INSIDE: HOW E15 PERFORMS AND CONNECTS WITH FANS MARCH 2012
Thirsting For Octane Establishing Ethanolâ€™s Strength as a Solution for Fuel Efficient Engines Page 46
ALSO Finding New Methods to Enhance Fermentation Page 34
Butanol Developers Target Corn Ethanol Producers Page 40
More Unit Trains Require Greater Focus on Rail Safety Page 58 www.ethanolproducer.com
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MARCH issue 2012 VOL. 18 ISSUE 3
34 FERMENTATION Taking Fermentation to a New Level
A look a new technologies from Syngar and Ferm Solutions By Holly Jessen
New Technologies By Susanne Retka Schill
7 Ad Index 10 The Way I See It
40 ALTERNATIVES Target for Transformation
Pondering a New Strategy By Mike Bryan
Biobutanol developers discuss opportunities for corn ethanol producers By KRIS BEVILL
11 Events Calendar
Upcoming Conferences & Trade Shows
12 View From the Hill
46 OCTANE Thirsty for More
Ethanol’s Future Won’t
New fuel efficiency standards could be met using ethanol’s octane By Kris Bevill
Wait By bob dinneen
52 PERFORMANCE The Fan Connection
Breaking Oil’s Hold Over
NASCAR Shares Results of First Season By Holly Jessen
America By tom buis
16 Grassroots Voice
Timid Predictions and
58 SAFETY Training for Trains
Bold Vision By RON LAMBERTY
18 Europe Calling
More unit train handling prompts focus on rail safety By KRIS BEVILL
Is Double Counting a
Double Whammy? By Rob Vierhout
20 Business Matters Get in Gear for Tax
CONTRIBUTIONs 62 ENZYMES Total Cost Per Gallon: The True Measure of Success
Optimizing cellulosic ethanol process requires holistic approach By Jason M. Blake
66 FEEDSTOCKS Researchers Evaluate Agave’s Potential for Ethanol
Agave-based ethanol could surpass even sugarcane yields By Remigio Madrigal-Lugo and Alejandro Velázquez-Loera
Changes in 2012 By Donna Funk
22 Business Briefs
70 PROCESS Supercritical Water Could Provide Greener Pathway to Corn Ethanol
High temperatures dramatically impact ethanol process By G. Graham Allan, John R. Di Iorio and Milo U. Zorzino
24 Commodities Report 28 Distilled 78 Marketplace
74 YIELD New Pathways Could Improve Ethanol Yields
INSIDE: HOW E15 PERFORMS AND CONNECTS WITH FANS MARCH 2012
Metabolic conversion of corn oil into sugar is possible By Trent Nguyen
Thirsting For Octane Establishing Ethanol’s Strength As a Solution for Fuel Efficient Engines Page 46
ALSO Finding New Methods to Enhance Fermentation
Ethanol Producer Magazine: (USPS No. 023-974) March 2012, Vol. 18, Issue 3. 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.
4 | Ethanol Producer Magazine | MARCH 2012
Butanol Developers Target Corn Ethanol Producers
On The Cover General Motors Co.’s direct injection, turbo-charged Ecotec engine performs to its potential when operated on higher octane fuels, such as ethanol blends.
More Unit Trains Require Greater Focus on Rail Safety Page 58 www.ethanolproducer.com
PHOTO: GENERAL MOTORS
New Technologies Susanne Retka Schill, Editor
New technologies accelerate industry innovation, and this month Ethanol Producer Magazine brings several such developments to the forefront. In our cover story, Associate Editor Kris Bevill reports on recent research on ethanol’s octane advantage, which could become the key to unlocking greater fuel efficiency in new engine technologies. Associate Editor Holly Jessen writes about the work of two companies examining new technologies to enhance the age-old core technology of ethanol production— fermentation. Our contributing writers this month address the same theme from different angles, talking about applying known technologies in new ways like supercritical water or certain metabolic pathways, or applying holistic modeling techniques to optimize cellulosic processes. Sharp readers may have noticed I borrowed my opening line above from the National Ethanol Conferences’ theme, “Accelerating Industry Innovation.” I plan to attend the NEC in Orlando, weather cooperating. (Last year a snowstorm 300 miles away at the Minneapolis airport canceled my flight.) While I’ll be intently listening to the speakers and reporting on the conference, I would love to talk with you there during breaks—get your feedback, pick up a few story ideas and just learn more about the ethanol industry in your corner of the world. Look me up.
For industry news: www.ethanolproducer.com
CORRECTION An article in the January issue titled “Certifying Sustainability” incorrectly implied that the World Wildlife Fund favors the International Sustainability and Carbon Certification scheme over other sustainability schemes for biofuels. In fact, WWF supports the following schemes: Bonsucro, the Roundtable for Responsible Soy, the Roundtable on Sustainable Biofuels and the Roundtable for Sustainable Palm Oil.
Susanne Retka Schill firstname.lastname@example.org
ASSOCIATE EDITORS Holly Jessen email@example.com Kris Bevill firstname.lastname@example.org
COPY EDITOR Jan Tellmann email@example.com
ART ART DIRECTOR Jaci Satterlund firstname.lastname@example.org
GRAPHIC DESIGNER Lindsey Noble email@example.com
PUBLISHING CHAIRMAN Mike Bryan firstname.lastname@example.org
CEO Joe Bryan email@example.com
VICE PRESIDENT Tom Bryan firstname.lastname@example.org
SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor email@example.com
EXECUTIVE ACCOUNT MANAGER Howard Brockhouse firstname.lastname@example.org
SENIOR ACCOUNT MANAGER Jeremy Hanson email@example.com
ACCOUNT MANAGERS Marty Steen firstname.lastname@example.org Bob Brown email@example.com Andrea Anderson firstname.lastname@example.org Dave Austin email@example.com
CIRCULATION MANAGER Jessica Beaudry firstname.lastname@example.org
ADVERTISING COORDINATOR Marla DeFoe email@example.com
Senior Marketing Manager John Nelson firstname.lastname@example.org
EDITORIAL BOARD Mike Jerke, Chippewa Valley Ethanol Co. LLLP Jeremy Wilhelm, Cilion Inc. Mick Henderson, Commonwealth Agri-Energy LLC Keith Kor, Pinal Energy LLC Walter Wendland, Golden Grain Energy LLC Neal Jakel Illinois River Energy LLC Bert Farrish Lifeline Foods LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP Bernie Punt Siouxland Energy & Livestock Co-op
Customer Service Please call 1-866-746-8385 or email us at email@example.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada 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. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (866) 746-8385 or firstname.lastname@example.org. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at (866) 746-8385 or email@example.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to firstname.lastname@example.org. Please include your name, address and phone number. Letters may be edited for clarity and/ or space.
Please recycle this magazine and remove inserts or samples before recycling
6 69 39 57 64 63 15 29 32 33 56 71 68 22 80 8 13 17 76 73 55 61 38 77 67 19 & 84 2 65 45 5 54 60 27 37 11 23 3 26 21 48 72 51 31 75 49 81 83 42 9 82 30 50 44 36 43
2012 International Biomass Conference & Expo 2012 International Fuel Ethanol Workshop & Expo 2013 National Ethanol Conference ACE American Coalition for Ethanol Aggreko Agra Industries BetaTec Hop Products BrownWinick Law Firm Buckman Burns & McDonnell Casho, Inc. Cellencor Inc. Cereal Process Technologies CPM Roskamp Champion E1 Technologies Eco-Energy Inc. Fagen Inc. FCStone, LLC Ferm Solutions Inc. Fermentis Flottweg Seperation Technology Foundation Analytical Laboratory Freez-it-Cleen Fuel Ethanol Industry Directory Gamajet Cleaning Systems, Inc. GENENCOR® - A Danisco Division Growth Energy Highmark Renewables Hydro-Klean LLC ICM, Inc. Indeck Power Equipment Co. Johnson System, Inc. Lallemand Ethanol Technology Louis Dreyfus Mole Master Services Corporation Natwick Associates Appraisal Services Novozymes Phibro Ethanol Group Pioneer Hi-Bred International, Inc. Premium Plant Services, Inc. R3 Fusion Renewable Fuels Association RPMG, Inc. SGS North America, Inc. Sud-Chemie AG Sukup Manufactoring Co. Sulzer Process Pumps (US) Inc. Sustainable Development Technology Canada Syngenta Seeds, Inc. Tranter Phe U.S. Tsubaki Vogelbusch USA, Inc. Wabash Power Equip. Co. WCR Incorporated WINBCO
COPYRIGHT © 2012 by BBI International TM
MARCH 2012 | Ethanol Producer Magazine | 7
A simple solution for a complex market. Whatever your role in the biofuel supply chain, our integrated platform, leading insights, and expert team make us the perfect partner for you.
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the way i see it
Pondering a New Strategy By Mike Bryan
I just finished reading a book titled Blue Ocean Strategy, by Chan Kim and Renee Mauborgne. It’s not a new book; in fact it was first published in 2005, so many of you may have already read it. It relates to the development of business strategies that move a business or an entire industry, for that matter, into a different realm, a blue ocean strategy instead of a red ocean strategy. A red ocean strategy is one that many businesses and industries continue to operate in, slogging it out with the competition, continually addressing the same issues, fighting the same fights year after year, sometimes gaining ground, but at a high cost. Unfortunately, this has become the norm for many industries. As I read the book I kept coming back to the ethanol industry and how such a strategic shift might be just what we need. I bring this up, not as a criticism of our industry or how it has progressed, but more out of curiosity—is there a better way, a blue ocean strategy where we begin to control our direction? I’m talking about a strategy that looks at the markets, the methodology, the objections and the opportunities in a whole new light. I’m not promoting the book, I have no vested interest, but there is something rather intriguing about the concept of
10 | Ethanol Producer Magazine | MARCH 2012
breaking out of the red ocean and setting sail on a blue ocean in a new direction with a whole new strategic plan. As the book points out early on, “There are no excellent permanent companies just as there are no excellent permanent industries.” The idea is to develop a strategy that creates an uncontested marketplace, makes competition irrelevant and creates dynamic new markets by attracting all levels of consumers, who currently may not even be our customers. There are literally hundreds of businesses and industries that have successfully developed blue ocean strategies. One interesting example is Cirque du Soleil. They changed the entire circus industry from one of three rings, high cost and dwindling attendance by parents and children, to a whole new uncontested market for adults and corporate clients that made the competition irrelevant. Another excellent example is the U.S. wine industry. The $20 billion U.S. wine industry is bogged down in a red ocean of competition. Wine snobbery, proper aging, complexity, price and overwhelming selection, has created a market that the average nonwine connoisseur simply does not feel comfortable in. Then along came Casella Wines of Australia with Yellow Tail. Priced right, properly marketed as a social drink, a wine not targeted towards the connoisseur, but to the average consumer, with simple traditional varieties. It didn’t steal sales from the wine industry, it created a whole new market of previously
nonwine drinkers and, in 2003, sold 4.3 million cases and was the number one selling red wine in the U.S., outstripping California labels. Frankly, I’m not sure where this whole story is going, except to wonder, is there a better way for this industry, a blue ocean strategy? The ethanol industry has continued to drive costs down, but have we sufficiently demonstrated product value to the consumer, especially to a huge, yet untapped, customer base? We have successfully fought numerous legislative battles, but have we resoundingly convinced Congress that ethanol needs to be the national alternative fuel of choice? How can we make gasoline irrelevant to the success of our industry? What new market opportunities can be developed to extract us from the red ocean we have swum in for the past three decades? I offer you nothing more than food for thought this month, and will leave you with a line to ponder: “There are no excellent permanent industries.” That’s the way I see it.
Author: Mike Bryan Chairman, BBI International email@example.com
events calendar SILO AND BIN CLEANING
International Biomass Conference & Expo April 16-19, 2012
Colorado Convention Center | Denver, Colorado A New Era in Energy: The Future is Growing Organized by BBI International and coproduced by Biomass Power & Thermal and Biorefining Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries. (866)746-8385 | www.biomassconference.com
International Fuel Ethanol Workshop & Expo June 4 -7, 2012
Minneapolis Convention Center | Minneapolis, Minnesota Evolution Through Innovation Now in its 28th year, the FEW provides the ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-tobusiness environment. As the largest, longest running ethanol conference in the world, the FEW is renowned for its superb programming—powered by Ethanol Producer Magazine. Early bird registration rates expire April 23. (866) 746-8385 | www.fuelethanolworkshop.com
Algae Biomass Summit September 24-27, 2012
Sheraton Denver Downtown Hotel | Denver, Colorado Advancing Technologies and Markets Derived from Algae Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. Register today for the world’s premier educational and networking junction for the algae industry. (866) 746-8385 | www.algaebiomasssummit.org
SAFETY IS A WAY OF LIFE At Mole•Master•••
firstname.lastname@example.org …so when OSHA clamped down www.fuelethanolworkshop.com recently on compliance for the existing OSHA Grain Handling Standard, it didn’t scare us at all. That’s because nobody in the industry puts more emphasis on safety training than Mole•Master.
Mole•Master has even installed a new training silo at our facility so our employees can rigorously train on all aspects of silo and bin cleaning including all required OSHA and MSHA standards. In addition to our own intense ongoing safety training, Mole•Master has been qualified by multiple safety groups who monitor stringent safety requirements for their large grain clients. So whether you need Professional Silo Cleaning Services or Do-It-Yourself Bin Cleaning Equipment, make the safe choice.
International Biorefining Conference & Trade Show November 27-29, 2012
Hilton Americas - Houston | Houston, Texas Organized by BBI International and produced by Biorefining Magazine, the International Biorefining Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry. Contact a knowledgeable account representative to reserve booth space now. (866) 746-8385 | www.biorefiningconference.com
27815 State Route 7 Marietta, OH 45750 USA 800.322.6653 Fax 740.374.5908 email@example.com
www.molemaster.com Ask about our new soda blasting capabilities. © 2012, Mole•Master Services Corp. All rights reserved.
view from the hill
Ethanol’s Future Won’t Wait By Bob Dinneen
Let’s be perfectly candid: the progress of cellulosic and advanced ethanol production has been far slower than everyone in the ethanol industry had hoped to see. Prior to the 2008 economic collapse and the attendant finance freeze, such promising progress was being made that the oft-repeated line of cellulosic ethanol being just five years away seemed overly pessimistic. The slower rate of commercialization has created confusion, consternation and calls for an end to efforts to help America’s ethanol industry evolve. These feelings, as reasonable as some may seem, ignore a very real truth: failing to fully harness the potential of turning American biomass into American renewable fuel will greatly impale, if not mortally wound, the nation’s ability to end our addiction to fossil fuels. That means that we must push through, ignoring the pitfalls of falling back on old fossil fuel technologies just because we are comfortable and familiar with them. We must recommit our innovative spirit to shepherding promising new technologies over the finish line. To claim that the wait for cellulosic ethanol production is over, or nearly over, would be misleading and undermine the credibility of American ethanol producers who have met the challenges put before them. It is fair to say that the wait for proven technologies in the market is
12 | Ethanol Producer Magazine | MARCH 2012
shorter today than it was just a few years ago. To wit, companies across the nation are building commercial-scale facilities to turn feedstocks other than grain starch into renewable fuel. Abengoa Bioenergy is building a 25 MMgy biorefinery in western Kansas that will produce ethanol and power from both grain and nongrain feedstocks. ZeaChem just received a USDA loan guarantee to build a biorefinery in Oregon that will turn wood into a variety of renewable products, including fuel. Likewise, projects in states as diverse as Iowa and Alabama, Florida and Illinois, are redefining what it means to produce ethanol in the United States. These investments, and future investments once these technologies are proven efficient, would not be possible without consistent public policy. America must keep in place critical public policy initiatives that will help drive the evolution of American ethanol production. Before year’s end, Congress should pass a multi-year extension of the Producer Tax Credit for cellulosic ethanol production as well as the Accelerated Depreciation Allowance for Cellulosic Biorefineries. These vital tax incentives provide the kind of security private companies and investors need to bring demonstrated ethanol technologies out of the lab and into the real world. Congress must also resist calls from the oil and gas patches, as well as from the angry birds and mad cows, to reopen, revamp, or repeal the renewable fuel standard. While cellulosic ethanol production has yet to meet the mandates called for by Congress, this standard is the lifeline keeping investments in cellulosic and
advanced biofuels alive. Through the power provided to the U.S. EPA, shortfalls in cellulosic biofuel availability in the near term can be met through commonsense discussions with all stakeholders. Such shortfalls should not be the rationale to end the RFS, as it has proven to be the most effective tool the U.S. has implemented to directly replace imported oil with domestic, renewable alternatives. Congress should also get out of the way of emerging technologies by eliminating century-old subsidies for very mature fossil fuel industries that dramatically distort the market. Right now, renewable fuels are the gamblers in the oil industry’s casino, and we all know the house always wins. Finally, continued investments in ethanol and alternative fuel infrastructure must be made. Taking a long-term view of America’s energy needs necessarily requires investment in technologies that will give a diverse consumer base the ability to choose the fuel and fuel blend that is best for them. Blender pumps, flexible-fuel vehicles, and other commonsense technologies give the power of choice, and the purse, back to consumers. America’s energy future, and that of its growing and evolving renewable fuel industry, will not wait. A failure to act with vision will squander the gains America has made in energy security and cutting edge renewable fuel technology. Our answer to our grandchildren’s questions about what we did to make America great should not be we further embedded the status quo. Author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835
Breaking Oil’s Hold Over America By Tom Buis
News that Iran’s navy could stop oil shipments through the strategic Strait of Hormuz sent oil to an eight-week high in January. With Iran and a handful of other countries controlling the lion’s share of the world’s oil, any disruption in supply implies disaster for America’s still-sputtering economy. Our nation imagines itself the most free and secure in the world, but the volatility of the global oil market shows how vulnerable we are as a nation to saber rattling by strongmen and dictators. Every president since Nixon has warned that the influence of foreign oil in our economy is threat to both our national and economic security. Yet for more than four decades, our federal government has failed to ultimately deal with the problem of our national addiction to foreign oil. In 2012, Growth Energy is reminding Congress and America that ethanol is a key to finally breaking our oil addiction and achieving energy independence. Ethanol is not a someday fuel; it is replacing foreign oil today, and if we lift the artificial hurdles blocking access to the fuels market, it can replace more. So how do we create a level playing field for ethanol to compete with oil?
