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JANUARY/FEBRUARY 2013 VOLUME 10 ISSUE 1
Zero Waste and Plant Optimization
Biodiesel Growth Opportunities
BY RON KOTRBA
BY RON KOTRBA
Creating value from waste and improving efficiencies, yields
Advertiser Index 15 41 42 5 & 26 32 43 27 20 21 35 29 34 2 8 10 13 28 38 37 39 12 23 14 11 44 9 22 32
2013 Algae Biomass Summit 2013 Fuel Ethanol Workshop 2013 International Biomass Conference & Expo 2013 National Biodiesel Conference Algae Biomass Association BBI Consulting Services Biodiesel Industry Directory California Biodiesel Alliance Chempump Crown Iron Works Company EcoEngineers Eurofins QTA, Inc. Evonik Degussa Corporation GEA Westfalia Separator Gorman-Rupp Pumps International Process Plants INTL FCStone Inc. Iowa Central Fuel Testing Lab. Jatrodiesel, Inc. Louis Dreyfus Methes Energies Moeller Plastics Oil-Dri Corporation of America QualSpec Reclamate Global LLC Schroeder Industries Superior Process Technologies Wilks Enterprise, Inc.
REG’s Dave Elsenbast talks feedstock, markets and logistics
CONTRIBUTION 36 ENERGY
Energy Farms: Is the Time Ripe?
The state of progress in co-location of various energies
BY PETER BROWN
DEPARTMENTS 4 Editor’s Note
BY RON KOTRBA 6 Legal Perspectives
The Grant-Back Clause in Your Technology License
BY THOMAS B. MCGURK 7 Talking Point
Process Technology Meets New Biodiesel Challenges
BY ROMAN WOLFF 8 Biodiesel Events 10 FrontEnd
Biodiesel News & Trends
16 Inside NBB 20 Business Briefs
Companies, Organizations & People in the News
40 Marketplace Biodiesel Magazine: (USPS No. 023-975) January/February 2013, Vol. 10, Issue 1. Biodiesel Magazine is published bi-monthly by BBI International. 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 Biodiesel Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
JANUARY | FEBRUARY 2013
MILESTONES RECOGNIZED Ron Kotrba
Editor Biodiesel Magazine firstname.lastname@example.org
E D I T O R I A L
For those reading this at the National Biodiesel Conference & Expo in Las Vegas, welcome to the show! This is a special
Tom Bryan President & Editor in Chief email@example.com Tim Portz Vice President of Content & Executive Editor firstname.lastname@example.org Ron Kotrba Editor email@example.com Jan Tellmann Copy Editor firstname.lastname@example.org P U B L I S H I N G Mike Bryan Joe Bryan Matthew Spoor Howard Brockhouse
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Subscriptions Subscriptions to Biodiesel 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.biodieselmagazine. com or you can send your mailing address and payment (checks made out to BBI International) to: Biodiesel Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-7465367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 701-746-8385 or email@example.com. Advertising Biodiesel 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 Biodiesel Magazine advertising opportunities, please contact us at 701-7468385 or firstname.lastname@example.org. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to Biodiesel Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or email to rkotrba@ bbiinternational.com.
year for biodiesel. Not only will the industry grow production to meet this year’s unprecedented 1.28 billion gallon federal standard, but several milestone anniversaries are upon us. For starters, the National Biodiesel Board turns 20 years old. CEO Joe Jobe details the fantastic history of this young but maturing industry in his excellent column on page 16, “Biodiesel Industry, NBB Celebrate 20 Years.” Also, the 2013 National Biodiesel Conference represents the 10th national show organized by NBB. The first was in Palm Springs, Calif., in 2004, a small gathering of enthusiasts that grew into the conference and exposition you know and love today. Finally, this year marks the 10th consecutive year of production for Biodiesel Magazine. Publisher BBI International saw a burgeoning market in biodiesel in the early 2000s and launched Biodiesel Magazine in 2004, published then nine times a year. Since my tenure began in January 2005, I’ve seen great changes in the industry and, coincidentally and consequently, in the only trade journal dedicated exclusively to biodiesel. Growing with biodiesel production volumes, Biodiesel Magazine boosted printing to 12 times a month in 2006 and exploded in girth, reaching telephone book-sized issues in the 2006-’07 time frame. The industry’s, and the magazine’s, slowdown began in 2008-’09, as a confluence of factors came together—feedstock prices spiked, the economy collapsed, Europe shut its doors to subsidized U.S. exports, delayed implementation of RFS2—to contract the industry to near collapse in 2010 after lapse of the $1 tax credit nearly put the final nail in the coffin for the industry, and this magazine. By then I had climbed editorial ranks from staff writer to senior staff writer to editor, and took personally the success or failure of this publication. After the credit was renewed retroactively from Jan. 1, 2010, to Dec. 31, 2011, the industry saw its greatest year, but it has changed—it has become leaner, more serious. Again, the magazine followed suit. Now published bimonthly, Biodiesel Magazine is leaner, meaner and scrappier than ever, ready to grow with this fine industry again.
Please recycle this magazine and remove inserts or samples before recycling TM
JANUARY | FEBRUARY 2013
COPYRIGHT © 2013 by BBI International
CELEBRATE 20 YEARS OF BIODIESEL 2013 marks the 20th anniversary of both the National Biodiesel Board and the U.S. biodiesel industry. As we look to the next 20 years, biodiesel has the MOMENTUM to continue to play a vital role in our Nation’s fuel supply. We hope you will join other high-level decisionmakers in their respective ﬁelds for what is sure to be our best conference yet.
The Grant-Back Clause in Your Technology License BY THOMAS B. MCGURK
With the flurry of construction long past and the capabilities of your plant ascertained, you may have decided it’s time to upgrade your production process. With your years of experi-
ence producing biodiesel, you may have developed ways to improve your plant’s performance. Alternatively, you may have turned to a vendor offering the latest innovations in process technology. But there may be more to the story than simply improving your plant processes and enjoying the fruits of your efforts. Upon review of your original technology license, you may discover that it contains a provision that obligates you to license the improvements you developed back to the original technology provider. You wonder where you stand and what your obligations are. This type of provision is generally known as a grant-back license, and it obligates a licensee to license any improvements made to a licensed technology back to the original technology licensor. The grant-back clause is common in technology license agreements in many industries. Grant-back clauses typically arise in the context of the licensing of patented technology. Consequently, such clauses, while viewed in terms of contract law, also fall within the intersection of patent and antitrust law. Whereas a patent grants for a limited time to the patent holder the right to exclude others from engaging in certain conduct in regard to the patented technology, antitrust law generally prohibits anticompetitive business practices. Courts have balanced the competing aspects of these two areas of the law in crafting the legal theories by which grant-back licenses are judged. Grant-back licenses generally are considered acceptable means of protecting a technology licensor’s interests while promoting the licensing of the underlying technology. A properly drafted grant-back license can encourage the licensing of technology by removing the fear that the licensor could find itself competing with a licensee who has developed an improvement to
JANUARY | FEBRUARY 2013
its technology. However, an improperly drafted grantback clause risks being viewed as an anticompetitive provision that inhibits innovation. The courts generally apply a “rule of reason” to the review of grant-back provisions. Courts will evaluate several aspects of the grant-back license to determine its validity. Key aspects include: the relationship of the improvement to the licensed technology, whether the grant-back license is exclusive or nonexclusive, and, whether the term of the grant-back license is less than or equal to the term of the patent protection on the underlying technology. Courts are more likely to find a grant-back license valid and enforceable if the improvement is closely related to the patented technology, the license does not grant an exclusive license to the improvement, and the term of the grant-back does not extend beyond the term of the patent protection on the underlying technology. Courts also will factor into their analysis whether there are alternative technologies available to the licensee at the time the technology transfer agreement was entered. The nature of your improvements, the scope of the original technology license, and the specific language of the grant-back provision all will affect your particular situation. Of course, concerns about the ramifications of a grant-back clause on your ability to innovate are best addressed during the negotiation of the original technology license. These comments are for general educational purposes and should not be considered legal advice. Since the terms of grant-back provisions can vary significantly, and the relevant facts surrounding the improvement applied to production processes can vary from one biodiesel producer to another, it is important to seek legal assistance in evaluating your specific situation. Author: Thomas B. McGurk Managing Member, McGurk Intellectual Property Advisors email@example.com
Process Technology Meets New Biodiesel Challenges BY ROMAN WOLFF
The biodiesel industry used to be fairly straightforward. Economical, refined soybean oil was fed into a well-known batch caustic process to produce on-spec product. High-priced diesel, high-value glycerin byproduct and a tax credit made turning a profit relatively simple. Over the past few years, however, the industry has changed dramatically. Expensive feedstock, ever-tightening specifications for biodiesel and glycerin, government mandates and no tax credit have added a new level of complexity and reduced margins. Against this backdrop, producers turn toward process technology to remain competitive. Feedstock still represents more than 80 percent of biodiesel production costs, so as producers seek processing cheaper feedstock, high free fatty acid (FFA) levels, moisture, â€œheavies,â€? sulfur and solids must be dealt with. Many producers will use outside technology experts to help them define and implement the process technology suite that best fits their needs. High FFA (15 to 100 percent): Many pretreatments can economically process up to 15 percent FFA, including noncaustic technologies, distillation, glycerolysis, acid esterification and ion exchange. Some technology combinations are effective up to 30 percent FFA, but only noncaustic technologies can effectively process up to 100 percent FFA. The best technology or combination of technologies will depend on the needs of each particular plant. Moisture/water (higher than 2 percent): This is unacceptable for many pretreatment technologies and for transesterification. Further, since water separates over time, there may be periods when concentration is much higher than 2 percent. Pretreatments that are less affected by moisture include some noncaustic processes, distillation and glycerolysis. Heavy components: Heavies, present in feedstock like DDG oil derived from corn, brown grease and some tallow, affect product quality and must be removed. Biodiesel distillation is used to remove heavy components. Sulfur: Present in feedstock like brown grease and tall oil from the forestry industry, sulfur affects product quality, in particular with tightening sulfur specifications. Biodiesel distillation is used to reduce sulfur. Solids and trash: Filtration is an effective way to remove solids, but many producers choose to settle solids in the feed tank over time and clean it periodically to eliminate regular solids handling. Lower sulfur and glyceride specs and new cold filter plugging point expectations, among others, worry some
biodiesel producers. Cheaper feedstocks can make transesterification more difficult, leaving mono- and diglycerides in the biodiesel. Distillation, again, can help meet tightening specs but not without cost. Greater use of lower quality feedstock increases the likelihood of product losses throughout the plant. There are feedstock losses during filtration and tank cleaning; FFA creates emulsions in the reactor and product is lost to the glycerin stream; and biodiesel distillation to achieve tighter specifications may generate sizable product losses. While there are no silver bullets, technology choice or optimization may dramatically improve yields. Pretreatment technology should lower FFA to 0.1 percent instead of the currently accepted 1 percent to minimize emulsions. Reaction conversions can be increased to minimize glycerides. Biodiesel distillation can be upgraded to reduce biodiesel losses. Noncaustic technology can, in general, process lowquality feedstock with minimal yield losses. Methanol losses end up in the wastewater or glycerin and become economic and environmental challenges. Two distillation columns are used to recover and dry methanol, and adding recovery systems tends to have a short payout. Even if the plant has a methanol recovery system, there are opportunities for additional methanol recovery and energy efficiency. A newly upgraded biodiesel plant with multiple distillations (feedstock, methanol, glycerin, biodiesel) will benefit from periodic energy audits and investment in energy efficiency. Heat recovery, boiler and hot oil system efficiency improvements are a few of many opportunities. Capacity increases will reduce fixed costs per gallon and is a fraction of new capacity capital expenses. Existing infrastructure, use of plant personnel and relationships with local suppliers make capacity increases a good way to improve competitiveness. Finally, in addition to in-house technical staff, a producer should build a relationship with a technology company to provide technical services and support. These may include independent energy audits, yield improvement projects and technology upgrades. Using outside technology consultants for special projects such as plant optimization and technology upgrades, and ongoing technology reviews, is common practice in the refining industry to remain competitive in an ever-changing, challenging environment.
