INSIDE: MITIGATING POTENTIAL TANK AND PIPELINE CORROSION november 2011
The Critical Link of Feedstock Logistics
Cover Crops Aid Stover Removal
Debating Cellulosic, Advanced Biofuel Volume Mandates Page 56
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november issue 2011 VOL. 17 ISSUE 11
Cellulosic Facets By Susanne Retka Schill
10 The Way I See It Tout the Benefits of
Ethanol in Agriculture By Mike Bryan
11 Events Calendar FEEDSTOCK
The logistics of cellulosic feedstocks present many challenges By Kris Bevill
Environmentally friendly cover crops could pave the way for greater stover removal By Holly Jessen
Cropping Between the Lines
The Round and Square of It
12.9 million gallons
Upcoming Conferences & Trade Shows
12 View From the Hill
‘Can’t’ Never Did Anything By bob dinneen
The Renewable Fuel
Standard Means Certainty By tom buis
16 Grassroots Voice
Defending the Merits
3.45 million gallons
of the RFS By brian jennings
18 Europe Calling
Gauging 2012 Volumes
RFS woes accompany lag in cellulosic ethanol production By Kris Bevill
Protecting Those Workhorse Tanks A look at corrosion mitigation strategies By Holly Jessen
Is There Too Much
Land in Europe? By Rob Vierhout
20 Business Matters Take Credit for
Research and Innovation By trina swart
22 Business Briefs
24 Commodities Report 28 Distilled 78 Marketplace 82 Ad Index
E15: Cracking the RVP Nut
The largest barrier to the new blend may be the vapor pressure issue By Jeremy P. Greenhouse
When Product Development is Just the Tip of the Iceberg
INSIDE: MITIGATING CORROSION POTENTIAL IN TANKS AND PIPELINES november 2011
New enzyme-producing corn variety requires special handling By Tim Tierney
Ethanol Producer Magazine: (USPS No. 023-974) November 2011, Vol. 17, Issue 11. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
4 | Ethanol Producer Magazine | november 2011
The Critical Link of Feedstock Logistics
Cover Crops Aid Stover removal
Debating Cellulosic, Advanced biofuel volume mandates Page 56
On The Cover In Denmark, Inbicon’s demonstration plant using straw for cellulosic ethanol is integrated with parent company, DONG Energy’s generating facility. PHOTO: INBICON
Conversion technologies are often the focus, but the emerging industry of cellulosic ethanol development is multifaceted. In this issue, Associate Editor
Kris Bevill writes about the latest ideas on feedstock logistics. As we all know, a commercial plant will need mountains of feedstocks. Many are concerned about how getting all that biomass in motion is going to work. There’s an interesting divergence of views: Some say farmers will want to retain the added value and do the work themselves; others say a system for custom biomass harvest is required. Associate Editor Holly Jessen takes a different look at the feedstock issue. She reports on new cover crop ideas that could allow for more stover to be removed for cellulosic conversion. Cover crops have had a hard time catching on, in spite of their many benefits such as improving water quality by reducing nutrient leaching, because of the lack of economic return. Enhancing feedstock supplies for cellulosic production could have the ancillary effect of improving corn’s environmental performance—and might just take some of the heat off corn ethanol, too. Covering another facet of the nascent industry, there’s plenty of uncertainty on the market side. Bevill takes a look at the issues surrounding the volume mandates for cellulosic biofuels in the renewable fuel standard and the struggle to get the renewable identification number system for cellulosic and advanced biofuels functioning. From feedstock logistics to changing corn agronomics to market mechanisms—all areas have many unknowns, requiring input and ideas from many.
Cellulosic Facets Susanne Retka Schill, Editor email@example.com
For industry news.
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letters Re: Donald Barry’s letter to the editor in the September issue I can understand your frustration with trying to find a fueling facility that provides E85. You are “surprised that more producers do not acquire pumps with their own money, rather than wait for the U.S. government to provide the funds.” Here is what it would take for a producer to dispense E85: Local zoning laws must be confronted and overcome; state, local and federal fire/environmental codes must be dealt with and roadway access negotiated. Then, construction might take place, at an investment of more than $1.5 million for one retail facility. Also, individual fueling facilities branded from a major oil company have clauses in their contracts that prohibit “adulterated fuels,” meaning fuels with additives that were not provided by the oil company. This means no E85, E10 or any other blend not authorized or supplied by the oil company.
Unfortunately, it all boils down to what people are willing to pay for. If manufacturers will produce motors that will take advantage of ethanol’s capabilities (Brazil’s auto industry did), people will be willing to buy the product. If people are willing to buy the product, more outlets will become available. As producers and marketers of renewable fuels, we need to reach out to the people we want to use the product, so that they can create the demand that will support the infrastructure that will be able to offer the product. Sorry to say, but there are many more steps to take before we can make E85 a viable product across the country, but it is up to us to make it happen.
6 | Ethanol Producer Magazine | november 2011
Eric Hammer b2b Solutions LLC Lake Forest, Ill.
A Hawaiian View I have customers using up to 40 percent in their cars with no problems, so what is the big deal on E15? We get great performance and gas mileage from this mix of more ethanol in the gas. In Hawaii the ethanol is blended up to 5 percent and no more. I don’t see why [there would be] a problem with more ethanol in the gas. I have a plastic bottle with E100 ethanol in it and no problems, nor with damage to rubber, plastic or fiberglass. I would be glad to give you a list of some of my customers that have used 30 to 40 percent ethanol for over a year now. My cars have been on it for 10 years at 50 percent with no damage to fuel lines or anything. I use E100 in my ’73 Pantera and have no problems. And, what about Brazil? They have been using more ethanol with no problems for 50 years now. Ethanol is the best fuel to use, I would like to see people prove that it is the ethanol that is causing all that they say it is. George Nitta 50th State Ethanol Inc. Honolulu, Hawaii
EDITORIAL EDITOR Susanne Retka Schill firstname.lastname@example.org ASSOCIATE EDITORS Holly Jessen email@example.com Kris Bevill firstname.lastname@example.org COPY EDITOR Jan Tellmann email@example.com
ART ART DIRECTOR Jaci Satterlund firstname.lastname@example.org GRAPHIC DESIGNER Erica Marquis email@example.com
PUBLISHING CHAIRMAN Mike Bryan firstname.lastname@example.org CEO Joe Bryan email@example.com VICE PRESIDENT Tom Bryan firstname.lastname@example.org
SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor email@example.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse firstname.lastname@example.org SENIOR ACCOUNT MANAGER Jeremy Hanson email@example.com ACCOUNT MANAGERS Chip Shereck firstname.lastname@example.org Marty Steen email@example.com Bob Brown firstname.lastname@example.org Andrea Anderson email@example.com Dave Austin firstname.lastname@example.org CIRCULATION MANAGER Jessica Beaudry email@example.com ADVERTISING COORDINATOR Marla DeFoe firstname.lastname@example.org Senior Marketing Manager John Nelson email@example.com
EDITORIAL BOARD Mike Jerke Jeremy Wilhelm Commonwealth Agri-Energy LLC Mick Henderson Pinal Energy LLC Keith Kor Golden Grain Energy LLC Walter Wendland Chippewa Valley Ethanol Co. LLLP Cilion Inc.
Neal Jakel Illinois River Energy LLC Bert Farrish Lifeline Foods LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP Bernie Punt Siouxland Energy & Livestock Co-op
Customer Service Please call 1-866-746-8385 or email us at firstname.lastname@example.org. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or email@example.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at (701) 746-8385 or firstname.lastname@example.org. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to email@example.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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november 2011 | Ethanol Producer Magazine | 7
The New Ethanol. Refined, retailed, and rolling across America now.
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the way i see it
Tout the Benefits of Ethanol in Agriculture By Mike Bryan It must be my age that drives me to rant on about things, but the article in the Modesto Bee, from Modesto, Calif., claiming that ethanol has put a large farm out of business because of the ethanol mandate, just made me angry. I have empathy for anyone going out of business, but to say that a farming operation that employs 185 people was put out of business because of the high cost of corn alone seems to me a bit of a stretch. No mention of the high oil prices, no mention of a weak economy, no mention of increased-cost fertilizers and other farm commodity issues. No, it was because of the ethanol mandate. Just behind Canada, ethanol is now the second largest supplier of fuel in the U.S. Ethanol supplies more fuel to America than six other major oil exporting countries. The renewable fuel standard that is driving the mandate is necessary because without it, the oil industry would not use ethanol. So the mandate that the Modesto Bee is talking about is literally helping keep oil and gasoline prices in check and thereby helping reduce farming costs. If America were to remove ethanol from the market, oil prices would skyrocket. Eventually, with the advent
10 | Ethanol Producer Magazine | november 2011
of cellulosic technology, ethanol could replace 90 percent of our gasoline demand. Ethanol production only uses 3 percent of the total world grain supply. It’s a well-established fact that the current, and previous, price spikes in corn are largely driven by Wall Street speculators, not ethanol demand. Average corn yields in the United States continue to increase, from 50 bushels per acre in 1960 to 150 bushels per acre in 2011, while ethanol production from corn has now stabilized. The share of the dollar that farmers get from the commodities they produce is a pittance compared to the overall cost of food. Farmers receive less than 16 cents for every dollar of food cost and, when it comes to corn, it only represents 3 cents for every dollar of food. From an environmental perspective, ethanol production continues to play a greater role in greenhouse gas reduction. Today’s ethanol facilities are powered by natural gas and increasingly by alternative clean energy sources. As farming practices and ethanol production technologies advance, so will the environmental benefits of ethanol. Included in these advancements are substantial reductions in the use of water, from nearly 6 gallons of water for every gallon of ethanol in 1998 to 2.7 gallons today and projected to go down even
further in the decade ahead. Don’t even get me started on the whole indirect land use issue. While ethanol production has steadily increased over the years, deforestation has steadily decreased. In fact, deforestation of the Amazon has decreased by 72 percent since 2004. The indirect land use issue is a nonstarter when it comes to ethanol production. If the Modesto Bee is serious about helping farmers in the region, then it should be touting the economic benefits that ethanol provides in agriculture. At a time when Wall Street is gouging America, ethanol provides a much needed boost to Main Street. Come on Modesto Bee, get with the program and stop giving me things to rant about. That’s the way I see it!
Author: Mike Bryan Chairman, BBI International firstname.lastname@example.org
Pacific West Biomass Conference & Trade Show January 16-18, 2012 San Francisco Marriott Marquis | San Francisco, California With an exclusive focus on biomass utilization in California, Oregon, Washington, Idaho and Nevada— the Pacific West Biomass Conference & Trade Show will connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers. (866) 746-8385 www.biomassconference.com/pacificwest
Biomass Event Hotspot: San Francisco in January 1/16
BBI International’s regional biomass show heads to San Francisco in January. The Pacific West Biomass Conference & Trade Show, being held Jan. 16-18 at the San Francisco Marriot Marquis, is produced jointly by Biorefining Magazine and Biomass Power & Thermal. The conference, one of three regional offshoots of BBI’s International Biomass Conference & Expo, will feature more than 60 speakers in four tracks. The Feedstock track will not only discuss resources and sustainability, but also dig into the details of logistics and pretreatments. The Biomass Power and Thermal track will cover the use of biomass in electrical generation and industrial heat and power applications. Those attending the Biorefining track will learn more about low-carbon fuel standards as well as markets and market access. Themes of the Project Development track will also be covered in one of the general sessions that will feature investment bankers and their views of the biomass industry, their experiences and case studies. This the third year, the regional conference is connecting the western U.S.’s current and future producers of biomass-derived electricity, industrial heat and power and advanced biofuels with all the players in this emerging industry. The list includes growers, aggregators, waste handlers, technology providers, equipment manufacturers, utility executives, municipal leaders, investors, policy makers and more. For those wanting to extend their education into the field, conference organizers are lining up tours in the bay area. For more information, and to find updates on the agenda as speakers are confirmed, check the website at www.biomassconference.com/pacificwest. Registrations are accepted online or by phoning (866) 746-8385. The deadline for early bird, discounted registrations is Dec. 5. Sponsorship and exhibiting opportunities are also available.
CRFS to Convene in Calgary
Growing Our Energy Diversity is the theme for the 8th Annual Canadian Renewable Fuels Summit to be held Nov. 28-30 at the Westin Hotel in Calgary, Alberta. Speakers from all sectors of the Canadian renewable fuels industry will be featured, including biodiesel, ethanol and advanced biofuels. General sessions will cover the Canadian outlook and global perspectives while two concurrent tracks will give attendees a chance to zero in on policy or technical issues. For more information and to register, visit www.greenfuels.org.