14 | Ethanol Producer Magazine | MARCH 2012
First, we must open the market to more ethanol to strip oil of its strategic status as a commodity. A full move to E15 will give consumers greater access to clean, renewable ethanol today. By expanding the market through E15, we can spur private capital investment into the development of ethanol from cellulosic biomass. With cellulosic ethanol, we can turn feedstocks such as corn stover, citrus waste and even woodchips into clean, renewable fuel. Second, the industry needs to expand its infrastructure, in the form of flex-fuel pumps and flex-fuel vehicles, to create a market where consumers have a choice at the pump. By encouraging auto companies to manufacture their fleets to run on higher blends of ethanol, we can reduce America’s dependence on foreign oil, create green jobs that can’t be outsourced and keep more money here in the U.S, where it can support our domestic economy. Third, Congress should maintain support for the renewable fuel standard— the only national energy policy in place today designed to reduce our dependence on foreign oil by gradually increasing the use of renewables in our fuel supply. The RFS has been the single most effective policy at displacing foreign oil. Because of the stability created by the RFS, the ethanol industry supports more than 600,000 American jobs that can’t be outsourced and helps us take back some of the $300 billion a year we send to foreign economies for access to oil.
We have a plan for energy independence, and we must stick to it. The future success of the domestic ethanol industry and the key to America’s energy security depends on solid policies that create a fair market where consumers have a choice at the pump. It is imperative for our country to produce and use our own sources of renewable energy so we don’t have to rely on foreign nations as heavily. American ethanol is the only commercially viable alternative fuel that is proven to reduce harmful emissions in the air, create jobs at home and reduce our dependence on foreign oil. For 40 years, we have been at the mercy of a foreign cartel that has controlled one strategic commodity: oil. A strong commitment to policies that ensure access to clean, domestically produced alternatives like ethanol will help America break free from oil’s stranglehold. Author: Tom Buis CEO, Growth Energy (202)545-4000 firstname.lastname@example.org
Visit us at FEW, booth 915
Put BetaTecÂŽ natural hop extracts to work in your fermentation process to replace antibiotics and enhance yeast propagation. IsoStabÂŽ is the natural way to effectively control gram-positive bacteria while eliminating antibiotics and harsh chemicals. Plus, antibiotic-free DDGS adds value to your co-products. VitaHopÂŽ Silver yeast nutrient enhances yeast performance and vitality, inducing faster fermentations and larger yields. Combined with BetaTecÂŽ fermentation expertise and training, these technologies will significantly increase your plantâ€™s efficiency. BetaTecÂŽâ€Śthe natural hop to higher profits. For more information specific to fuel ethanol producers, visit www.bthp.info. 4HJ(Y[O\Y)S]K:\P[L >HZOPUN[VU+* ;!-! www.betatechopproducts.com
Timid Predictions and Bold Vision By Ron Lamberty
E15 will not be commercially available for widespread use by March. How do I know? Well, I don’t. But over the past year or so, when it seemed like E15’s arrival to a convenience store near you was imminent, some of us in the ethanol industry got excited and said publically that we expected it to be available “soon,” “sometime this (insert season here),” “by late in the next quarter,” or some other nonspecific yet not-so-far-off timeframe. We were wrong. Every time. Powerful forces conspired to make all of us look bad. So I now predict that E15 is not going to happen this March. I could point to reasons like EPA waiting until it makes CAFE (corporate average fuel economy) and/or Tier 3 decisions, the futility of finally making E15 available at a time when the impending low-RVP (Reid vapor pressure) season will make it virtually impossible to use until fall, but I’m not going to do that. We’re just not going to see E15 in March. Mark it down. Go ahead, Powerful Forces, make me look bad again. Prove me wrong. I dare ya. On a serious note, March is a time to remember a friend of ethanol. March 26
16 | Ethanol Producer Magazine | MARCH 2012
marks the sixth anniversary of ethanol’s first appearance as the fuel of a major motorsport series—the Indy Racing League—on a day that will always be remembered instead as the day we lost one of ethanol’s most dynamic promoters and spokesmen, Paul Dana. When it came to ethanol and racing, Paul used to talk about people who “get it.” “It” wasn’t about selling ethanol to racers. If every racer in the country used ethanol, in a year we wouldn’t use two weeks output from even a single average ethanol plant. And although motorsports are the number one spectator sport in America, “it” isn’t really about selling ethanol to racing fans, either. As big as racing is, there are a lot more people who don’t know the IRL from NASCAR from the World of Outlaws. About 35 million Americans watch some part of the Daytona 500 every year— meaning about 265 million Americans don’t. “It” is all about image. “It” is the old marketing truism: “perception is reality.” If ethanol is perceived as a cheap substitute for gasoline, it IS a cheap substitute for gasoline. And with that perception comes all of the concerns that accompany “cheapness.” On the other hand, the real “reality” is that ethanol is a clean-burning, allAmerican, high-octane motor fuel. Paul Dana knew that the sight of cars whizzing around a track, powered by ethanol, could change the perception of our fuel. By having the IRL, and now NASCAR, use
ethanol in extreme race conditions, we demonstrate power and reliability, and we learn about any weakness of the fuel—if any weaknesses ever appear … Paul Dana knew “it” wasn’t about him, the IRL or even racing. It was an opportunity for the ethanol industry to “shift gears,” and promote ethanol for what it IS, instead of what it is not. Racing shows people ethanol is a high-octane performance fuel, and gives us the opportunity to drive home other benefits. The best list is still the one that was written on the side of Paul’s first IRL car. It said simply: “Ethanol: Clean. American. Renewable.” “Cheap” was nowhere to be found. Author: Ron Lamberty Senior Vice President, American Coalition for Ethanol (605) 334-3381 email@example.com
A GLOBAL UNDERSTANDING
A GLOBAL UNDERSTANDING Ethanol is a global industry, and it takes a company with a worldwide reach to understand it. Thatâ€™s INTL FCStone, Inc. and its subsidiaries. Whether your operations are centered in Brazil, Europe, Australia, China or the United States, we can make your world a little easier to manage and understand. With deep roots in agribusiness, we have a wealth of resources to help you cope with uncertainty and price volatility in grain, energy, ethanol, and other renewable fuels. With customers in more than 100 countries around the world and wideranging expertise in interest rate and currency risk management, weâ€™ve got you covered no matter where you are or what you need.
FCStone, LLC Renewable Fuels Group West Des Moines, Iowa 2829 Westown Parkway, Ste. 100 firstname.lastname@example.org 800.422.3087, ext. 3728
www.intlfcstone.com Commodity trading involves risks, and you should fully understand those risks before trading.
Is Double Counting a Double Whammy? By Robert Vierhout
The most popular take-away food in the U.K. is fish and chips. The frying of all this fish and fries requires quite a lot of vegetable oil. Collecting the used oil from restaurants, bars and cafes for the production of biodiesel has become big business. Between April 2010 and April 2011, the U.K. used 428 million liters of used cooking oil (UCO) for the production of biodiesel. It has become the primary source for biofuel used in U.K. transportation fuel. Of all biofuel used in the U.K., 30 percent is from UCO, 21 percent is from Argentine soy and 20 percent from sugar cane ethanol, according to the U.K. Department of Transport. The big driver for using UCO biodiesel is the tax incentive of 30 U.S. cents per liter. It is costing the Exchequer £10 million per year (almost $16 million) but, according to the U.K. Sustainable Biodiesel Alliance, provides value in terms of employment and waste recycling. The tax measure ends April 2012, after which UCO biodiesel will receive two tradable certificates (the equivalent of the U.S.’s renewable identification numbers)— double that given first-generation biodiesel from soy or rapeseed. The UKSBA fears that counting UCO biodiesel twice is not
18 | Ethanol Producer Magazine | MARCH 2012
adequate to compete with biodiesel from, for example, Argentina. Their concern is based on past experience with renewable fuel certificates that sometimes had a value of zero; and “double nothing is still nothing,” they say. Their concern about the risk of too low a market value is justified. Why would a fuel distributor pay more for a double counting biofuel, if he doesn’t receive any benefit from it? The target set in the Renewable Energy Directive is mandatory for member states, not for fuel suppliers. A fuel supplier, therefore, doesn’t care if the volume is more on paper than the physical volume. The whole concept of double counting has never been well-thought out. When included in the bill, it seemed a good measure to promote the production of biofuel from waste, residues and lignocellulose. There would be few land use concerns and greater greenhouse gas (GHG) emission savings and it would be a nice way to get to the finish more quickly in terms of volumes. A full supplier will only pay more for a biofuel if it will give him a clear benefit. For example, if the GHG emission saving is the prime aim of using biofuels, then such a biofuel becomes interesting—the market will value these nonconventional biofuels more. We don’t have this situation yet, and consequently, the once most promising legal instrument to stimulate the development of lignocellulosic ethanol is not contributing to that aim. If today a lignocellulosic ethanol producer would
offer his biofuel to the market, he would not see an acceptable return on the higher investment and production costs for making that biofuel. Later this year, the European Commission will report on secondgeneration biofuels development. It cannot be anything but disappointing, as there is little investment in new production capacity and hardly any market penetration. If the EU decisionmakers and regulators really want this type of biofuel to take off, a fundamental change in policy is needed. There are a few options: dedicated and mandatory targets coupled to a high noncompliance penalty and/or a tax incentive that is linked to a) GHG saving performance—the higher the saving, the more tax credit, and/or b) the higher the investment or production costs, the higher the tax credit. If the double counting mechanism does not change, it will be a double whammy—no higher market value and no incentive to develop and invest in lignocellulose ethanol production. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org
work as hard as you do Call 1-800-847-5311 for information or visit www.genencor.com
Get in Gear for Tax Changes in 2012 By Donna Funk
The beginning of a new year brings new opportunities, even when expected changes are on the horizon. As ethanol plants said good good-bye to 2011, they also prepared for the end of the small producer tax credit, the Volumetric Ethanol Excise Tax Credit, the 100 percent bonus depreciation and the research and development credit—to name just a few. While the industry has appreciated those credits and incentives, this year also marks the final year for two additional biofuel tax advantages passed during the presidency of George W. Bush that generally lowered tax rates and revised the code. These included the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Obama administration extended the rates for two years as part of a larger tax package we know as the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The 15 percent capital gains rate will end Dec. 31 and yet another good-bye will be to the 50 percent bonus depreciation, which was intended to stimulate the economy. Still, ethanol plants and ethanol plant owners in a pass-through structure should
20 | Ethanol Producer Magazine | MARCH 2012
continue to monitor these tax opportunities as Congress could extend or modify either one. To take advantage of the capital gains rate, it might be worth considering triggering some LT capital gains in 2012 and paying the 15 percent tax, then rebuying the asset with a higher basis to be used in future years when capital gains rates are higher. This, of course, assumes a taxpayer’s ordinary income is going to be taxed at the same or higher rates in the future when compared to today. If a plant is considering capital expenditure projects and, all things being equal, the time value of money might suggest buying the assets in 2012 versus waiting until next year or 2014. Did I mention a new year also brings new opportunities and challenges? There are tax changes slated to take effect in 2013 as a result of the Healthcare and Education Reconciliation Act. Investors in ethanol plants may find a significant provision called the surtax, which is a 3.8 percent Medicare tax. This surtax applies to individuals, trusts and estates with income that exceeds specific thresholds. In addition, the surtax is assessed differently for trusts and estates than for individuals. The 3.8 percent surtax will be applied to the lessor of net investment income or modified adjusted gross income in excess of a threshold (ranging from $11,000 to $250,000, depending on filing status). Income from passive investment activities is included in net investment income and therefore, many ethanol investors will have net investment income subject to the surtax. An immediate question is how to make an investment active or not passive.
Unfortunately, that isn’t always possible, and those considered active can be subject to self-employment income on that activity, which results in a 3.8 percent tax as well. Every situation will be different but, for example, if an ethanol plant allocates $2 million of passive income to its members, the additional tax could be $76,000. A plant and the members should consult their tax advisor for specific details on the impact of the surtax. The new year also brings new legislative sessions at the federal and state level. As the respective governmental bodies deal with budget crisis, stimulate new business and modify the tax code, we are guaranteed to see additional proposed changes that must be followed and analyzed to lend our support for or against these measures—both to protect our own business but also the industry as a whole. Though we always anticipate change in tax credits from year to year, it is important for any business to plan from the beginning for the year ahead. Taking advantage of the the capital gains rate and bonus depreciation in 2012 and planning for the surtax in 2013 can make your year the best it can be. Author: Donna Funk CPA, Kennedy and Coe LLC (800) 303-3241 email@example.com
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Interstates Companies has promoted Jaron Vande Hoef to a senior project manager, principal, with Interstates Engineering. In addition to project management, he is the point person on Interstates Project Engineer Engineering’s manJaron Vande Hoef joined Interstates in power planning efforts, 2002. His industry and shares business project experience includes ethanol, development responsibiodiesel, energy bilities. “Jaron has sucmanagement, feed and grain, pet food and cessfully led many of others. He has written articles for both Ethanol our complex projects,” Producer Magazine said Interstates Engiand Feedstuffs. neering President Doug Post. “He has been instrumental in ramping up our project-level sales efforts and has regularly been the first to implement change initiatives through his projects.” Inbicon A/S has certified Harris Group Inc. as meeting all quality, reliability and professional standards necessary for engineering projects involving Inbicon Biomass Refineries. Because Harris provides multiple engineering disciplines, it can handle every aspect of front-end and detail engineering, says Inbicon’s marketing manager Christian Morgen. Its experience in the power industry, pulp and paper projects and renewable energy are relevant as Inbicon’s cellulosic ethanol technology is deployed in North America. Inbicon has operated its $100 million biomass refinery in Kalundborg, Denmark, since 2010. The European project, Biocore, has announced the successful pilot scale production of ethanol from wheat straw. In the project, CIMV SA converted wheat straw into its main components at its pilot family in Pomacle, Marne, France, and supplied DSM Biobased Products & Services BV with refined cellulose. Using proprietary thermostable en-
zymes, DSM converted the cellulose into glucose, which was fermented into ethanol. In a final step, Arkema SA will use the ethanol to produce ethylene, a precursor of PVC.