JANUARY | FEBRUARY 2013
Author: Roman Wolff President, Enhanced Biofuels LLC 713-301-8660 firstname.lastname@example.org ď Ź
EVENTS CALENDAR National Biodiesel Conference FEBRUARY 4-7, 2013
The Mirage Resort & Casino Las Vegas, Nevada Join the MOMENTUM as the biodiesel industry gathers at the 10th annual National Biodiesel Conference & Expo. 2013 marks a momentous occasion for the biodiesel industry as we celebrate the 20th anniversary of the National Biodiesel Board, and of the US commercial biodiesel industry itself. Join us at the largest biodiesel event of the year to take a look at where the industry has come from and where it is headed in 2013 and beyond! 877-433-3976 | www.biodieselconference.com
International Biomass Conference & Expo APRIL 8-10, 2013
Minneapolis Convention Center Minneapolis, Minnesota Building on Innovation Organized by BBI International and coproduced by Biomass Magazine, the International Biomass Conference & Expo program will include 30-plus panels and more than 100 speakers, including 90 technical presentations on topics ranging from anaerobic digestion and gasification to pyrolysis and combined heat and power. This dynamic event unites industry professionals from all sectors of the worldâ€™s interconnected biomass utilization industriesâ€”biobased power, thermal energy, fuels and chemicals. 866-746-8385 | www.biomassconference.com
International Fuel Ethanol Workshop & Expo JUNE 10-13, 2013
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Americaâ€™s Center St. Louis, Missouri Where Producers Meet Now in its 29th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the worldâ€”and the only event powered by Ethanol Producer Magazine. Visit our website to reserve premium booth space now. 866-746-8385 | www.fuelethanolworkshop.com
Algae Biomass Summit
SEPTEMBER 30- OCTOBER 3, 2013 Hilton Orlando Orlando, Florida This dynamic event unites industry professionals from all sectors of the worldâ€™s algae utilization industries including, but not limited to, financing, algal ecology, genetic systems, carbon partitioning, engineering & analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements and foods. Organized by the Algae Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. Itâ€™s a true one-stop shop â€“ the worldâ€™s premier educational and networking junction for all algae industries. 866-746-8385 | www.algaebiomasssummit.org
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Biodiesel News & Trends
G20 fails as fossil fuel subsidies reach $523 billion As another United Nations Climate Change Conference got under way in Qatar, Nov. 26-Dec. 8, the Global Renewable Fuels Alliance criticized G20 leaders for failing to hold up their commitment to phase out the costly fossil fuel subsidies that hurt developing economies and slow the development of alternative fuels. According to the International Energy Agency, fossil fuel subsidies reached more than half a trillion dollars this past year, with latest estimates showing subsidies reaching $523 billion in 2011, up from $412 billion in 2010. Despite the G20 nations committing to eliminate unnecessary fossil fuel subsidies at the 2009 Pittsburgh G20 Summit, these subsidies have increased almost 30 percent. In 2009 when the commitment to eliminate subsidies to both consumption and production were made, fossil fuel subsidies were at $300 billion; they are nearly double that today.
“A $111 billion increase in subsidies in one year underscores the importance of phasing these subsidies out as quickly as possible,” says Bliss Baker, GRFA spokesperson. “It is somewhat perverse that the world continues to subsidize the consumption and production of crude oil at a time of near-record oil prices.” Last year the IEA forecast that fossil fuel subsidies could rise to $660 billion by 2020 if G20 countries did not take immediate action to phase these subsidies out. G20 nations along with the rest of the world met in Qatar at the United Nations Climate Change Conference where the issue of fossil fuel subsidies was not on the agenda. “The IEA has committed to raising the issue of fossil fuel subsidies in Qatar and the GRFA applauds their efforts,” Baker says. “However, this should not detract from the fact that the G20 has failed to meet their commitment to phase subsidies out. In fact, since making the commit-
Fossil Fuel Subsidies 2010
(*projected if G20 countries do not take action) SOURCE: IEA
ment to phase these distorting subsidies out, they have almost doubled. If the UN and the rest of the world want to combat climate change, the UN Climate Change Conference in Qatar [was] the opportunity to show leadership and end these neverending subsidies to fossil fuels and move beyond crude oil to a world with sustainable alternatives such as biofuels.”
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Program developed to authenticate feedstock as â€˜renewable biomassâ€™ It may be common sense that a qualified renewable fuel under RFS must be made from a renewable biomass, but Ramon M. Benavides, president of Global Renewable Strategies and Consulting LLC, says proving this isnâ€™t as easy as it sounds. â€œThe burden of proof lies with the producer,â€? he says. â€œThe producer has the responsibility to prove their feedstock is deemed satisfactory. If producers had to prove their feedstocks meet the criteria of â€˜renewable,â€™ 90 percent of them couldnâ€™t do this today.â€? Benavides, along with Jeff and Michelle Fetkenhour of Gorge Analytical LLC, developed the Feedstock Conformance Protocol, which mitigates risk in the biodiesel marketplace by authenticating RINs on the front-end through a rigorous feedstock-testing program rather than just validating RINs on the backend. Gorge Analytical was chosen as a partner because of its strong history, knowledge and experience in the field. â€œThe FCP screens the feedstock to make sure there are no bad actions or contaminants that would diminish qualification of the finished fuel,â€? says Benavides. â€œWhen this protocol is combined with a qualified production process, objective evidence is compiled to authenticate the renewable fuel. Over time we became keenly aware that adding additional forensic methods was needed to rule out contaminants, so the only thing left over is renewable biomass and, therefore, the only fuel produced is a renewable fuel.â€? Some contaminants Benavides has seen in feedstock include PCBs, ethylene glycol,
heavy metals such as chromium and arsenic and even motor oils. A feedstock profile is provided before the material arrives at the biodiesel facility, which helps prequalify feedstock for RINs authentication through the combined assessment of: key markers that ensure the product purchased is the product received; adulterants that will affect mass balance criteria; the presence of select, dangerous hazardous materials that would mitigate a nonconformance with Tier 1 and Tier 2 Health data and threats to the environment; the potential for previously produced fuels sold as feedstock; as well as identifying necessary criteria to ensure authenticity of a RIN and renewable fuel by measuring required components in several codes, including EPAâ€™s RFS, USDAâ€™s bioenergy and biopreferred programs and the IRSâ€™ biodiesel, renewable diesel, and alternative fuels excise tax program. Benavides said the FCP is complementary to all existing RIN quality assurance plans. â€œNone of them have this central component,â€? he says. Benavides is targeting FCP application directly to biodiesel producers, seeking partnerships with existing third-party RIN verifiers, feedstock providers and government. The FCP establishes a baseline for each producer or producerâ€™s supplier and then transitions to scheduled interval testing to ensure for the producer that the supplier is maintaining conformance of the initial profile. During this period, the FCP randomly rotates assessment without prior notice through five components to reduce risk of fraud.
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Big uptick in U.S. light-duty diesel sales Clean diesel automobile sales in the U.S. have increased 25.6 percent in 2012, according to sales information compiled by HybridCars.Com and Baum and Associates. Most recently, U.S. sales of clean diesel autos increased 21.2 percent in October 2012 over October 2011, 44 percent in September, and 28.1 percent in August. “The 44 percent increase … in September was the largest gain of any month in 2012,” says Allen Schaeffer, executive director of the Diesel Technology Forum. “An important trend in U.S. clean diesel sales is the consistency of the monthly increases,” Schaeffer says. “Diesel sales have increased in 26 of the past 27 months with 23 of these months showing double-digit increases. Impressively, there have been 20 percent or better increases in 20 of the past 27 months.” Schaeffer also says the U.S. Energy Information Administration forecasts that compared to 2012 the price of diesel fuel will decline by about 3 percent in 2013 to $3.83/gallon.
Schaeffer adds that while 14 clean Projected North American Growth diesel autos and SUVs were available in the U.S. at the end of 2012 (31 includ- in Light-Duty Diesels ing light-duty trucks and vans), the 2012 282,000 number will nearly double in the next 18 months. Some of these include the 2018 928,000 Audi A6, A7, A8 and Q5 TDI diesels to be available this year. A TDI clean SOURCE: JUNE 2012 PIKE RESEARCH STUDY diesel A4 version is also expected in plans to bring a diesel in the GLK and 2014. BMW also announced the U.S. C-class for a total of eight diesel models market will see a 2.0-liter four cylinder diesel and 3.0-liter inline six-diesel engine by 2014. by end of year. Chrysler will introduce its A June 2012 Pike Research study also projects that growth of diesel light-duty new Jeep Grand Cherokee Ecodiesel in vehicles will be especially strong in North 2014, along with a new version of the disAmerica, with annual sales expected to continued Dakota pickup that will include a diesel. Ford will offer a new diesel Transit increase from 282,000 vehicles in 2012 to 928,000 by 2018. Pike Research also full-size commercial van in 2013. General Motors will offer a Cadillac ATS diesel and predicts nearly 80 million clean diesel vehicles—light- and medium-duty—will be a diesel version of the Chevrolet Cruze in sold worldwide from 2012 to 2018. 2013. Mazda will become the only Asian car manufacturer to sell diesel cars in the U.S. when it introduces its SKYACTIV-D 2.2-liter clean diesel engine. Mercedes also
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Algae news roundup Algae news made prolific headlines the past two months. Here is a synopsis of the recent activity in algae: Sapphire Energy and Institute for Systems Biology formed a strategic partnership to further the scientific research and development of algae biofuels. They will focus on applying systems biology solutions to algae with the goal of significantly increasing oil yield and improving resistance to crop predators and environmental factors to further advancement of commercialized algae biofuel production. Researchers at University of Michigan announced they can “pressure-cook” algae for a minute to transform 65 percent of the algae into biocrude. The research, “The Effects of Heating Rate and Reaction Time on Hydrothermal Liquefaction of Microalgae,” was funded by the Emerging Frontiers in Research and Innovation program of the National Science Foun-
dation. The university is pursuing patent protection for the intellectual property and is seeking commercialization partners. Iowa State University’s pilot algae production facility, which houses two raceway pond systems, four large flat-panel photobioreactors and a custom-made revolving attachment-based photobioreactor, was nearly completed as of November. Total production capacity is 50 to 100 dried kilograms of algae biomass annually. Propel Fuels and Solazyme Inc. brought algae-derived fuel to retail pumps in the San Francisco Bay area for a monthlong pilot program. Biologists at UC San Diego have demonstrated for the first time that marine algae can be just as capable as fresh water algae in producing biofuels. The scientists genetically engineered marine algae to produce five different kinds of industrially important enzymes and say the same
process they used could be employed to enhance the yield of petroleum-like compounds from these salt water algae. Their achievement is detailed in a paper published online in the current issue of the scientific journal Algal Research. A Cornell research team has received a $910,000 grant from the U.S. DOE to work toward revolutionizing how biofuels are produced from algae. The team seeks to design and build a completely new type of bioreactor that efficiently delivers light and collects fuel produced by algae inside the reactors. They call it an “optofluidic reactor” and it will harness photosynthesis by directly converting carbon dioxide to biofuels using blue-green algae (cyanobacteria).