California Biodiesel & Renewable Diesel Conference January 16, 2012 San Francisco Marriott Marquis | San Francisco, California Presented by California Biodiesel Alliance and Biodiesel Magazine CBA will kick off its first statewide conference Jan. 16, in downtown San Francisco. This one-day event, with evening reception, will take place as part of BBI International’s Pacific West Biomass Conference, which will also be held Jan. 16-18 in the Marriott Marquis. Details are being developed now and will be posted here as they become available. (866) 746-8385 www.biomassconference.com/pacificwest
International Biomass Conference & Expo April 16-19, 2012 Colorado Convention Center | Denver, Colorado Organized by BBI International and coproduced by Biomass Power & Thermal and Biorefining Magazine, this event brings current and future producers of Bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries. Presentation ideas are now being accepted online. (866) 746-8385 www.biomassconference.com
International Fuel Ethanol Workshop & Expo June 4-7, 2012 Minneapolis Convention Center | Minneapolis, Minnesota Evolution Through Innovation Now in its 28th year, the FEW provides the ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. As the largest, longest running ethanol conference in the world, the FEW is renowned for its superb programming— powered by Ethanol Producer Magazine. Presentation ideas are now being accepted online. (866) 746-8385 www.fuelethanolworkshop.com november 2011 | Ethanol Producer Magazine | 11
view from the hill
‘Can’t’ Never Did Anything By Bob Dinneen
America has always been a nation of doers. We have never shied away from tackling the hard challenges that keep America President Reagan’s shining city on the hill. Yet, when it comes to breaking our addiction to oil, all we seem to hear is the word “can’t.” The latest report from the National Academy of Sciences is a perfect example of that can’t-do attitude surrounding energy innovation and domestic renewable fuels. The purpose of the report was to provide an assessment of the federal renewable fuel standard (RFS). Instead, it became a rehash of every criticism leveled against American ethanol production and more fodder for the environmental, meat, fast food and oil lobbies to dismiss the innovation and evolution of the industry. The top finding as listed in the summary of the report was, “Absent major technological innovation or policy changes, the RFS2-mandated consumption of 16 billion gallons of ethanol-equivalent cellulosic biofuels is unlikely to be met in 2022.” It is true that commercialization of next-generation biofuels will continue to be a challenge as long as the industry and investment community receive mixed signals from policymakers about whether there will be enduring support for biofuels. And, it is possible that the goals of the RFS could go unmet if we continually keep telling ourselves that we can’t do it. This report is not the only evidence
12 | Ethanol Producer Magazine | november 2011
of cold water being thrown on America’s evolving biofuels market. Routinely, lobbyists for the environmental community tell us that the nation cannot produce ethanol and other biofuels because of scientifically unsubstantiated claims about indirect land use changes caused by American ethanol production. While these groups continue to erect roadblocks to America’s biofuel evolution, the world’s thirst for energy strengthens. As such, instead of harnessing the carbon-neutral benefits of renewable fuel production, America and the rest of the world is looking to marginal, environmentally devastating, and economically unsustainable sources of oil like Canadian tar sands. Seeking to ensure its monopoly on the transportation fuels market, the oil lobby frequently points out its perceived challenges with renewable alternatives, such as the perpetual bogeymen about pipeline compatibility and cost competitiveness. We are told that America can’t satisfy its energy needs from renewable sources, so why bother. The same can’t-do spirit even permeates offices on Capitol Hill where the lobbies intent upon stopping America’s march to greater reliance on ethanol and renewable energy sources have set up shop. Bill after bill is introduced to weaken or repeal forward-looking policies that seek to foster the development of a robust ethanol industry producing low-carbon, cost-effective ethanol from a wide range of feedstocks. The most recent assault on the RFS by Reps. Bob Goodlatte and Jim
Costa, with the support of the corporate livestock industry, is a perfect example. Instead of wringing our hands about the challenges associated with revolutionizing our energy supply, we should embrace the challenge in a manner that only Americans can. We need to broaden our thinking on energy policy, starting with an immediate end to the billions in subsidies channeled every year to the mature fossil fuel industry. We should be fostering an environment of success for new renewable fuel technologies by investing in advanced and cellulosic ethanol technologies. We must modernize our transportation fuel market, providing consumers with more choice in fuels, such as higher level ethanol blends, and vehicles that can utilize such choices. And, we need to ensure the bedrock of this evolving industry is sound by maintaining the integrity of the RFS. America has never stood still or accepted the notion we can’t do something. Americans were the first to fly. Americans eradicated polio. It was an American that was first to set foot on the moon. And, by tapping into this unmatched entrepreneurial and innovative spirit, we can be the nation that leads the world toward an end of fossil fuel reliance. It’s far past time we got started. As the old saying goes: “Can’t” never did anything. Author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835
Fueling a Sustainable Future Advanced biofuels are the way of the future. Investing in them now gives you the edge in developing the most sustainable and economic biofuels solutions. Let Burns & McDonnell help you create a sustainable future.
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The Renewable Fuel Standard Means Certainty By Tom Buis
When Congress passed the Energy Independence and Security Act in 2007, it strengthened the renewable fuel standard (RFS) as a means of promoting the renewable fuels industry so it could begin to displace foreign oil. That energy bill was adopted by a bipartisan Congress, and signed into law by President George W. Bush. Across the political spectrum, we saw our elected leaders come together in agreement that it was critical for our nation to foster a renewable fuels industry that could make us independent of foreign oil. Yet there are opponents of ethanol— the only viable alternative to foreign oil—who would block the growth of our industry. Their next goal is to dismantle the RFS. America cannot allow that to happen. The RFS creates the market certainty that is crucial to both firstgeneration and second-generation ethanol. Over the years, our opponents have worked against us on several fronts—
14 | Ethanol Producer Magazine | november 2011
they concocted the food versus fuel myth and blocked our efforts to redirect the Volumetric Ethanol Excise Tax Credit away from Big Oil and toward building out flex-fuel pumps and other ethanoldelivery infrastructure. When the VEETC expires at the end of this year, the only significant policy in support of ethanol will be the RFS. We must make it a point to remind this Congress of the original goal of the RFS, and show that while it has succeeded in some areas—today grain ethanol represents 10 percent of the fuels market—we are still short of the goal in other areas, particularly our efforts to make next generation ethanol commercially viable. The RFS set a goal of 36 billion gallons of renewable fuels by 2022, with the majority of that being provided by a combination of grain and cellulosic ethanol. The one industry that is taking the greatest strides toward making cellulosic ethanol a commercial reality is the grain ethanol industry itself, in part because it already has access to an abundant source of biomass as feedstock. But as we all know and recognize, the cost of developing next generation ethanol is high. The best way to draw the private capital needed to speed its development is to make sure the
market is certain. The RFS provides that certainty. Our industry needs to send Congress a clear message: keep the RFS intact. Weakening the RFS goals for cellulosic ethanol would not just block our progress toward a viable cellulosic ethanol industry, but it will literally turn the clock back to the 1970s—and put OPEC further in control of our economy. At this point, that’s the last thing our country needs. A continued commitment to our nation’s renewable fuel industry will strengthen our energy security, generate more U.S. jobs that can’t be outsourced and improve our environment. Author: Tom Buis CEO, Growth Energy (202)545-4000 email@example.com
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Defending the Merits of the RFS By Brian Jennings
Life is full of uncertainties. While there’s been some handwringing about the size of this year’s corn crop, as harvest comes to an end and the bushels pile up we’re reminded that American farmers are the most productive and efficient in the world. We won’t know for certain the final corn tally until the USDA collects and files its reports but it’s safe to say the doomsday crowd is wrong once again. As of this writing, we also don’t know whether reforming the Volumetric Ethanol Excise Tax Credit to support blender pumps, small ethanol producers and cellulosic ethanol will be enacted by Congress. Inside the beltway, conventional wisdom would predict reform at this late stage is doubtful and therefore the tax incentives, including the tariff, will simply expire at year’s end. What we do know is that ethanol opponents won’t be satisfied to witness VEETC’s demise; their sights are fixed on the renewable fuel standard (RFS) as well. Indeed, for months groups such as meat packers and grocery manufacturers have been scheming ways to dismantle it. Already five bills have been introduced in Congress to modify, reduce or repeal the RFS. While this legislation poses more
16 | Ethanol Producer Magazine | november 2011
headline-type public relations risk to our industry than a real threat, the drumbeat to repeal the RFS will only continue and we should expect serious legislative attempts in 2012. As in previous policy battles, the ethanol industry has the facts on its side. The American Coalition for Ethanol will be very aggressive in defending the merits of the RFS using those facts. For instance, according to a May 2011 report from the U.S. Energy Information Administration, “U.S. dependence on imported oil has dramatically declined since peaking in 2005.” EIA goes on to say, “by the broadest measure, U.S. dependence on imported oil fell from 60.3 percent in 2005 to 49.3 percent in 2010.” EIA’s report further notes that “increases in biofuels production also played an important role in moderating import dependence. U.S. ethanol net inputs grew from 230,000 barrels per day in 2005 to 779,000 bbl/day in 2010.” This much is certain, the RFS is the single most effective policy enacted by Congress to increase supplies of domestic, affordable and clean biofuel and reduce foreign oil imports. We must fight and fight like hell to defeat any attempt to reduce or repeal it. Not only would reduction or repeal of the RFS signal a retreat, turning the clock back to pre-2005 days when foreign oil comprised more than 60 percent of U.S. demand, but fuel prices would increase on American working families and small businesses as well.
We all know who stands to benefit from repeal of the RFS. Meatpackers and grocery manufacturers who feel they are entitled to cheap corn forever, because it would once again require taxpayers to subsidize the production of cheap corn merely to their benefit. And let’s not forget OPEC, the seemingly untouchable oil baron of the world, just salivating at the thought of repealing the RFS. They hate the fact that in the U.S., we can grow our own fuel from our own farms. This much is also certain, the law already provides EPA mechanisms to adjust the RFS if a legitimate case can be made by a petitioner. If grocery manufacturers, meat packers, and integrated livestock conglomerates have compelling evidence of inadequate corn supplies or extreme high prices they should prove it by making a credible case to EPA. Oil company actions prior to the RFS proved that, left to their own devices, they wouldn’t use a cleaner, safer, more affordable, domestic alternative in ethanol. The real-world benefits stemming from enactment of the RFS are unmistakable and we must stand up and fight to protect it. Of that we must be certain. Author: Brian Jennings, Executive Vice President, American Coalition for Ethanol (605) 334-3381 firstname.lastname@example.org
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Is There Too Much Land in Europe? By Robert Vierhout
The European Common Agricultural Policy is controversial. For some it is too expensive, while others cannot do without it. Once driven by the necessity to guarantee enough of a domestically raised food supply for Europe, the CAP now deals with opening international borders and environmental demands—new challenges that are causing considerable strain on the farming community. The supply-side approach of the early days resulted in a strong agricultural sector, but at the same time, more products than Europeans could digest. The butter mountains, wine lakes and cereal surpluses forced the CAP to become more market oriented. One of the many CAP reforms resulted in the creation of a set-aside instrument taking land out of cultivation to reduce supply. Initially set up in the late 1980s as a voluntary scheme, it became obligatory in the early ’90s. By 2000, 10 percent of all arable land of the EU15 was no longer used for growing crops for food purposes. The land could be used, however, for growing crops for energy. Then, we had the food price spikes in 2007-’08. In no time, the set-aside policy was thrown into the shredder. More land for more crops was needed. Unfortunately, only 7 percent was suitable for cultivation; the rest had been permanently converted.
18 | Ethanol Producer Magazine | november 2011
With this history in mind, combined with the ever-growing demand for agricultural commodities and yearly increase of bioenergy demand, one would think that the EU would no longer move towards a policy of set-aside. Even if that extra demand would not exist, why would European politicians want to increase idled land, knowing that year-on-year, according to the Food and Agriculture Organization of the United Nations, arable land in Europe is left idle? This reality does not seem to have an impact on the thinking of the European Commission. As part of another reform of the CAP, the commission will soon introduce “ecological focus areas” and farmers will be required to devote at least 7 percent of their eligible program hectares to fallow, terraces, landscape features, buffer strips and reforestation. Well, it may have a nice name, but in reality is nothing else than set-aside in a different suit. If environmental concern is the name of the game, why then not force upon all crop production, whatever the end-use, sustainability criteria that already apply to biofuel crops? That would most likely deliver more than the 7 percent land being envisaged with this measure. But what is most striking is the impression given that there is an abundance of arable land in Europe and that we can do with less. If that is indeed the case, why are we having this silly debate on indirect land use change (ILUC)? A study published in March 2011, commissioned by a group of nongovernmental organiza-
tions and conducted by the Institute for European Environmental Policy, found the anticipated indirect land use by 2020 associated with increased biofuels in the EU would require an area almost equal to the entire Republic of Ireland. The 7 percent arable land set aside for ecological focus areas would comprise about 7 million hectares—more or less the size of Ireland. How ironic can this be: Trying to win land by abolishing biofuel policy while giving away an equal area of land at the same time, and through the back door, forcing it to be taken out of production. The EU urgently needs to answer one question: Do we have enough arable land to fulfill our needs now and in the future? If the answer is yes, then forget about ILUC, at least for domestic biofuels. If the answer is no, don’t even think about mandatory set-aside, in whatever form or fashion. Worries about food shortages and the resulting risks of harmful land use changes are without substance, if Europe has the luxury to sacrifice valuable productive hectares for ecological enhancement. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org
Take Credit for Research and Innovation By Trina Swart
Earning a tax credit for business research and development doesn’t require the use of a white lab coat.
For years, the federal government and numerous states have rewarded companies that incorporate innovation and creativity to expand their product line. The credit has changed since it was originally put in place and currently the federal Credit for Increasing Research Activities is available to companies such as engineering companies, technology providers, agriculture operations and manufacturers—including ethanol production facilities. As one of the most progressive, adaptive industries in the country, it makes perfect sense for biofuels companies to take advantage of this research and development tax credit. Maximizing this benefit can be accomplished in many ways. If a plant is working to create a new product line, modify an existing coproduct or improve current operational processes to become more efficient, this tax credit could apply. A manufacturer could be contracting research labor, using in-house labor or utilizing new materials, all of which can be applied toward the tax credit. For many years, the credit required research activities include a discovery test for patents and inventions and extensive documentation. In 2003, the regulations changed to keep innovation and creativity in the U.S. The government eliminated the discovery requirement and modified the documentation standard. Congress later made it clear through
20 | Ethanol Producer Magazine | november 2011
legislative history that the credit should not impose unreasonable record-keeping requirements. And it increased the budget for this credit to $9 billion. In 2005, 1,100 firms took $5.7 billion or 63 percent of the allowable credit. That year manufacturing alone earned 71.2 percent of credit dollars. Currently, the rule identifies four criteria for the work to earn the tax credit. The work is 1) Aimed at implementing a new or improved business component, 2) Working toward the elimination of uncertainty, 3) Using a process of experimentation, and 4) The work must be technological in nature. The rule also allowed new industries such as engineering, chemistry, biology and computer sciences to qualify. Manufacturing companies can take advantage of the credit through research and development activities already in place. A company could be working toward an improved product, incorporating new tooling or equipment fixture design, designing a unique computer numerical control program, redesigning manufacturing equipment, rolling out new products to clients, modifying machinery and equipment, implementing alternative materials testing, using new coating systems or implementing health and safety procedures or equipment. All of these things, and many more, are considered research and development eligible for the tax credit. Keep in mind the end result of the research doesn’t have to be successful. Merely the action of using innovation or
revamping a product is what this tax credit is all about. One Kennedy and Coe client who manufactures equipment has utilized the Credit for Increasing Research Activities for the past four years. In the first year, the company saved approximately $40,000 in federal income tax by investing in new processes, design/model types and structures. The company continued to invest in engineering and new prototypes and in 2010, earned a $100,000 tax credit. These activities all made good business sense for the company and taking advantage of the research and development credit lets the federal government help pay the cost. For every dollar of research and development, the average taxpayer receives seven cents back in tax credits. Often the results are much higher and there is no federal limit on the amount per company that can be saved. It’s also important to note that dollars invested are still valid business expense deductions while, in addition, a credit is generated that can be used directly against a tax liability. When the federal government provides an opportunity like this, it is a nobrainer. Companies should be exploring this opportunity right now, while the tax planning window for 2011 remains open. Consulting your tax advisor about the Credit for Increasing Research Activities could mean significant tax savings in 2011. Author: Trina Swart CPA , Senior Associate, Kennedy and Coe LLC (800) 303-3241 email@example.com
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business briefs People, Partnerships & Deals
Three new members joined the board of the American Coalition for Ethanol at its annual meeting in August: Bob Sather, director of public affairs, who will represent Ace Ethanol LLC, a 43 MMgy ethanol producer in Stanley, Wis.; Ron Wetherell, chairman, Little Sioux Corn Processors, a 108 MMgy locally-owned ethanol plant in Marcus, Iowa; and, Kevin Dailey, president and CEO of North American Bioproducts Corp. Akin Gump Strauss Hauer & Feld LLP expanded its project finance and renewable energy capabilities with the addition of partners Thomas Trimble and Jeremy Schwer, who have re-joined the firm's Washington office. Trimble was co-head of the renewable energy practice group at his former firm, Hunton & Williams LLP. Firm chairman R. Bruce McLean remarked, "We are very excited to welcome back Tom and Jeremy to the Washington office. Their arrival continues the momentum of our project finance team expansion, which had a big boost last quarter on the West Coast with the arrival of Ed Zaelke and Adam Umanoff and their team from Chadbourne and Parke." Pacific Ethanol Inc. announced its subsidiary, Kinergy Marketing LLC, has entered into a two-year extension of its exclusive ethanol marketing arrangement with AE Advanced Fuels Keyes Inc., a wholly-owned subsidiary of AE Biofuels Inc. The companies extended a Nov. 11, 2010, agreement to sell all the ethanol produced by AE Keyes’ 55 MMgy facility located in Keyes, Calif. The AE Keyes facility became operational in the second quarter of 2011. Petro Serve USA received the Paul Dana Marketing Vision Award from the American Coalition for Ethanol for its support of E85
and its efforts in urging its oil company suppliers to allow blender pumps. Petro Serve General Manager Kent Satrang also played a crucial role in getting state funds allocated to improve blender pump infrastructure in North Dakota which has the largest number of blender pumps of any state in the nation.