Tenaska BioFuels LLC and NEDAK Ethanol LLC have entered into a seven-year asset management agreement that will provide working capital and risk management services to NEDAK’s 44 MMgy ethanol production facility near Atkinson, Neb. Tenaska will purchase corn and natural gas and market the plant’s ethanol and distillers grains. Tenaska has worked with NEDAK since October 2010. “This [agreement] is a positive step in the right direction for NEDAK,” said Jerome Fagerland, NEDAK general manager. “The company has been through challenging times, along with the rest of the ethanol industry, since the second quarter of 2010. We are looking forward to working with Tenaska BioFuels, which has the financial wherewithal to manage through volatile commodity markets and assist us in maintaining a balanced physical or financial grind margin. The agreement will enable us to take advantage of favorable forward grind margins as the market allows them, which will help NEDAK to improve its financial liquidity and reduce debt.” Praj Industries Ltd. has acquired a majority stake in Neela Systems Ltd., a Mumbai, India-based water treatment and modular process system company focused on the biotech, pharma, life sciences and cosmetics industries. “Praj was scouting for acquisitions in the area of water and wastewater treatment since it entered the space in early 2010. Neela is a good fit as it addresses areas wherein Praj wants to build a stronger presence, globally,” said Pramod Chaudhari, chairman, Praj Industries.
P4 Consulting announced a front line supervision program designed for ethanol plant lead operators, supervisors and production managers. The aim of the supervisor training program is to increase productivity, accountability and engagement of front line employees. A front line that requires less supervision frees up managers to implement efficiencies, innovate, and spend more time on value-added activities. The program includes a three-day training session in Colorado followed by individual coaching and webinar followup lessons. The Advanced Ethanol Council welcomed two new members, Beta Renewables and ZeaChem Inc. Beta Renewables is a joint venture formed from the Chemtex division of Gruppo Mossi & Ghisolfi and TPG. Its cellulosic ethanol facility in Crescentino, Italy, is expected to be completed later this year. ZeaChem announced in January that it has completed the core construction on its demonstration-scale facility in Boardman, Ore. Other companies on the council include Abengoa Bioenergy Corp., BlueFire Renewables Inc., Coskata Inc., Enerkem Inc., Fulcrum BioEnergy Inc., Inbicon A/S, Iogen Corp., Osage BioEnergy and Qteros Inc. BBI International and NEAtech LLC have announced a joint venture to develop a new international consulting service called BBI Consulting Services. By combining their experience and BBI Internationalâ€™s broadcast spectrum, the new venture will have the ability to offer a &RQVXOWLQJ6HUYLFHV breadth of bioenergy consulting to companies and organizations worldwide, as well as state and federal departments in the United States. Leading the consulting group are two experienced bioenergy consultants, Rafael Nieves, CEO, and Mark Yancey.
In a roundup of news headlines of the past month: Biobutanol developer butylfuel Inc. has a new name, Green Biologics Inc., after merging with U.K.-based Green Poet LLC has dropped Biologics Ltd. its U.S. DOE loan guarantee and partnered with Royal DSM on the buildout of Project Liberty, which will hold a formal groundbreaking March 13 for the 20 MMgy cellulosic ethanol plant at Emmetsburg, Iowa. Fiberight LLC received a conditional commitment on a $25 million USDA loan guarantee for its cellulosic ethanol facility planned for Blairstown, Iowa. Fiberight is partnering with Novozymes A/S on the conversion technology. Kansas 6 MMgy ethanol producer MGP Ingredients Inc. is teaming up with four Kansas universities and the Kansas Alliance for Biorefining and Bioenergy to develop biobased products such as foams, plastics and fuels from distillers dried grains with solubles. Mascoma Corp. is planning to first apply its proprietary consolidated bioprocessing technology platform in the corn-ethanol industry, offering a genetically-modified yeast that alleviates the need for most of the enzymes currently used. The company has signed agreements with ICM Inc., Lallemand Ethanol Technology and Valero Renewable Fuels Company LLC, as part of the commercialization strategy. Chippewa Valley Ethanol Plant Co. LLLP will receive a $500,000 grant from the American Recovery and Reinvestment Act funds to help with a $2 million project to recover waste heat from the plantâ€™s regenerative thermal oxidizer. Green Plains Grain Co., a wholly-owned subsidiary of Green Plains Renewable Energy Inc., is expanding its grain storage by 1.9 million bushels in an agreement with JW Grain, St. Edward, Neb., about 40 miles from Green Plainâ€™s 100 MMgy Central City ethanol plant. Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 7468385, or e-mail it to firstname.lastname@example.org. Please include your name and telephone number in all correspondence.
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commodities Natural Gas Report
Natural gas prices break 10-year low Jan. 23—An amazing thing happened in January—natural gas prices broke through the 2002 low. The prompt NYMEX natural gas price at $2.40 per MMBtu is well below 2002 levels. As the chart shows, the market has ranged from $2.48 per MMBtu in October 2002, to near $14 in 2008 and is now under $2.40. Have we hit a market low that will propel the market upward as occurred in 2002 or will the market continue to make new lows? Our sense is that unless, and until, new demand is found to take care of current excess supplies, or supply drops, prices will languish under $3 per MMBtu. We don’t see tremendous short-term demand increases since fuel oil users have already switched to natural gas and the economy is not yet booming. While some are switching from coal, that won’t impact
By Casey Whelan
overall demand. On the supply side, producers continue to drill and connect new wells. Production will likely continue to increase and set new records until drilling activity drops off materially. In summary, we expect a buyers’ market for natural gas for some time to come. In the longer run, natural gas will likely become an export opportunity for the U.S. as lowpriced domestic supply searches for higher value European and Asians markets. When that happens, domestic natural gas prices will more closely reflect international prices,
which are currently above $10 per MMBtu. Enjoy these low prices while they last because at some point the market will get back in balance and prices will increase.
Carryout to use higher than expected in January Jan. 25—South American weather and slow producer movement rallied the corn market despite a steep sell-off after the USDA report. Nearby futures traded synthetically below the limit as the January corn supply/demand and quarterly stocks reports came out. The USDA increased the average yield to147.2 bushels per acre versus the previous projection of 146.7 and 152.8 last year. Planted acreage was left unchanged while harvested acreage increased from 83.9 to 84.0 million acres. U.S. export demand was increased by 50 million bushels as Argentine exports decreased. Ultimately carryout was 846 million bushels, only a 6.7 percent carryout-to-use ratio, but higher than expected. The Dec. 1 quarterly stocks report showed 9.64 billion bushels of corn in storage, 240 million bushels higher than the aver24 | Ethanol Producer Magazine | MARCH 2012
age trade guess. This indicated a September through November disappearance of 3.84 billion bushels, less than last year’s 4.10 billion bushels. Analysts are projecting Argentine corn production at 18 to 21 million metric tons (mmt) compared to the USDA’s 26 mmt and last year’s 22.5 mmt. If the U.S. were to gain 50 percent of that demand, that would lower the current carryout by another 100 million bushels or about 1 percent. World wheat stocks are at 210.02 mmt this year versus last year’s 199.94 mmt, becoming competitive globally as feed . In the accompanying chart, the vertical bars illusutrate corn ending stocks in million
BY JASON SAGEBIEL
bushels (left axis) and the horizontal line illustrates the corn stocks-to-use ratio (right axis). Premliminary numbers for next year would show the U.S. rebuilding stocks.
Regional Ethanol Prices Front Month Futures (AC) $2.177 REGION
$2.454 SOURCE: DTN
Regional Gasoline Prices
DDGS supplies to depend on plant margins BY SEAN BRODERICK Jan. 23â€”The DDGS market first escalated in price going into the holidays as buyers covered needs for the last half December, and then declined once the new year started. Demand picked up as feeders put DDGS back into diets when its value relative to corn came back down. The corn futures volatility contributed to this roller coaster as well. On the export side, there are more enquiries for containers lately, especially going to China. Buyers from there have been emboldened by the fact that their Ministry of Agriculture pushed out to June 28 their decision on the antidumping case that was initiated against the U.S. more than a year ago. Chinese DDGS
imports are down from last year, but the rest of Southeast Asia has picked up, with the exception of South Korea. Bulk business is still limited to the occasional hold, mostly to fill out a grain vessel. Logistically, we have had very few issues so far this winter due to warm and dry weather. Looking ahead, a lot will be determined by plant margins, and how hard they are run. We are starting to see signs of plants slowing down. Cash corn is getting harder to come by, and most expect getting farmers to part with that corn in the months ahead will be difficult. With expectations of record plantings, it is sure to be a volatile spring.
Front Month Futures Price (RBOB) $2.8050 REGION
$2.835 SOURCE: DTN
DDGS Prices ($/ton) MAR 2012
MAR 2011 185
214 SOURCE: CHS Inc.
Corn Futures Prices Date Jan. 24, 2012
(May Futures, $/bushel)
6.35 1/4 6.28
Dec. 23, 2011
Jan. 24, 2011
6.65 SOURCE: FCStone
Cash Sorghum Prices ($/bushel) LOCATION
Ethanol futures show an unsteady stability BY RICK KMENT Jan. 23â€”At first glance, it appears not much changed in ethanol futures in a month, but although month-end prices did not change, it would be hard to overlook the 15 cent swing. Corn prices led the roller coaster ride with strong gains leading into the new year, only to be scaled back significantly following increased crop production reports in early January. Dry and hot weather in South America has stolen the limelight with traders focusing on possibly significant corn reductions in Argentina. This kept production costs of ethanol higher in late January and drew light renewed support into the ethanol market. But all of this late-month support is moving prices back to late-December levels and, in ef-
fect, leaves the overall market moves unable to show much direction. The RBOB gasoline market, on the other hand, has seen significantly strong buyer support as traders look for growing domestic and worldwide demand over the coming months. These gains in the futures have not been reflected in rack or wholesale prices, indicating that there may still be additional price shifts ahead. Support from gasoline will typically draw ethanol higher in the coming months as well. Ethanol prices will continue to closely follow corn, but increased retail demand for gasoline could spark increased blending interest as the spring driving season arrives.
JAN 20, 2012
DEC 20, 2011
JAN 27, 2011
SOURCE: Sorghum Synergies
Natural Gas Prices
FEB 1, 2012
JAN 1, 2011
FEB 1, 2011
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production
SOURCE: U.S. Energy Information Administration
MARCH 2012 | Ethanol Producer Magazine | 25
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distilled Pain at the Pump
E85 prices fall victim to VEETC’s demise In the months leading up to the expiration of the 45-cent-per-gallon Volumetric Ethanol Excise Tax Credit, E85 retailers warned that their fuel could end up being priced out of the market as they would likely have to raise the price by 38 cents per gallon to compensate for the loss of VEETC. Because E85 gets fewer miles per gallon than conventional gasoline, a price differential is necessary in order for most drivers to justify purchasing the fuel and retailers said that without VEETC, it would be difficult to sell E85. A coalition was formed by concerned retailers and industry supporters to request that Congress extend another portion of the tax code known as the Alternative Fuel Credit and then urge legislators to modify it to allow E85 to qualify for the 50-cent-per-gallon credit. Doing so would essentially replace VEETC’s positive price influence on E85 and allow retailers to keep it cost-competitive with gasoline, according to the group. By the end of January, no Congressional action had been taken on the Alternative Fuels Credit, but the Coalition for E85 was optimistic that Congress would eventually extend it and make it effective retroactively to Jan. 1. Once that hurdle is overcome, the group still faces the challenge of convincing lawmakers to add E85 to the list of applicable fuels. To help achieve that goal, the coalition launched a grassroots information campaign to raise awareness among consumers, offering sample letters to Congress, pump-top posters for retailers to display at their fueling stations and social media site links on its website—www. coaltionforE85.org. For retailers who have invested millions of dollars in the installation of E85 infrastructure, the lead-up to the new year no doubt caused justifiable anxiety. However, while the potential for a crushing blow to E85 demand as a result of price hikes is still high, not all retailers were forced to immediately price E85 28 | Ethanol Producer Magazine | MARCH 2012
Ethanol News & Trends
Example impact of VEETC removal on E85 price With VEETC $0.450
Without VEETC $0.000
Ethanol at $2.90 wholesale/gallon
Gasoline at $2.88 wholesale/gallon
Gasoline cost of E85
Ethanol cost w/o VEETC
Less VEETC (.85 x .45)
Net Price for E85
E85 Price, % of Gasoline
VEETC (Blenders tax credit)
SOURCE: AG MARKETING RESOURCE CENTER AT IOWA STATE UNIVERSITY
higher than gasoline. Mike Pearson, manager of California’s Pearson Fuels, an alternative fuel retailer who operates about 15 E85 locations in the state, said that in mid-January his company was still selling E85 at $3.49 per gallon compared to $3.59 for gasoline. The company had filled its E85 storage tanks shortly before VEETC expired, which had helped them delay price changes. But, more significantly, the price of ethanol had dropped in recent weeks while the price of gasoline had gone up, he says. “We did get one load of ethanol after the first of the year, and the price was substantially lower,” he says. “If the tax credit were still there, we would be selling a ton of E85 because we’d be able to sell it for 38 cents less than we’re selling it now. But we just don’t sell much E85 when it’s only a 10-cent difference.” Robert Wisner, professor emeritus and biofuels economist at Iowa State University, says when considering E15’s slow entry into the market, E85 is the industry’s best current chance to beat the blend wall. But he also predicts that the loss of VEETC will raise E85 prices substantially, which could have damaging results. “It [E85] was already limited by the number of flex-fuel vehicles, by prices that generally were not fully competitive and by lack of retail outlets,” he says. “It’s one more
negative that has come down on the E85 market.” It is possible that E85 prices may remain somewhat competitive for the short-term, but for that to happen ethanol prices would need to stay low—not ideal for ethanol producers— and gas prices would need to stay high. In midJanuary, Wisner noted that ethanol futures and gasoline futures were predicting ethanol at an approximate 45-cent discount to gasoline, which he interpreted as a signal that the market was attempting to adjust for the loss of VEETC. Bloated supply stocks at the end of the year also likely contributed to the drop in ethanol prices. Lewis believes high gas prices have also helped mask the issue with E85 prices, but he expects oil prices to come down eventually, and that will spell trouble for E85 prices. “It doesn’t matter what E85 costs; it matters what gasoline costs versus E85,” he says. “We could have a 50-cent price increase tomorrow and nobody would care, as long as we had a 50cent price increase for gas at the same time. If we had to raise our price of E85 38 cents a gallon, we’d have people complaining all day. But mostly people complain with their pocketbook. They just don’t come or they buy gas instead.” —Kris Bevill
Up and Running
Retailers respond positively to SD blender pump incentive The application window for South Dakota’s inaugural blender pump grant program may have just opened on Jan. 9, but it already appears that the incentive will be a success. More than half the fiscal year’s available funds had been applied for within a couple of weeks of the Ethanol Infrastructure Incentive Program’s launch, according to South Dakota’s Energy Policy Director Hunter Roberts, leaving little doubt that the entire $950,000 budget would be quickly distributed to future blender pump retail locations. “I’m extremely pleased with the activity we’ve already seen,” Roberts said in late January. “We only started accepting applications this month and we have received $515,000 in applications for 15 different stations to install 29 blender pumps. Clearly, we’re seeing a lot of positive interest.” South Dakota’s blender pump program is a five-year, $3.5 million grant program and was
initiated by the state’s ethanol producers, who volunteered to redirect a portion of the state’s Ethanol Producer Payments Program to fund the initiative. Dana Siefkes-Lewis, president of the South Dakota Ethanol Producers Association, says the goal is to increase the availability of ethanol blends, thereby benefiting the state’s economy and the ethanol industry. A total of 15 ethanol plants are located in South Dakota, representing more than 1 billion gallons of annual production capacity, including top U.S. producer, Poet, which has five plants and a research facility in the state. In early January, representatives from the American Coalition for Ethanol and Growth Energy joined with officials from the state’s economic development office to conduct a series of informational meetings for retailers. Rick Serie, director of market development at ACE, and Roberts said feedback from retailers was very positive. Most retailers interested in installing blender pumps say they would do so to gain an edge over their competitors, Serie
says. According to ACE, there are currently about 45 blender pump locations in the state and the Governor’s Office of Economic Development estimates blender pumps at around 100. Serie says the GOED should be commended for creating a user-friendly blender pump incentive program. The application form is a mere two pages and is very easy to complete, he says, compared with the USDA’s Renewable Energy for America Program application, which stretches to more than 100 pages. “That’s the key: keep it simple,” he says. “We think this is going to be a good model for other states to follow.” The majority of the S.D. program’s funds will be awarded on a first-come, first-serve basis. The GOED says it will consider the program a success whether it results in many new pump locations or a few locations with many new pumps. Applicants are eligible to receive grants for up to $25,000 for the installation of a station’s first blender pump, and up to $10,000 for each additional pump. —Kris Bevill
The Next Level
Marketing firms join to form next generation of ethanol marketing Mansfield Oil Co. has joined forces with global agricultural and energy products supplier Noble Group to create Noble Mansfield Renewable Energy, a joint venture that the companies say will combine their existing marketing abilities to define the next generation of ethanol marketing. The new venture will be headquartered in Bloomington, Minn., where
Mansfieldâ€™s C&N ethanol marketing business is based. Bill Covey, previously the head of Noble Groupâ€™s ethanol marketing segment, will serve as CEO and Jon Bjornstad, founder of C&N Ethanol Marketing, is president. â€œThe traditional plant marketing approach has to evolve in order to continue to add value for producers in new ways,â€? Bjornstad says.