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Navy showcases B20-powered steam plant
Oil lobby sues EPA over US biodiesel standard increase
Deputy Assistant Secretary of the Navy (Energy) Tom Hicks toured a steam plant at St. Julien’s Creek Annex in November in Portsmouth, Va., now running on B20. The plant is the Navy’s first one in the Mid-Atlantic area to run on B20. The fuel provides steam to heat 16 office buildings and 13 warehouses. It is expected that the fiscal year 2012 (FY13) heating season will require the use of about 235,000 gallons of B20. The Navy said using B20 will not increase the Navy’s costs to heat the base and it will help meet the Secretary of the Navy’s goals for greater energy security. “The Navy uses an annual average of 30 million barrels of fuel per year which equates to about $4 (billion) to $5 billion of fuel cost,” says Hicks. “Because of this, it is important to explore additional and alternative sources.” “The steam plant is using B20 and this fuel blend will help make progress towards the Navy’s renewable energy goals,” says John Breckner, renewable energy program manager for Naval Facilities Engineering Command Mid-Atlantic. “This is one of the pilot projects for the heating season and we hope to expand to other areas in the region.” St. Julien’s Creek Annex is a U.S. naval support facility that provides administrative offices, light industrial shops and storage facilities for tenant naval commands. Its primary mission is to provide a radar testing range (35 acres or 141,640 square meters) and various administrative and warehousing structures.
The American Petroleum Institute filed a lawsuit in the U.S. Court of Appeals on Nov. 26 against U.S. EPA for the agency’s decision to mandate the use of 1.28 billion gallons of biodiesel this year, a 28 percent increase from the statutory minimum. One week earlier, API filed a petition with EPA to reconsider the biodiesel increase, coming on the heels of EPA’s denial of multiple state requests to waive the renewable fuel standard on the basis of economic hardship from drought and higher feed costs. “EPA’s overzealous 2013 biodiesel mandate is unworkable, could raise the costs of making diesel fuel, and should be reduced,” says Bob Greco, API group downstream director. He says the increase was completely discretionary and EPA shouldn’t have gone beyond the statutory minimum of 1 billion gallons. “It’s disappointing that the petroleum industry continues to fight advancements toward clean, renewable fuels—even as it embraces alternative energy in its marketing,” says Anne Steckel, vice president of federal affairs for the National Biodiesel Board. “The EPA clearly determined, in an independent analysis, that increased biodiesel production is good for the country … We would encourage the oil industry to drop these lawsuits and work constructively toward improving our energy security with a mix of traditional and renewable fuels.”
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KNM seeks payment from Mission Biofuels
Petrobras helps launch fish oil extraction unit
KNM Process Systems filed a “winding-up” petition in the Shah Alam High Court in Malaysia against Mission Biofuels, a wholly owned subsidiary of Australia-based Mission NewEnergy Ltd. A winding-up petition, according to Carter Clark Financial Recovery, is a petition presented to the court, typically by a creditor, seeking an order that a company be put into compulsory liquidation. According to KNMPS, Mission Biofuels is indebted to KNMPS for a sum of more than $16.5 million for equipment and services as contractor for Mission Biofuels’ second 75 MMgy biodiesel process facility that features continuous acid conditioning, silica pretreatment, free fatty acid pretreatment and technicalgrade glycerin refining; in addition to the balance owed on a plant in Kuantan Port, Malaysia. Mission stated in public filings that the amount KNMPS claims it’s owed by Mission is under dispute, and its solicitors advised the petition is “defective, frivolous, vexatious, malicious and an abuse of the court process…” since the dispute is already in arbitration with no award. Per the EPC contract, arbitration is the recognized solution in settling disputes and, therefore, this should not be circumvented, stated Mission. Executive chairman of KNMPS parent company KNM Group Ir Lee Swee Eng owns a major shareholding interest in Mission NewEnergy Ltd.
Following an October partnership between Petrobras Biofuel and the Brazilian Ministry of Fisheries and Aquaculture to intensify research into producing biodiesel from waste fish oil, Petrobras Biofuel recently participated in the release of Machine Biopeixe, equipment to extract oil from fish waste developed by Nutec with support from the Bank of Northeast Brazil. According to Nutec’s project coordinator, Tarcisio Costa Filho, the machine is in the process of technology transfer to future commercial-scale production. The completion of this phase was to begin late 2012 at the Research Laboratory of the National Department of Works Against Drought, at Pentecost, Ceará. The equipment is designed to enable an environmentally sound end use of waste produced by the fishing industries and also allows the increase of the income of producers of tilapia ponds of Ceará with the sale of fish oil (biopeixe), extracted from waste, to biodiesel production. Silvano Cavalcante, manager of agricultural supply for the Quixadá biodiesel plant, says, “This is a potential feedstock for biodiesel production with environmental gains, and [it] promotes social inclusion.” According to Petrobras, the initiative is in line with the guidelines of the National Program for Production and Use of Biodiesel.
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Biodiesel Industry, NBB Celebrate 20 Years As we head into 2013, the National Biodiesel Board kicks off the celebration of its 20th anniversary. Not only is this an accomplishment for the organization, it is an accomplishment for the entire biodiesel industry. NBB was started as a research and development group in 1992 by a group of farmer leaders. Soybean oil was a surplus product of soybean production and processors found themselves building larger and larger tanks to store the surplus inventory. The country had just emerged from the first Gulf War and soybean farmers envisioned an opportunity for this surplus product that would contribute to energy security. There was no biodiesel industry in the U.S. at that time, and biodiesel was only produced as a specialty fuel. Many of the soybean farmer leaders had been through some of the early challenges of the ethanol industry back in the gasohol days, and did not want to repeat similar missteps. The farmers took the next seven years to fund NBB's efforts to do engine durability, compatibility and emissions testing. An ASTM commercial specification was passed. We conducted health effects testing to make biodiesel a legally registered fuel with the U.S. EPA and compliant with the Clean Air Act. Biodiesel became one of the best-tested fuels because of the robust technical program carried out by NBB in the 1990s. The American Soybean Association worked to achieve policy milestones such as getting biodiesel designated as an alternative fuel and qualified to meet alternative vehicle-fuel fleet purchase requirements. But after millions of dollars of investment, there was still only a small, half-million-gallon-per-year government fleet market for biodiesel, and farmers were growing weary. As a few biodiesel companies began to emerge, they began participating in NBB meetings, and weighing in on industry direction. Since they were making hardly any money or having losses on their biodiesel operations at that time, they indicated that they could not afford the $10,000 annual dues to join as NBB members. At an NBB meeting in March 1999, my first meeting as CEO, biodiesel producers made a proposal. They proposed a dues structure for producer member companies of a penny per gallon. This proposal acknowledged that dues would be low at first, but as the industry grew, their ability to contribute to industry-wide efforts would also
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grow proportionally. While dues have been adjusted down several times since, NBB still operates based on a volume-based dues structure. We have been able to highly effectively leverage our revenues in a unique way. The soybean checkoff and some federal grants continue to support our technical, communications, fuel quality, sustainability, awareness and other im- Joe Jobe, CEO, portant programs. Meanwhile, our biodiesel National Biodiesel producer dues are leveraged and focused in the Board area of federal and state policy. In the early years, the U.S. industry often looked to the European biodiesel industry for guidance, and it became very clear that demand in Europe for biodiesel wasn’t due to some grand marketing efforts, but rather through effective energy policy. Energy policy would be required to crack the economics and, of course, economics drives everything. Once effective policy could create an environment where economics could begin driving development, that development would be perpetuated by innovation spurred by competition. In 2002, NBB held a meeting with the most influential agricultural leaders and the ethanol industry, stating NBB's commitment to pursue a biodiesel blenders tax credit. The industry leaders agreed to support this initiative and NBB’s largest initiative to date was launched. In November 2004, President Bush signed the 2004 Energy Bill, which included the biodiesel tax credit. The tax credit proved highly effective leading to explosive growth in 2005 and 2006. But extensions of the program were increasingly difficult to achieve. The original renewable fuel standard, or RFS1 as it came to be known, was passed in 2005, and NBB worked to make sure that biodiesel qualified. But the program was primarily an ethanol program designed for the gasoline market and did not work for biodiesel. In early 2005, a bill was introduced by newly elected Sen. Barack Obama, called the “alternative diesel standard” to broad, bipartisan support. This was a comprehensive alternative fuels program, and NBB began working with other stakeholders and members of Congress to make it workable for biodiesel. This proposal was in some ways a precursor to RFS2. For the next three years, NBB again rallied
NBB resources to launch its largest-ever initiative to date. NBB’s goal was to achieve a workable and successful RFS2, which would work for biodiesel in ways the RFS1 did not. This led to the creation of the advanced biofuel category with the carve-out for biomass-based diesel. After a huge, sustained effort, we achieved this goal with bipartisan support leading to President Bush’s signing of the Energy Independence and Security Act in December of 2007. It took two years for the preliminary rule to be issued. The preliminary rule would have disqualified approximately 70 percent of the available feedstock for biodiesel based on life-cycle carbon numbers that utilized flawed indirect land use change (ILUC) models. NBB had recently launched its sustainability program, which invested in sound science to improve ILUC modeling and fill data gaps. This effort was effective and a workable final rule came out in 2010. 2011 saw a transition for the industry, where the RFS2 demonstrated its effectiveness as a stabilizing energy policy, catapulting the biodiesel industry above a billion gallons for the first time. The
program continued to demonstrate success in 2012, and is on track to exceed 2011 volumes. RFS2 has become, by far, the policy cornerstone and biggest driving force for the industry. The future is exciting for biodiesel. Energy policy will continue to be important for the near- and medium-term. But that energy policy will continue to stimulate growth and innovation in areas hardly imagined today. Our nation’s energy picture absolutely must change to a more diversified and domestic portfolio of energy options. The U.S. biodiesel industry has demonstrated that it is one of the most resilient industries ever. Now we are larger, stronger, and more diverse. We are battle-tested, seasoned and salty. We know adversity. We eat it for breakfast. Then we eat it again for second breakfast, elevensies, lunch, tea, dinner... we ain’t just fresh out of the Shire. We can handle adversity and we will. Twenty years from now, I predict that we will have prevailed in doing our part to diversify the fuel pool and will have proven that we were the ones on the right side of history. Joe Jobe, CEO, National Biodiesel Board
Biodiesel champion Byron Dorgan to give keynote address at National Biodiesel Conference A former U.S. senator widely recognized as a national leader and expert in energy and agriculture issues will give the keynote address at the National Biodiesel Conference & Expo Feb. 4-7. First elected to Congress in 1980, former Sen. Byron Dorgan represented his home state of North Dakota for 30 years in Washington, first for 12 years in the U.S. House and then for 18 years in the U.S. Senate. After retiring, he became a senior fellow at the Bipartisan Policy Center, where he recently joined former Senate Majority Leader Trent Lott to launch and chair the center’s Strategic Energy Policy Initiative. As a House member and in the Senate, Dorgan was a champion for biodiesel and other renewable fuels. He repeatedly sponsored legislation to create renewable fuels requirements for U.S. fuel supplies and strongly advocated the biodiesel tax incentive. He also was an advocate for renewable energy programs in the Farm Bill.