ICM Inc. has coupled its feedstockflexible gasification system with Eisenmann Corp.’s dual-field WESP (wet electrostatic precipitation). ICM chose this emission abatement technology based on work at ICM’s commercial-scale demonstration gasifier adjacent to the Harvey County municipal solid waste transfer and recycling facility in Newton, Kan. The gasifier can test multiple feedstocks, include refuse-derived fuel (RDF), tire-derived fuel mixed with RDF, wood chips, wheat straw, switchgrass and corn stover.
Missouri-based LLL Transport Inc. has been sold to a private ownership group led by Gary Waller and Joshua Wheeler, who will assume the roles of CEO and chief financial officer, respectively. “I have come to know and respect Gary Waller and Josh Wheeler over the past few years. They know the transportation and biofuels industries, and I am confident they will continue the legacy of LLL Transport,” said Jeff Littrell, who founded the company 25 years ago. He and his sons, Jason and Daniel, will remain in leadership roles, as will Greg Davis, operations manager. The company has no plans for workforce reductions among its 130 employees. ExperTune Inc. is offering a no-cost upgrade for existing users of Rockwell RSTune and RS Loop Optimizer, both developed by the company for Rockwell systems. ExperTune’s PID Loop Optimizer software provides a direct replacement for the Rockwell products, with many feature upgrades included.
Eco-Energy Holdings Inc. is partnering with J.T. Russell and Sons Inc. for the development, construction and day-to-day operations of a unit train facility at its ethanol distribution facility in Denton, N.C. It will be equipped to receive up to 96-car unit trains via both the CSX and NS railroads and will have tank storage for more than 95,000 barrels of ethanol. The partnership will offer throughput agreements to ethanol suppliers and end-users desiring to lower their supply chain costs. Focusing on the marketing and distribution of biofuels, Eco-Energy is one of the largest full-service marketing companies in North America with over $2.5 billion in sales and handling nearly 10 percent of the biofuels market.
22 | Ethanol Producer Magazine | november 2011
BUSINESS BRIEFS Sponsored by
Founders Jeff and Larry DeGraaf celebrated the 25th year of business for their company, Industrial Construction & Engineering Co. Missouri-based IC&E began as a regional contractor providing insulation services and has since expanded to become a national contractor serving industries such as renewable energies, power and process, refrigeration and food and beverage. “The renewable energies market has been a big growth area for us,” Jeff DeGraff, president, said. IC&E’s dedicated renewable energy crews have completed more than 30 ethanol projects and 13 biodiesel plants.
Gavilon LLC became Heron Lake BioEnergy LLC’s exclusive corn supplier and marketer of ethanol and distillers grains Sept. 1. "We are extremely pleased to be selected as Heron Lake's exclusive provider and marketer of the ethanol plant's inputs and outputs," commented Randy Ives, director of ethanol services at Gavilon. "This agreement leverages our core capabilities and will enable Heron Lake to reduce its working capital requirements and more effectively manage its processing margins in both the spot and forward markets." Heron Lake procures approximately 18 million bushels of corn per year and produces approximately 50 million gallons of ethanol and 160,000 tons of DDGS. Trillium FiberFuels Inc. received a $150,000 Small Business Innovation Research grant from the National Science Foundation to support enzyme development for cellulosic ethanol. Trillium can now compete for a larger Phase II award in 2012. Trillium will use the funds for the development of a novel, naturally occurring enzyme
that was isolated by Stephen Giovannoni at Oregon State University that converts xylose into a sugar fermentable by brewing yeast.
ternative fuel dispensers at more than 80 of PC&F’s 300 gas stations and convenience stores located in California, Washington Oregon and Colorado. PC&F will provide Propel with access to its retail sites while Propel will own and operate the alternative fuel equipment, provide E85 and biodiesel for the system and handle customer outreach and education.
CPM announced a new industrial market manufacturers’ sales representative agreement with Synertek Process Equipment Inc. Scott Engle and Scott Holland of Synertek will be industrial market sales representatives for CPM Roskamp Champion in Georgia, Alabama and Tennessee and the Florida Panhandle. Synertek has been a leader in dry process equipment applications since 1990, representing equipment manufacturers who weigh, batch, blend, mill, screen and classify, measure, monitor and convey dry solids or powder material. CPM business units include Crown Iron Works, Roskamp Champion, California Pellet Mill, Beta Raven, Century Extrusion, Wolverine Proctor and Greenbank Technology.
Clean Burn Fuels LLC’s primary lender, Cape Fear Farm Credit, has taken possession of the plant in Raeford, N.C., following an unsuccessful foreclosure auction. Necessary maintenance is now being done on the plant, which has been idled since it filed for bankruptcy early this year. Cape Fear will also invest in completing the necessary repairs to restart the facility while continuing to seek a buyer for the plant, according to CEO Michael Jackson.
GreenShift Corp. announced the successful commissioning of its patented corn oil extraction technology at Advanced BioEnergy LLC’s 110 MMgy ethanol plant in Fairmont, Neb. “We are consistently extracting our desired yield without use of chemical additives,” said Richard Peterson, Advanced BioEnergy CEO. “The turn-key system designed by GreenShift has a payback of substantially less than one year. We look forward to the additional income this system will generate for our business.” A multi-year agreement between Pacific Convenience and Fuels LLC and Redwood City, Calif.-based Propel Fuels Inc. allows Propel to co-locate its Clean Fuel Point al-
Enerkem Inc. has signed an offtake agreement with Methanex Corp. for methanol that will be produced at Enerkem’s 36 MMly (10 MMgy) facility in Edmonton, Alberta. The facility is currently under construction and is expected to begin producing methanol from municipal solid waste (MSW) in the second half of 2012. The offtake agreement allows Enerkem to generate revenues from an intermediate product while construction of the ethanol island is finalized. Enerkem is also developing a 10 MMgy MSW-to-ethanol facility in northeast Mississippi near Pontotoc.
Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 7468385, or e-mail it to firstname.lastname@example.org. Please include your name and telephone number in all correspondence.
november 2011 | Ethanol Producer Magazine | 23
commodities Natural Gas Report
Natural Gas: The Long View Sept. 30—Occassionally it is useful to take a long view and assess potential market dynamics over the coming decades. The “MIT Study on the Future of Natural Gas” published this summer gives that opportunity. Following are some of the most interesting observations. The U.S. has tremendous supply potential. At current usage, the U.S. has roughly 100 years of recoverable gas resources assuming no price constraints. If prices stay in the $5 per million Btu (MMBtu) range in constant dollars, available supply shrinks to roughly 40 years. on the web For the full report, The “MIT Study on the Future of Natural Gas,” visit: http://web.mit.edu/mitei/research/ studies/naturalgas.html
By Casey Whelan
Carbon policy matters. With “business as usual” assumptions, natural gas demand will increase 60 percent by 2050 and prices will escalate to $10.40 per MMBtu. With a targeted 50 percent carbon reduction by 2050 from 2005 levels, natural gas demand will increase by only 14 percent and prices will rocket to $21.90 per MMBtu. Much of the price is related to carbon pricing and does not flow back to the producer. Globally, other than the Middle East and Russia, the U.S. has the most recoverable gas resources. Interestingly, neither China nor India has a material amount of recoverable gas resources. There are massive potential recoverable gas resources in the form of gas hydrates that are not presently included in estimates due to technology constraints. If economical, safe,
environmentally responsible recovery technology is developed, which we may not see for decades, gas resources will expand materially. There is significant potential to convert natural gas to liquid fuels for transportation, using existing technology. Natural gas has a much lower carbon footprint than crude-derived liquid fuel. In addition, natural gas has stronger supply fundamentals which may support a continued wide spread between natural gas and crude prices. The MIT study is very thoughtful and prepared with input from a variety of experts. While it is impossible to forecast precisely what will happen next year, let alone in 20 years, this report does a good job of discussing factors that will drive supply and prices well into the future. If you are an energy geek like I am, it’s a good read.
Evidence of demand rationing behind supply/demand moves BY JASON SAGEBIEL Oct. 3—The corn market spiraled down in late September as the world economy sputtered, overall commodity liquidation occurred and yield expectations improved. December corn plummeted $2.06 from Sept. 29 to Oct.1 on the bearish quarterly grains stocks report. The first culprit in September’s wild ride was the bullish monthly supply/demand report, with USDA estimating corn yield at 148.1 bushels per acre, down from 153 in August. Yield prospects improved, however, particularly in the Western Corn Belt. The updated numbers in the October report will be closely watched. The USDA’s quarterly grain stocks figure at the end of September was grossly bearish as corn stocks through September totaled 1.13 billion bushels—larger than what traders expected, though still down 34 percent from the year before. The report revealed demand
rationing had been occurring. Many other grains, oilseeds and coproducts have seen historical highs, yet, with high corn values and tight corn basis, feeders were focused on other feed ingredients to incorporate in their rations. For the 2011-’12 marketing year, the USDA kept ethanol demand at 5.0 billion bushels and export demand at 1.65 billion bushels, projecting feed demand at 4.70 billion bushels as compared to the current old crop demand figure of 5.0 billion bushels. The old crop figure should be reduced in the October report. World carry-out should increase as well, due to the increase in the U.S. and good prospects for China and Eastern Europe. Wheat could
24 | Ethanol Producer Magazine | november 2011
be a precursor to a positive fundamental outlook as continued dry conditions are exhibted in the central and southern plains. Southern hemisphere weather will be watched because any production disruption could lead to global supply concerns.
Regional Ethanol Prices Front Month Futures (AC) $2.489 REGION
$2.945 SOURCE: DTN
Regional Gasoline Prices
DDGS value gaining relative to corn, demand stays strong BY SEAN BRODERICK Sept. 30—DDGS has been gaining value against corn. Prices were slow to move up, and now are slow moving down. Users can’t switch rations overnight. Many traditional DDGS users have been evaluating soybean and canola meal options, as DDGS strengthens relative to corn. As biodiesel demand for oil stays strong, meals will be in good supply. Many nutritionists are revisiting a corn/soymeal mix, which will pressure distillers grains prices. That being said, U.S. demand is still very strong, especially from dairy, cattle and hogs. Internationally, in addition to increases from Mexico and Canada, we are seeing many more countries increase DDGS use, including Saudi Arabia, Malaysia, Spain and the UK. In addition to
private efforts, groups including the US Grains Council have done a great job of educating feeders and nutritionists worldwide in the advantages of DDGS usage. Overall DDGS exports are down about 10 percent from last year, but unlike years past, more volume has shipped in containers, rather than bulk vessels. The Chicago container market has been the best-paying destination for many Midwestern plants, and both rail and truck have been moving in aggressively. Containers enjoyed a $25-per-metricton discount to bulk, delivered to Asian ports. There is an impending freight rate increase, though, and with the oncoming grain harvest, competition for available empty containers will be fierce.
Front Month Futures Price (RBOB) $2.6220 REGION
$2.730 SOURCE: DTN
DDGS Prices ($/ton) Nov 2011
Nov 2010 115
146 SOURCE: CHS Inc.
Corn Futures Prices Date Sept. 30, 2011
(Dec. Futures, $/bushel)
5.92 1/2 7.67 1/2
August 31, 2011
Sept. 30, 2010
4.95 3/4 SOURCE: FCStone
Cash Sorghum Prices ($/bushel) LOCATION
Energy, ethanol prices pressured by outside markets BY RICK KMENT Sept. 30—Energy and ethanol markets had a turbulent ride in the second half of September, sparked by continued domestic and global economic unrest due to continued high unemployment numbers as well as renewed concerns about European debt. It first appeared that moderate to strong continued support would hold for RBOB gasoline and the energy market, but this quickly changed due to expected weakening global gasoline demand and a pullback from noncommercial or investment trader interest. The gasoline market tumbled as the Dow Jones fell nearly 700 points through the month of September and RBOB gasoline futures fell nearly 30 cents per gallon. The retail implications of the lower market has yet to be fully
seen, although pump prices are starting to ease and could continue to erode over the next several weeks. Corn markets were hit extremely hard, with the Sept. 30 quarterly stocks report plunging the market into a bearish tailspin. Through September, corn futures prices fell $1.83 per bushel as demand faded due to higher prices, and production estimates were slightly better than expected. The lower corn market slashed ethanol prices by nearly 50 cents per gallon on the futures market through September. Additional pressure will likely develop across both the spot and rack ethanol markets in order to adjust to the new, lower production costs associated with weakness in the corn complex.
sept 29, 2011
aug 26, 2011
oct 1, 2010
SOURCE: Sorghum Synergies
Natural Gas Prices
oct 1, 2011
sept 1, 2011
oct 1, 2010
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production
SOURCE: U.S. Energy Information Administration
november 2011 | Ethanol Producer Magazine | 25
REG ISTR ATIO N
NOW OPE N!