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30 | Ethanol Producer Magazine | MARCH 2012
He began marketing renewable fuels years ago and says that the industry has grown to a point where high-speed, automated transactions are an absolute necessity. Mansfield has adapted to meet these needs, investing heavily in developing its renewable identification numbers (RINs) management and compliance services and automating other aspects of the business to lessen workforce requirements and reduce risk. â€œHaving systems like this really does separate us from the pack,â€? he says. â€œToday, in an environment where obligated parties are really concerned with risk, there will soon be a short list of counter parties that refiners are willing to do business with. Refiners donâ€™t want the risk of noncompliance via nonvalid RINs.â€? Bjornstad also stresses the strength of Mansfieldâ€™s ethanol and distillers grains export program as being a benefit to the new partnership, adding that Nobleâ€™s international presence will compliment Mansfieldâ€™s previous efforts and help to expand those services to even more markets for their clients. Covey says Noble brings three key strengths to the new venture: risk management expertise, unmatched financial strength and a history of working relationships with blenders and refiners to market multiple products. â€œEthanol producers need a financially secure marketer with large operating scale, direct access to global markets, and a full suite of risk management services,â€? he says. â€œThis new organization offers plant partners access to unmatched risk management services and a scope of services on a global scale.â€? Reflecting on the changes in the ethanol industry over the past two decades, Bjornstad says he thinks the venture between Mansfield and Noble serves as a sign of the times. â€œThe industry is going to have to consolidate and streamline to enable it to run with the energy sector,â€? he says, adding that the new venture is already prepared for the next stepâ€”marketing new fuels and chemicals produced at biorefineries. â€œAs ethanol continues to mature, there will be more innovative ways to produce various products from the plants,â€? he says. â€œMansfield is already a marketer for Gevoâ€™s butanol and weâ€™re ready to market other products ethanol producers come up with.â€? â€”Kris Bevill
Back on the Horse
There’s activity again at the biorefinery in Soperton, Ga. LanzaTech purchased the former Range Fuels plant Jan. 3, renaming it the Freedom Pines Biorefinery, although it wasn’t yet ready in late January to say when the plant might begin producing ethanol. “That’s exactly what company engineers are looking at right now,” spokesperson John Williams says. “They are doing a thorough review of the existing assets and determining the integration pathway. This process is expected to take a few months.” The plant has sat idle since early last year and will need extensive renovations. Just as was planned originally, LanzaTech will utilize the facility to produce ethanol from wood. “We plan to leverage some of the existing technology at the facility alongside our own proprietary technology to produce clean, renewable and domestic fuels and chemicals from the bountiful waste biomass in the region,” the company said in a press release. LanzaTech’s technology converts gases from biomass or waste industrial gases into ethanol and chemicals. On Jan. 23, LanzaTech announced it had closed on Series C funding with total new investments of $55.8 million that will help advance the Freedom Pines and other Lanza-Tech projects, Williams says. To date, it has raised more than $85 million. Although the company isn’t saying exactly how the money will be spent, at least part of it will be used to further develop its core gas fermentation technology, including the company’s pilot facility in New Zealand and the Freedom Pines site. “It is too early to project our investment, but given that Freedom Pines is a project 100 percent under our control, we consider it a key, strategic asset for us,” he says. “We will allocate funds accordingly.” The purchase of the Soperton facility isn’t the only good news story in Georgia. The only other existing ethanol plant in the state, Southwest Georgia Ethanol LLC, emerged from bankruptcy in early January after operating as a debtor-in-possession for nearly a year. The 100 MMgy corn-ethanol plant is located in Camilla, about 150 miles from the Freedom Pines plant. —Holly Jessen
Failed Range Fuels plant under evaluation by new owner LanzaTech
Under New Ownership Technology developer LanzaTech is the new owner of the former Range Fuels Inc. cellulosic biofuels plant in Soperton, Ga. The facility has been renamed Freedom Pines Biorefinery.
MARCH 2012 | Ethanol Producer Magazine | 31
When the Chips are Gasified
Demonstration project produces green energy from yard waste PHOTO: CITY OF NAPERVILLE
Naperville, Ill., population 145,000, has found a way to turn sticks and leaves picked up during its annual brush collection into power and fuel for its municipal fleet. The city, which is located 28 miles west of Chicago, is part of a demonstration project to create electricity, hydrogen and ethanol from wood chips. “It will become a model for municipalities across the country to use biomass residue to power fleet vehicles,” according to information on the city’s website. “These carbon-neutral fuels are produced from landscape materials which currently cost the city Green Depot In Naperville, Ill., hopes are that its demonstration plant producing electricity, hydrogen and ethanol from yard waste will become a model for many cities. money to remove.” thanks to efforts of U.S. Rep. Judy Biggert, R-Ill. Packer Engineering, A gasifier developed by Packer Engineering has been installed at Naperville’s Green Fuels Depot. It will process about 1 ton a engineering consulting business with multiple research efforts in the of wood chips daily and has the capacity to power 12 to 15 suburban alternative energy field, and the city of Naperville are contributing to homes. The electricity produced will be used to power the system, sup- the project though temporary use of land and buildings as well as manply electricity to the city-owned utility’s power grid and power plug-in power. Argonne National Laboratory, which is developing a process to hybrid vehicles. The system can also divert a portion of the energy pro- produce ethanol through gasification, is also a partner in the project. The Green Fuels Depot is expected to create jobs, save money for duced to make hydrogen for fuel cell vehicles or ethanol for flex-fuel the city and reduce pollution. Similar systems could be used in cities vehicles. Primary funding for the project is from the U.S. DOE, secured with 7,000 or more single family dwellings, the city said. —Holly Jessen
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Mining for Solutions Brian King, lab manager of the natural science department of Ferm Solutions, works in the lab at the company, which has libraries of more than 200 yeast and 2,000 bacteria samples for use in its research and development. PHOTO: FERM SOLUTIONS
34 | Ethanol Producer Magazine | MARCH 2012
Taking Fermentation to a New Level Two companies develop new technologies aimed at revolutionizing fermentation By Holly Jessen
Understood since man first made beer, fermentation is an age-old process that has been developed to the point where it’s nearly impossible to improve on the efficiency of the process. “It’s maxed out,” says Garth Likes,
CEO and chairman of Syngar Technologies Inc. That’s why many biofuels companies are focusing elsewhere—such as feedstock development, more easily digested cellulose, pretreatment processes or gasification, to name a few. Syngar, however, is tackling the basic building block of fermentation itself. “Everybody else is off trying to solve the problem from different angles,” he says, “we have just been able to bring a very simple engineering technology process to the fermentation procedure and improve it.” A technology in the precommercial phase by the Edmonton, Alberta, company has the potential to increase biofuel fermentation yields by 33 to 60 percent. The Pulsed Low Ultra Sound Wave, a patent pending technology trademarked as PLUSWave, utilizes ultrasound waves. Applied at specific frequencies and power levels at timed intervals, it stimulates organism growth through cell division and protein synthesis. “It’s sort of like, one plus one equals three,” Likes says. “We are increasing the growth curve of the organism so that it eats faster, it chews faster, it converts faster.” Although it’s not yet known exactly how it works, he likens it to the body’s response to a cut. Signals immediately go out stimulating blood
MARCH 2012 | Ethanol Producer Magazine | 35
clotting and growth to heal the skin. “I think that what’s happening with the ultrasound is that we’re simulating growth responses within the organism because of this irritation, I’ll call it, from the sound wave frequencies,” he says. “And so in the process of growing and responding to enhanced growth, we’re also creating extra proteins or enzymes within the organism as part of the growth cycle.” He adds that research has shown the increase in yield is stimulated by the ultrasound waves, and is not only due to mixing. Although the technology may have other applications, such as in the medical field, Syngar is first focusing its energy on the ethanol and biodiesel industries. The company is working toward licensing the technology for an upfront fee of $100,000 for manufacture and installation, plus a royalty based on the increase in gallons produced. Currently, it has teamed up with two other companies, one U.S. and one Canadian, on small-scale ventures and is look-
ing for other partners to help bring it to commercial scale. For traditional grain-based ethanol plants, PLUSWave would mean a retrofit to existing equipment. It also works in the conversion of cellulosic materials to ethanol. “It’s not just a one specific technology to a one specific type of organism, it’s a very broadband, wide platform approach,” he says. During cellulose degradation by the fungus Trichoderma reesei, PLUSWave increases the production of fermentable sugars by 40 percent. In the next step, it increases the ability of the yeast Saccharomyces cerevisiae to ferment sugars to ethanol by 20 percent. In all, the company estimates it could reduce cellulose conversion costs to 1.2 cents per liter. Once the company has a handle on that, there are plans to research a consolidated cellulosic production process that would combine the hydrolysis and fermentation into one step, which would further decrease costs. “It not only increases its growth rate and its budding rate, but it produces more
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cellulase enzymes, which will directly act on the cellulose to convert into sugars,” he says. “We are quite optimistic with our data showing us that we would have a viable process of being able to put cellulose materials into a bioreactor, convert it to an end product sugar and then add the yeast to do the fermentation so that in a one-step consolidated process you could have cellulose to ethanol.” To commercialize PLUSWave, Syngar needs to solve the technical problem of how to achieve uniform dispersion of ultrasound waves through a large fermentation vessel. It works in the lab with small volumes, Likes says, comparing it to achieving water jiggle in a glass on a desk to jiggling the water an office-sized tank. “How do we disperse the sound waves through whatever volumes we are working with in order to get the maximum dispersal of sound waves through that entire volume so that all the organisms, etcetera, can be affected by the PLUSWave?” he asks. “We know that once they are exposed to the PLUSWave, the effect is always the same, which is the stimulation of growth and the stimulation of enzyme production. Once we have that worked out from an engineering perspective, we will be ready for our commercial launch.” Of course, the timeline also depends on money. Syngar is working towards going public, Likes said, estimating it could receive upwards of $10 million in financing, if successful. “That will allow us to move things forward,” he says. “Based on what I see right now, I’d say probably in 12 months we would be ready to be commercially offering licenses with all of the proof and all of the data and all of the expertise so it becomes a turn-key operation.”
Even as novel technologies such as the PlusWave are being developed, other companies continue to build on existing antibacterial and yeast products. Ferm Solutions Inc. has an arsenal of such products, and is in the research and development phase on multiple others. “We’re very focused on reducing costs and at the same time increasing performance through optimization and improved products and processes,” says Shane Baker, president and CEO. “We hope to bring several of those to commercialization by this year.” The company plans to break ground in 36 | Ethanol Producer Magazine | MARCH 2012
PHOTO: FERM SOLUTIONS
Creating Opportunity Since 1851.
Frozen Samples Organisms are kept in suspension at 80 degrees below zero Celsius in a cryogenics freezer in the Ferm Solutions natural science department.
February on a $1 million expansion to its Danville, Ky., facility, which it hopes will be completed by midyear. The goal is to add more space for laboratory research and for its advanced training programs for ethanol personnel, Baker says. In exchange for $100,000 in forgivable loans and grants from state and local government, Ferm Solutions has committed to adding five new high-tech jobs to the current 20. “In addition to in-house laboratory and research support services, we also have an extensive collaborative network with different academic and industrial institutions,” says Patrick Heist, chief scientific officer. The company has a history of working with the grain-based ethanol industry with its FermGuard and FermPro products. In the advanced biofuels arena, Ferm Solutions has helped clients develop new methods for producing ethanol from everything from sweet sorghum, potatoes, waste streams from candy manufacturing and expired beverages, to name a few. Although its core competency remains serving the ethanol industry, research has identified fermentation applications for the food industry and bacterial control methods for the medical field. “It is possible that this could not only expand into second-generation biofuel production, but also into other industries as well,” Heist says, adding that diversification has the potential to make the company stronger. New nonantibiotic bacterial control products are in the later stages of research and development at Ferm Solutions. Using natural products, such as extracts from plants, fungi, insects and other living organisms, the team is mining for chemicals that could be used to control bacterial contamination at ethanol plants, Heist says. These chemicals would
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MARCH 2012 | Ethanol Producer Magazine | 37
PHOTO: FERM SOLUTIONS
Sick Mash A contaminated plate shows bacterial growth from a sample of fermented mash.
be less likely to pose regulatory issues for the ethanol industry because they aren’t used for treatment of human disease. The company’s own antibacterial product, FermGuard, is a well-known, safe product for solving bacterial problems at ethanol plants, Heist says. Based on their own studies of the issue, Heist believes any residual antibiotics in distillers grains are at safe levels and may not even be biologically active. However, it’s still a good area for continued study. “We are looking to the future, in case there was some type of a problem with antibiotics, which I don’t foresee, then we have alternatives,” he says. Research is also being conducted on the possibility of controlling bacterial contamination on the molecular level. “We’re actually looking at how bacteria communicate with each other and so using various self-signaling pathways, we can create signals that may tell a bacteria, ‘Hey, this is not a good place to live and reproduce,’” he tells EPM. Thanks to assistance through academic and industrial collaborations, Ferm Solutions is also conducting basic scientific research to better understand the dynamics of bacterial contamination in the ethanol production process. That’s the foundation for understanding how to fix the problem. “Before you come up with a control strategy, you really have to understand what you are trying to control,” he says. “In the case of bacteria that affect ethanol plants, in the grand scheme of things, it’s a highly understudied area.” Work is also under way to create new yeast strains from a repository of more than 200 strains collected from mostly natural habitats. The team is evaluating the strains for beneficial characteristics, such as improved stress and temperature tolerance, sensitivity to organic acids, ability to utilize multiple sugar sources and the addition of nutritional value to distillers grains. Once that process is complete, Ferm Solutions will work to mix and match the positive attributes among yeast strains through genetic modification or traditional breeding strategies. Other technologies, such as corn oil extraction methods and enzymes, are also under investigation. Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 firstname.lastname@example.org
38 | Ethanol Producer Magazine | MARCH 2012
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Tools for Transformation Butanol producers seeking to transform the ethanol industry are employing a variety of production methods. Gevo Inc.â€™s method, shown in the diagram above, utilizes biotechnology to replace metabolic pathways in a robust yeast biocatalyst to produce isobutanol instead of ethanol. DIAGRAM: GEVO INC.
40 | Ethanol Producer Magazine | MARCH 2012
Can biobutanol provide ethanol producers new paths towards diversification? By Kris Bevill
Given the steady stream of adaptations and advancements made by ethanol producers just since the renewable fuel standard was updated in 2007, attempting to pinpoint one 12-month period as particularly transformational could be futile. Consider, however, the nonexistence of a blenders tax credit for the first time in 30 years, combined with an industry at a blendwall, and it doesnâ€™t take much crystal ball gazing to predict that 2012 could be the turning pointâ€”the year the industry begins to transform into its future self. Diversification has been a topic of interest for some time now, but this is the year producers need to move toward incorporating alternative revenue streams into their operations. High on the list of contenders is biobutanol. It offers producers the opportunity to squeeze another product out of existing corn-ethanol facilities or to entirely convert their operations to produce a fuel with chemical and transportation applications. Itâ€™s not likely to push ethanol out of the transportation fuels market anytime soon, if ever, but it has potential as a gasoline additive or in the chemicals market. Several companies poised to aggressively court the ethanol industry this year say the time is right for ethanol producers to welcome this four-carbon fuel into their stable and transform their facilities from ethanol plants to advanced fuel biorefineries.