“During his career in public office, Sen. Dorgan consistently championed renewable energy and energy independence, promoted the economic needs of rural America, and fought for sound economic policies,” said Joe Jobe, CEO of the National Biodiesel Board. “Sen. Dorgan continues to be a thought leader in Washington, D.C., and is highly engaged in energy policy development. We’re thrilled that he will join us at our conference to share his insights as we lay a course for the next 20 years.” Dorgan was a senior senator on the Appropriations, Energy and Commerce Committees in the Senate. He currently serves as co-chairman of the government relations practice Arent Fox. Also, it is never too early to save the date for the 2014 National Biodiesel Conference & Expo set for Jan. 20-23 in San Diego.
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National Biodiesel Board members elect industry leaders National Biodiesel Board members recently selected their trade association leadership, electing three returning governing board members and four new members to serve on the leadership committee. “Biodiesel is one of our nation’s valuable tools to fight greenhouse gas and enhance energy security,” said Jennifer Case, CEO of New Leaf Biofuel in San Diego. “It is exciting to be able to represent a diverse biodiesel industry, working together to produce an advanced biofuel from a number of different resources. I’m proud to be a part of a governing board that has representatives from California to New Jersey and reflects every component of our diverse industry.” Officers elected to lead the board are: • Gary Haer chairman, Renewable Energy Group Inc. • Ed Ulch, vice chair, Iowa Soybean Association. • Ron Marr, secretary, Minnesota Soybean Processors. • Steven J. Levy, treasurer, Sprague Operating Resources LLC. Biodiesel board members also voted to fill seven board positions. Elected were: • Steven J. Levy, treasurer. • Greg Anderson, Nebraska Soybean Board. • Jennifer Case, New Leaf Biofuels. • Mike Cunningham, ASA.
• Brandon Foley, Sanimax. • Tim Keaveney, Hero BX. • John Wright, Owensboro Grain Co. Bob Metz, Robert Stobaugh, Kris Kappenman, Ed Hegland and Jim Conway also continue to serve on the governing board. Based in Jefferson City, Mo., the National Biodiesel Board is dedicated to supporting the commercial biodiesel industry. Its membership is comprised of biodiesel producers, state, national and international feedstock and processor organizations; fuel marketers and distributors; and technology providers.
NBB launches new mobile site for 2013 conference For 10 years, the National Biodiesel Conference & Expo has been known as the hottest networking event in the biodiesel industry. And now, with the launch of NBB’s mobile site NBBConnect, making connections at the conference is even easier. The primary goal of NBBConnect is to facilitate connections between conference attendees before, during and after the conference in order to shed light on beneficial business opportunities. The site includes several features that help attendees looking for services find the organizations that are best suited to serve them. For example, organizations can track attendees as they register for the conference and learn more about their biodiesel interests and needs. Then, if a company believes that it can offer valuable resources to a particular individual, an online invitation can be extended to that individual to attend a meeting at the company’s booth. Additionally, attendees will also be able to browse the site and view a list of registered guests, events and sponsors so as to more
NBB welcomes new members Advanced Biodiesel Inc.—Noblesville, Ind. Endicott Biofuels ll LLC—Houston Outpost Biodiesel LLC—Grafton, N.H. 18
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efficiently navigate the conference. Not only can companies seek out individuals, individuals can also pursue businesses and organizations that they believe can meet their unique biodiesel needs. And all of this is accomplished without providing your email address directly to the people who want to connect with you. NBB Connect will serve as your “pocket guide,” including the schedule of events, map of the exhibit hall and the most up-todate information for everything conference related. For companies and organizations looking to further increase their exposure at the conference, NBBConnect is offering limited advertising on the site. Access to NBBConnect is free for all registered attendees. Participants will receive an email with instructions on how to access the site once they’ve signed up for the conference. To register for the 2013 National Biodiesel Conference & Expo or to learn more about the event, which will be held in Las Vegas from Feb. 4-7, visit biodieselconference.org/2013.
Stoel Rives LLP—Seattle Sunoco Partners Marketing & Terminals LP—Aston, Pa.
Bioheat television campaign captures consumers’ attention Heating oil consumers in the Northeast are learning how making a small change will support American jobs, domestic energy security and cleaner air, thanks to three television commercials airing to promote the benefits of Bioheat. The National Biodiesel Board has worked to encourage consumers and oilheat dealers alike to adopt Bioheat in place of traditional home heating oil for years, but the new television commercials aim to speed up that process by generating more consumer demand. The commercials began running throughout the Northeast in late November, and will run through February during local newscasts and football pregame shows in markets such as Boston, New York City and Hartford, Conn. The ads highlight the benefits of Bioheat, including greater energy independence, supporting American jobs, and “making the air in your home and town cleaner.” In New York City, one of the commercials congratulates the city on using 2 percent biodiesel in all of its heating oil, thanks to a law that took effect in October. The ads proclaim New York City “Proud 2B2,” a play on the B2 requirement. This is the first advertising campaign involving television commercials for Bioheat. “Strong imagery supporting our message is an advantage in creating a connection with customers,” said Paul Nazzaro, petroleum liaison for the National Biodiesel Board. “Consumers see the visual of
a Bioheat truck, and see families like theirs, which helps personalize the message. Our goal is simply to pique their curiosity, drive them to the Bioheat website, and contact a dealer who carries it.” The campaign also is meant to serve as a marketing tool for Bioheat dealers, who can use the commercials in their own markets or on their websites. The campaign is funded by the Nebraska Soybean Board, the United Soybean Board, the Iowa Soybean Association and the South Dakota Soybean Research & Promotion Council. To see the commercials, visit bioheatonline.com.
Partnership results in year-round biodiesel availability in Upper Midwest A successful partnership between the South Dakota Soybean Research and Promotion Council, Minnesota Soybean Research and Promotion Council, Harms Oil Co., National Biodiesel Foundation, and Clean Cities has increased the availability of biodiesel blends in the region. Biodiesel is regularly blended at temperatures above freezing. During the winter months, biodiesel blends have been difficult to find for diesel fleets and fuel retailers in South Dakota and southwest Minnesota due to the absence of heated storage tanks. A new Harms Oil biodiesel blending facility in Sioux Falls, S.D., has a heated tank that will allow year-round blending of the renewable fuel. Installation of this biodiesel-loading infrastructure is especially important in Minnesota where all diesel fuel currently must contain a minimum of 5 percent biodiesel (B5). The percentage will eventually increase to B10, and then B20. “It had become apparent that additional infrastructure in Southwest Minnesota would be necessary for everyone to feel comfortable increasing the statewide requirement from 5 to 10 percent biodiesel,” said Shelby Neal, NBB director of state governmental affairs. “The new terminal should address that need and move the state closer to adoption of B10.” Jim Willers, a soybean farmer from Beaver Creek, Minn., and chair of the Minnesota Biodiesel Council, added, “This facility will of-
Representatives from South Dakota Soybean Research and Promotion Council, Minnesota Soybean Research and Promotion Council, Harms Oil Co., and the National Biodiesel Foundation were on hand for the opening of the new biodiesel blending infrastructure in Sioux Falls, S.D.
fer year-round service that hasn't been available from a fuel distributor before, plus they will be capable of supplying an underserved region of the country.” “Harms Oil is pleased to be a part of this important addition to our region’s fuel supply infrastructure, making biodiesel readily available to our customers on a year-round basis,” said Jason Harms of Harms Oil. “The improved facility will continue to bring our country another small step toward energy independence and improved air quality.”
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rate finance, investment banking and executive management with rapidly growing entrepreneurial companies. Propel currently operates stations throughout California and Washington state with more than 200 stations planned for new and existing markets over the next two years. PHOTO: METHES ENERGIES INTERNATIONAL LTD.
Propel Fuels has closed on the initial phase of its Series D round of funding with $11 million in equity capital from existing investors Nth Power, Craton Equity Partners and @Ventures, as well as a new investor, Gentry Venture Partners. In addition, the company has secured $10 million in debt financing from CapX Partners. With the new funding, Propel will be able to accelerate the build out of its network of stations that offer drivers the cleanest, most sustainable, domestically produced fuels on the market today. Propel operates a growing network of stations that provide renewable fuels (E85, biodiesel blends) alongside the conventional gasoline that most drivers use today. Propel enables drivers to offset carbon from their fuel purchases, improve their vehicles’ fuel economy, find rideshare opportunities, tune bicycles, and recycle on the go. Propel is the only fueling company in the country to bring drivers the opportunity to offset their emissions at the pump through the company’s unique CarbonOffset program. As part of the investment by Gentry, Thomas B. Raterman, a partner, has joined Propel’s board of directors. Raterman has more than 30 years of corpo-
Companies, Organizations & People in the News
Methes Energies International Ltd., a renewable energy company that offers an array of products and services to biodiesel fuel producers, announced that its wholly owned subsidiary, Methes Energies Canada Inc., has received the New Producer of the Year award from the Canadian Renewable Fuels Association. Recently commissioned, Methes Energies’ new Sombra, On-
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tario, facility has a capacity of 50 MMly (13 MMgy). The facility operates with Methes’ own technology, the Denami 3000, which can produce biodiesel from a wide variety of feedstock. Methes markets and sells biodiesel fuel produced at its showcase production facility in Mississauga, Ontario, and at its recently commissioned 13 MMgy facility in Sombra, to customers in the U.S. and Canada, as well as providing multiple biodiesel fuel solutions to its clientele. Its services include selling commodities to its network of biodiesel producers, selling their biodiesel production and providing clients with proprietary software to operate and control their processors. Methes also remotely monitors the quality and characteristics of its clients’ production, upgrades and repairs their processors and advises clients on adjusting their processes to use varying feedstock to improve the quality of their biodiesel.