FEBRUARY 22-24, 2012 Gaylord Palms Resort & Convention Center | Orlando, Florida
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Ethanol News & Trends
Fall Ethanol Plant Map
Many proposed projects in holding pattern The fall 2011 edition of the Fuel Ethanol Plant Map enclosed with this issue of Ethanol Producer Magazine shows few changes in the existing corn-based ethanol industry while second-generation projects continue to develop. The stragglers from the big corn-ethanol buildout—Hereford Renewable Energy LLC, Aventine Renewable Energy-Aurora West LLC, and Aventine Renewable EnergyMt. Vernon LLC—have completed construction. But, because the Aurora West plant has not yet started up, it remains on the under construction list. Notably, it’s now the only grain-based U.S. ethanol plant on the under construction list. One of the best-read features in past issues of Ethanol Producer Magazine was the annual review of proposed plants, which often covered multiple pages. Beginning in spring 2010, EPM added the list of proposed projects to the twice-yearly map. In the past two years, some of those projects have slowly dropped off the list as developers come to terms with the reality that the ethanol boom has fizzled. That spring 2010 list of U.S. grain/sugar-based proposed plants numbered 35—this time around, the number is 26. Of those projects, many are in a holding pattern, not willing to give up on the idea, but not able to move forward due to high corn prices or lack of financing. That’s not to say there’s no movement. Highlands EnviroFuels LLC, a project of U.S. EnviroFuels LLC, reported at the end of September that it had received its air construction permit from the Florida Department of Environmental Protection. The company plans to break ground in the early second quarter of 2012 on a 30 MMgy sugar cane and sweet sorghum plant near Lake Placid, Fla., that will also produce up to 30 megawatts of renewable power from bagasse. Financing continues to be the black cloud hanging over many proposed cellulosic ethanol projects. Nearly every proposed proj-
ect that has not advanced in the past year cited the difficulty in acquiring financing. Many project leaders also commented that unclear policy messages from Washington have caused hesitation in the investment community. Some proposed projects are now looking to Asia for financing, while others have decided to drop their projects completely. “It’s been four and a half years of research and spending money with good results, but the financial situation in this country is ‘wait and see,’” said one project developer who has decided to shelve plans indefinitely. Many other projects say they are in “wait and see” mode until the financial climate improves. Despite the many difficulties, there are bright spots on the cellulosic map this fall. Several plants are actively under construction, including the 23 MMgy Abengoa Bioenergy Biomass of Kansas LLC project in Hugoton, Kan. and the 8 MMgy Ineos New
Corn ethanol dwarfs all other feedstocks when the numbers are analyzed from the Fall Ethanol Plant Map: • The grand total of all first- and secondgeneration, existing, under construction and proposed plants is 17.27 billion gallons. • Straight corn and corn combined with milo or small grains totals 15.94 billion gallons of ethanol capacity, proposed and existing. Of that, 13.77 billion gallons is existing ethanol capacity using straight corn. • Other feedstocks using the first-generation, starch/sugar conversion platform are miniscule in comparison, with 115 million gallons using barley and wheat and 136 million gallons using sugar crops or waste sugars. • The cellulosic ethanol scene is far more diverse, although dominated by hybrid plants using corn, stover and other cellulosic feedstocks, totaling 380 MMgy in
28 | Ethanol Producer Magazine | november 2011
Planet Bioenergy LLC plant in Vero Beach, Fla. Both facilities have received federal loan guarantees for their projects. To further attest to the power of federal loan backing, Poet LLC, which has already installed storage space and conducted preliminary construction activities at the site of its 25 MMgy plant in Emmetsberg, Iowa, is also expected to soon begin constructing its main biorefinery now that it has received final approval for a U.S. DOE loan guarantee. Ineos expects to begin producing cellulosic ethanol next year. Abengoa and Poet will come online the following year. BP, which is financing its $400 million 36 MMgy plant in Florida independently, has not yet begun construction of the facility, but planted feedstock in the form of energy grasses this fall. The company expects to have its facility up and running in 2013. —Kris Bevill, Holly Jessen, Susanne Retka Schill
capacity. Of that, 70 MMgy is listed as corn stover only. Just 9 MMgy in capacity has been built, and another 86 MMgy is now under construction, leaving this category represented by nearly 650 MMgy in proposed capacity—a number that will undoubtedly be very fluid as new projects are proposed and others put on the back burner. The accompanying chart shows the breakout by broad feedstock categories for all the cellulosic ethanol plants on the list this fall.
Battle of the GM Corn
Bunge North America and Syngenta Corp. are locked in a court battle over whether Bunge should still accept Syngenta’s genetically modified (GM) Agrisure Viptera trait corn despite the fact that the trademarked product doesn’t yet have regulatory approval for the export markets of the European Union and China. An issue of contention is whether China is a “major importer” of U.S. corn. In September 2010, the North American Grain Association urged the Biotechnology Industry Organization to “define the minimum markets in which regulatory requirements should be met prior to commercialization” to include eight countries, one of which was China. The recommended list of countries was not changed, however, and Syngenta followed BIO’s existing recommendations for import approvals when offering Viptera corn for commercial sale in the U.S. Further, Syngenta says approval for China is expected in early 2012. In court documents, Syngenta argued that Bunge could separate Viptera corn to nonexport users, such as ethanol plants, food processors or feed mills. Bunge, however, said such a separating system would cost $6 to $8 million per facility and that if a shipment to China were rejected for contamination with an unapproved transgenic trait, such as Viptera, the cost to redirect that corn could be from $4 to $20 million. In addition, it was pointed out that some ethanol facilities may not accept Viptera corn because distillers grains from that plant couldn’t be exported to the EU or China if produced with Viptera corn. Viptera corn became commercially available to U.S. corn farmers for the 2011 planting season. The corn variety provides protection from 14 insects, including corn borer and
Syngenta moves ahead with Bunge lawsuit
Market Questions Syngenta has filed suit against Bunge North America for not accepting deliveries of its genetically modifed Agrisure Viptera corn variety, saying farmers need assurance for GM varieties.
corn rootworm. It also reduces development of fungus and mycotoxins in stored corn, due to reduction in insect damage. The genetically modified corn has received the necessary regulatory approvals from the USDA. It has also received approvals for cultivation in Canada, Argentina and Brazil and import in several countries, including Brazil, Canada, Japan, Mexico and more. Legally, Bunge scored the first point in late September when a judge in U.S. District Court for the Northern District of Iowa ruled against Syngenta’s motion for a preliminary injunction against Bunge. Regardless of that ruling, Syngenta is still moving forward with a lawsuit against the Bunge. “This lawsuit is only part of Syngenta’s determination to secure greater clarity for growers regarding industry marketing practices for newly approved technologies, enabling them to market their grain with confidence,” a Syngenta spokesperson tells EPM. “From this perspective, our determination is unchanged.” Bunge, on the other hand, says the court decision denying the preliminary injunction was a sign that the court would ultimately rule that Syngenta’s case is without merit. “We believe the court’s final ruling will further validate the actions Bunge took to protect the integrity of our export supply chain.”
Bunge is not the only major player to announce it won’t accept Viptera corn. Archer Daniels Midland Co. said it wouldn’t take it at any of its North American wet mill facilities until the corn receives regulatory approval from the European Union. Cargill Inc. also isn’t accepting the corn at its wet-milling facilities, says Mark Klein, spokesperson. He points to a long-standing policy of not accepting product not approved for use in the EU—a policy that was in place before Syngenta’s Viptera corn was commercialized. The fact that exports of corn and distillers grains to China have increased in recent years is also a factor for Cargill. The company joins others such as Bunge in considering China to be a major export market. “Cargill strongly values its right to accept or restrict products of agricultural biotechnology, dependant on the approval status in export markets and needs of our customers,” Klein tells EPM. The company’s policy at its grain elevators is different. Cargill requires written notification before delivery of Viptera corn to its grain elevators, Klein says. Still, the company doesn’t guarantee the corn will be accepted at Cargill grain elevators, even with written notification. —Holly Jessen
november 2011 | Ethanol Producer Magazine | 29
Ethanol Supporter Secretary of Agriculture Tom Vilsack has been a strong supporter of the ethanol industry. He spoke Sept. 21 at Growth Energy’s invitation-only Second Legislative Conference, held in Washington, D.C.
Speaking with a Single Voice
importance of the U.S. agricultural industry. “We don’t have the luxury—that’s what it is, in my view—of fussing with each other,” he said. “We have to Ag industry needs to present have a concerted effort to speak united front, Vilsack says to the other 99.9 percent.” It’s a message, he added, that he’s Whenever possible, the agricultural brought to groups such as the National Catcommunity should speak with a single voice, tlemen’s Beef Association and the National said Secretary of Agriculture Tom Vilsack. Pork Producers Council. Vilsack also talked about advances in Whether it’s the livestock industry, corn growers or bioenergy producers, all should technology that have allowed agriculture to focus on telling one of the greatest untold substantially expand productivity. Agriculstories—the extraordinary innovation of ture has not been static. “Instead of fussing with each other, figure out how you can do agriculture. Vilsack tackled the topic of the live- it all,” he said. “Part of it involves a commitstock industry’s perceived concerns over ment to research.” Billions in research fundfeed availability during his keynote address, ing is going into programs to do wonderful Sept. 21 at Growth Energy’s Second Legisla- things like find a cure for cancer. Agricultive Conference. Corn growers and bioen- tural research, on the other hand, has flatergy producers should be considered friends lined and even declined somewhat, Vilsack of the livestock industry, not foes, he said said. Further productivity gains are needed in answer to a question from an audience at a time when U.S. agriculture needs to find member. When these groups waste time ways to feed billions of people, at home and “fussing” with their friends they are losing overseas. Finally, Vilsack pointed to the biorean opportunity to talk about the power and 30 | Ethanol Producer Magazine | november 2011
fineries of the future. The biofuels industry is working on alternative feedstocks and alternative fuels, such as cellulosic ethanol. “My sense of this—we are now at a tipping point. We are going to start seeing a lot of these biorefineries pop up like mushrooms,” he said, “and people are going to say where did this all come from?” The ethanol industry has always had his emphatic support, Vilsack said, because of its role in providing jobs and revitalizing rural communities. “Your industry is a great example of American ingenuity and American opportunity and it is important and necessary that this industry be allowed to progress,” he said. There are challenges, of course. “At the end of the day, you are producing something that the rest of the world is very interested in,” he says. “And as we perfect the process, as we create alternative ways to produce energy from waste products and from a wide variety of feedstocks, you are going to establish and set the table for the rest of the world.” —Holly Jessen
New group focuses on fuel choice in the marketplace A coalition of biofuel producers, technology providers, cleantech investors and supporting companies have formed a new lobby campaign focused on convincing lawmakers to open the U.S. fuel market to alternative fuels. The campaign, called FuelChoiceNow, supports the deployment of technologies that will enable all types of alternative fuels the opportunity to compete in the consumer fuel space, including methanol, natural gas, electricity and biofuels. “The only way to free the American consumer from the vicious cycle of world oil price spikes is to give them a choice at the pump,” Matt Horton, CEO of alternative fuel pump retailer Propel Fuels, says. “There are alternatives, but we need to unleash them.” In response to the group’s introduction to the biofuels community, Advanced Biofuels USA, a biofuels education group and staunch advocate of the advanced biofuels industry, chastised FuelChoiceNow for its inclusion of fossil fuel-derived alternatives in its plan. “This organization appears to have hijacked a biofuels train for non-renewable fossil fuel cargo and has introduced more confusion to a complex topic,” Advanced Biofuels said in a statement. But Sue Hager, vice president of corporate communications and government affairs for Qteros Inc., a member of FuelChoiceNow, says promoting one specific alternative fuel over another is not the point of the new group, and to do so would be detrimental to the overall mission. “The purpose of FuelChoiceNow is to make the transport system open and competitive to other fuel types,” she says. “By giving consumers a choice, they will pick the winners. We’re not having the right debate if we keep advocating one fuel type over the other. This is one reason for FuelChoiceNow—to elevate the
conversation beyond one fuel over another and address the fact that we have a closed fuel market.” Early this year, Rep. John Shimkus, RIll., and three co-sponsors introduced the Open Fuel Standard, a bill which would require auto manufacturers to make 95 percent of the vehicles they produce flex-fuel capable by 2017. Sens. Maria Cantwell, D-Wash., and Dick Lugar, R-Ind., introduced a similar bill to the Senate in September, calling for 80 percent of vehicles produced to be flex-fuel capable by 2018. Members of FuelChoiceNow say they agree with many of the objectives introduced in the Open Fuel Standard, but hadn’t publicly endorsed the legislation as of early October. Brooke Coleman, director of the Advanced Ethanol Council and coordinator of FuelChoiceNow, says while vehicles are certainly key to the consumer’s ability to use alternative fuels, infrastructure is perhaps equally important, and the coalition will devote attention to the need for expanded alternative fuels infrastructure. “It’s a wellrecognized chicken-and-egg problem where vehicle makers say, ‘If you make the pumps, we’ll make the vehicles,’ and station owners don’t think there are enough vehicles to change pumps,” he says. “Both arguments are somewhat reasonable. The problem is:
one has to change. The easiest and cheapest way to cut that knot is to have automakers make a commitment to putting more flexfuel vehicles into the space.” Denmark-based enzyme producer Novozymes signed on to the coalition because it believes consumers deserve the chance to choose what fuel to use in their vehicles and because the cleantech industry will provide much needed jobs to the U.S. economy, says Adam Monroe, president of Novozymes North America. “The formation of this new coalition proves that momentum is continuing to build behind biofuels,” he says. “Novozymes is proud to be working with these forward-thinkers to give consumers more choices when buying a car and filling it up. By freeing our country from costly foreign oil, we are helping consumers and our economy at the same time.” Other supporters of the group include Abengoa Bioenergy, Agrivida, BlueFire Renewables Inc., Coskata Inc., Enerkem, Fulcrum Bioenergy Inc., Inbicon, Iogen Corp., Mascoma Corp., Osage Bio Energy and venture capital firms @Ventures, Advanced Technology Ventures, Battery Ventures, Craton Equity Partners, Globespan Capital Partners, Mohr Davidow Ventures, Nth Power, Paladin Capital Group and Venrock. —Kris Bevill
Power at the Pump The FuelChoiceNow campaign wants the transportation fuel system to be open to any fuel, providing consumers with the power to choose the winners. november 2011 | Ethanol Producer Magazine | 31
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to help the nationâ€™s farmers, agricultural producers and rural small businesses conUSDA ends REAP year with serve natural resources, cre$3 million for blender pumps ate more green jobs and lead us on the path to becoming Considering it was the first year that an energy independent nation,â€? he said. While there are notably few blender the USDA allowed Rural Energy for America Program funds to be used for blender pumps across the country, agriculturepump installations, and considering that centric Midwestern states have the greatest officials had just two months to get the numbers, and that is also where most of word out to potential applicants and guide the REAP funding will be used to install them through the process, the end result more. In Wisconsin, for example, Unitwas not bad. In total, blender pump proj- ed Cooperative plans to use a $448,500 ects received less than $3 million of the to- REAP grant to install 33 ethanol blender tal $38.6 million in REAP grants and loans pumps and 17 biodiesel dispensers in the the USDA awarded to hundreds of proj- south-central part of the state. Six projects ects in rural areas throughout the U.S. this in Missouri received a total of more than year. But 54 blender pump projects, and $290,000 in REAP grants. Meanwhile Calieven more actual pumps, will be installed fornia, which has more flex-fuel vehicles on the road than any other state, received as a result of the funding assistance. Secretary of Agriculture Tom Vilsack just $135,000 for four projects. One unforhas been an aggressive crusader for the ex- tunate caveat to the REAP program that pansion of biofuels infrastructure since last automatically rules out urban applicants is fall when he declared a goal of establishing that projects must be located in areas with 10,000 blender pumps throughout the U.S. populations of 50,000 or less in order to over the course of five years. In announc- qualify. Vilsack made it known that he was ing the REAP awards, he noted that the aware of this issue when he announced expansion of biofuels infrastructure sup- the first round of REAP awards in August ports the Obama administrationâ€™s vision and said that USDA officials were working of building a clean energy economy and with other programs within the agency to providing much-needed jobs for people in determine whether other types of funding rural areas. â€œThis funding is an important could be made available. â€”Kris Bevill part of the Obama administrationâ€™s plan
Light Your Fire 72//)5(( ZZZDTXDSRZHUXV LQIR#DTXDSRZHUXV +\GUREODVWLQJDQG YDFXXPVHUYLFHVVLQFH 32 | Ethanol Producer Magazine | november 2011
The turbine operated for 14-18 hours per day, five days a week for most of the 1,000 hours. LPP Combustion technology LPP has previously idenreaches milestone tified ethanol production facilities as a potential market LPP Combustion LLC recently an- for its technology, stating that producers nounced that its technology to vaporize could use low-grade ethanol or the overvarious liquid fuels, including ethanol and capacity ethanol to supply fuel to turbines biodiesel, into natural gas equivalent has in place of natural gas. A benefit of using successfully been used to operate a com- its patented technology is the reduction of mercial Capstone C30 combustion turbine emissions by up to 80 percent compared for 1,000 hours. The turbine generated to fossil fuel-powered turbines, according electricity to power lights, computers and to LPP. â€”Kris Bevill heating, venting and air conditioning units. Excess electricity was delivered to the grid.
