cpi

Filtration Equipment BWF America 800-733-2043

www.bwf-america.com

Fluid Engineering 814-453-5014

www.fluideng.com

W.S. Tyler 1-800-321-6188 FEECO International, Inc. 920-468-1000 ICM, Inc. 316-796-0900

Fractionation─Corn www.feeco.com www.icminc.com

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

Distillation Equipment SRS Engineering Corporation 800-497-5841 www.srsengineering.com

Emission Monitoring Systems

Dryers─Flash

MonitorTech Corp.

866-682-6771

Barr-Rosin,Inc. 630-659-3980

Aeroglide Corporation 919-851-2000 Littleford Day, Inc. 859-525-7600

www.aeroglide.com www.littleford.com

Dryers─Other Davenport Dryer, LLC 309-786-1500 www.davenportdryer.com

Dryers─Ring Barr-Rosin,Inc 630-659-3980

www.monitortechgrp.com

Continuous Emissions Monitoring Systems Easiest installation, operation and maintenance Meet or exceeds EPA requirements NOx, O2, CO, SO2 and others Turnkey systems for under $100,000.00 P.O. Box 9271, Columbus, Oh 43209 866-682-6771 sales@monitortechcorp.us

Dryers─Rotary Drum Aeroglide Corporation 919-851-2000

www.aeroglide.com

Barr-Rosin,Inc. 630-659-3980

www.barr-rosin.com

www.buhlergroup.com/us

Cereal Process Technologies 217-779-2595 www.cerealprocess.com FWS Technologies 204-487-2500 Sturtevant Inc. 781-829-6501

www.fwsgroup.com www.sturtevantinc.com

UE Systems, Inc. 914-592-1220

Allegheny Coupling Company 814-723-8150 www.alleghenycoupling.com

Grain Handling & Storage Sukup Manufacturing Co. 641-892-4222

Lantec Products, Inc. 617-265-2171

Heat Exchangers

www.lantecp.com

GEA NIRO Inc 410-997-8700

www.niroinc.com

Fermentation Monitoring

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

www.sukup.com

Custom Metalcraft Inc. 417-862-0707 www.custom-metalcraft.com

HRS Process Technology, Inc. 623-915-4328 www.hrs-americas.com

ETS Laboratories 707-963-4806

www.uesystems.com

Gaskets

Emissions Testing & Reduction

Evaporators www.barr-rosin.com

Buhler Inc. 763-847-9900

Gas Detectors

www.barr-rosin.com

Dryers─Fluid Bed

www.wstyler.com

Reach your customers Your Solution. Advertise Today.

www.etslabs.com

EPM MARKETPLACE

177

EPM MARKETPLACE Laboratory─Equipment

Mixers

Astoria-Pacific International 800-536-3111 www.astoria-pacific.com

KINEMATICA, INC. 631-750-6653

Perten Instruments, Inc. 801-936-8165

Moisture Analyzers

www.perten.com

Laboratory─Outsourcing

Perten Instruments, Inc. 801-936-8165

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

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

Laboratory─Supplies

Molecular Sieves

Midland Scientific, Inc. 800-642-5263

www.midlandsci.com

Laboratory─Testing Services Eurofins GeneScan, Inc. 504-297-4330 www.gmotesting.com Midwest Laboratories 402-334-7770

www.midwestlabs.com

Romer Labs, Inc. 636-583-8600

www.romerlabs.com

SGS North America, Inc. 281-478-8234www.sgs.com/alternativefuels Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com Munters - Des Champs Products 540-291-1111 www.deschamps.com

Endress+Hauser 317-535-2174

www.us.endress.com

Instrument Associates 708-597-9880 www.instrumentassociates.com Process Sensors Corp.

508-473-9901 www.processsensors.com Perten Instruments, Inc. 801-936-8165

www.perten.com

Shimadzu Scientific Instruments 800-477-1227 www.ssi.shimadzu.com WIKA Instrument Corporation 888-945-2872, x5127

www.wika.com

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

Jet Cookers ProSonix Corporation 800-849-1130, x. 801

178

www.hemcocpm.com

SafeRack 866-761-7225

www.saferack.com

www.gtsieve.com

Vaperma, Inc. 418-839-6989

www.vaperma.com

Zeochem, LLC 502-634-7600

www.zeochem.com

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

Pipe American Stainless & Supply 800-845-5511 www.americanstainless.com www.isco-pipe.com