Chico, Calif.-based Springboard Biodiesel announced that its trademarked smallscale biodiesel processor, BioPro EX, has met the Green Restaurant Association’s rigorous endorsement standards for alter-
BUSINESSBRIEFS Sponsored by native fuel refueling stations. By using the BioPro EX, restaurants can make biodiesel that meets ASTM specifications for 95 cents a gallon, according to Springboard Biodiesel. In addition to saving costs on fuel, restaurants that use the GRA-endorsed BioPro EX can stay ahead of legislation and significantly reduce CO2 and particulate emissions. Restaurants will earn 2.5 GreenPoints towards becoming a Certified Green Restaurant based on the GRA’s certification standards in the environmental category of eliminating waste. The BioPro EX equipment is made entirely in the U.S.
Minden, Nev.-based Bently Biofuels, a 1 MMgy biodiesel producer and fuel distributor, among other things, recently closed its retail C-store, the Bently Biofuels Outpost on Buckeye Road in Minden to prepare for a new direction the company will take in 2013: wholesale biodiesel sales to its northern Nevada and California outlets. The Outpost in Minden, however, will still sell fuel—E10 (regular gasoline), E85, B5, B20 and B50 in the winter months and B99 in summer months. Clients will be able to use credit or
debit cards to pay at the pump 24/7. In the new year, the company will focus on wholesale biodiesel sales to its six retail outlets: Bently Biofuels Outpost in Minden; Allied Washoe in Reno, Nev.; Sacramento Biodiesel Network in Sacramento, Calif.; The Biofuel Oasis in Berkley, Calif.; and Dogpatch Biofuels and People’s Fuel Cooperative, both in San Francisco. Bently Biofuels is also offering delivery of B20 home heating oil. Off-road red dye B20 and B50 will continue to be available, the company said. In other company news, Donald E. Bently passed away in October and his son Christopher Bently has taken the helm of the Bently family of companies. Christopher has led the Leadership in Energy and Environmental Designs certification of several buildings in the company’s portfolio, and he looks forward to increasing involvement in the Minden, area this year. Bently Biofuels has been producing biodiesel from seed and recycled cooking oil since 2005.
Renewable Energy Group Inc. has expanded its terminal locations to serve the largest population center in the U.S., the New
York City metropolitan area, with REG-9000branded biodiesel and Bioheat. The firm, already the nation’s largest biodiesel producer with more than 225 MMgy of operational producFalcone tion capacity, now has biodiesel positions at four New York metropolitan terminal locations. Biodiesel distribution points in Whippany, N.J., and New York locations in New Hyde Park, Port Chester and near Brookhaven are slated to offer quick access for blending biodiesel to augment heating oil and diesel supplies. The news came just weeks after REG acquired two 15 MMgy biodiesel plants in New Boston, Texas (North Texas Bio Energy), and in Georgia outside of Atlanta (Bulldog Biodiesel). Biodiesel is available today at the New Hyde Park facility and is being marketed by biodiesel veterans Michael Cooper and Daniel Falcone, formerly with Ultra Green Energy Services, who recently joined Renewable Energy Group’s team. Cooper and Falcone are now REG’s biodiesel sales managers for the Northeast.
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PHOTO: PROMETHEAN BIOFUELS
EXCELLING: Standing next to California Secretary for Environmental Protection Matt Rodriquez (right), Promethean founder Todd Hill accepted the Environmental Excellence Award for recycling and waste reduction.
Promethean Biofuels, a communityscale biodiesel producer in Temecula, Calif., stood with giants such as Sony and BP Arco at the recent Environmental Excellence Awards Summit in San Diego. The awards were given by the Industrial Environmental Association and co-sponsored by the California Manufacturers & Technology Association and the Chemical Industry Council of California. To qualify for an award, companies must be able to show a program with a measurable benefit to date, and an anticipated future benefit. Promethean won its award under the category
Recycling and Waste Reduction. Todd Hill, founder and managing principal of Promethean Biofuels, received the award. Using research as well as design and build concepts, Promethean Biofuels has been able to fabricate more than 90 percent of the equipment in its production facility with repurposed materials. Promethean production volumes are on track to recycle more than 1 million pounds of liquid waste product before the end of this year. “Our goal is to become a world-class fluid waste recycler,” Hill said, adding that Promethean Biofuels has positioned itself to be a supporter of and participant in a zero-waste environment by creating unique and innovative ways to solve liquid waste disposal problems for the customer. Promethean takes industrial waste off the hands of its customers, primarily food processors, and develops practical, solution-oriented products—whether it is biodiesel fuel, biomass products for agriculture, or specialty chemicals.
Bourne’s Energy recently opened the first local biofuel blending plant in the central Vermont area. Bourne’s Energy was
awarded a $45,000 grant through the Vermont Sustainable Jobs Fund to support the development of an injection blending operation for biodiesel, allowing it to supply B5, B10, B20 and B99.9 blends of fuel on demand. “This is a great new opportunity for Vermonters to experience the ‘biodiesel difference’ with a high-quality biofuel blend, made locally from recycled cooking oils and mixed in this state-of-the art facility,” said Netaka White, Bioenergy Program Director of the Vermont Sustainable Jobs Fund. Peter Bourne recognizes the demand for green living is growing in the Green Mountain state, and Bourne’s Energy's Biofuel Blending plant will be able to supply the community with alternative heating and fuel solutions without compromising the food chain or creating other environmental issues. “The production of Bourne’s biofuel is an interesting journey,” said Bourne. “[Biofuel] begins at local eateries as used cooking grease, which is picked up and recycled by a partner company, White Mountain Biodiesel. Bourne’s collects the future fuel and brings it to the biofuel blending plant where it’s converted/blended into Bioheat or biodiesel.” Bourne’s Energy celebrates
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BUSINESSBRIEFS Sponsored by its 65th anniversary of being a local, familyowned heating fuel and equipment business and has five local offices throughout North and Central Vermont.
Genuine Bio-Fuel Inc., headquartered in Indiantown, Fla., is expanding its operations to the northeastern Caribbean region with the development of new subsidiary, Caribbean Bio-Fuel Inc. The new company will be based in Puerto Rico and will service Caribbean and South American markets. These emerging markets will be able to capitalize on GBF’s proprietary technology, which allows it to reduce the biodiesel production time from hours to mere seconds—without creating any hazardous byproducts in the process. Executive Vice President Jeff Longo noted the Caribbean Bio-Fuel plant would have the capacity to produce about 12 MMgy. The 35,000-square-foot facility is slated to open in March employing 12 to 18 people at launch. The raw materials and multifeedstocks will come from Puerto Rico and surrounding islands.
EcoEngineers is partnering with Degart Global, a provider of BQ-9000 consulting services, to integrate its popular RIN Quality Assurance Program with BQ9000 requirements. EcoEngineers’ RIN Quality Assurance Program will be seamlessly integrated into the current practices and procedures of an existing BQ-9000 facility. Plants in EcoEngineers’ RIN management platform that do not have BQ-9000 status can easily transition into BQ-9000 via a transition program that is being put in place. The transition program will evaluate current operations and recommend best practices to obtain BQ-9000 status. Process controls related to sampling and testing and equipment calibration are common in both
the RIN QA and BQ-9000 programs and are examples of how synergies can be realized by combining the two programs. Foreign producers of biodiesel currently cannot obtain BQ-9000 status, but they have the ability to have the benefits without the formal BQ-9000 status. For plants interested in pursuing such a goal, EcoEngineers can now offer not only a solution that will implement quality procedures at the plant but also a monitoring program that will provide the needed RIN QA and verification to downstream RIN generators.
SHARE YOUR BUSINESS BRIEFS To be included in Business Briefs, send information (including photos, illustrations or logos, if available) to: Business Briefs, Biodiesel Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to 701-746-5367, or email it to rkotrba@ bbiinternational.com. Please include your name and telephone number in each correspondence.