STEP UP Green it Up
PHOTO: GREAT PLAINS INSTITUTE
try, just as we work to encourage investment in second generation facilities,” Great Plains said in a Great Plains Institute statement following the gatherhosts Minneapolis meeting ing. The event provided an opIs California’s Low Carbon Fuel Stan- portunity to update stakeholders from govdard the primary reason ethanol producers ernment, academia and the environmental are going greener? That perception exists, community with current information on said Geoff Cooper, vice president of the the tremendous progress the grain-ethanol Renewable Fuels Association, but it’s not industry has made in the past decade, inone he buys into. “My view is that, in most cluding technology adoption, energy efcases, technology adoption and efficiency ficiency, water use and greenhouse gas improvements are happening—and were emissions. “More broadly, this event rephappening long before the LCFS came resented an opportunity to revive a conalong—primarily because it enhances a structive dialog between the environmental producer’s bottom line.” community and the biofuels industry—two Cooper was one of the speakers at groups that haven’t done much talking in the Innovation in the Midwestern Biofuels the past few years,” Cooper said. Industry meeting held Sept. 12-13 in MinCooper’s presentation focused on neapolis. The event was organized by the some of the challenges associated with Great Plains Institute, co-hosted by the the renewable fuel standard and the LCFS. Midwestern Governor's Association, and The fact is, no two ethanol plants are exattended by several ethanol, agriculture actly the same and accounting for differenand environmental groups. tiation/uniqueness is a challenge for lifeThe event’s planning committee cycle analysis-based regulations, he pointed members included representatives from out. Both the RFS and LCFS take “bucket RFA, the Institute for Agriculture and approaches” to default pathways but allow Trade Policy, Minnesota Corn Growers biofuel producers to petition for new or Association, Monsanto, Natural Resourc- modified pathways, attracting numerous es Defense Council, Poet LLC and the petitions for both. Union of Concerned Scientists. “Meeting Ethanol producers can reduce emisparticipants agreed that there are areas of sions and increase energy efficiency common ground, and that they should be through a variety of technologies and pracworking together to figure out how to en- tices. The bottom line is, those technolocourage investment in the existing indus- gies and practices have to make financial sense. “An ethanol company isn’t going to sink tens of millions of dollars into a capital project that might lower its carbon intensity score by 10 or 20 percent unless there is a very high probability of a quick payback and a clear benefit to the bottom line,” he said. —Holly Jessen Greening Ethanol Industry representatives and environmentalists met in September to discuss the “greening” of the existing ethanol industry.
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WATERLOO, IOWA november 2011 | Ethanol Producer Magazine | 33
Build It, Because They’re Coming
100-car unit trains. CSX will transport ethanol from Midwest producers to Kinder Morgan’s Tampa Terminal where Kinder Morgan, CSX, Tampa Port it will be offloaded withexpand ethanol handling in Florida in 24 hours and distributed to blending termiIn response to growing demand for nals and other markets via Kinder Morgan’s ethanol in Florida, the Tampa Port Author- 2-mile Inter-Terminal Transfer pipeline. Kinder Morgan will expand its ethanol ity, CSX Corp., and Kinder Morgan Energy Partners LP have agreed to invest in a joint receipt and distribution system within its intermodal expansion project that will allow port terminal and complete several modififor unit train delivery of ethanol to an off- cations to its pipeline. Changes will include loading yard at the Hooker’s Point terminal the addition of ethanol-compatible pumps, in the Port of Tampa. Richard Wainio, port the replacement of parts on the pipe, pumps director and chief executive said the first-of- and valves to ensure their compatibility with its-kind intermodal project is a “win-win” ethanol, the installation of an additive injecfor the parties involved, consumers and the tion system to protect the pipe from ethaenvironment. The project is expected to be nol, and new connections from the pipeline to all blend terminals. The port authority complete by September 2012. As part of the agreement, the Tampa and CSX will invest more than $10.9 million Port Authority and CSX will build new rail for rail facility construction. Kinder Mortrack and supporting infrastructure to handle gan is not releasing details of its financial
investment in the project. “We’re happy to be a part of a project that improves ethanol transportation within the Port of Tampa and offers quick turnaround time to our customers who are working to meet Central Florida’s growing demand for ethanol,” said Tom Bannigan, Kinder Morgan’s products pipeline president in a statement following the project announcement. Approximately 70 percent of all ethanol produced in the U.S. is moved by rail, with the other 30 percent being hauled by truck or barge. Of the ethanol moved by railcar, it is estimated that up to 35 percent is currently shipped by unit train. Logistics experts within the industry believe that unit trains will continue to increase in popularity in the coming years because they are efficient and cost effective. More terminals are expected to make modifications to handle unit trains as a result, particularly in the Southeast where access to blending terminals via train is lacking. —Kris Bevill
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1 | Ethanol Producer Magazine | november 2011 34CAS-196A.indd
1/21/11 1:38 PM
Don’t Hurt the Little Guy
the second is the depletion a l l owa n c e. Independent oil producers fight against Both of possible repeal of subsidies those things are capital Texas-based Breitling Gas & Oil Co. initiatives that small oil and gas companies is a small independent upstream explora- use to power their business.” According to Faulkner, the federal govtion and production company. CEO Chris Faulkner wants to remind the Obama ad- ernment should continue to incentivize oil ministration that there are more than 10,000 and gas production because it is an industry small companies like his in the U.S. that with a lot of risk. The oil industry is also a would be negatively impacted by a decision huge job creator and booster of the econoto repeal petroleum subsidies. “Everybody my, he says. He also points to the less-thantakes advantage of these tax incentives if ideal situation of the U.S. importing much they’re available, but if you look at the capi- of its oil from unfriendly countries and says tal available to Big Oil and compare that to the feds should open up new opportunities the capital available to a small independent, for domestic fuel production. Replace “oil” with “ethanol” and the a large portion of the capital they are re-investing back into their business comes from argument sounds very familiar. Except for two major components that the administra- the part where the subsidies stay in place. tion is targeting,” he says. “The first is the Unlike oil, the ethanol industry has commitdeduction for intangible drilling costs and ted to the expiration of its main tax incen-
tive in December and says it’s only fair that the petroleum industry should give up some if its incentives as well. “Given the state of the U.S. economy and taking oil industry profits into consideration, especially profits from the big oil companies, it’s a shame that they have been unwilling to step up to the plate like the ethanol industry did and offer to sacrifice some of their tax subsidies,” says Brian Jennings, executive vice president of the American Coalition for Ethanol. “Congress ought to summon the courage to repeal Big Oil’s unnecessary tax subsidies and work with the ethanol industry to enact policies providing consumers with meaningful fuel choice.” The American Jobs Act, which was introduced by President Barack Obama to Congress in September, would repeal a host of oil subsidies, but Faulkner says he is confident Congress won’t pass them. —Kris Bevill
november 2011 | Ethanol Producer Magazine | 35
cist Ken Vogel tells EPM. “The main cost is sample preparation which also has be done for wetResearchers use near-infrared sensing to lab or conventional analyses and equipto measure yield in switchgrass ment costs.” Using near-infrared sensing (NIRS) to Five USDA researchers, including Vopredict ethanol yields for corn isn’t new. In a gel, a University of Nebraska researcher, used different twist, however, USDA Agricultural NIRS to measure 20 components in switchResearch Service researchers figured out a way grass, such as cell-wall sugars, soluble sugars to use the same system to measure the poten- and lignin. That information was used to detial of perennial grasses. termine 13 traits, including how efficiently the The real bonus is that grading grasses sugars will be converted to ethanol. Hexoses, costs only about $5 a sample with NIRS. Com- or six-carbon sugars, were used as the basis to pare that to $300 to $2,000 per sample using predict actual ethanol yields. With improved conventional analytical methods, which utilize conversion technologies, additional ethanol chemistry laboratory tests on each plant com- can be produced from pentose or five-carbon ponent, from cell-wall sugars to starch and sugars, meaning the NIRS method can be more. NIRS, on the other hand, uses wave- used to estimate total potential yield if all suglengths of reflected light to determine sam- ars were converted to ethanol. “It will now be ple composition. “Instead of running weeks possible to determine the best switchgrass culof analyses, a sample can be analyzed in less tivars and management practices, Vogel says. than 5 minutes using NIRS analyses,” geneti- “The technology can be expanded to other
PHOTO: BRETT HAMPTON
Grading Grasses on the Cheap
Energy from Grass Switchgrass can yield almost twice as much ethanol as corn, estimates geneticist Ken Vogel, who is conducting breeding and genetics research on switchgrass to improve its biomass yield and its ability to recycle carbon as a renewable energy crop.
species but it will require additional comprehensive work.” The NIRS equations developed in this study are already being used to develop new cultivars in breeding programs in Nebraska and Wisconsin. It could also be used to identify methods for growing grasses for the best ethanol yields. ARS and the Near Infrared Spectroscopy Consortium have a cooperative agreement to get the switchgrass composition calibrations out to other public and private laboratories researching switchgrass. —Holly Jessen
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36 | Ethanol Producer Magazine | november 2011
Thanksgiving table offers for new drying agents
Inspiration can come from anything at any time, even the Thanksgiving dinner table. A few years ago, Michael Ladisch, a distinguished professor of agricultural and biological engineering at Purdue University, was at his mother-in-law’s for Thanksgiving when a triangular-shaped bag of ingredients usually reserved for pudding caught his eye. “I saw this bag of tapioca pearls on the counter, looked at the contents and it turned out to be starch,” he says. “It led me to wonder whether these materials, which look a little like molecular sieves, would work for drying ethanol.” In his role as a professor at Purdue, and as chief technology officer at cellulosic ethanol developer Mascoma Corp., Ladisch is very interested in various starch properties and how they could be used in industrial applications. With funding from Archer Daniels Midland
Co. and assistance from ADM researcher Ahmad Hilaly, Ladisch and fellow ideas Purdue researcher Youngmi Kim characterized varying sizes of tapioca pearls and found that Ladisch’s initial speculation was correct—the pearls were excellent at absorbing water from fuel-grade ethanol. In fact, the tapioca collected about 34 percent more water than corn grits, which is another natural alternative to nonrenewable molecular sieves. Some ethanol facilities use corn grits packed into towers to absorb water from ethanol, but those grits are irregularly shaped and contain fiber, protein and other unnecessary substances. Tapioca pearls are a spherical structure and are comprised of 100 percent starch. They can be dried and reused and have the potential to become feedstock for ethanol when they are no longer useful as drying agents. “Tapioca is very efficient and it’s all natural,” Ladisch says. “There are no disposal issues. It’s much more environmentally friendly.” Tapioca is derived from the cassava plant,
PHOTO: KEITH ROBINSON, PURDUE AGRICULTURAL COMMUNICATIONS
Thirsty Pearls Michael Ladisch, distinguished professor of agricultural and biological engineering at Purdue University, has found that tapioca pearls are very effective in absorbing water from fuel-grade ethanol.