Rather than building free-standing facilities, several biobutanol companies would prefer to piggyback on the existing infrastructure, workforce and feedstocks offered by ethanol producers. The BP and DuPont joint venture, Butamax Advanced Biofuels LLC, has formed an Early Adopters Group for existing ethanol producers who sign on
MARCH 2012 | Ethanol Producer Magazine | 41
PHOTO: GEVO INC.
ing masters ICM Inc. to also take the total retrofit approach. Gevo expects to begin producing isobutanol this summer from a 22 MMgy corn-ethanol plant in Luverne, Minn., purchased in 2010. Once the retrofit is complete, the facility will have a butanol capacity of 18 MMgy, but isn’t expected to approach full-scale production until the second half of this year. Gevo has also signed a joint development agreement with South Dakota’s 50 MMgy Redfield Energy LLC and is retrofitting that facility to produce 38 MMgy of isobutanol when complete. Gevo anticipates beginning production there sometime in 2013. U.S.-based Green Biologics Inc., the newly announced merger between Ohio’s butylfuel Inc. and UK-based industrial biotechnology company Green Biologics Ltd., is taking a slightly different approach to the ethanol-butanol relationship. It is seeking to partner with ethanol producers to either retrofit their plants or to bolt its n-butanol proFirst Converter Gevo Inc.’s first commercial-scale butanol production facility is a former ethanol duction capabilities onto existing facilities. The company plant located in Luverne, Minn. The facility is expected to begin production this year. had not yet announced ethanol partners as of late January but Joel Stone, president, North American, and global vice to collaborate on isobutanol retrofits. Its first taker was Lamberton, president of engineering, says several ethanol producers have shown a Minn.,-based Highwater Ethanol LLC, which signed a letter of intent in December to potentially retrofit its 50 MMgy corn ethanol plant. “high degree of interest” in the concept because it would allow ethaCalling biobutanol “the next step in biofuels,” Highwater CEO Brian nol production throughout the bolt-on process, rather than requiring Kletscher said shortly after the announcement that butanol has the a temporary shutdown for retrofits. Ethanol producers will be allowed potential to be a drop-in fuel that can be utilized nationwide and will to determine what amount of ethanol and butanol output they would allow Highwater to remain a leader in renewable fuels production. His like from the finished plant. For example, a 100 MMgy ethanol plant company signed with Butamax because it offers new technology and could choose to produce 90 MMgy of ethanol and divert between the engineering resources necessary to complete retrofit operations, 10 and 20 percent of its corn intake to the butanol stream, lessening Kletcher said. It will be 2013 before retrofitting begins, but Butamax pressure on the ethanol blendwall and adding diversity to the plant’s revenue streams, he says. suggests it could produce at a commercial scale in 2014. The co-located butanol facility would license Green BiologColorado-based Gevo Inc. has partnered with ethanol engineer-
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ics’ technology, which Green Biologics would own, operate and serve as marketer. Stone says that is another benefit for ethanol producers if they participate as an investor. They don’t have to learn a new market or product; they’d be required only to supply feedstock and serve as the host facility. Green Biologics is also exploring building its own facilities, but Stone says they will be aggressively courting ethanol producers to host butanol facilities first.
Developers are more than willing to share the benefits of butanol compared to ethanol. While the ethanol industry is still struggling to make E15 legally available for sale, butanol can currently be blended at up to 12.5 percent by volume. At this level, it is defined under the Clean Air Act as being “substantially similar” to gasoline, which means it can
be used in gasoline infrastructure, including pipelines and retail dispensers, without modifications. Additionally, because the Energy Independence and Security Act of 2007 declared that isobutanol has 30 percent more energy than ethanol, producers generate 1.3 renewable identification numbers (RINs) per gallon of isobutanol compared to 1 RIN per gallon of ethanol. One of ethanol’s most well-known, albeit not insurmountable, flaws is its affinity for water. This phase separation issue is nonexistent for butanol, according to companies like Gevo, which, in a white paper addressing many of the differences between the two fuels, stated that butanol acts more like a hydrocarbon when introduced to water in a fuel blend, thereby avoiding any dilution of the gasoline’s octane and reducing or entirely eliminating any operational issues related to water content.
PHOTO: GREEN BIOLOGICS LTD.
Existing Example Green Biologics Limited is currently retrofitting three facilities in China to produce n-butanol using a variety of feedstocks.
MARCH 2012 | Ethanol Producer Magazine | 43
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44 | Ethanol Producer Magazine | MARCH 2012
IMAGE: GEVO INC.
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What’s the Catch?
For all of its benefits, there are also multiple issues left to be resolved before butanol can stake its claim as being a widely used gasoline additive. For example, as ethanol producers know, the U.S. EPA allows fuel containing 9 to 10 percent ethanol to exceed the 9.0 psi Reid vapor pressure (RVP) limit by 1 pound during summer months. Because the waiver strictly applies only to E9 or E10 blends, if butanol-blended fuel were to be added to a storage tank containing E10 in the summer months, diluting the overall ethanol content to less than E9, the fuel would violate EPA regulations if the RVP is greater than 9.0 psi. This puts would-be suppliers of butanol blends at a disadvantage because they would likely need to store that fuel and ethanol-blended fuel in separate tanks in order to avoid potential compliance issues. “If I go to my local fuel station and buy a truckload of E10 and the next day I buy a truckload of B12.5, I cannot pour that truckload of B12.5 into the E10 that’s already in the tank because it will reduce the volume of ethanol in the tank to less than 9 percent,” explains Glenn Johnston, vice president of regulatory affairs at Gevo. “Thus, even though the two fuels separately are perfectly legal in commerce, when you mix them together in an underground storage tank they would be illegal. It’s a complexity in the compliance that we are working with EPA to resolve. It
has nothing to do with the emissions criteria or the cleanliness. It has everything to do with how the EPA enforces the fuel and fuel additives underneath the Clean Air Act in commerce.” Butanol producers also need to register their fuel with the U.S. EPA before it can be introduced for sale in the marketplace. The registration process requires the producer to disclose the fuel additive’s chemical composition and to describe an analytical technique that can be used to detect the presence of the additive in the fuel. The applicant must also complete various tests to analyze evaporative emissions, to screen for potential health effects from emissions and to provide other scientific information related to the fuel. In October 2010, Gevo successfully registered its product as a small business and is working now on completing the Tier I and Tier II registration with the EPA. Butamax says it expects to complete the registration process on a timeline consistent with its plans to produce commercially in 2014.
Not Just a Fuel
Finally, butanol producers must overcome the cost of production in order to be a competitive player with ethanol. As with every second-generation biofuel, production costs are currently higher than for first-generation ethanol. However, while ethanol’s mainstay is in the transportation fuels market, butanol
producers can easily venture into the chemicals market, where the cost of production suddenly becomes much more manageable. As a testament to this, Gevo has committed most of its production capacity for the next two years to Sasol Chemical Industries Ltd. Green Biologics will initially sidestep the fuels market entirely in favor of chemical production. â€œWhy use butanol for a fuel when it can be marketed as a higher value chemical?â€? asks Stone. He says that while butanol holds great potential as a fuel, it still needs to overcome some of the same regulatory issues ethanol faces. Meanwhile, the chemical applications are well-known and represent a 10 billion-pound-per-year market for the nbutanol Green Biologics plans to produce. So, as is the case for many potential biorefiners, Stone says it is a wiser choice to produce butanol for chemical markets initially so that plants can capture the most profit while working to drive the price of butanolfor-fuel production down to more competitive levels. This will allow entry into the biofuels markets when demand and economics are matched, he says.
Gevo believes that while chemical markets represent a profitable venture for butanol production, there is also great potential for it to be used in segments of the transportation fuel market that currently hold issue for ethanol, namely marine and small engine equipment. Not all of Gevoâ€™s initial production volume will be sold to Sasol because it wants to have enough to also seed the marine fuel market and other specialty applications that have tested well using butanol. â€œI would anticipate that could be one of the first markets youâ€™ll see us inâ€”a local marina, if you willâ€”supplying an option for the marine market that would be better than their option of ethanol-blended gasoline,â€? says Brant DeMuth, executive vice president of strategy and corporate development for Gevo. â€œThe marine group has been very supportive because of their work on testing our blendstocks with E15 and the better performance, quite frankly, that they got out of isobutanol-blended fuel.â€? Gevo supplied isobutanol for testing
on marine and small engines last fall that showed promising results. The National Marine Manufacturers Association and the Outdoor Power Equipment Institute both stated isobutanol-blended fuel performed better in those types of engines than E15 and indicated it could be a viable biofuel alternative.
Despite the regulatory hurdles and initial cost to produce, butanol producers are confident that the ethanol industry will agree its value is worth the effort. Stone even envisions a production model that would allow ethanol plants to produce their own 100 percent, bio-based E85 by replacing petroleum-based gasoline with butanol. â€œIf you have a bolt-on butanol plant and you produce butanol using 15 percent of the corn volume, you could produce E85 with butanol and sell it directly to your regional distributor,â€? he suggests. Gevo executives say ethanol producers will likely relish the opportunity to produce a product that can be sold to markets without the same volatility experienced in the ethanol market. DeMuth says that was a selling point for the Redfield, S.D., plant. â€œTheyâ€™ve made good money in good times and theyâ€™ve lost money in the challenging times, despite being one of the best operating plants in the U.S.,â€? he says. â€œThey looked at the isobutanol opportunity to reduce the volatility of their profit margin, but also to expand the profit margin. Even when split with Gevo, they have the opportunity to make more money selling into that specialty chemical market than they would otherwise have had selling into the fuel market. It opened up new markets, potentially higher margins and, equally importantly, less volatility of those margins, which is why they agreed to the joint venture terms that we have with them.â€? Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 email@example.com
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Octane Lovers New testing is proving that fuel efficient engines, such as General Motors Co.â€™s direct injection, turbocharged Ecotec engine shown here, are able to perform to their greater potential when operated on higher octane fuels. PHOTO: GENERAL MOTORS CO.
46 | Ethanol Producer Magazine | MARCH 2012
Ethanol’s high octane rating may be the ticket for meeting escalating fuel efficiency standards in engines By Kris Bevill
In November, the U.S. EPA and the National Highway Traffic Safety Administration jointly announced the next step in the Obama administration’s plan to improve vehicle fuel efficiency and significantly reduce emissions over the next 15 years. The proposed Corporate Average Fuel Economy standards and greenhouse
gas (GHG) emissions standards unveiled by the agencies, which reportedly had the support of major automakers and environmental groups, would steadily increase fuel efficiency requirements for light-duty truck and passenger cars from an average of 34 miles per gallon (mpg) in 2016 to more than 50 mpg in 2025 and reduce allowable emissions to 163 grams of CO2 per mile in model year 2025 vehicles. To meet the more stringent fuel standards, the NHTSA and the EPA said they believe engineers will continue to make advancements in vehicle technologies, including engines and transmissions, but also in areas such as vehicle weight reduction, aerodynamics and air conditioners. “NHTSA’s and EPA’s technology assessment indicates there is a wide range of technologies available for manufacturers to consider in improving fuel economy and reducing GHG emissions,” the NHTSA stated. “The proposals allow for long-term planning by manufacturers and suppliers for the continued development and deployment across their fleets of fuel-saving and emissionsreducing technologies.” Automakers have already begun to roll out engine technologies that can be used to both improve efficiency and reduce emissions. General Motors Co.’s Ecotec engine and Ford Motor Co.’s Ecoboost engine, for example, feature turbocharging and direct fuel injection, which enable the smaller engines to consume less fuel than their
MARCH 2012 | Ethanol Producer Magazine | 47
Estimated Average Required Fleet-Wide Fuel Economy (mpg) under Proposed FootprintBased CAFE Standards Base Passenger Cars Light Trucks Combined Cars & Trucks
37.8 28.8 34.1
40.0 29.4 35.3
41.4 30.0 36.4
43.0 30.6 37.5
44.7 31.2 38.8
46.6 33.3 40.9
48.8 34.9 42.9
51.0 36.6 45.0
53.5 38.5 47.3
56.0 40.3 49.6
More and Less When considering projected vehicle sales, the National Highway Traffic Safety Administration estimates that passenger cars should have an average required fuel economy of 56 miles per gallon by 2025. SOURCE: NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION
predecessors while still offering similar performance. This type of engine improvement is a definite step in the right direction, but will it be enough to meet the stringent requirements proposed for 2025? With this in mind, ethanol industry stakeholders recently funded two separate studies to examine ethanol’s true potential as a fuel and how it might be used to assist automakers in meeting national fuel efficiency and emissions reductions goals.
Recently, the Renewable Fuels Association contracted automotive engineering group Ricardo Inc. to evaluate engine technologies and to explore the potential role biofuels has in these changes, focusing specifically on how higher-octane fuels can contribute to increased efficiency in newly designed engines. “We saw the converging vehicle-specific regulations as an issue that is not simply solvable
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1 | Ethanol Producer Magazine | MARCH 2012 48 20340_3_premps_ethpro.indd premps
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through new vehicle engineering,” says Kristy Moore, the RFA’s vice president of technical services. “We believe these regulations will force a change to the fuel as well as changes to the vehicles.” Ricardo’s independent testing reinforces that opinion, showing that higher octane fuels can play a valuable role in improving fuel efficiency and, as a direct side effect, also reducing emissions. To complete the study, Ricardo researchers first plotted what they believe is a roadmap of engine technology improvements for the next 15 years. They determined that while electric vehicles will continue to be a popular concept, nearly all of the vehicles in the U.S. in 2025 will still be powered by some type of liquid fuel-fed engine. “They [electric vehicles] may be very high profile, but in terms of actual number of new vehicles sold, it’s going to be pretty small,” says John Kasab, chief engineer and Ricardo and author of the RFA’s report. “The majority of vehicles are still going to have internal combustion engines and almost certainly have gasoline, spark-ignited engines in them. They may be in hybrids, they may be in advanced conventional vehicles, but people are still going to go to a fueling station, they’re still going to have to put liquid fuel in the tank.” Ricardo further found that while some of the engine technologies being developed by automakers are neutrally impacted by higher-octane fuel usage, others—such as direct injection and turbocharging—readily lend themselves to the use of fuels with octane ratings greater than 87, which is the standard rating for unleaded gasoline today. This is due to several factors. Boosted engines such as the Ecoboost or Ecotec are designed to allow for increased air pressure to be pumped into the cylinder. This improves the efficiency of the engine but it also makes the engine thirsty, essentially, for higher octane, Kasab says, because while higher compression ratios improve fuel performance, they can also cause the engine to reach its knock limit (the point at which uncontrolled combustion occurs) more often. Higher octane fuels can push out the knock limit of engines, allowing them to run at higher speeds and higher loads before knock occurs. Ethanol specifically offers another benefit in that it has a higher la-
tent heat of vaporization, meaning that the fuel can absorb more heat from the combustion, therefore the engine runs cooler than it would when using other fuels. Thus the compression ratio of an engine can be increased to compensate for the difference in combustion temperature and allow the engine to run at the original temperature. Rod Beazley, Ricardo’s project director, engines, says his group’s research proves that to meet future fuel efficiency and emissions requirements, vehicles will likely require a combination of engine technology improvements and higher-octane fuels, whether it be ethanol-blended fuel or another high-octane fuel. “There is some low-hanging fruit in terms of fuel economy because for every unit increase in compression ratio, there’s a 3 percent fuel economy benefit,” he says. “And to increase your fuel compression, you need a higher-octane fuel.” This presents an interesting quandary for automakers, however, because while they are required to meet national fuel standards, they must also continue to design engines to operate on the fuels available to consumers. And high-octane fuels are not currently widely demanded on the market. “They can’t develop an engine for a higheroctane fuel if it’s not available in the field,” Beazley adds.