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MODEL PLANT: Pacific Biodiesel Technologies’ new Big Island Biodiesel plant opened last year and is the firm’s new model of state-of-the-art design. It features zero-waste production through various approaches such as efficient reaction, methanol recovery, distillation and still bottom consumption for process heat and steam, glycerin purification and more. PHOTO: PACIFIC BIODIESEL TECHNOLOGIES
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Zero Waste and Plant Optimization Internalizing or finding added value from waste, and improving efficiencies BY RON KOTRBA
When Pacific Biodiesel Technologies’ Big Island Biodiesel refinery came online last year, it was marketed as a state-of-the-art, zero-waste plant. The facility, scaled at 16,000 gallons a day, was Hawaii’s first since 2000 and boosted the state’s capacity by 500 percent. The phrase “zero waste” has gained popularity over the past year, perhaps as a result of Pacific Biodiesel’s marketing efforts, or maybe simply because it’s part of industry maturation to evolve beyond the inefficiencies of its legacy refineries. The term, however, means different things to different people. To Will Smith, engineering manager at Pacific Biodiesel responsible for process technology design and implementation at Big Island Biodiesel, being a zero-waste plant is not necessarily about being green or sustainable—although those attributes come as a nice added benefit. To him and others, it’s purely economical. “Zero waste means we’ve made the necessary capital investments to eliminate all of the traditional waste products that can come out of a biodiesel process,” Smith says. And depending on the feedstock utilized at a particular plant, there can be a multitude of varying waste streams generated from virtually every stage of the process. Smith documented all possible waste streams from biodiesel processing and has developed a matrix he shared with Biodiesel Magazine
identifying uses of those side stream waste products, from most to least favorable. Feedstock refining or pretreatment produces several waste streams. If the plant is processing used cooking oil (UCO), there are wastewater and solids to contend with. The most favorable use of wastewater and solids from pretreatment of UCO, according to Smith, is anaerobic digestion, followed by composting and landfilling. Gums and foots are a side stream of oil degumming practices, and lecithin upgrading is preferred over selling direct to the feed market or, lastly, landfilling. Also, soapstock from caustic refining, spent bleaching clay and deodorizer distillate are more potential wastes generated from feedstock refining or pretreatment. The best route for soapstock would be to split to acid oil and esterify to biodiesel; second is direct sale of acid oil to feed markets. The clay can be composted or landfilled. Lastly, the best option for deodorizer distillate is selling for vitamin E recovery, or sold directly to feed markets. The 1.5 MMgy Newport Biodiesel in Rhode Island, which collects UCO and refines to biodiesel, has been tagged a zerowaste plant, and Nat Harris, founder and production manager, shares with Biodiesel Magazine how his plant made the journey from paying disposal costs to finding added value in its waste. “Our food and water waste was something we would have a local septic hauler haul away, and we were charged
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PRODUCTION money to dispose of it,” he says. But a fairly recent development in the past year or so has allowed Newport Biodiesel to turn that disposal cost into added value by selling its high BOD (biochemical oxygen demand) wastewater and food scraps from UCO pretreatment to an anaerobic digester in Maine. The UCO collected is comprised of 20 percent water. “It’s much better to realize a little bit of value,” he says, rather than paying someone to haul it away. “There are various definitions as to what ‘zero-waste’ would be,” Smith says. “A lot of people would claim that they can get rid of a product at zero cost, so if someone will take it,
it wouldn’t be a waste. The way I see it is, whatever leaves the plant has to have a real, marketable value—creating income from it, it has a market. I would say less than 20 percent of biodiesel plants today are zero waste. There are a lot of facilities that are generating coproducts they are disposing of, which, in my opinion, is a waste.” From the core of a biodiesel refinery— the reaction and purification of fuel—several more waste streams exist. The best avenue for wet methanol would be in-house rectification and reuse, followed by marketing to an external refinery or, as a last resort, disposal as hazardEW
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ous waste. In-house recovery of unrefined glycerin to refiner’s crude grade is optimal, Smith says, followed by marketing it to a refiner, then anaerobic digestion, and finally disposal as a hazardous waste. For saltwater and methanol from esterification, the best route, again, is in-house recovery and reuse or, as a second option, selling to an external refinery. For water-wash plants, spent water can be recycled and reused in-house, anaerobically digested or, at least value, disposed via the sewer system. Spent silicate from dry wash can be composted or landfilled. Spent ion exchange resins can be returned to the manufacturer for regeneration or landfilled, according to Smith, but Newport Biodiesel and its supplier have found another value-added use for spent resins. “We decided early on to go with ion exchange instead of water wash,” Harris says, thereby eliminating wash water going down the drain. When the resin is spent, the supplier takes the old resin and sells it to oil and gas drilling companies as hydraulic fracturing lubricant for wells. Finally, still bottoms from the distillation columns can be used in-house as fuel for process heat and steam, or sold as heater fuel to outside companies. Pacific Biodiesel’s Big Island plant employs distillation and uses its still bottoms to generate process heat and steam, helping offset the higher energy consumption of distillation. “We’ve installed recovery and reprocessing equipment to utilize all of the side streams from biodiesel production on-site,” Smith says. “Methanol recovery, there’s removal of soaps and entrained esters. We take the glycerin— we call it the reactor bottoms—we take the material off the bottom of the reactors, the separator, we remove the soaps and entrained esters, and the esters are recycled into the biodiesel purification process, and the methanol is treated and recycled. The things you have to take into account are watching your capacity in biodiesel purification and reaction as well as the size of the methanol purification and recycling systems to make sure you can accommodate that extra recovered methanol. The facility is really designed from the get-go with this in mind, so it’s different than going back and retrofitting a plant to do the same thing.” Waste streams from glycerin refining include salts, which can be used as fertilizer (best) or landfilled (worst), fatty acids that can
PRODUCTION be esterified to biodiesel and glycerin distillation foots, which can be sold to the feed market (best) or landfilled (worst). “A lot of biodiesel plants are producing glycerin with a high MONG (material organic non-glycerol) content, or it still has methanol in it,” Smith says. At Big Island Biodiesel, and the plants Pacific Biodiesel has built on the mainland, they produce glycerin that’s 85 percent pure. The methanol is recovered and treated, and pushed back into the process. “That’s typically not done,” Smith says. “It’s sold as a waste product or for very little value for upgrading.” Derek Masterson, product sales manager with Crown Iron Works, says, “When we design a biodiesel plant, we follow the philosophy that we don’t want to discharge any water. We push any excess water into the glycerin for glycerin refining. You have a choice—you can make good biodiesel and pretty good glycerin or you can make biodiesel and shove all your problems in the glycerin, and we’re not about shoving the problems into the glycerin. We think that’s the wrong thing to do because then you have a poor-quality crude glycerin. So in the biodiesel plant, we’re trying to do a good job separating the biodiesel and the crude glycerin, recovering the methanol from the crude glycerin to end up with what I’d call ‘nice, crude glycerin.’ So out of that you’re going to end up with salts and a little bit of fatty acids and other organics and that could be 5 to 10 percent of your crude glycerin.” “There’s a possibility to have a no-waste plant by just selling what you don’t need or throwing it into other products,” he says. “That’s been done for decades. I think the small producers are figuring out that they have small amounts of waste and it’s a good idea to do something with it, whereas on a large scale, those problems were already solved because they were such big problems that they have done something about it already. If you got a huge problem, you gotta take care of it. If you have a small problem, maybe you don’t.” Masterson says maybe plants that were inefficient before are becoming more efficient, and that waste streams may already be taken care of in certain process technologies themselves. Perhaps cruder technologies produce more waste that must find a home. While sustainability is powerful, the motivators for zero-waste production are purely
economic. “Business can be sustainable and it can make economic sense to be that way—and maybe it makes more economic sense to be sustainable than to be otherwise,” Harris says. “It’s about minimizing or eliminating disposal costs, as well as the potential production upsets from not being able to find the appropriate markets or disposal routes for what would be considered waste,” Smith says. “All of the ‘wastes’ that are usually generated in biodiesel production, when recovered appropriately, are high-value products—we’re talking about fatty acids, or glycerin, or methanol or off-specification biodiesel. All of these products have mar-
kets either internally or externally. You’re looking at a cost savings when treated properly and upgraded. They’re no longer a waste product. So it’s very much an economic case to be made for being a zero-waste plant from an operational cost standpoint, and potential avoidance of shutdowns. That’s one of the things we’ve run across with biodiesel production the past four years. When they put in their plant they had a market for their glycerin when it came off the process, or their wastewater or solids that come off their pretreatment process. But then something happens to their buyer and they have to shut their plant down until they could find an-
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PRODUCTION other market for it, which is obviously disruptive. So those are the two major reasons: a cost reduction or another profit center, as well as avoidance of shutdowns.”
Plant Optimization Plant optimization is very closely intertwined with the concept of being a zero-waste producer, as both aim to increase margins and decrease wastes. Raj Mosali, president of Jatrodiesel, says producers rarely approach a process technology service provider and say, “I want to optimize my plant.” Rather, if a producer seeks feedstock flexibility, for example, a technology
provider representative does a walk-through. “That’s when we notice optimization-related issues,” Mosali says, adding that it’s common for what is on the plant floor to differ from the piping and instrument diagrams. “We typically like to see the plant as it was built,” he says. He starts with the transesterification unit and works out from there, from the front to back. Once all that data is in-hand, plus knowing what feedstocks the plant will consume, they go one step at a time and develop a series of procedures required to optimize to perform at the specified volume. “Many times a plant is supposed to produce at one level, but it’s usu-
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ally not because heat exchangers or condensers are not performing as they did upon installation,” he says. Cooling towers, boilers, water composition (soft enough?) and pumps are also checked. Pumps can decrease throughput for various reasons—additional piping or tees, or too much sediment in feedstock. “You design for 200 gallons per minute in the reactors and now if you’re at 150 gpm, this affects your whole reactor and the amount of time needed to finish,” Mosali says. Rocky Costello of consulting firm R.C. Costello & Associates says an obvious technique is improving reaction. “You can improve it by using the Shockwave Power Reactor from Hydrodynamics to get more conversion,” he says. “The more conversion, the less likely you will need to distill the biodiesel, which is an expensive option in the first place. If you strip out the methanol, you’re in pretty good shape. People are touting distillation, and that’s a very expensive energy step. The sins of poor reaction—monos and diglycerides—are eliminated through that distillation process. If you have poor reaction, you can clean it up, but when you have really great conversion, say 99.9 percent, it’s not necessary.” If a batch plant doesn’t want to move to continuous flow ultrasonics, though, Costello says, phase separate out the glycerin multiple times. “It’s a reversible reaction so as the glycerin remains, it prevents the reaction from going farther to the right,” he says. “As it’s eliminated, the reaction goes farther to the right and you have conversion.” He also recommends installing static mixers in line prior to the stir tank reactors to premix the oil and methoxide. “Those are ways to clearly improve your conversion.” Many plants have already optimized to become feedstock flexible, but for those that haven’t, strong consideration should be given to do so. “If you have a plant that just has transesterification and you want to be more flexible, like our own BioFlex plant technology, we have degumming up front, esterification and traditional transesterification,” Costello says. “But there’s quite an expense to do that. On the other hand, it doesn’t mean that your transesterification unit that you originally started with has been optimized.” The addons for feedstock flexibility include degumming to remove phospholipids, and esterifica-
PRODUCTION tion that converts FFA to biodiesel and water. “Ultimately flexibility is important because it allows lower-cost feedstock, and what most clients tell me is their single largest expense is feedstock. It’s so expensive to the point that they’re not that concerned about energy. It’s getting cheap feedstock.” Mosali says optimizing a multifeedstock plant involves a few key items. “One is, when the feedstock comes in make sure you know how much sediment and water you’re getting, and what the FFA concentration is,” he says. “The big problem with multifeedstock plants is sediment and water. What happens is, if you go with yellow grease versus corn oil from ethanol plants and animal fats, there’s a big fluctuation in the amounts of moisture and sediments that come in. Those are two big things, so if you address those on the frontend, then the rest of the process is very consistent, you don’t have to do anything major to change from one feedstock to the next, or a combination.” Batch plant optimization differs from continuous flow plants by the sheer nature of its operations: repeatedly going full throttle and stopping. “Continuous flow is predictable and stays at one level all the time,” Mosali says. “In batch plants, you have to look at certain things because of the load fluctuations— pumps, reactors, boilers, cooling towers, chillers. Anything that’s running has that effect, so you need to make sure those load fluctuations don’t adversely affect that equipment.” Mosali says one critical area where a lot of plants lose value is in lack of methanol recovery. He says typical return on investment from biodiesel and glycerin methanol recovery is six to eight months. “Some large customers don’t want to spend the money on energy to dry the methanol out, but there’s no other way,” he says. “It’s a one-time cost that pays you back in about six months.” Costello says methanol volume optimization to triglycerides is important, but tricky. “The more methanol you have, the higher conversion you have,” he says. “However, the more excess methanol you have, the more you’ll have to distill out at the end. You’re caught between a rock and a hard place. More methanol means better conversion, but more methanol means more energy to strip the methanol out of the biodiesel distillation column downstream. So
many producers try pinching that methanol to the bare minimum, so that’s a suspect if there’s poor conversion. On the other hand, they may not have the capacity and distillation columns to strip out more methanol, so they’re pinched back for a reason.” The tradeoff for better conversion is excess methanol in the reactors versus distillation capacity on the backend. “You have to strip the methanol out of the biodiesel or you won’t meet spec,” Costello says. “It’s optional on the glycerin. If you don’t remove the methanol from glycerin phase, that would be considered hazardous material, but if you have someone who could take it as a product, you
can ship it on a bill of lading rather than on a hazardous waste manifest.” Ultimately, Costello says, when it comes to plant optimization, most people have done a lot of the obvious; therefore, new opportunities and benefits lie in the unobvious, and for that, many producers should call on the assistance of process technology experts to identify them. Author: Ron Kotrba Editor, Biodiesel Magazine 218-745-8347 email@example.com
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GOLDEN OPPORTUNITY: Dave Elsenbast, REG’s vice president of supply chain management, says biodiesel from inedible corn oil, extracted from the backend of ethanol plants, made up between 6 and 7 percent of the total biodiesel gallons produced in 2012 through September. PHOTO: REG INC.