which is grown mostly outside of the United States. While tapioca is readily available in North America, Ladisch believes South American facilities would be the most likely to use it. Ladisch’s starch-based research is a continuing effort at Purdue, and he believes there could be other products like tapioca that could also be used to replace molecular sieves. “It’s a fundamental research area, but it’s still very fascinating,” he says. “Now that we understand how they work, we could make them from other forms of starch.” —Kris Bevill
november 2011 | Ethanol Producer Magazine | 37
Ethanol for Cooking In Mozambique, in southern Africa, a small-scale ethanol plant currently under construction is expected to have a big impact on the incomes, health and livelihoods of area residents. The 300,000 gallons of ethanol produced there a year will be sold as cooking fuel, replacing charcoal, which is harmful to the environment and human health. It’s a project of Novozymes and CleanStar Ventures, which have together formed CleanStar Mozambique. The food and energy business will work with 3,000 smallholder farmers, to help with a transition from slash-and-burn agriculture to sustainable farming. Whatever crops the families do not consume will be sold to CleanStar Mozambique. The crops will be used to produce a wide range of food products as well as an ethanolbased cooking fuel made from cassava, which will be sold into urban markets, Novozymes says. The business is intended to improve nutrition, increase incomes by up to 500 percent, improve degraded soils, save thousands of acres of forest and safeguard lives from charcoal smoke. “By rethinking biofuel and the African household energy market, we will help poor African farmers make more out of the little
they have—and jumpstart a whole new industry that can provide clean and affordable energy to the urban poor,” Anders Lau Tuxen, energy strategist for Novozymes, tells EPM. Cleaner A resident of Maputo, the capital of Mozambique, cooks with Another partner in Quicker, an ethanol cookstove. Faster and cleaner than charcoal, cooking with ethanol the project is ICM Inc., allows her to return to her market stall more quickly to earn an income. which will design and manufacture parts for the ethanol plant. The erate continuously, though it can start or stop only exception is fermentation tanks, which as needed. ICM is providing all shop-fabricated will be produced in the region. “These parts and specialty equipment, plus a small customwill be shipped any day and we expect assem- built biomass boiler manufactured by Victory bly to start later this year with commissioning Energy for steam production and a generator taking place next year,” Tuxen says, adding that engine for electricity, modified to run on hyonce the business model has been proved, the drous ethanol. In addition, ICM will provide companies will consider increasing capacity or training for the local operators. The biggest design challenge for ICM was building additional plants in other locations. Eighteen pounds of locally grown cas- selecting small, reliable and low-maintenance sava chips can be converted to 1 gallon of pumps. “ICM put a lot of thought into de185+ proof ethanol, ICM tells EPM. (It takes termining what equipment will work best for 20 pounds of corn to make 1 gallon of etha- a location that may not have reliable overnight nol.) The cassava milling and cook process is delivery,” says Dennis Vander Griend, ICM sesized to operate 10 to 12 hours a day while the nior process designer. —Holly Jessen distillation portion of the plant is sized to op-
38 | Ethanol Producer Magazine | november 2011
PHOTO: JEFFREY BARBEE, NOVOZYMES
Novozymes, ICM project aims to improve health, stop deforestation in Africa
Building Supply USDA grant focuses on Southeast biomass supply
The USDA believes the Southeast region of the U.S. offers huge potential for a variety of dedicated energy crops and in September, the agency agreed to provide $15 million to form the Southeast Partnership for Integrated Biomass Supply Systems (IBSS) to develop that potential. The grant was one of five issued by the USDA’s National Institute of Food and Agriculture as a means to accelerate renewable energy feedstocks throughout the country. IBSS will be led by Tim Rials, director of the Center for Renewable Carbon at the University of Tennessee’s Institute of Agriculture, and is comprised of a wide range of partners, including multiple universities and technology providers. The multifaceted project includes a number of goals, but the immediate focus will be on sustainability research, workforce training and, of course, feedstocks. “One of the strengths and weaknesses of the region is that we have a very diverse landscape and sources of biomass,” Rials says. “What we’re looking to do is take this to the next level, where we are optimally providing feedstock that is designed and tailored to different conversion technologies. It’s really about feedstock delivery and develop-
Woody Resources The Southeast Partnership for Integrated Biomass Supply Systems will be looking at woody biomass resources as well as switchgrass and other feedstocks in the Southeast.
ing a sustainable biomass supply system for the region.” Switchgrass, already proven to hold great potential for the Southeast through work carried out by the University of Tennessee and Dupont Danisco Cellulosic Ethanol LLC, will continue to be developed at IBSS. Woody crops are another area of focus, particularly short-rotation hardwoods such as eucalyptus and hybrid poplar. “If you look at this particular region, we’ve got 20 million acres of pine production out there in plantations, but the hardwood plantations have not seen the same type of success,” Rials says. “As we talk about feedstocks for biochemical and thermochemical conversion technologies, it’s important for us to make progress in that hardwood system.” Information is already being compiled for IBSS extension and outreach programs, including an internship program with several univer-
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sities to introduce students to various biomass considerations and conversion methods. Planting of new biomass crops will begin in earnest in the spring, Rials says. Forestry product developer ArborGen is a core member of IBSS and will focus on optimizing wood characteristics for biofuels feedstocks and developing sustainable methods for harvesting, transporting and storing those types of trees. “Our entire team of scientists, silvicultural and forestry experts work every day to develop new solutions for short-rotation woody feedstocks and biofuelsand bioenergy-related technologies,” says Maud Hinchee, chief science officer at ArborGen. “We will lend our collective expertise toward this effort, which we believe will help meet the Southeast region’s need for biomass and our nation’s growing demand for wood, fiber and energy.” —Kris Bevill
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november 2011 | Ethanol Producer Magazine | 39
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Long Haul In Denmark, shown above, wheat straw is a major component of energy production. The U.S. cellulosic ethanol industry has been researching crop residues as feedstocks for years but just recently began large-scale harvest trials. PHOTO: INBICON A/S
42 | Ethanol Producer Magazine | november 2011
Round and Square of it
Proving the sustainability of crop residue removal By Kris Bevill
Three years ago, ag giants John Deere & Co., Archer Daniels Midland Co. and Monsanto Co. pooled their respective areas of expertise and embarked on an experiment. Each company had its own specific reasons for wanting to determine whether stover could truly be harvested from the nationâ€™s corn fields in a sustainable fashionâ€”questions regarding equipment, processing and field productivity, respectivelyâ€”but without extensive testing of the various harvest, storage and transportation theories, it would be impossible to know whether hypotheticals could become reality. Soils needed to be sampled. Fields had to be harvested. Bales needed to be made, and storage areas needed to be acquired. But, most importantly, they had to get farmers onboard.
november 2011 | Ethanol Producer Magazine | 43
the soils,” Petersen says. “In every area it’s a little different and that’s why we’ve done as much research as we have.” All uncertainties aside, Petersen is convinced the need to harvest stover will increase. Monsanto has publicly committed to providing corn varieties that will average 300 bushels per acre by 2030 and as corn yields increase, so will stover yields. This will likely inspire more farmers to entertain collaboration opportunities with biorefineries looking for stover. “It becomes a real issue for the grower,” Petersen explains. “They have to either use additional tillage passes or they grow less corn, because they have all of the issues with the residue that's left on the soil. So we want to find a way to make corn stover a coproduct of corn farming and not a byproduct." The DAM project is not the first, and
“Initially, that was difficult,” says Steve Petersen, end-use market manager for Monsanto. At first, many farmers were skeptical of removing stover from their fields for fear that it would be a detriment to soil health. A few exceptions, those with the largest corn on corn yields, were eager to have the excess residue removed, but many were cautious. They needed convincing, and that took a little time. Many farmers who participated in field trials, which took place in the heart of corn country near Cedar Rapids, Iowa, were willing to commit only one field the first year of the project. “But once they gained a comfort level with it and saw that we were not taking all the stover off the ground and that we were doing this in a sustainable manner, we had a lot of them that then put all of their fields in,” Petersen says.
In all, 38 fields were enrolled in the DAM [Deere, ADM, Monsanto] project in 2008, 36 in 2009 and 25 in 2010. Of the farmers who participated, 18 returned every year to contribute their fields to the experiment. Fewer fields were harvested than enrolled, for various reasons, but project leaders determined it is necessary to sign up more fields than needed as a way to mitigate weather and timing issues. While the project evaluated many of the smaller details of stover harvesting, the overall conclusion was that sustainable stover harvests are certainly possible, but as with everything agriculture, there is no one-size-fits-all approach. “It depends on what your yields are, it depends on what the slope of the ground is, it depends on what the possible wind and water erosion is and it depends on the organic matter of
Pennies on the Pound Research conducted by Monsanto Co. has concluded stover removal equates to the need for about $10 worth of additional fertilizer per 1,200 pound round bale. 44 | Ethanol Producer Magazine | november 2011
PHOTO: POET LLC
Full House Poet’s 2009 Project Liberty Field Day drew a large crowd of people interested in learning more about the opportunities available with corn cob collection.
certainly not the last, to explore the finer points of regularly harvesting ag residues. In Minnesota, long-time ethanol industry consultant Larry Johnson began conducting stover research on behalf of Inbicon A/S, a Denmark-based technology client, after becoming inspired by the wheat strawto-power practices he saw in use in Denmark. He knew farmers in the U.S. would be getting frustrated with the ever-accumulating amounts of stover in their fields and believed the Danish model for collection and storage of the feedstock could easily be replicated here. In 2009, he began evaluating the logistical challenges associated with collecting, storing and transporting thousands of tons of biomass within the short harvest window.
Custom vs. Farmer
One of the first issues that drew Johnson’s attention was the need for harvesting equipment. Manufacturers and innovative
farmers have been developing a variety of implements for harvesting large amounts of stover for a while now, but in order to supply individual farmers with the equipment needed to bring their own stover into ethanol plants, a serious ramp up of manufacturing would be required. Johnson explains the mind-boggling logistical requirements necessary for farmer harvests: “If we need 450,000 tons [of stover] for a 20 MMgy plant, and we’re getting 3 tons per acre, that’ll require 150,000 acres,” Johnson says. “If we’re going to do 500 acres per farmer, that’ll require 300 farmers. If you’re going to harvest right behind the combine, you’d have to have a baler behind 300 separate combines for one plant.” Expanding that view to what he expects could be 100 cellulosic ethanol plants using stover by 2022, Johnson figures manufacturers would need to produce 30,000 stover balers, just for farmers to bale stover for ethanol plants.“Considering that most
combines pass no more than one and a half tons of cobs and stover per acre through the combine, that would double the acreage required,” he says. I think that eliminates that possibility.” Aside from the equipment requirement, another issue with farmers harvesting stover themselves is the unknown quality of the product, he says. “Farmers are aware of how to collect stover and bale corn stover in large round bales. They’ve been doing it for livestock for decades. But they don’t care if they’ve got dirt lumps or roots in there. As an ethanol plant, we are not going to want to see any dirt in there. And sometimes it has a high moisture content, leading to product degradation and shrink.” Because of these issues, Johnson believes third-party custom harvesters are the only feasible way to collect and deliver stover to ethanol plants. That way farmers don’t have to invest in purchasing or leasing new equipment and third parties can con-
november 2011 | Ethanol Producer Magazine | 45
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46 | Ethanol Producer Magazine | november 2011
trol the quality of the feedstock, as well as handle the storage and transportation aspects. “Farmers will be glad to have people come and take their stover away,” Johnson says. “They don’t want to bother with it.” Dave Simpson, owner of Sharpsville, Ind.,-based custom harvesting company Simpson Straw Co., says he’s experienced growing interest from farmers who would like to remove excess residue from their fields without having to invest their own time or money. Farmers planting corn on corn, especially, are in need of stover removal because excess residue clogs equipment, he says. His business owns five balers and can cover between 500 and 600 acres per day, harvesting about 10,000 acres of wheat straw and 2,000 acres of corn stover annually. Simpson believes there is enough manpower and equipment available for widespread commercial stover harvests. “There’s no way to make it easier, it just takes hard work,” he says. Custom harvesters were used for the DAM project trials, and Petersen agrees that most of the stover acquired by ethanol
plants will probably be brought in by third parties. “There may be some extremely large farms that may do it as a profit center and have their own equipment, but I think those will be extremely large operators,” he says. “Most of these are going to be custom operators.”
On Their Own
There is one big exception to the growing consensus that custom operators will be key to stover collection. This fall, Poet will begin its third annual stover harvest near Emmetsberg, Iowa, with approximately 100 area farmers participating. Poet continues to believe that farmers can and will deliver the stover necessary to feed its 25 MMgy cellulosic ethanol plant, dubbed Project Liberty, and expects about 70 percent of the participating farmers to harvest the stover themselves. “The farmer has as valued of an interest in this as we do,” says Adam Wirt, regional biomass coordinator for Poet Biomass. “Plain and simple, the way to do this the cheapest is to cut out the middle man. So if the producer is willing
PHOTO: LARRY JOHNSON
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Take it (Almost) All Off Following stover harvest, fields are left with a certain percentage of residue to protect against erosion and replenish nutrients lost through the growing cycle.
and wants to do that work, we know he can do it cheaper than adding in a third party and why not let the money go to his operation if he wants to? Our whole model is built on farmer investment and farmer participation, so this is just another carry on that.” Poet has been conducting stover harvests since 2009 and signs four-year contracts with farmers to collect and deliver biomass to the plant, according to Wirt. Last year, 85 farmers participated in Poet’s stover harvest. This year, all of them returned and brought a few newcomers into the mix, indicating that they are pleased with the results so far.