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

www.rjsales.com

Pipe─Fittings

Maintenance Services

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

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

St. Louis Pipe & Supply 800-737-7473 www.stlpipesupply.com

Maintenance Software

Pipe─Flanges

Mapcon Technologies, Inc. 800-922-4336

www.mapcon.com

Mills─Hammer CBT Wear Parts, Inc. 888-228-3625

www.cbtwearparts.com

CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com Prater-Sterling 630-679-3254

Agri-Systems 406-245-6231

www.rjsales.com

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

www.rjsales.com

Pressure & Temperature

www.prater-sterling.com

WIKA Instrument Corporation 888-945-2872, x5127

www.wika.com

Pressure Vessels WINBCO Tank Company 641-683-1855

www.winbco.com

Process Control

Millwright www.pro-sonix.com

www.perten.com

Gordon Technologies 570-279-8086

ISCO Industries 800-345-4726

Loading Equipment Hemco Industries, Inc. 877-347-7106

Instrumentation

www.kinematica-inc.com

www.agrisystems.net

Harris Group Inc. 206-494-9422

www.harrisgroup.com

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

EPM MARKETPLACE Pumps

Storage─DDGS

ITT Industries Goulds Pumps 315-568-2811 www.gouldspumps.com

Laidig Systems, Inc. 574-256-0204

Watson-Marlow Bredel Pumps 800-282-8823 www.watson-marlow.com

Structural Fabrication

Yamada America, Inc. 800-990-7867 www.yamadapump.com

Perten Instruments, Inc. 801-936-8165 Phenomenex 310-212-0555x3328

www.perten.com www.phenomenex.com

Cherokee Steel Fabricators, Inc. 903-759-3844 www.cherokeesteelfabricators.com

Agra Industries, Inc. 715-536-9584

www.agraind.com

Brown-Minneapolis Tank 281-252-9809 CMC Letco Industries 417-831-1528

RTO Media Lantec Products, Inc. 617-265-2171

www.lantecp.com

Resource Recovery Eco-Tec, Inc. 905-427-0077

www.eco-tec.com

Safety www.simplexgrinnell.com

www.aesseal.com

Utex Industries, Inc. 432-333-4151/800-873-0946

www.utexind.com

Federal Equipment Company 800-652-2466 www.fedequip.com Greenberry Industrial 541-757-8458

www.greenberryinc.com

Paragon Trailer Sales 800-471-8769

www.paragontrailer.com

EISENMANN Corporation Crystal Lake, Illinois 815.455.4100 es.info@eisenmann.com

www.winbco.com

Thermal Energy

Reach your customers Your Solution. Advertise Today.

EPM MARKETPLACE

www.electro-sensors.com

www.fluideng.com

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

Separators Westfalia Separator,Inc. 201-784-4322

www.wsus.com

Steel Suppliers

www.icminc.com www.pro-env.com

Turbines─Gas Kawasaki Gas Turbines 281-970-3255x18 www.kawasakigasturbines.com

Separation Equipment Fluid Engineering 814-453-5014

ICM, Inc. 316-796-0900 Pro-Environmental, Inc. 909-989-3010

Sensors

Outokumpu Stainless 847-517-4050

for VOC, CO & PM ABATEMENT

American Waste Removal 505-417-9933 www.americanwasteremoval.com

Aesseal Inc. 865-531-0192

Chapel Steel 800-320-6042

PROVEN RELIABILITY

www.bmt-tank.com www.cmc-letco.com

WINBCO Tank Company 641-683-1855

Seals

Electro Sensors 800-328-6170

www.laidig.com

Tanks

QA Test Products

SimplexGrinnell 800-746-7539

Thermal Oxidizers

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

Reach your customers Your Solution. Advertise Today.

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Your Ad HERE

davidj@chapelsteel.com www.outokumpu.com

Your Solution. Advertise Today.