The Optimum Number
Ricardo did not attempt to determine which ethanol blend would be ideal for use in technologically advanced engines, but another year-long test recently completed by powertrain systems developer AVL Powertrain Engineering and funded by ICM Inc. and the National Corn Growers Association came a little closer to identifying that optimum number. For this research, AVL engineers added various ethanol percentages to base fuels and tested them in three fuel delivery systems— the port injection system commonly used in vehicles today, a direct injection system and a system that simulated testing procedures for current octane test measurements—to accurately evaluate how ethanol performs at specific blends. ICM’s research data also showed that higher-octane fuels, such as ethanol, can be beneficial in meeting fuel efficiency requirements, but further concluded
that midlevel ethanol blends offer more value than has previously been estimated, particularly when used in direct injection fuel delivery systems. “The findings of this study further support our existing understanding of ethanol in that they [the ethanol industry] demonstrate its inherent ability to meet our nation’s need for an affordable, sustainable domestically produced fuel source,” NCGA Ethanol Committee Chairman Chad Willis said in a statement. “NCGA, together with the states that also contributed, funds studies such as this to add to the data on biofuel. We do this not only as proponents of corn farmers, but also as citizens concerned with finding the innovative solutions that will help our nation improve the economy, environment and national security.” ICM’s full report will be released in April at the annual Society of Automotive Engi-
neering conference, but early details indicate that E30 may be the so-called sweet spot for octane performance. A summary released by ICM noted that it will be “critically important” for vehicles to operate at higher loads to obtain higher efficiencies and meet future fuel standards. The data supports that intermediate blends such as E30 can play an important role in meeting those standards, according to the summary. “This new testing data has proven to be a great tool to illustrate how much performance can be achieved by simply adding ethanol to gasoline,” says Steve Vander Griend, head of ICM’s research and development of ethanol engines. “We are seeing a significantly higher value for ethanol and use of intermediate blends to support the changing needs of the automakers and the new fuel efficiency standards that have been issued.” Vander Griend says ICM is already work-
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‘There is some low-hanging fruit in terms of fuel economy because for every unit increase in compression ratio, there’s a 3 percent fuel economy benefit. And to increase your fuel compression, you need a higher-octane fuel.’ —Rod Beazley, project director, engines, Ricardo
ing on the second phase of testing, which will further demonstrate the value of high-octane ethanol in new engines as well as focus more attention on emissions aspects and validate actual mileage per gallon. He expects that phase of research to be complete by the end of March. Moore says the RFA will also continue to fund research dedicated to identifying optimal ethanol blends.
50 | Ethanol Producer Magazine | MARCH 2012
So far, no study has attempted to determine exactly which octane rating would be the preferred step up for fuel-efficient engines. It is generally believed this is a question best left for the original equipment manufacturers (OEMs) to answer. In a statement provided to EPM, GM says it supports the need for higher-octane fuels in concert with other manufacturers through the Alliance of Automobile Manufacturers, a group that represents 80 percent of new car sales in the U.S. and includes members such as Ford, GM, BMW, Mercedes-Benz and Toyota. GM further stated that it supports higher-octane fuels, including ethanol, because of their favorable impact on fuel economy. “Gasoline-ethanol blend fuels can be formulated to have octane characteristics that are very desirable for displacement-reduced or turbo-downsized engines,” says Mark Maher, GM’s executive director of powertrain vehicle integration. “Additionally, these blends have combustion chamber cooling characteristics that, when combined with direct injection technology, are helpful to enable marginally higher compression ratios, which improves engine thermal efficiency. The ability to capitalize on this opportunity in production vehicles depends upon alignment of certification fuels with in-use field
fuels as well as with stringent emission and fuel economy regulations.” In testimony delivered to the EPA earlier this year at a hearing on the proposed CAFE and emissions standards, Mitch Bainwol, president and CEO of the Alliance of Automobile Manufacturers, said it will ultimately be the consumers who decide if more fuel efficient vehicles are worth the additional costs. Future fuel prices are difficult to predict, he said, and fuel economy often ranks low on the consumer’s list of priorities when selecting a new vehicle. He recommended that the agency seek out peer reviews to determine whether the costs of advanced engine technologies are declining as expected, evaluate consumer response to fuel prices and determine whether liquid fuels can support the fuel-efficient technologies being introduced by engine designers. “Ultimately, consumers should decide what best meets their needs,” Bainwol said in his testimony. “Vehicles that run on gasoline, diesel, biofuels, electricity, hydrogen and natural gas will all play a role in improving fuel efficiency and reducing greenhouse gas emissions.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 email@example.com
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Research shows NASCAR fans are:
89 percent more likely than nonfans to believe hundreds of thousands of permanent jobs have been created in the U.S. as a result of the production of ethanol. 86 percent more likely than nonfans to support the use of ethanol blended with gasoline to fuel NASCAR race cars. 42 percent more likely than nonfans to support the use of ethanol blended with gasoline to fuel their own cars. 41 percent more likely than nonfans to support the use of ethanol blended with gasoline to fuel cars on the road today to increase U.S. energy independence. 8 times as likely as nonfans to closely associate NASCAR with being “environmentally responsible.” 50 percent more likely than nonfans to indicate their household is “very green.” SOURCE: NASCAR
PHOTO: JERRY MARKLAND/GETTY IMAGES
52 | Ethanol Producer Magazine | MARCH 2012
Connection NASCAR looks back on a year of E15 as the 2012 season kicks off in February By Holly Jessen
The basic message of 2011 was simple: If E15 is good enough for NASCAR racecars, it’s good enough for street cars too. Backing up that message is the fact that NASCAR made no changes to the engines and very few changes to the vehicles overall to prepare for its switch from unleaded gasoline to E15, says Mike Lynch, director of green innovation for NASCAR. The only change to NASCAR racecars from 2010 to 2011 was a new fuel cell. Basically, racecars don’t have a hard gas tank like passenger cars—they use a bag supported by a structure. As a precaution, this container was swapped out for an alcohol-compatible component. “That’s not an engine performance component at all, it’s literally the gas tank,” he says. “Otherwise, under the hood, we were all good with where we were before.” The decision to make no changes was based on extensive testing over about a year and a half. NASCAR first tested E15 in engines on a dynamometer (dyno) at multiple engine shops on Dodge, Chevy, Ford and Toyota engines. Next, drivers put E15 through its paces during thousands of miles of performance and endurance testing on racetracks. Every test was double-and triple-checked to make absolutely certain nothing would go wrong before NASCAR committed to making the switch to E15, Lynch says, adding that testing wrapped up right before the October 2010 announcement that NASCAR and American Ethanol were entering into a three-year partnership, including the switch to E15. Looking back on a year of more than a million miles fueled by E15, NASCAR couldn’t be happier, Lynch tells EPM. Thanks to ethanol, racecar drivers saw a 5 to 10 percent increase in horsepower, depending on the race and the conditions. And, although critics often gleefully point to the fact that ethanol has one-third the energy density of gasoline, NASCAR really didn’t see a big loss in mileage, Lynch adds, saying the decrease wasn’t anything of note. “One of the things that makes it conducive to
MARCH 2012 | Ethanol Producer Magazine | 53
PHOTO: JARED C. TILTON/GETTY IMAGES
Need for Speed Clint Bowyer drove the No. 33 Chevrolet car in 2011 and was a spokesperson for American Ethanol. This year drivers Kenny Wallace and Austin Dillon will serve as spokesmen for American Ethanol. Wallace served in the same role last year as well.
ethanol, without any adjustment whatsoever, is the higher compression ratio than would be typical for any street car,” he says. “It’s a 12 to 1 compression ratio, which is really key to taking advantage of the higher octane characteristics of ethanol and an ethanol blend.” NASCAR is proud to have American Ethanol as partnership and proud to help
spread the positive message about ethanol’s impact to jobs and energy independence, Lynch says. “Everyone in NASCAR leadership couldn’t be more passionately on board with this partnership. NASCAR green is here to stay and American ethanol as a part of it is here to stay as part of it for the long term.” It’s a message NASCAR fans have
strongly identified with too. Known for their loyalty to the sport, which includes brand loyalty to the logos displayed everywhere—on the cars, on driver clothing and around the track—NASCAR fans are showing signs of supporting ethanol in increasing numbers. [continued on page 56]
PERFORMANCE Since the 1980s, most car engines have used fuel injection. Not so for NASCAR racecars, which have used carburetors since 1949. This season, all Sprint Cup Series race cars will have transitioned to fuel injection—a technology NASCAR says will work well with E15. “Fuel injection is just going to make it an even stronger story,” Lynch tells EPM. Fuel Injection means maximal performance for minimum fuel use. It also works hand-in-hand with E15 to reduce greenhouse gas and particulate emissions. “You get the best intersection of performance and environmental friendliness that you can get, in terms of the current state-of-the art engines,” he says. “We’re expecting fuel injection to be great actually for E15 and the data on that will roll out over the year.” NASCAR has three partners in rolling out fuel injection—McLaren Electronic Systems, Freescale Semiconductor and Bosch. Basically, says Steve Nelson, Freescale’s director of marketing for the Americas, it’s about bringing electronics into NASCAR racecars. While some might wonder why this wasn’t done years ago, the truth is carburetor technology worked just fine in the past. “A racecar is a very rarified beast,” he says. “It does one thing—it wants to go fast—and anything that doesn’t help it do that, it’s not interested in. It’s not worried about air conditioning, it’s not worried about the radio.” Computerized fuel injection will allow for rapid and real-time adjustments that will add up to reductions in emissions and increased fuel efficiency. “The more electronics you put in, the more control you have,” he says. On the fuel-efficiency side, it’s hard to give exact numbers. Carburetors are efficient enough when a racecar is running full out, especially on a long track, Nelson says. Fuel-efficiency gains will be most noticeable on shorter tracks.
Transition to Fuel Injection
With fuel injection, fans won’t see spurts of flame shooting out of the exhaust when drivers lift off the throttle, especially when they enter the pit area. While the flames may look exciting, it’s a signal of inefficiency. “Air is still flowing at a very high rate through the engine, so what it is doing is pulling gas through the engine, and that’s unburned gasoline that’s coming out at the exhaust pipe,” he says, adding that with fuel injection, fuel flow stops instantly as drivers lift off throttle. All this fits in well with NASCAR’s greener image, of which ethanol is a major part. “The fuel injec-
tion will help reinforce that green message,” Nelson says. “At the end of the day it’s motor sports—burn the fuel, win the race—and yet, this is another piece of that tie-in.” Second, fuel injection will help connect racecars with the passenger vehicles fans drive every day. “The customer sees ethanol at the pump, they see ethanol at the track, and now they see fuel injection at the track,” he says, adding that the electronics in NASCAR Sprint Cup Series racecars are the same as the ones that go into passenger cars.
MARCH 2012 | Ethanol Producer Magazine | 55
[continued from page 54]
PHOTO: JOHN HARRELSON/GETTY IMAGES
That was proven in the results of NASCAR research to gauge changing attitudes about ethanol and the environment. “American ethanol—so corn ethanol—is good for the environment, it serves the environment, it contributes to major job creation in the U.S., and helps us strengthen our energy independence,” Lynch says. “On those three points, our fans definitely understand that.” Three years ago, the result of the re-
Boosting Ethanol Austin Dillon, a 2012 spokesperson for American Ethanol, sits in a NASCAR racecar.
search was nearly identical for both fans and nonfans. Follow-up research released at the end of 2011 showed a radical shift, with NASCAR fans showing much greater support for environmentally responsible behavior and ethanol. Lynch credits NASCAR’s focus on making the sport greener, including the switch to E15, for this shift. “They know— and this is a trust that has been earned over 60 years in the sport—that NASCAR would never introduce something that we haven’t done our homework on and didn’t believe was the right thing to do for a number of reasons, including for our country,” he says. Of course, NASCAR isn’t the only place people are hearing the environmentally friendly message. It can be found in many places, such as children’s movies and the green efforts of some large corporations. Lynch asserts, however, that NASCAR and NASCAR fans are taking it even further. “With the sport going in a green direction and ethanol being a major aspect of that, fans are going with it too,” he says. “The thing is
that they are going to it to a much greater degree than nonfans.” That’s not a small thing, considering that 20 percent of the U.S. population identifies themselves, on some level, as fans of the sport. That adds up to more than 65 million people. Avid fans make up about 20 percent of that group, about 12 to 15 million people. “Our fan base is absolutely enormous,” he says. “So when you talk about fans versus nonfans, and our fans moving in a direction, you are talking about a massive number of people having the benefit of fact-based education and exposure about what we are doing.” Author: Holly Jessen Associate Editor of Ethanol Producer Magazine (701) 738-4946 firstname.lastname@example.org
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56 | Ethanol Producer Magazine | MARCH 2012 CAS-190L.indd 1
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58 | Ethanol Producer Magazine | MARCH 2012
raining for rains
A 130-ton tank car is a unique beast that demands its handlers have proper safety knowledge By Kris Bevill
The risks of transporting millions of gallons of flammable ethanol around the country by rail or truck are well-known. Groups like the Emergency Ethanol Response Coalition were formed years ago to educate first responders on best practices for ethanol-related incidents. Accidents are rare, but they do happen. For the 200 or so ethanol plants producing more than 13 million gallons of fuel annually, however, the risk of injury or incident related to transporting ethanol begins well before the train ever leaves the plant. A couple of decades ago, railroad carriers typically extended their services to include car movement and track maintenance at private rail yards. But as railways have become busier and more unit trains are used, it’s no longer economical for carriers to provide crews to move cars or inspect track on private property. For ethanol plants, this means that plant personnel are now performing railroad duties, usually with little or no safety training. “Thirty years ago, the industry didn’t do a lot of unit shipments, so it was more advantageous for the railroads to operate within the plant and move the cars for the shipper,” says Ken Hay, a retired 37-year veteran of Union Pacific Railroad who spent most of his career as an operations supervisor and who currently serves as a trainer for Rail Safe Training Inc. “With more unit trains, the railroads have decided it’s easier to drop off the cars and leave the handling up to the shipper. It takes two days to load a unit shipment, so it’s unfeasible for a railroad to have a crew there to move cars one at a time. So, the ethanol plant takes the responsibility.” Without some type of safety training, this practice invites mishaps. Addressing the fact that most ethanol plant employees possess agriculture-related skills as opposed to railroad experience, one industry observer jokes that the job of moving railcars at ethanol plants often gets doled out to the employee who has driven the biggest tractor. But a fully loaded, 130-ton tank car is no joke. It is a unique beast that demands its handlers have at least basic safety knowledge.
MARCH 2012 | Ethanol Producer Magazine | 59
The founders of Sioux City, Iowa-based Rail Safe Training created their company several years ago specifically for that reason. A group of long-time railroaders with first-hand knowledge of the dangers posed to ethanol plants and other industries operating private rail yards began to become concerned that, without an opportunity for safety education, it would be only a matter of time before a major incident occurred at one of the country’s ethanol plants. They contacted Brian McNaughton, who contributed a career’s worth of curriculum development experience to the project. Using Class 1 railroad rules and regulations as a base, the company’s founders developed a basic education curriculum about the hazards and procedures needed to operate a rail yard safely. To date, Rail Safe has provided safety training to about a dozen ethanol companies, several of which operate multiple production facilities. Originally a three-day program, Rail Safe has condensed the training into a oneday course because when ethanol plants are running at full capacity, producers can find it impossible to replace employees for several days. The company is considering offering online training, which would allow plant personnel to complete the training at a more flexible pace. For first-time participants, the training course begins with a consultation to iden-
tify the plant’s “pain points,” or specific areas of difficulty within the yard operations. “We try to target the training to the needs of the plant,” McNaughton says. “Some things almost always need to be addressed at every plant, but you need to hit the target of the customer.” Once the focus of training is identified, a curriculum is designed and plant employees are treated to a four-hour educational course followed by a hands-on demonstration of procedures introduced during training. Some plants sign on for annual safety courses, typically four hours in length, to refresh existing employee skills and train new hires. “Continuous improvement is our goal,” McNaughton says.