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A sit-down with Dave Elsenbast, vice president of supply chain management for Renewable Energy Group Inc. BY RON KOTRBA
For more than 25 years, Dave Elsenbast has been a leader in agricultural business development, supply chain management, operations and purchasing. Prior to joining Renewable Energy Group Inc., the largest U.S. biodiesel producing company with more than 225 MMgy of operational productive capacity to date, Elsenbast served as the vice president of business development for Milk Specialties Co. Elsenbast earned a Black Belt in Six Sigma accreditation, and he currently serves on the board for the American Fats and Oils Association. Elsenbast, who says he does “a little bit of farming in Northwest Iowa,” is considered one of the industry’s foremost experts in biodiesel feedstock, as he manages procurement of fats, oils and grease for REG’s seven large operating biodiesel plants centered in the Midwest with two outposts in Texas (REG Houston and REG New Boston, formerly North Texas Bio Energy), as well as gauging and analyzing feedstock markets in regions where the firm has plants under construction in the Southeast (REG Atlanta, formerly Bulldog Biodiesel), the Southwest (REG Clovis in New Mexico, also an operational terminal), Louisiana (REG New Orleans) and Kansas (REG Emporia). Q: REG just last week announced its gaining new positions at four New York City metro area fuel terminals. From what I could see, those biodiesel terminals were established by Ultra Green Energy Services. REG also hired Daniel Falcone and Michael Cooper from UGES. Can you share some details behind that deal? A: It was a good opportunity for us to really move into the great [Northeast] biodiesel market both for heating oil as well as over-the-road, ultra-low sulfur diesel. The Ultra Green group had been working that market quite well, Danny and Michael, and the distribution assets, their
relationships with the terminals and the transloads, were really brands for us to start utilizing to be able to get some of our biodiesel into those markets, especially some of the higher-cloud material into that during the winter months. So it’s helped us expand our goal of a very strong nationwide distribution, and we’re starting to ship quite a bit of biodiesel out there now in servicing that market. And we’re really excited about that. Q: Are those terminals serviced by both REG and UGES now, or did REG buy out UGES? A: It was not an acquisition. We acquired, or had some of the assets, contracts and relationships, assigned to REG. Q: REG has been buying distressed plants at a fast clip, including the acquisition North Texas Bio Energy in New Boston, Texas, and Bulldog Biodiesel near Atlanta in three weeks’ time. How does REG ensure consistent, quality feedstock procurement for these acquisition plants that are outside of REG’s Midwest biodiesel production hub? A: Quality and consistent supply of feedstock near any one of our plants is a critical hurdle that we have to pass whenever we start to consider where we may want to locate a plant or look at an acquisition. Many times we’re already working with many of the suppliers that are in those areas because they are companies that have many plants regionally or across the country. So many times it’s expanding already great vendor relationships into more of their locations. But also when we go into an area, we investigate all the suppliers that we’ve not had the opportunity to do business with mainly through logistics, but then we establish relationships, we look at samples from the suppliers, we test the quality of their product in our lab in Ames, Iowa,
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Q&A and as we approve those samples, then we work toward establishing a new vendor relationship in the areas around the plant we’re looking at acquiring. Q: Tell me about how biodiesel feedstocks differ per region, and how does the same feedstock differ in quality and price per region? A: When you think about different feedstocks around the country, it’s best to first look at livestock production maps. You can look at different production numbers of poultry,
swine and cattle around the country to get a feel for what types of feedstocks you’re going to acquire in those regions, and the second area you look at is population maps, and you can make some extrapolations as to how much recycled waste restaurant grease could be available in those markets. Pricing between markets is something that, historically, companies such as the Jacobson report, would cover different fat markets around the country―we track them, and we watch the spread between the different markets. But also one of the positives is we have people on our purchasing teams who are trading in all the different markets on a daily basis
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so we’re watching the spreads in the different regions and trying to react to what the markets are doing. Q: What advantages does REG have over its competitors, outside of sheer volume, when it comes to feedstock supply? A: A few things that come to mind there is, we do have a full-time team of people in our procurement area; we have seven people on our team who are actively trading in the marketplace every day. That gives us good coverage throughout the country every day. We have a great plant information system that keys us into all of the production activity at all of our plants in a real-time fashion, so we’re watching receipts, production, consumption and forecasting future needs off that in a real-time basis. And also we have a very extensive vendor list. Our objective is always to do business with everyone who can meet our quality needs and be cost-competitive and to try and do business with as many suppliers as we can and we also play in every commercially available feedstock, so I guess spreading out our risk amongst many vendors with many different feedstocks is one of our advantages. And most of our production plants have that lower-cost model of manufacturing where we’re able to use lower-cost, lower-valued feedstocks and we’re able to convert those efficiently into biodiesel. Q: What are some mistakes that biodiesel companies make in procuring feedstock that end up hurting their bottom line? How could they correct these? A: We would probably say, get to know your vendors very well. Sample and test their product to see what kind of quality parameters they are able to meet. Get to know your vendors. They’ll get to know you. But have a very good understanding of what your plant is capable of utilizing. We’ve all heard the stories out there in industry that startup plants start buying feedstocks before they know what their plants can process. Understand what your plant is capable of utilizing before you’re in the marketplace filling up the tanks.
Q&A Q: For third-quarter financials, REG initially proposed its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) would be $10 million to $15 million, but due to lower RIN values and risk management positions, the company’s third quarter adjusted EBITDA came in at a $2.3 million loss. Can you talk in detail about what those positions were, how that led to a significant loss in adjusted EBITDA versus initial guidance of an even more significant gain, and what lessons have been learned from the third-quarter of 2012? A: In our conference call, we talked about a tougher biodiesel environment, the RINs market tested down, due in part to the level of production that the market had produced to date. The market was giving signals that we need to slow down production. That made the market environment challenging during the third quarter, but we’re also excited about the announcement of the 28 percent increase in the RVO (renewable volume obligation) for 2013, and we look forward to starting produce for that higher mandate. Q: A couple years ago at the Fuel Ethanol Workshop, where you presented, you said corn oil extracted from the backend of the ethanol process made up slightly less than 10 percent of U.S. biodiesel production feedstock in 2010. What are those numbers today, and what do you project them to be in coming years? A: First of all, inedible corn oil has been a great synergy story between the biodiesel industry and the ethanol industry. REG has been using inedible corn oil since 2007, and it’s a very [important] feedstock for us. And as the ethanol industry has expanded its production of inedible corn oil, we have made plant investments to put in the capability to use it. It’s a growing feedstock for us. Some of the numbers you might be looking for are, at the end of September 2012, the EIA data shows that we’ve used 414 million pounds of inedible corn oil in biodiesel production this year. If you extrapolate that into biodiesel gallons,
it’s roughly maybe 6 to 7 percent of the overall gallons produced. But certainly the inedible corn oil used, having a growth feedstock, helps us and, in the process, is a story to point to as we work to grow the RVO in the forward years. Q: Is there any concern about the current state of the ethanol industry now with plants idling due to the socalled blend wall having been reached? Obviously, the less ethanol that’s produced, the less inedible corn oil is available for biodiesel production.
A: We always are watching the ethanol industry closely, it’s a good partner for us, and their margin structure is challenged right now, which reinforces the need for many of the ethanol producers to have this capability installed in their plant. We do think the ethanol industry will continue to move toward this separation on the back of their plants. And we think the market is going to, in another year or two, be fully penetrated through all ethanol plants. In a lot of cases, it will be the help in margins that they’ll need to continue to produce ethanol in a difficult market. The other thing we think will get a lot of attention in the next year or two is
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Q&A improvements in separation technology. They have seen the positive benefits of separating a little bit of the corn oil from the DDGS and thereâ€™s certainly a direction to separate more and more of the oil out and get it pushed into the market and get them the higher returns. So the ethanol industry production could be down a little this year, but we do think overall corn oil production will be up. Q: In mid-September the USDA released its soybean forecast for this harvest, the worst drought year in decades. The numbers were not good and analysts
projected that in early 2013 soybean prices, and therefore soy oil prices, would reach record highs. What is your perspective on this yearâ€™s harvest, how it will affect soybean and other feedstock prices under the theory that a rising tide raises all ships, and ultimately, biodiesel production margins? A: The current USDA soybean estimate for the June crop is 3.094 billion bushels, and this is the fourth highest bean crop ever in the U.S. I think it really benefited a lot from the late season rains we got from the last half of Au-
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gust. I think the yields have improved dramatically from what we thought they would be in the month of July. I do a little bit of farming in Northwest Iowa and many of our neighbors were seeing 50 to 60 bushels per acre range. But the demand for soybeans has been strong, crush margins have been excellent, we have very strong demand for protein. Exports of soybeans have been very strong. So the market is concerned a little about bean supply as we get into Q2 and 3, but the positive story out there is the growing South American crop. Iâ€™ve looked at some estimates, and currently the Argentina soybean production estimate is for 54.5 million metric tons versus production of 41 million metric tons last year. And soybean production in Brazil is estimated at 80.8 million metric tons versus 66.5 million metric tons last year. It looks like we could be getting off to a very good start, and again it wonâ€™t be long before the U.S. starts a new growing season and I would anticipate that higher prices on soybeans are going to send strong signals to farmers to grow more. But we could have a bias toward higher soybean oil prices as we get into Q2 and 3. But again, the biodiesel industry is built off a very strong multifeedstock approach to it, and at REG, our focus is to be able to use the full spectrum of commercially available, lower-cost feedstocks. We think thereâ€™ll be plenty of feedstocks in the marketplace to be able to sufficiently meet the requirements for 2013. And do it cost-competitively. Q: With higher soybean prices in Q2 and Q3, like you mentioned, might we see some upward pressure on the other feedstocks that are considered lowervalued, lower-cost for biodiesel? A: One of the factors tempering soybean oil is very strong palm oil production and palm oil stocks on the market. Thatâ€™s tempering a little bit of the upside on soybean oil. Q: We have only a matter of days before Congress breaks for the year. Do you think a tax credit will pass by the end of this year (2012), or even possibly early next year? Some people ask, whatâ€™s the value of the credit to producers if itâ€™s only going to raise feedstock prices?