Square vs. Round
Once the fields are enrolled and a harvest method is determined, the next item on the stover acquisition to-do list is to choose which way the stover should be collected. There are a variety of ways to do it—chopping it into windrows and bagging it or baling it, either into square or round bales. The DAM project explored all of these methods and found that, again, the preferred method will likely vary depending on the geography of the fields and the end-user’s preference. Differing slightly, Johnson has determined that square bales are the most economical method and believes that will be the way most stover is harvested, at least for the near-term. “Large square bales, at this point, are the only way to get maximum tonnage on a semiload of bales,” he says. “And then, once you have it loaded to capacity, it’s much more efficient to travel long distances.” While most of the stover will likely be collected within a 25-mile radius of ethanol plants, Johnson says the square bale method will allow stover to originate as far as 50 miles away from the plant and still be economical. It is believed that ethanol plants will need specialized processing equipment to handle one particular form of feedstock, be it round bales, square bales, pellets or otherwise. But, once again, Poet is branching out on its own and forging a different path by planning to take in both round and square bales. “We need all the feedstock we can get and until we’re getting that 300,000
tons that we need on an annual basis, we don’t feel we can make the switch to either rounds or squares, nor have we decided that we want to,” Wirt says. “It’s a matter of getting the tons and, if a guy wants to do it one way or another, we’re open to that.” Storage is another issue directly related to the feedstock’s form. While round bales shed rain, square bales are easier to stack in a storage area. It’s an important determination to make, because proper storage is vital to the feedstock’s longevity and, considering that farmers are lucky to have a 30-day harvest window, ethanol plants need to be prepared to store feedstock adequately for up to 12 months. And that will require a lot of space. Poet has its own relatively small storage yard but plans to ask farmers to store their bales themselves. “If we were going to take on storage, there’s a huge cost,” Wirt says. “Twenty-two acres sounds like a lot, but in terms of overall amount that it can hold for a yearly basis, it’s really small.”
Harmful to Health?
As mentioned, one of the early concerns voiced by some farmers and observers was that stover removal would also remove vital nutrients, potentially damaging the health of the field and perhaps requiring greater use of fertilizers. This concern has largely been debunked through various studies conducted by universities and industry participants. The DAM project found that, on average, the removal of a 1,200-pound round bale of stover equated to an additional $10 worth of fertilizer. For farms that also have livestock operations, as is often the case in Iowa, the manure from livestock delivers so much phosphorous, nitrogen and potassium back to the fields that, for them, removing the stover was an advantage, Petersen says. Additionally, stover removal reduces the number of required tillage passes, which in turn reduces the amount of emissions from farming equipment and wear and tear on the field. Some stover is left behind for protection and the USDA offers planning tools that can help estimate the amount needed to november 2011 | Ethanol Producer Magazine | 47
control erosion and provide organic matter. The DAM project utilized those tools and determined they can guide sustainable stover harvests. Wirt says Poet has engaged several universities to conduct studies analyzing soil health, but when it comes right down to it— the farmer usually knows best. “The farmer’s never going to jeopardize his field or the production or health of it,” he says. “He knows where that limit is.” Wirt believes farmers are more concerned about the timing and financial aspects of stover harvests than studying the health of a field that they already know needs stover removed. “For the time they’re going to put into this, they want to make sure there will be a return on investment,” he says.
The return on investment is also a large part of ethanol producers’ concerns. An economic evaluation of stover harvest activities conducted by Purdue University, sponsored
in part by Monsanto, concluded that the total cost of stover collection would likely range between $73 and $90 per dry ton. Assuming custom harvesters are used to collect 15,000 round bales from 5,000 acres of land, harvesting operations would cost about $40 per ton for fields in a corn-soybean rotation. That number is cut almost in half, down to about $23 per ton, when considering corn-on-corn fields because the stover harvest would eliminate one tillage pass, the researchers found. Once the stover is harvested, Purdue economists estimate that loading and unloading the bales would cost about $7 per ton, transporting them adds another $23 per ton, assuming 26 round bales are hauled 42.4 miles on a flatbed trailer, and storing the bales onsite under a tarp for 12 months would cost about $19 per ton. Purdue’s calculations provide an easy breakdown of the various input costs required to bring stover from the field to the factory, but it is important to remember that commercial facilities may require at least
48 | Ethanol Producer Magazine | november 2011
300,000 dry tons of feedstock annually. Using that figure as a starting point, and assuming that each round bale weighs 1,200 pounds, Purdue’s high-end calculation of $90 per dry ton in total costs equals a total cost of $27 million annually to collect, store and transport stover to a nearby ethanol plant. “It’s going to take some serious financing,” Johnson says. The Purdue economic evaluation didn’t include payments to farmers, which will add even more to ethanol producers’ initial out-of-pocket expenses because, as Johnson points out, farmers are skeptical when it comes to IOUs. “Especially after the debacle with VeraSun Energy Corp., farmers are not going to be likely to let you take the stover without at least a large down payment,” he says. Also, farmers aren’t likely to be clamoring over each other to jump on with a project that hasn’t been built yet, and banks aren’t seemingly too excited to finance a project without guaranteed feedstocks. Johnson believes that’s where the government should step in. “It all ties together and,
in my mind, that is a role for government to be able to see this vision and, if not guarantee the capital to make it happen, at least put together some reasonable energy policies so that the private sector can see that this has a future.” The first federal steps in that direction finally came in late summer when the U.S. DOE finalized loan guarantees for Poet’s Project Liberty and Abengoa’s cellulosic ethanol plant near Hugoton, Kan. Certain Congressional members continue to wage war against the renewable fuel standard (RFS), however, and the U.S. EPA will issue its final decision by the end of November on next year’s RFS volumes, once again lowering the cellulosic biofuels mandate in the face of lagging production options. It’s a worrisome signal to some investors, but those involved in the actual stover harvest activities believe it will soon become standard practice in many areas of the Corn Belt. Petersen notes that land surrounding ethanol plants happens to be particularly well-primed for stover har-
vests, which is a benefit to plants considering bolt-on cellulosic additions. Fields surrounding ethanol plants are typically flat, many of them are planted with corn-on-corn and yields are very high, Petersen says. “In those areas, you’re going to see stover harvests on an annual basis,” he predicts. Johnson says that given enough money and manpower, large-scale stover harvests could happen this fall. Realistically, however, stover harvests probably won’t start ramping up until next year at the earliest, which still puts it on track with the building schedule of the first few commercial-scale plants. According to Johnson, Inbicon has several cellulosic ethanol projects in the U.S. in planning and preliminary engineering phases, but policy is a factor in getting them started. “These projects will be ready to go when the conditions are right,” he says. As for the first step of the stover puzzle—getting farmers to agree to participate— Petersen, Johnson and Wirt all say education and information is the key. Petersen rec-
ommends a good testing protocol to show exactly what you are removing from the farmer’s fields, backed up with information to illustrate how it can be done sustainably as a way to convince them to participate. Wirt says education is the main area of focus for Poet when working with farmers on stover harvests and he believes that coordinated efforts between ag producer and ethanol producer will be a success. “We may not know all of the answers and they may not either, but we’re working together to try to get the best results,” he says. “So far, it’s working for us. This is a matter of all of us succeeding together, no matter the pathway. It’s a matter of figuring out how we collect stover as one part of the giant scheme of converting that into energy. We all need to be successful in this.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 firstname.lastname@example.org
november 2011 | Ethanol Producer Magazine | 49
50 | Ethanol Producer Magazine | november 2011
Cropping Between the Lines The bull’s-eye on corn ethanol could fade if the industry steps up and makes corn production and stover harvesting more environmentally friendly By Holly Jessen
Conventional wisdom has long held that cropland should sit fallow over winter, with nothing growing on it. “That was absolutely the stupidest thing we have ever thought of in the world,” says Jim Hoorman, a member of the executive committee of the Midwest Cover Crop Council. Today, no-till or strip-till farming is gaining ground, and researchers are examining systems that combine reduced tillage with planting perennial or annual cover crops. Instead of competing with the primary crop for nitrogen and water, as once was feared, planting cover crops offers farmers a way to improve the soil. Other benefits range from reducing erosion and water quality problems to increasing soil organic matter levels as well as providing insect and weed suppression.
Getting Growing Researchers Jeremy Singer and Ken Moore, who worked on an Iowa State University study of cover crops for corn, examine perennial grasses planted between rows of corn. PHOTO: DAN KUESTER, ISU
november 2011 | Ethanol Producer Magazine | 51
This summer, Iowa State University revealed the results of a three-year study of cover crops in corn fields. The study found that planting a perennial cover crop with corn can keep soil, nutrients and carbon in the fields while providing corn yields equal to traditional farming methods. Unlike annual cover crops, which are planted in the fall and killed off in the spring, perennial cover crops save time and money on seeding, says Jeremy Singer, a research agronomist with the National Laboratory for Agriculture and the Environment, who participated in the ISU study. It’s exciting news not just for corn producers, but for the ethanol industry. With corn stover high on the list of possible cellulosic feedstocks, many have wondered how much of it can be harvested before the scale tips and the practice harms the land. It’s clear that harvesting all the stover wouldn’t be a good idea. “[That would remove] the last buffer against severe soil erosion and severe environmental issues related to that practice,” says Ken Moore, a distinguished professor of agronomy at ISU and one of the researchLooking to the Lawn Ken Moore, a ers who worked on distinguished professor the perennial cover of agronomy at Iowa State University, crop study. screened more than 30 In this way, cover cover crops to identify Kentucky bluegrass as crops provide an anan ideal perennial cover swer to the food vs. crop for corn. fuel debate—corn producers can truly produce feed and fuel from their corn crops, Singer says. “By using the cover crop you are protecting the soil, you are increasing nutrient cycling, you are offsetting a lot of the carbon that is being harvested in the stover,” he says. “We feel like you can harvest as much of the corn stover as you want, basically.” Cover cropping addresses water quality concerns as well, such as the hypoxic zone in the Gulf of Mexico where nutrient runoff from the Mississippi River watershed creates a dead zone. Crops growing on the land only four months out the year add up to “sort
of a leaky system,” Singer says. Nitrogen in the soil turns into nitrate, which can leach through the soil and contaminate surface and ground water. Cover crops help Strip Till capture that nitrogen Jeremy Singer, a research agronomist in the spring and with the National fall. “It could help Laboratory for take corn off the bad Agriculture and the Environment, worked on list—that’s sort of the developing agronomic take home message practices for planting perennial cover crops of this,” he says. with corn. Moore agrees. “This will make the whole system sustainable,” he says. “Nobody can really complain, under this system, that corn production is having severe adverse impacts on the environment.”
From Lawn to the Field
In every study, there are winners and losers. ISU’s study, which was funded by a Sun Grant for biobased research, identified Kentucky bluegrass—a common lawn turf—as a recommended perennial cover crop for corn. Thirty-five potential ground covers were screened to identify crops that, with little or no suppression, did not compete with corn, Moore says. Different corn hybrids were also tested to discover if there were varieties that worked better in a cover cropping system. The final component was determining which agronomic practices would be required to grow corn with perennial cover crops. On the ground cover side, researchers identified a number of species that would work. “It turns out, based on our work, that just about any one will work as long as it’s suppressed and can take the suppression,” Moore says. What made Kentucky bluegrass stand out from the crowd is how easy and inexpensive it is to purchase the seed. “It’s a very common plant in the Midwest,” he says. “It’s in everybody’s lawn—if everybody is lucky, it would be the only one in their lawn.” In addition, farmers are already very familiar with controlling it. “I think if we brought
52 | Ethanol Producer Magazine | november 2011
in an exotic species for a ground cover they would balk at that initially,” he says. The study also revealed some winners and losers in corn hybrids. In other words, some hybrids performed better with cover crop competition, leaving the door open for further research and genetic work. “We believe there is scope for improving the corn hybrids to grow better in a companion situation with a cover crop,” he says. Finally, researchers mapped out exactly how to grow cover crops with corn. The combination that worked the best was a fall strip till about 4 inches wide combined with herbicide use, Singer says. In the spring, either before corn is planted or before it has emerged, they applied Paraquat, a contact herbicide, to burn back the green tissue of the grass without killing the plant completely. “So that buys corn some time,” Singer says. Then, as the corn starts to canopy, they applied a 10-inch band of Round Up to the herbicidetolerant corn. “Just to make sure that we have that zone of no competition right over the row,” he adds. Then, during summer and fall, the grass begins to grow back before going dormant in the winter. Maintenance seeding may be needed every three to five years. The most exciting results of the study were that corn yields with cover crops under this system were essentially the same as the control. In addition, no extra fertilizer was needed. “We didn’t have to increase the nitrogen rate to achieve that,” Singer says. “That’s a significant finding.” At this point, the researchers aren’t recommending wide-scale perennial cover cropping for corn growers. “We’re not ready for prime time yet, but we think it’s absolutely doable,” Moore says. Additional research needs to be done to quantify the impact on nitrogen levels in a cover crop system. The question is, what’s the actual financial benefit—the return to producers—in increased soil productivity? If soil improves, that could be a selling point for producers. “The struggle with cover crops, whether they are annuals or perennials, any type of cover crops, has just been penciling out the cash benefits, the return to the producer, because a lot of the functions cover crops perform are longer term,” Singer explains.
So what needs to happen for cover cropping to catch on nationally? Iowa has seen a pretty dramatic increase due to a cost share program that provides USDA funding for cover crops in watershed states bordering the Mississippi River. Funding is available through the Natural Resources Conservation Service, with varying funding levels in different states and even among different counties within the same state. Still, Singer doesn’t feel that type of incentive is what’s going to work in the end. “I don’t think that government cost share is sustainable,” he says. “Government is shrinking right now—funding is shrinking for conservation practices. You can’t rely on cost sharing to increase adoption for producers.” What’s really needed is for an industry or service sector to step up and help establish cover crops. That could mean agribusiness or, specifically, the ethanol industry. The motivation there would be a mutual effort to get the bull’s-eye off the back of corn-ethanol. “The corn ethanol industry depends a lot on farming and it’s important to your industry that farming keep sustainable,” Moore says.
It’s clear that soil should have something living and growing on it year round, says Hoorman, who, besides serving on
the cover crop council, is a cover crops and water quality specialist for Ohio State University extension service. The more soil is used—the more plants growing on it—the healthier it becomes. He, like others, sees the exciting possibilities of using cover crops in concert with bioenergy feedstocks. “It would be a great way to give us that three-legged stool, for food, fiber and also fuel,” he says. Research at OSU has shown that cover crops in a continuous, no-till corn/soybean/wheat rotation can produce enough nitrogen to compliment or even replace fertilizer for corn production. Seven years of research identified two annuals, cow pea and winter pea, as ideal cover crops. “Cover crops produce enough nitrogen to where farmers many not need to add nitrogen fertilizer to their corn crop, but if they want to be sure of maximizing their yields, farmers can supplement the cover crops with 25 to 30 pounds of nitrogen fertilizer,” says Rafiq Islam, an OSU Extension soil scientist in a 2010 press release about the research. “That’s more than enough a farmer needs to support the corn crop.” Commercial fertilizer wasn’t widely used until about World War II, Hoorman tells EPM. As time went on, farmers started using more fertilizer and growing more monocultures. In the 1980s, the U.S. imported 24 percent of the nitrogen used
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Ground Cover Researchers in Michigan have been eyeing cereal rye as an annual cover crop for use with corn.