Areas for Improvement
Two of the most common mistakes made in rail yards by nonrailroad personnel, according to Rail Safe experts, include failing to set hand brakes on rail cars and “shoving,” which is the railroad equivalent of backing up a vehicle without first checking the blind spot for obstacles. Both of these mistakes are easily preventable, but without proper safety training, personnel may simply not know the risks they are taking. Bill Fry, a Rail Safe consultant with more than 40 years experience at Burlington Northern Sante Fe, points out that railroad employees are required to take extensive training before they are allowed on-
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60 | Ethanol Producer Magazine | MARCH 2012
to the tracks, but private industries are not required to subject their employees to any type of rail training. “Private industries are trying to run a business and a railroad,” he says. “It takes a lot of learning and care to do that extra stuff every day. Are they going to have more accidents if they don’t [expose employees to training]? Probably.” Hay says he has spotted a handbrake error at every ethanol plant he’s visited, but stresses it’s not necessarily due to negligence on the part of the plant personnel. More likely, they simply don’t know any better. To be fair, he also often notes a failure by trained railroaders to engage handbrakes on rail cars as well. Hay believes this simple step often gets overlooked because cars appear harmless when they’re motionless on the track. But McNaughton points to two incidents at ethanol plants that could have been avoided had the employees set the handbrakes. In one scenario, a lone car rolled out of the plant’s rail yard and onto the main line where it derailed. Fortunately, the rogue car did not collide with other cars on the track, but the derailment still forced a temporary shutdown of the ethanol plant. Another, more extreme, situation involved multiple cars parked at the top of a small hill and left for the evening. Overnight, wind speeds increased enough to nudge the cars down the hill, where they eventually derailed, ruining a portion of the
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track and causing hundreds of thousands of dollars in damages. Neither of those real-life examples resulted in human injury or death but in a worst-case scenario, a slow-moving rail car could easily kill a person. A little-known component of rail liability, according to Rail Safe experts, is that even if an injury or death does not occur on private property, a railroad carrier can, and will, sue a company for assistance in compensating a railroad employee for damages received as a result of a private company error. “It’s amazing how at risk you are,” McNaughton says. Ethanol plants function on thin margins and the cost of a voluntary training course may not immediately appear to be money well spent, but if it prevents an incident from occurring, the training is worth its weight in gold, according to McNaughton. “Just getting a crane to upright a tipped car costs twice as much as the training,” he says. “If the car is damaged, it’s even more expensive.” Another area now overlooked by railroad
carriers, but which carries dire consequences for the ethanol plant, is the track itself. Some railroads still offer occasional track inspections, but not all. Rail Safe includes track inspections in its services, which means someone physically walks every inch of track on the property. Fry and Hay say that railroad tracks at ethanol plants are generally in very good condition because they are relatively new. Railroad tracks can typically withstand heavy use for 50 years, so unless something has happened to jeopardize the integrity of the track, the chance of identifying a major issue is low. But minor problems such as missing or loose bolts or switches in need of recalibration can also be detected during track inspections and fixed before becoming a major problem.
To the ethanol industry’s credit, although many regulations and compliance measures have been placed on the producers’ backs, the industry overall still appears willing to
take additional measures to ensure it is operating safely and efficiently. Fry says that in his experience, he finds ethanol plant personnel to be friendly and accepting of the training. “They all know they need something,” he says. “They don’t always know what it is, but they know they need something.” Hay agrees and says feedback from the training he’s conducted has been positive. “A lot of what I get is: ‘Wow, I never thought of that,’” he says. McNaughton says the best compliment his company receives is a change in employees’ behavior after attending their safety course. “You can train people all you want, but they go back out to their job and they do it the way they’ve always done it … so to notice a change in behavior means they have become more aware of the situation.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 firstname.lastname@example.org
Total Cost Per Gallon: The True Measure of Success
Finding the sweet spot requires a holistic view of optimization By Jason M. Blake
Lowering a plantâ€™s total cost per gallon to the optimum level is a daunting task, but it is possible already today. The key is finding the optimal sweet spot. For each and every cellulosic ethanol plant there is a unique sweet spotâ€” that one specific point where all its parameters converge flawlessly to attain the lowest total cost per gallon possible. Cellulosic ethanol plants that have mastered identifying and optimizing their process sweet spot have been able to obtain the financing they require and travel down the path to commercialization. Yet, the optimal sweet spot is not easy to find. A myri-
ad of variables must be skillfully balanced that take the right tools, a deep understanding of each variable and its synergies with others, and a holistic view of optimization. By utilizing this sweet spot mindset and methodology, itemized costs become less relevant as the spotlight is moved towards the total cost per gallonâ€”matched up against the expected selling price of the ethanol. In fact, focusing on reducing all input costs separately without recognizing the interdependencies among the variables could have the opposite effect of driving up the total cost per gallon and thus also the selling price needed to make
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the investment case bankable. Proper modeling allows us to understand the total cost drivers and tweak them to achieve competitive total cost per gallon.
Game of Trade-offs
Making ethanol from lignocellulosic feedstock is a game of trade-offs. Due to the relatively complex structure of biomass in its native feedstock form, it is, to a large extent, impervious to enzyme and microorganism attack, and pretreatment must be applied to open up the structure. The product stream that results from the chosen pretreatment often contains both physical and chemical characteristics that can prevent the enzyme proteins from catalyzing the depolymerization of the cellulose and hemicelluloses into monomeric
Model Analysis Every choice made in the cellulosic ethanol plant has ramifications later in the process. Cost modeling can simplify and expedite component accounting. SOURCE: NOVOZYMES
sugars, thus inhibiting further fermentation total solids loading, hydrolysis time, reaction temperature and mixing strategy. Although it into ethanol. The research and development team at sounds optimal, getting to 100 percent conNovozymes A/S has identified that modeling version is probably not the best case scenario. can play a key role in identifying and realizing The sweet spot model takes into account tothe lowest total cost per gallon. The focus of tal production parameters and optimizes in a the approach is on parameters such as plant holistic way (see Figure 1). design and construction, as well as process optimization to achieve targeted overall cost goals. The sweet spot approach facilitates an understanding of the many process variables and the synergistic effects they have on one another. This enables well-informed economic decisions to be made Figure 1 Beyond a certain level, higher conversion targets dramatically increase by utilizing a dynamic the cost to produce a gallon of ethanol. cost modeling tool. For processes with a homogeneous and Enzyme Key well-defined raw material (such as corn) going While enzyme cost is no longer one of to a single product (glucose), simple correlathe major cost components as it was in years tions based upon laboratory data can be used past, it is still essential to increase efficiency to point to the most economical process. For and lower costs for these key ingredients. the considerably more complex biomass-toThe newest product on this path from Noenergy process, cost modeling can simplify vozymes is Cellic CTec 3, a cellulase that unand expedite component accounting. This locks new ways to optimize pretreatment and complicated accounting allows for many fachydrolysis enabling plants to lower the total tors to change simultaneously and arrive at a cost per gallon to a level that is fast approachprocess cost for each combination of values. ing that of corn ethanol and fossil-based fuFor example, in the hydrolysis step alone, els. The new enzyme promises the following there are numerous factors to consider, some improvements: of the most relevant being: enzyme dose,
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â€˘ Significant reduction in a plantâ€™s total cost per gallon. â€˘ An improvement in hydrolysis costefficiency across processes and substrates. â€˘ Lower dose required. â€˘ Shorter hydrolysis time needed. â€˘ Consistent higher biomass conversion to sugar (with no glucose inhibition). â€˘ The possibility for higher total solids loading. â€˘ An opportunity to reduce pretreatment severity.
Finding Fiberightâ€™s Sweet Spot
Fiberight LLC, a developer of a conversion process for municipal solid waste (MSW) to biofuel, has been extensively collaborating with Novozymes for the past three years. The two companies focused on sharing R&D work and obtaining process optimization to specifically meet Fiberightâ€™s unique needs. Resulting pretreatment optimization found efficiencies throughout the process and brought down the total cost per gallon as well as the enzyme cost from $5 to $1 per gallon. With the performance improvement gained and the move to Cellic CTec3, Fiberight was able to reduce its enzyme dosing by 80 percent and at the same time increase its biomass conversion to glucose by 50 percent. Another key goal achieved was higher conversion yields on actual MSW biopulp material (75 percent on substrate with 60 percent cellulose), which has improved profitability and frees capital to make investments in other optimization efforts. Also, a move to milder Figure 2 Through strong collaboration, Fiberight and Novozymes have overcome challenges and, by combining process optimization and highpretreatmentsâ€”from a high performing enzymes, reduced enzyme dosage and increased yields leading to temperature process to simple the decision to build a demo-scale plant.
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jet cookingâ€”significantly improved energy efficiency and facilitated a redesign of the entire plant process. Fiberight has achieved the lowest total cost per gallon for its process, which has spurred the decision to upgrade its Blairstown, Iowa, demonstration plant to commercialization level in the first half of 2013.
Partnerships Enable Commercialization
Ultimately itâ€™s only total cost per gallon of cellulosic ethanol that matters, but reaching the absolute lowest possible level is extremely hard to achieve. Reducing total cost per gallon to a commercially relevant level required for scale-up, can only be achieved by skillfully balancing many variablesâ€”not the least of which is overall capital and enzyme costs. This process requires insights and decision making that only comes though close partnerships. This is the premise that Novozymes has been following for over a decade. Working together with partners to share the load, and in the process gaining the insights, the approach to partnering and the tools needed to enable our partners to move to commercialization ahead of the pack. Author: Jason M. Blake Global Director, Biomass Business Development, Novozymes email@example.com
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Patents are granted (US 7,927,491, US 7,014,768 and CA 2416690 and others) and pending in many other countries.
Big Producer Remigio Madrigal-Lugo stands by a specimen from an agave variety that produces stems of 150 kg with 27 percent sugar content and six years to harvest time. PHOTO: Chapingo Autonomus University
Researchers Evaluate Agaveâ€™s Potential for Ethanol
High-yielding varieties promise agave-based ethanol could surpass even sugarcane yields By Remigio Madrigal-Lugo and Alejandro VelĂĄzquez-Loera
Ethanol currently comprises in crop yield by country, as well 85 percent of global biofuel pro- as the efficiency of conversion. duction, with nearly 90 percent of Brazil has the highest ethanol yield per hectethanol production coming from are of 5,476 liters (585 gallons per acre), from just two producers, the U.S. and an average yield of sugar cane of 73.5 tons Brazil. Ethanol yield per hectare per hectare and a conversion efficiency of varies widely, due to differences 74.4 liters of ethanol per ton of feedstock. In the U.S., average corn yields of 9.4 tons per
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). 66 | Ethanol Producer Magazine | MARCH 2012
hectare and 399 liters-per-ton conversion efficiency produces 3,751 liters of ethanol per hectare, according to one 2007 estimate. Up to now, there has been no reported use of agave feedstock for ethanol production. In Mexico, most industries producing alcoholic beverages from agaves, such as tequila or mezcal, have seen successful production levels. In late 2007, the tequila industry reached a historic production of 292.1 million liters, of which 149.7 million was exported to more than 100 countries. The mezcal industry
Feedstocks for Bioethanol Feedstocks
Corn (USA) (1)
Sugar Cane (Brazil) (1)
Years to Harvest Time
Bioethanol production (liters per hectare)
KG of Feedstocks required to produce one liter of bioethanol Crop Yield (tons per hectare)
(1) Naylor et al (2007) Source: Remigio Madrigal-Lugo and Alejandro Velรกzquez-Loera
also achieved a record 500,000 liters. Other products manufactured from agaves include pulque and bacanora (beverages), inulin (a plant fiber used as a food additive) and fructose syrup. Agave used for tequila and mezcal is cultivated on a large scale in Mexico while other types are planted in smaller plots or on edges of fields. Agave plants are found in all kind of soils, from shallow and eroded with steep slopes to flatter lands with better fertility conditions. In the State of Jalisco, where most agaves are grown, the Tequila region has a 200-year tradition of cultivating blue agave. In this area, the altitude ranges from 800 to 1,360 meters (2,500 to 4,400 feet), the average annual rainfall is 1,340 millimeters (53 inches), the average temperature ranges between 22 and 26 degrees Celsius (71 to 79 degrees Fahrenheit). In the Los Altos region, another area of great importance for agave cultivation in Jalisco, the altitude ranges between 1,600 and 2,020 meters, and the climate is mild. The average annual rainfall varies from 1,420 to 1,500 mm, the average temperature ranges between 18 to 26 C. Plant populations can vary from 800 to 5,000 plants per hectare, although an average of 3,000 agaves per hectare are planted in commercial plantations. Sometimes seasonal crops such as corn and beans are sown between agave rows. Comprehensive control of pests, diseases and weeds is required and fertilizer is applied as needed. Mature plants
can be harvested at 6 to 12 years. Expert workers, called jimadores, use a long-handled blade to hand harvest the plants, cutting the stems first, then trimming the leaves to be left on the field while the stems are taken to the factory for processing. Statistical data on average yields per hectare for agave is not available, but in several meetings with agave producers, most agree that small producers and small industrialists producing their own raw material harvest agave heads that average 25 to 30 kilograms with 17 to 21 percent sugar content and harvest cycles of eight to 10 years, utilizing few agronomical practices. On the other hand, large tequila producers who raise most of their own raw material, harvest agave heads that average 40 to 55 kg with 24 to 27 percent sugar content and cycles of six to eight years to harvest time. These producers apply appropriate crop practices on their plantations. In visits with agave producers, we have admired pictures where technicians pose beside huge agave heads. Despite efforts by many, these magnificent plants with exceptional characteristics for high yields have not been reproduced by the traditional method of suckers. Instead, new methods are in development to develop high-yielding agave varieties from mother plants with characteristics of high weight of the stem or head, sugar content, age to maturation and architecture of the plant (which affects the yield). The MARCH 2012 | Ethanol Producer Magazine | 67
establishment of highly productive plantations from these new varieties promises to supply traditional agave markets as well as introduce agave as a competitive ethanol feedstock. As researchers in the Plant Science Department at Chapingo Autonomus University, we first worked on applying biotechnology techniques on the agaves starting in 1979. We developed an in vitro propagation protocol for henequen (Agave fourcroydes Lem.) and
initiated an in vitro germplasm bank. The first plantation with agaves reproduced in the laboratory was established in the State of Yucatan. In 1981, we continued the investigations with the agave for tequila (Agave tequilana W. blue agave) and the agave for mezcal (Agave angustifolia Haw.) and developed the specific protocols for their in vitro propagation. In 1989, we planted the first blue agave and agave for mezcal plots in the State of Jalisco, and six years
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Cereal Process Technologies Phone: 913-957-7525 Web: www.CerealProcess.com 68 | Ethanol Producer Magazine | MARCH 2012
later we harvested the stems and produced the respective alcoholic beverages. After years of research work and the observation of millions of plants, we have selected those agaves whose stems weigh from 140 to 213 kg, with 17 to 38 percent sugar content and a six-year harvest cycle. With the methodology developed for the agave germplasm bank, we have continuously kept plants under in vitro conditions for 30 years. The characteristics of these agaves when they have been grown in the field are equivalent to the original mother plants. Thus, it is possible to conserve agaves of these species with diverse outstanding characteristics in the germplasm bank for long periods of time. Another result of the applied methodology is the development of a variety of agave for mezcal that we are about to register in Mexico. The main characteristics of this agave variety are stems of 150 kg with 27 percent sugar content and six years to harvest time. The plant characteristics are presented in the comparison of ethanol production from corn, sugarcane and agave found in the table. An agave variety with stems of 150 kg and 27 percent sugar content, grown at a density of 3,000 plants per hectare and harvested in six years has a potential annual ethanol yield of 7,500 liters per hectare. This yield is highly superior to those reported for corn and sugarcane. Higher yielding varieties of agave still can be developed from elite plants seldom found in the plantations. Second-generation ethanol production from cellulose contained in leaves and the waste pulp of the agave stem will considerably increase the yield. Though yields from agaves raised by tequila and mezcal producers are not presently competitive with sugarcane and corn, we propose these high-yielding varieties in development could allow us to take advantage of this feedstock to produce tequila or mezcal and become a viable and competitive option for ethanol production.
Authors: Remigio Madrigal-Lugo Alejandro VelĂĄzquez-Loera Researchers, Plant Science Department Chapingo Autonomus University 01 (595) 95 21500 ext 6215 firstname.lastname@example.org email@example.com
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Supercritical Water Could Provide Greener Pathway to Corn Ethanol
High temperatures yield remarkable changes in waterâ€™s chemical reactivity By G. Graham Allan, John R. Di Iorio and Milo U. Zorzino
The utilization of supercritical water in the ethanol process could dramatically change both the corn starch and cellulosic processes, potentially simplifying the process, eliminating inputs and reducing energy inputs, even while using extremely high-temperature water.