Q&A A: Well, we’re certainly monitoring the situation and we have a staff that’s in D.C. that is working through the proper channels and we’re hopeful the tax credit does get passed, we think it’ll be positive for our relatively new industry to continue to get support as we work toward meeting the [requirements] of RFS2. The dollar tax credit, how that gets split up in the marketplace, is determined every day by varying trading levels between what we’re buying feedstocks for and what we’re selling biodiesel for. It doesn’t necessarily all end up in the hands of the feedstock providers. The market splits it up based on everyone’s supply and demand factors. I was looking at the numbers the other day and we had this happen at the end of 2010. Mid-December 2010 the tax credit wasn’t in place and at the end of the year Congress passed it, and made it retroactive back to the beginning of the year and through 2011. If you look at how the markets moved over the next 90 days, when you look at feedstock increases and RIN prices over that time frame, it seems like about 25 percent of that tax credit ended up in higher feedstock prices. So, again, the dollar—what I didn’t look at is the biodiesel basis selling price, so it’s split between all the parties in the value chain. Q: The concept of a multifeedstock biodiesel plant is to be able to take advantage of the feedstock markets so that when prices go up or down, the plant can maneuver and be flexible to buy cheaper available feedstocks. In reality though there are risk management decisions such as locking in prices on futures contracts, limited regional supplies and other elements that seem to make the ability to switch feedstocks on a dime more difficult than that. Can you describe how REG manages feedstock supply for its multifeedstock plants and explain what are the factors involved in making these decisions, and how are these decisions actually executed? A: The risk management, procurement and biodiesel selling positions are all intertwined, which is why we have the open trading floor [in our Ames, Iowa, office]. We’re all looking at and sitting right next to one another so that the coordination and communication
and speed of decisions, when it comes to feedstock and selling decisions, we’re all right next to each other, and it helps us make decisions that we need to make in the time we need to make them. Q: What are some of the more promising feedstocks under development now that have real potential in biodiesel?
one to three years. One of the positive things that REG has is, because of our experience and manufacturing expertise on using a very wide array of feedstock, we make very good commercialization partners for these companies to come to and work with, for them to bring their new oil to the market. That will be very helpful for us as we try and continue to grow the RVO each year going forward. Author: Ron Kotrba Editor, Biodiesel Magazine 218-745-8347 firstname.lastname@example.org
A: Pennycress, camelina, algae oil and jatropha are all oils that are under a lot of development and receiving a lot of R&D. We think that they’ll be potentially commercialized in the next
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Energy Farms: Is the Time Ripe? Biodiesel, ethanol and livestock production, wind turbines and photovoltaic installments situated in close proximity make energy―and economic―sense BY PETER BROWN
The concept is that if alternate forms of energy can be produced that are nonpolluting, renewable, provide jobs and are simple to manufacture, then it is obviously a “good thing.” But a new trend is appearing based on serendipitous allocation of space around a number of possible energy sources: the idea of the “energy farm.” There is no definition yet of an energy farm but, for the purpose of this article, we are defining it as an area where
three or more forms of renewable energy producing concepts and equipment have come together with the result that different forms of energy are created for local usage or resale. In some cases, each energy project was created independently of the other with different corporations just being in the same area. In other cases, there was a personal and business relationship that led to the farm and, finally, in cases where photovoltaic panels support local electricity demand, it was part and parcel of the whole.
With that in mind, let’s look at some of the ideas floating around out there. The first potential site is the St. Lawrence Seaway between Quebec and the U.S. In the lit- Peter Brown, tle town of Varennes, principal, Euro Quebec, Canada, Marketing Tools there is an ethanol production facility, a future 200,000 ton a year (60 MMgy)
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily refl ect the views of Biodiesel Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
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biodiesel complex and Hydro Quebec has installed a large electrical research facility aimed at optimizing battery power and photovoltaic research. Enerkem and GreenField Ethanol have also announced their plan to jointly build a waste-to-fuel facility for a project that will represent “one of the first integrations between an existing, first-generation ethanol plant and a new cellulosic ethanol plant,” as further explained by Vincent Chornet, Enerkem president and CEO. These are prime examples of what is being created in light of the insatiable demand for energy and mostly for independent, renewable energy. First stop, Varennes, Quebec, on the St. Lawrence just east of Montreal. Here an older ethanol production facility started operation in February 2007 and has been in continuous operation since then. It uses more than 12 million bushels of corn a year and returns 120 million liters a year of ethanol as well as 120,000 tons of animal feed to the local farming community. It is situated on a major waterway with direct connections to some of the richest farmland in North America, which is probably why there was a recent attempt to build a 60 MMgy biodiesel facility within sight of the ethanol plant. The plan would have included a large hexane extraction unit to handle the canola rolling in from the Midwestern provinces by the boat and train load. The biodiesel unit may still go through, but what is clearly going forward is one of the largest cellulosic ethanol facilities in North America based on Enerkem’s technology of converting municipal waste into ethanol, a technology that was initially created by Esteban Chornet, a professor of chemical engineering at the University of Sherbrooke.
The first renewable fuel project in Brittany is a research center for algae-based biodiesel created from the now-empty kaolin quarries outside of Lorient under the direction of Ifremer, called Safeoil. In partnership with Greenfield Ethanol, this facility will add another 10 MMgy of ethanol and eliminate tons of municipal waste. This exclusive technology creates a syngas that is then converted to liquid fuels. What is remarkable about Varennes is that in many ways it is a totally unremarkable bedroom community for Montreal
that was chosen as Hydro Quebec’s research site for advanced research in electrical power. In France, Brittany is another renewable energy pole probably because it has no native energy sources, is fiercely antinuclear and situated in a politically independent part of France. And yet, in the small fishing villages, the larger ports and
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In Mozambique, the creation of biodiesel will be part of rejuvenating a blighted economy.
the urban centers like Rennes, Brest and Lorient, ideas are bubbling up and taking root. Brittany is the ocean, the rough Atlantic with its legendary gales; the famous wreck of the Amoco Cadiz and its gigantic tides has long been a source of income, a challenge from Mother Nature and the indomitable spirit of the Breton sailor. No wonder that they are taking renewable energy as both a blessing and a source of regional pride. Offshore wind power is based on a revolutionary concept of floating the windmills on the ocean and sending the electricity ashore on cables that hug the bottom. The advantages are multiple, but some are unexpected. Where tests have been done, the windmills emulate the weeds and just bow down to the more destructive gales. They are out of sight of land; one of the more irritating aspects of windmills is their sheer bulk. Finally, for some reason, fish are congregating around the sites ensuring additional revenue to a region that has legendary fishing industry. That is a world-class wind power industry, but under the ocean surface, local engineers are designing tidal and wave systems to create electricity from the constantly moving and highly predictable tides and waves. Because of the Amoco Cadiz and the Torrey Canyon tanker disasters, all Bretons have an almost pathological hatred of over-water petroleum transportation. Both those disasters caused huge ecological damage to a region that has lived for centuries close to nature. The first renewable fuel project in Brittany is a research center for algae-based biodiesel created from the now-empty kaolin
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quarries outside of Lorient under the direction of Ifremer, called Safeoil. The second is a very serious effort to convert the fishing fleet to some percentage of biodiesel and the search for local feedstock has turned up the usual suspects of waste vegetable oils from the local restaurants, but more importantly, there are efforts to recuperate fish oils from the fisheries and convert that into biodiesel. At a local conference in Lorient, it was very clear that diesel fuel is perceived as a toxic chemical that should not be spread over the local fisheries and crustacean farms. Local mechanics are personally testing their fleets on mixtures of vegetable oil and ultra-low sulfur diesel. Since Brittany is an agricultural center, we are also seeing the propagation of small-sized methanizers. One company, Odipure, is selling its farm-based methanizers all over the world. With large cattle farms and serious pig production, there are now two proposals to create biodiesel facilities in the town of Lorient. This is in spite of the recent opening of a large biodiesel production facility at Le Havre. The situations in Quebec and Lorient are very similar, local entrepreneurs have found local solutions for energy production in the renewable sphere and created de facto energy farms based on what they know best. For Enerkem, it was chemistry. For Ifremer, it was the ocean. The model is agricultural, the ethos is agricultural and the end result has more to do with the farmerâ€™s concept of using the land to produce a new crop. Electrawinds in Belgium may have a rather unique ap-
proach to the energy farm concept since they are a biomass, photovoltaic and, yes, wind power company with several installations under its belt in 12 countries; and they select countries with good climatological conditions (presence of wind, sun and biomass streams), major potential for renewable energy, as well as a favorable and stable investment climate. Then they go in and design ecologically pure power projects, the majority producing electricity in one way or another. They become their own energy farm with an equation that pays out in grid transfer, sales of small partnerships, fuel and technology. The company that started out as a wind energy producer created the concept of green electricity and branched into photovoltaic panels with the largest Belgian photovoltaic site. They later perceived a business opportunity in converting waste to fuel and, hence, to electrical power. In Mozambique, the creation of biodiesel will be part of rejuvenating a blighted economy. In Germany, where tampering with legislation on the production of biofuels has slowed production, new energy solutions are allowing biofuels to be produced from a host of new sources. And finally, there is the schizophrenic solution of Aemetis that built a biodiesel facility in India in order to sell glycerin while becoming a world leader in the research and production cellulosic ethanol in California. The question of the energy farm becoming the norm is still to be proven, but there is an obvious move in that direction, renewable fuels imply harvesting, and that activity has always been the farmers’ mentality only raison d’être. Mostly because the infrastructure is so hard to permit, where any biofuel system is in place we are seeing interest in adding new revenue streams that will benefit from the crushers, the waterways, the railyards and that all-important permit for the production of biofuels. On the receiving end, whether crushing soy or camelina, the end result is the same. Extracting animal feed is a cash crop for ethanol and biodiesel producers. Farm sites are often energy hogs and adding a bagasse-powered turbine is a no-brainer while installing solar panels for the office space. We noted in passing several allusions from ethanol producers interested in converting their corn oil to biodiesel. Bottom line, there will be more areas where all renewables will be coming together and it is clear that companies like Electrawind may become much more popular going forward.
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