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Sandmeyer Steel Company 215-464-7100 www.sandmeyersteel.com ETHANOL PRODUCER MAGAZINE DECEMBER 2008

179

EPM MARKETPLACE Used Equipment

Fluid Engineering 814-453-5014

www.fluideng.com

Siemens Water Technologies 800-525-0658 www.siemens.com/water

Mergers & Acquisitions Thomas Group Capital 404-504-6050

www.thomassec.com

Risk Management

Ethanol Production Existing Producers

First Capitol Risk Management 800-884-8290 www.firstcapitolrm.com

Louis Dreyfus Commodities 402-844-2680 LDCommodities.com

R.J. Oâ&#x20AC;&#x2122;Brien 800-621-0757

Future Producers

Software-Accounting

Syntec Biofuel, Inc. 604-648-2092

www.syntecbiofuel.com

Encore Business Solutions 204-989-4330 www.encorebusiness.com Summit Software, Inc. 800-433-5724 x 181

Finance Accounting

www.rjobrien.com

www.summit-soft.com

Government

Christianson & Associates PLLP 320-235-5937 www.christiansoncpa.com Kennedy and Coe, LLC 800-303-3241

State

www.kcoe.com

Appraisals

VOC Scrubbers Lantec Products, Inc. 617-265-2171

www.lantecp.com

Valve Actuators

Natwick Associates Appraisal Services 800-279-4757 www.natwick.com

Rotork Controls,Inc. 585-247-2304

www.rotork.com

Valves

Due Diligence Harris Group Inc. 206-494-9422

www.harrisgroup.com

Central States Group 800-318-2747 www.centralstatesgroup.com

Equity Procurement

Check-All Valve Mfg. Co. 515-224-2301

www.checkall.com

Greenman Funding 888-802-7678 greenman.funding@verizon.net

www.metsoethanol.com

Jordan, Knauff & Company 312-254-5900 www.jordanknauff.com

Metso Automation 508-852-0215

North American Safety Valve 800-800-8882

www.nasvi.com

Insurance

Wastewater Treatment Services

Armor Companies, Inc. 612-501-5654 acline@armorcompanies.com

Biothane Corporation 856-541-3500x501

ERI Solutions, Inc. 316-927-4294

www.biothane.com

erisolutions.com

Water Treatment

Lender Representatives

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

Greenman Funding 888-802-7678 greenman.funding@verizon.net

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Legal Services Attorneys BrownWinick Law Firm 515-242-2400 www.biofuellawyers.com Dorsey & Whitney LLP 612-343-8275

www.dorsey.com

Faegre & Benson, LLP 612-766-6930 www.faegre.com ETHANOL PRODUCER MAGAZINE DECEMBER 2008

EPM MARKETPLACE Stoel Rives LLP 612-373-8800

www.stoel.com/biofuels

RAILCAR MOVING

Marketing Distillers Grains CHS, Inc. 651-355-6271 Gavilon 402-595-5678 Hawkeye Gold, LLC 515-663-6429

www.chsinc.com The CUB™ is an electromechanical machine designed to move single railcars or groups of cars.

Some advantages of the CUB™ are:

www.gavilon.com

•Safety of Personnel •One Person Operation •Little Maintenance Requirements •Low Investment/Operating Costs

www.hawkgold.com

Fuel Ethanol

Ask about our complete line of Railcar Moving Devices

Atlas Renewable Energy, LLC 800-884-8290 www.atlasenergyllc.com C&N Ethanol Marketing Corp.

952-854-6675 www.candncompanies.com Gavilon 402-595-5678

www.gavilon.com

Noble Americas Corporation 626-585-1705 www.thisisnoble.com Provista Renewable Fuels Marketing 651-355-8519 www.provistafuels.com

Transportation

412-788-9810

F

412-788-9822

Shuttlewagon 816-767-0300

E

info@heylpatterson.com

www.shuttlewagon.com

Railcar Parts Salco Products, Inc. 630-783-2570

www.salcoproducts.com

Utilities Utility

Heavy Highway Transport Landstar Carrier Group 920-487-3877

www.heylpatterson.com P

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass.

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

www.BiomassMagazine.com

Integrys Energy Services 608-235-2547 www.integrysenergy.com

www.landstar.com

Your Ad HERE

Rail

Your Solution. Advertise Today.

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

EPM MARKETPLACE

Blacklands Railroad 903-439-0738 www.blacklandsrailroad.com

EPM MARKETPLACE

Rail Consulting Antioch International, Inc. 402-289-2217 www.antioch-intl.com TKDA 651-292-4602

www.tkda.com

Rail Ties Thompson Industries, Inc. 317-859-8725 www.thompsonindustries.net

Railcar Moving Heyl & Patterson Inc. 412-788-9810

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

www.heylpatterson.com

ETHANOL PRODUCER MAGAZINE DECEMBER 2008

For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com.

181

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