The conversion of corn to ethanol presently involves 13 distinct steps starting with step 1, the complex planting and fertilized growing of the crop that is carried out by the farmer. The mechanical engineering activity of harvesting and kernel separation constitute step 2. The total harvested biomass amounts to roughly 9 tons per acre. Of this, only about one-third (7,110 pounds, at $7 per bushel or 13 cents per pound) of the corn moves forward
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to the ethanol facility as a source of starch for chemical processing. Therefore, about 6 tons of the low-value stalks, cobs and leaves produced by the farmer currently plays no role. Step 3 of the manufacturing process is reducing the physical size of the kernels for subsequent hydrolysis in the slurry tank, step 4; the jet cooker, step 5; and enzymatic liquefaction, step 6. After fermentation of the sugars generated from the kernels in step 7, the resultant acqueous ethanol produced is recovered from the beer in step 8 by distillation. The water in this distillate is removed with molecular sieves in step 9 and the anhy-
drous ethanol obtained is then denatured with gasoline in step 10. The economically mandatory processing of the stillage residues from the distillation system to yield dried distillers grain with solubles (DDGS, valued at about $220 per ton, or 11 cents per pound) is accomplished by sequential centrifugation, step 11, evaporation, step 12, and drying, step 13. Comparison of the energy requirements of each of these steps relative to the energy content of the total ethanol yield shows where attention should be focused if the overall process efficiency is to be significantly improved. A 2008 review by A.A. Peterson and colleagues in the journal Energy Environmental Science suggested that about 60 percent of total energy input is consumed by the liquefaction, distillation and DDGS preparation steps.
As an alternative to this traditional system, a new pathway based on the use of supercritical water, offers the promise of achieving reduction of this large energy input by virtue of the remarkable changes in the chemical reactivity of water observed when it is heated to above a temperature of 374 Celsius (705 degrees Fahrenheit), discussed in a 1999 paper by P.E. Savage published in Chemical Reviews. For example, Japanese scientists S. Saka and T. Ueno showed in research published in
1999 that cellulose is transformed into glucose in yields that are almost quantitative in a few seconds, without the need for acid catalysis. Other polysaccharides, of course, will behave similarly. Waxy and oily esters will also be rapidly cleaved so that the kernels may not need to be milled at all and the associated equipment and energy costs thus avoided. An additional energy-saving consequence of the exposure of the whole kernels to supercritical water will be that the slurry tank with enzyme addition, the subsequent jet cooking and liquefaction will all become superfluous. The subsequent ancient fermentation of step 7 with its inherent inefficiencies should remain substantially unchanged, except for the fact that the amount of the incoming sugars will be augmented since the precursor starch will have been completely hydrolyzed by the supercritical water so that none of the starch is wasted in the generation of nonfermentable oligomers. These changes will reduce the energy input associated with the diminished amount of material going through the centrifugation, evaporation and drum drying procedures needed to obtain DDGS solids that have a market value that is actually less than the original feedstock corn kernels.
In addition to these energy-saving advantages, the aid of supercritical water can also be invoked to utilize the 6 tons per acre of biomass grown at the same time as the corn kernels. The polysaccharide content of the stover will be hydrolyzed to sugars available for fermentation, but what about the lignin content? Lignin can be visualized as a mass of individual aromatic rings joined by nonaromatic linkages, as described by J. Urquhart in a paper in Chemistry World 2011. At short reaction exposures, supercritical water does not affect aromatic rings but does cleave the inter-ring linkages. As a result, the giant lignin macromolecule is converted into a mixture of low-molecular weight phenols, as was shown in research published in 2002 by K. Ehara, S. Saka and H. Kawamoto in the Journal of Wood Science. With the current price of oil-derived phenol at about 86 cents per pound, there is an attractive economic opportunity for ligninderived phenols as a replacement for some of the petroleum-based phenol now used in large-volume wood adhesives. Analogously, all of the structurally complex mycotoxins potentially present in corn will be cleaved into smaller and simpler nontoxic molecules that are unlikely to affect adversely the nutritional quality of any DDGS produced. From all of the foregoing, it is clear that
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MARCH 2012 | Ethanol Producer Magazine | 71
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there are excellent reasons why chemical-free supercritical water offers a greener prospect of significantly improving the economics of obtaining ethanol and chemicals from entire corn plants. The maximum benefits will be secured when the treatment with supercritical water is carried out continuously in an extruder, as recently disclosed in U.S. Patent No. 7,955,508 entitled “Supercritical Fluid Biomass Conversion Systems.” This patent teaches that a specialized extruder can convey selected biomass materials from an upstream hopper to a downstream supercritical fluid reaction zone, while increasing the pressure from atmospheric to greater than 3,200 psi. The supercritical fluid reaction zone further heats the flowing and pressurized biomass materials to supercritical conditions by means of a circumferentially positioned, high efficiency, alternating current induction coil. The liquefied reaction products are then expelled through a specially configured and proprietary spear and tube reactor that ensures complete biomass depolymerization and liquefaction. The liquefied reaction products are next expelled into an innovative expansion/separation chamber that contains liquid water and a hydrocarbon solvent to facilitate liquid-liquid extraction and phase separation of the resulting products. A detailed economic analysis of all of the labor, energy and equipment costs including depreciation associated with the system has shown that undried biomass can be transformed for less than a nickel per pound in the Pacific Northwest. Authors: G. Graham Allan Professor of Chemical Engineering, University of Washington, Seattle (425) 486-1649 email@example.com John R. Di Iorio Chemical Engineering Student Milo U. Zorzino Chemistry Student University of Washington
New Pathways Could Improve Ethanol Yields A close look reveals metabolic conversion of oil content into sugar is possible By Trent Nguyen, Ph.D.
With the current demand for energy, fossil fuel is estimated to be depleted within 60 to 80 years and energy use will focus on sustainable forms that are cleaner, more reliable and renewable. The most reliable and oldest form of energy is
biomassâ€”the product of photosynthetic organisms such as plants, some microbes and some algae. A closer examination of plant physiology and genetic engineering possibilities offers new pathways to improve bioenergy conversion. The initial photosynthetic product of plants, glucose, is the immediate energy source
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). 74 | Ethanol Producer Magazine | MARCH 2012
for cells that use the sugar to metabolize other forms of cellular energy such as starch, oil and proteins. Some useful products we derive from biomass include biodiesel from algae, cooking oil from corn, and ethanol from sugarcane and corn. To be considered a good biomass candidate for product derivation, a species must satisfy three criteria: be high yielding, easy to grow and contain high levels of extractable content. One example is sugarcane, a high-yielding
tropical grass with a stem diameter of 1 to 3 inches and a height of up to 5 feet or more. Sugarcaneâ€™s high extractable sugar content accounts for 10 percent of its weight. It is no wonder that the sugarcane species Saccharum officinarum is one of the most important foodproducing grasses in the world. Sugarcane re-
quires strong sunlight, much water and a long maturation period. Another example is hybrid yellow dent corn, a relatively easy speÂcies to grow and one of the most important production grains in the United States. Cultivated mostly in the temperate Midwest, corn is economical to grow and
yields a large amount of biomass. The corn kernel is a seed with 3 to 4 percent oil, 9 to 10 percent protein, and about 72 percent starch. The high starch content makes corn a good product for livestock and for the extraction of high-fructose sugar. Currently, almost all of the 200-some ethanol producers in the U.S. use corn. To produce ethanol, however, corn starch must be broken down into fermentable sugars, which makes it less economical than sugarcane with its high extractable content of fermentable sugars. Nature has endowed certain plants such as sugarcane with enhanced metabolic pathways to produce high sugar content. Molecular biologists can nudge certain unendowed plants, such as switchgrass, toward similar pathways. All plants produce sugar by photosynthesis, but differ in how the sugar is used or stored for easy access. Depending on the physiologic needs of a plant, sugar can be stored in starch, converted into oil, used for producing structural cellulose, or stay in circulation as an immediate energy source. A major hurdle in ethanol production has always been low yield and the unavailability of quality feedstock. Efforts to increase yield often focus on strategies in producing feedstock with high sugar content, either by genetic engineering or breeding selection. An obvious choice for selective breeding is sugarcane. Its
MARCH 2012 | Ethanol Producer Magazine | 75
sugar content is good, but its growth rate and ease of cultivation need improvement. Switchgrass is a grass species with a fast growth rate that is easy to grow, but lacks high sugar content. An ideal solution, then, would be to cross sugarcane and switchgrass—sugarswitch— which may satisfy all the three criteria of high yield, easy to grow and high extractable sugar content. The downside to selective breeding is that it involves a long learning curve, and the pattern of inheritance of desirable traits is not always straightforward. An alternative strategy is genetic engineering, which has become more widespread in the past three decades. In engineering plants producing high sugar content, the biology of the target species must be considered. For example, the yellow dent corn kernel is a seed—a fertilized embryo in dormancy until germination occurs and rapid growth requires the utilization of stored nutrients in the form of starch, protein and oil. In contrast, in rice seed, which has 16 to 20 percent lipid content in its aleurone layer, lipase activity utilizes oil as an energy source. The digested lipid content is used for gluconeogenesis within glyoxysomes. The rapidly growing, germinating seeds are able to convert stored oil into sugar for immediate energy, suggesting an approach to engineering enhanced sugar content in corn kernels or rice seeds.
76 | Ethanol Producer Magazine | MARCH 2012
Under certain conditions, plant oil such as corn triglycerides, can be reverted back into glucose sugar, the substrate for ethanol production. With the current ethanol production efficiency averaging about 93 percent of theoretical yield within the industry, there is not much room for improvement. Attempts at increasing yield should, therefore, focus on the metabolic conversion of oil into sugar. Mechanistically, triglycerides are broken down into fatty acids and glycerol—precursors for gluconeogenesis, the pathway that converts biomolecules into glucose. Fatty acids are converted into oxaloacetate using enzymes that include isocitrate lyase and malate synthase (Figure 1). Oxaloacetate is then used for the gluconeogenic conversion into glucose (Figure 2). Another product of triglyceride breakdown, glycerol is metabolized into glyceraldehyde 3-phosphate (GA3-P), a more immediate substrate for glucose synthesis. The pathway is catalyzed by glycerol kinase, G3P dehydrogenase, and triosephosphate isomerase enzymes (Figure 3). Various attempts at increasing ethanol yield have focused on enzymes or engineering new microbial strains for conversion. Enzyme use is cost-prohibitive, and complexity is an issue with microbial engineering. A different approach to plant engineering opens new possibilities for producing plants fit for
high ethanol yield. Plants could be engineered to enhance the expression of key enzymes that metabolize oil into sugar. The key catalysts in the pathways are isocitrate lyase (Figure 1), PEPCK (Figure 2), and glycerol kinase (Figure 3). Studies have shown that isocitrate lyase knockout in Arabidopsis leads to a drastic reduction of gluconeogenesis from oxaloacetate. The lack of malate synthase, however, does not have any effect on gluconeogenesis. PEPCK reduction in Arabidopsis also reduced the sugar levels. In the storage tissues of fatty seedlings, glycerol kinase was shown as responsible for the initial conversion of glycerol into sugar. The studies indicate the power of engineering plants that convert their oil content into sugar. The potential for yellow dent corn is intriguing, with its 3 to 4 percent oil content. If 95 percent of the oil could be converted to sugar, ethanol yield could be increased by as much as 10 percent, given that oil has more than twice the amount of energy as sugar. Author: Trent Nguyen President, Ebio Consulting (972) 983-1969 ttnguyen@EbioConsulting.OnMicrosoft.com
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Growth Energy 202-545-4000
Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com
Chemicals Desiccant Interra Global 847-292-8600
Enzymes CTE Global, Inc. 847-564-5770
Nagase American Corporation 212-703-1364 www.nagaeamerica.com
Yeast Fermentis-Division of SI Lesaffre 800-558-7279 www.fermentis.com Taurus Energy AB 952-926-0100 Xylogenics, Inc. 317-697-7514
www.taurusenergy.eu www.xylogenics.com Freez-It-Cleen 602-597-9337
Cleaning Dryer Systems
Seneca Companies 800-369-5500
Cloud/Sellers Cleaning Systems 800-234-5650 www.sellersclean.com
Hydro-Blasting MPS Group 515-953-5656
Tank Cleaning Equipment
Gamajet Cleaning Systems Inc 877-GAMAJET www.gamajet.com Scanjet, Inc. 281-480-4041
Tank Cleaning Services Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com
Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com
Seneca Companies 800-369-5500
Seneca Companies 800-369-5500
Emergency Spill Response Seneca Companies 800-369-5500
Evaporators Premium Plant Services, Inc. 888-549-1869 www.premiumplantservices.com
78 | Ethanol Producer Magazine | MARCH 2012
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Conferences/Trade Shows & Meetings Algae Biomass Summit 763-458-0068 www.algaebiomasssummit.org Algal Biomass Organization 763-458-0068 www.algalbiomass.org
Equipment & Services
Air Pollution/Odor Control
Hoffmann, Inc. 563-263-4733
Anguil Environmental Systems, Inc. 414-365-6400 www.anguil.com
Plant Construction Fagen, Inc. 320-564-3324
Cellulosic Pretreatment Vecoplan, LLC 336-861-6070
Roeslein & Associates, Inc. 314-729-0056 www.roeslein.com
ICM, Inc. 877-456-8588
Kahler Automation Corp. 507-235-6648 www.kahlerautomation.com
Hoffmann, Inc. 563-263-4733
Corn Oil Recovery
ICM, Inc. 877-456-8588
Environmental Air Resource Specialists, Inc. 970-484-7941 www.air-resource.com ERI Solutions, Inc. 316-927-4294
RTP Environmental Associates 516-333-4526 www.rtpenv.com Seneca Companies 800-369-5500
Bismarck State College 701-224-5735 www.BismarckState.edu/energy
ICM, Inc. 877-456-8588
Dryers-Rotary Steam Tube
Recruiting SearchPath of Chicago 815-261-4403 www.earchpathofchicago.com Strategic Resources 425-688-1151 www.strategicresources.com
ICM, Inc. 877-456-8588
Emissions Testing & Reduction ARI Environmental, Inc. 847-487-1580
ETS Laboratories 707-963-4806
Wolf Material Handling Systems 763-576-9040 www.wolfmhs.com
Fermentors Bioengineering, Inc. 781-672-2620 www.bioengineering-inc.com
Design/Build Burns & McDonnell 816-333-9400
Fractionation-Corn ICM, Inc. 877-456-8588
Process Design ICM, Inc. 877-456-8588
PreProcess, Inc. 949-201-6041
Hoppers Airoflex Equipment 563-264-8066 www.airoflexequipment.com
Process Designâ€“Cellulose ICM, Inc. 877-456-8588
MARCH 2012 | Ethanol Producer Magazine | 79
EPM MARKETPLACE Loading Equipment-Liquid
Determan Fluid Solutions 763-571-8110 www.determan.com PFT-Alexander, Inc. 1-800-696-1331
Maintenance Services Determan Fluid Solutions 763-571-8110 www.determan.com
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Determan Fluid Solutions 763-571-8110 www.determan.com ICM, Inc. 877-456-8588
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Productivity Enhancements ICM, Inc. 877-456-8588
ERI Solutions, Inc. 316-927-4294
Storage-DDGS Hoffmann, Inc. 563-263-4733
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Airoflex Equipment 563-264-8066 www.airoflexequipment.com
Size Reduction Shredders Vecoplan, LLC 336-861-6070
Clean Air & Energy Technology
Valves Best Supply Company 316-262-8336 www.bestsupplycompany.net Cashco, Inc. 785-472-4461
Wastewater Treatment Services ICM, Inc. 877-456-8588
Yield Enhancement EdeniQ, Inc. 559-302-1780
Ethanol Production Existing Producers Phone: 605-761-0224 To view a complete list of products and services, visit us at: www.e1technologies.com
80 | Ethanol Producer Magazine | MARCH 2012
Louis Dreyfus Commodities 402-844-2680 www.LDCommodities.com
Finance Insurance ERI Solutions, Inc. 316-927-4294
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March 2012 Ethanol Producer Magazine