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Cover Crop Veteran
Dave Brandt, a farmer from Carroll, Ohio, first incorporated no-till into his operation in 1971 and added cover crops in 1978. He uses a corn/soybean/wheat rotation on his farm and is an enthusiastic promoter of cover crops. When Brandt talked to EPM in September, he had about 350 acres of radishes and winter peas already planted for the winter cover crop. He was in the midst of harvesting another 300 acres of corn on land in which radishes and winter peas were planted the previous fall, and another 40 acres of corn that had been previously planted with hairy vetch as a winter cover crop. Cover crops supply nitrogen and nutrients to the next crop. Brandt has found that planting winter peas and radishes reduces needed nitrogen inputs by about 75 percent, while hairy vetch reduces it by about 60 percent. In addition, it costs much less to
plant cover crops than it does to fertilize, he says. Planting winter peas and hairy vetch costs him only $17.50 an acre, although that doesn’t include his time and equipment. Fertilizer, on the other hand, costs about $120 an acre at this fall’s prices. “We saved about half of our nitrogen costs, including the seed,” he says. He’s also gotten some good results protecting sloped ground from erosion. Starting at normal tolerated soil loss, Brandt has reduced soil erosion on his farm to less than 50 to 80 percent using cover crops. The long-term benefits are perhaps even more impressive. Brandt’s soil has gone from organic matter readings of half a percent to as high as 4.5 and 5 percent. That gain in organic matter adds up to measurable improvements in the crops themselves.
Long Reach Dave Brandt, an Ohio farmer that has been using cover crops since 1978 in a corn/soybean/wheat rotation, shows off a diakon radish in a field of cover crops. PHOTO: BRANDT’S FARM
54 | Ethanol Producer Magazine | november 2011
“We have done some work with grain sampling and we found that our no-till corn with cover have more nutrients than corn that is in a corn/bean conventional rotation,” he says. In general, Brandt finds that winter peas and radishes freeze out over a hard winter, while still providing the benefits of a cover crop. Hairy vetch, on the other hand, stays green all winter and needs to be suppressed in the spring before planting. No-till and cover crops do take a little more management, he says. It can be a difficult switch for those used to doing things a certain way—some ever since their grandfathers farmed the land. “You have to change your mindset if you are going to grow covers,” he says, advising farmers to start small so they can see the benefits for themselves.
and by 2010, that number had increased to more than 60 percent, according to information from OSU. Changing fertilizer practices is part of a movement to ecological farming— ecofarming—which includes eternal or exclusive no-till, cover crops and other best practices. “By working with Mother Nature, we’re finding we can produce maybe even better crops, higher yielding crops, than what we could before,” he says, “Because the one thing we really ignored was our soil quality.” Brazil has used the concept of ecofarming or eco-agriculture for the past 30 years. Starting with worn out soils, the country has increased its soil productivity through the use of cover crops and is now producing 40 to even 60 bushel soybeans. “As our soils in the United States are decreasing in value and productively, theirs are increasing,” Hoorman says. “They are taking worn out soils and making them better.” In Michigan, researchers looking at ce-
PHOTO: STEVE DEMING
|article continued from page 53|
Head Start Researchers in Michigan say aerially applied cover crops could allow farmers to plant before corn harvest, giving cover corps longer to establish before winter.
real rye, another annual cover crop, for use with corn, combined cereal rye cover crops with 10- to 15-inch strip till. Since cover crops keep the soil temperature lower, the strip till gives the soil a chance to warm up to encourage faster corn germination, says Dale Mutch, a senior extension agent at Michigan State University. With an annual cover crop, one of the challenges is timing. Michigan has a shorter growing season than Iowa and it can be difficult to get the cover crop planted quickly enough in the fall to provide the full benefit through the winter. One idea researchers are looking into is aerial applied cover crops, Mutch says. With a corn crop, the cover crop seed would probably be applied in the last part of August, giving it time to establish itself before harvest. Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 firstname.lastname@example.org
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november 2011 | Ethanol Producer Magazine | 55
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12.9 million gallons
3.45 million gallons
56 | Ethanol Producer Magazine | november 2011
It’s an already too-familiar routine to ethanol producers and petroleum refiners.
By Nov. 30, the U.S. EPA will issue its renewable fuel standard (RFS) volumes for the upcoming year and, once again, it will dramatically ratchet down the cellulosic biofuels category. At the time this article is being written, one could still speculate on how low the volume could go. Would agency officials settle on the lowest proposed amount—3.45 million gallons, less than 1 percent of the initial 500 million gallons initially set by the RFS? Or would they remain optimistic and finalize a volume on the high end of the proposed range, closer to the 12.9 million gallon mark? It’s difficult to say that 12.9 million gallons is the high side when considering Congress initially believed 500 million gallons could be attainable by now, but that’s the uncomfortable reality of cellulosic ethanol production at the end of 2011. No matter what end of the proposed volume spectrum the final needle points to, someone will be unhappy. This is due mostly to the renewable identification numbers [RINs] attached to each gallon of fuel produced. In the case of nonexistent cellulosic biofuel up to this point, the RIN is replaced by a certificate issued by the EPA in place of actual gallons produced. For refiners who must pay for the cellulosic RIN certificates, this presents a case for them to argue against the RFS. Why should they be required to pay for RINs meant to track their compliance with consumption mandates when there is no existing fuel for them to consume? In July, representatives from the petroleum industry emphasized that point during a public hearing held by the EPA to gain feedback on its proposed 2012 RFS volumes.
Will RINs prove that the RFS needs modifying? By Kris Bevill
“The Clean Air Act directs EPA to project the amount expected to be sold or introduced into commerce based on credible facts, not based on press releases, hopes or wishes,” said Greg Scott, who was serving at that time as executive vice president and general counsel of the National Petrochemical and Refiners Association. “No cellulosic biofuel RINs have been generated for the 11-month period of July 2010-May 2011. This should suggest caution when selecting the regulatory volume for 2012. If the EPA is wrong or if a biodiesel trade group representative or cellulosic ethanol spokesperson is wrong in his or her rosy predictions for production, it is our members that will experience the economic and regulatory pain.” Scott equated the cellulosic biofuel mandate and subsequent waiver credit requirement to a tax on refiners. “RFS obligated parties can buy up to 6 million cellulosic biofuel waiver credits in 2011,” he stated. “This is a $6.78 million tax that NPRA’s members must pay due to EPA’s misguided optimism regarding cellulosic biofuels production this year. Refiners should not have to pay millions of dollars in compliance taxes because of EPA’s gross miscalculation, and EPA must not repeat this miscalculation in 2012.”
At What Cost?
The Energy Independence and Security Act of 2007 provides the EPA with the authority to adjust the RFS each year based on anticipated production levels for the coming 12 months. In the case of a cellulosic biofuel production shortfall, EISA requires the EPA to establish a price for waiver credits, which are then purchased by obligated parties as a substitute for RINs to prove their RFS compliance. The price
november 2011 | Ethanol Producer Magazine | 57
of each waiver credit is set on an annual basis and is calculated by determining the difference between the average wholesale price of a gallon of gasoline and $3, not to drop below 25 cents per credit. In 2010, the price of cellulosic biofuel waiver credits was $1.56 per gallon. This year, credits were priced at $1.13 per gallon. per gallon Ethanol 2010 price for cellulosic industry repbiofuel waiver credits resentatives believe optimism is required to entice investors into the space. The Renewable Fuels Association asked the EPA to choose the high side for next year’s cellulosic volume mandate because it would provide a policy signal in support of cellulosic technology. “By setting the standard near the high end of expected industry production, EPA will provide certainty to projects under development and assist the industry in meeting the increased production requirements of the RFS2 over time,” the
RFA stated in its comments. “If EPA sets the 2012 standard well below what the industry is likely to produce in 2012, the urgency of project development will dissipate, making each subsequent annual target that much more difficult to achieve.” But for oil companies, the balance sheet rules. Several petroleum groups presented the EPA with alternatives to the cellulosic waiver credit situation this year, each of which results in refiners being exempt from paying for unproduced gallons of cellulosic biofuels. BP suggested that the EPA could waive any shortfall of production, eliminating the need for obligated parties to purchase waiver credits, but still provide the obligated parties with the option to comply through the purchase of credits or RINs. “This approach would continue to provide cellulosic producers assurance of a market, based upon the project volume to be made available, while eliminating the unjustified cost to obligated parties only after it was clear that the obligation was impossible to achieve,” Robert Leidich, BP regu-
58 | Ethanol Producer Magazine | november 2011
latory and advisory manager, stated in written comments submitted to the EPA. Patrick Kelly, senior policy advisor for the American Petroleum Institute, expanded that idea further, suggesting the cellulosic biofuels industry produce measurable amounts of fuel before refiners are required to pay for anything. He recommended that mandated volumes for the upcoming year be based on three consecutive months of proven cellulosic biofuels production. If no fuel is produced in that three-month period, then the next year’s mandate should be zero. “This type of cer tification per gallon process would 2011 price for cellulosic help the agenbiofuel waiver credits cy develop more realistic estimates and thus, achievable standards,” he said. Of course the ethanol industry rejects this notion and says it flies in the face of what Congress intended when it established the
It is risky to attempt to predict the EPAâ€™s actions, but if history tells us anything, one can assume that the agency will land some-
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Of greater interest to many grain-based ethanol producers is the advanced biofuels portion of the RFS. The EPA proposed to maintain the initial 2 billion gallon requirement for next yearâ€™s advanced biofuels category, a significant increase over the 2011 requirement of 1.35 billion gallons. In order to qualify as an advanced biofuel, the fuel must reduce greenhouse gas emissions by at least 50 percent and, to the dismay of corn ethanol producers, cannot be produced from corn. This could create an interesting scenario in 2012, says Clayton McMartin, president of the Clean Fuels Clearinghouse, which owns and operates the Rinstar Renewable Fuels Registry. â€œThereâ€™s going to be more and more
where in the middle of the RFS debate. The petroleum industry has been requesting the elimination of cellulosic biofuels mandates since 2009, and the EPA has yet to agree with it. In issuing Producers its final volume requireExpected to ments for 2011, the agency produce cellulosic noted that it must remain ethanol in 2012 optimistic when establishing cellulosic biofuel mandates because if actual production exceeds the mandate the industry will be at risk for weak product and RIN demand. The agency has also never agreed that corn ethanol should be allowed to make up for shortcomings in other categories. For the past two years, the EPA has settled on a cellulosic biofuels mandate of approximately 6 million gallons, and with little change in the industry it is likely to do the same this year. Cellulosic producers agree it will be necessary to reduce next yearâ€™s mandate. Of the six ethanol producers expected to produce next
Advanced at a Premium
demand for advanced biofuels, and sugarcane ethanol is pretty much the only option,â€? he says. This situation could drive up the prices for advanced biofuels RINs as obligated parties fight to comply with the RFS, he says. In his remarks at the EPA hearing, Growth Energy President Jim Nussle asked EPA officials to reconsider the corn discrimination clause in the advanced biofuels category. â€œWe believe that excluding corn ethanol risks many unintended consequences, such as increased costs, reduced supply pressures and market uncertainty, which would harm investment,â€? he said. Other ethanol producers have requested that the EPA reduce the advanced biofuels category but leave the overall 2012 mandate of 15.2 billion gallons untouched so that corn ethanol could be used to make up the difference.
RFS, which was to encourage the expansion of renewable fuels. â€œBasing annual cellulosic biofuel requirements on past production levels does absolutely nothing to encourage the construction of new cellulosic biofuel and discourages innovation,â€? the RFA stated.
november 2011 | Ethanol Producer Magazine | 59
year, several have a lot of unfinished business to attend to. Fiberight LLC has an existing 5.5 MMgy facility in Blairstown, Iowa, to work with, but it has been fine-tuning its technology and equipment this year and hasnâ€™t yet begun steady commercial production. Earlier this year CEO Craig Stuart-Paul said the delay in market value for cellulosic RINs was a factor in the companyâ€™s lack of production. The EPA expects Fiberight to contribute 3 million ethanol-equivalent gallons of cellulosic biofuel next year, but until commissioning is complete at the plant, Stuart-Paul was hesitant to predict whether that would be possible. As of late September, Fulcrum Bioenergy Inc. had not yet begun full construction of its 10 MMgy facility in McCarran, Nev. ZeaChem Inc.â€™s 250,000 gallon per year demonstrationscale facility in Boardman, Ore., was expected to produce biochemicals by the end of the year, but ethanol production would not be complete until 2012. In Florida, Ineos New Planet BioEnergy LLCâ€™s 8 MMgy facility was 25 percent complete by mid-September. Dan Cummings, vice president of Ineos Bio, said his company was comfortable with the projected 3 million ethanol-equivalent gallons anticipated from the plant and expected to be able to produce that much in 2012. No matter what the final volumes are next year, the petroleum industry will likely
continue to cry foul. Certain Congressional members have renewed the call to revise the RFS and the ethanol industry is furiously battling those efforts, but 2012 could prove to be a make-or-break year for the cellulosic industry. With so many federal government programs under fire for â€œwastefulâ€? spending, it How Soon? In its proposed volumes for the 2012 renewable fuel standard, the U.S. EPA included a list of cellulosic biofuel producers it expects to contribute to next yearâ€™s fuel supply. Several of the producers on that list have made advancements or changes to their production plans since the proposal was released in June. The following offers an updated look at their prospects for production as of late September. Dupont Danisco Cellulosic Ethanol LLCâ€”DDCE still expects to produce 250,000 gallons of switchgrass- and corn stover-based ethanol at its Vonore, Tenn., demonstration-scale facility next year and has also selected Nevada, Iowa, as the location for its first 27 MMgy plant. The start-up of that facility is also expected to occur next year. Fiberight LLCâ€”Fiberightâ€™s Blairstown, Iowa, plant has not yet begun producing continuously. The EPA expects it could contribute 3 million ethanol-equivalent gallons of municipal solid waste (MSW)-based ethanol to the 2012 volume.
is inevitable that the RFS will get lumped into a big picture argument and without a success story to point to it will only get harder to fight the opposition. Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 email@example.com
Fulcrum Bioenergy Inc.â€”engineering activities have taken place at the site and construction of the 10 MMgy MSW-to-ethanol plant is expected to begin by the end of the year. In September, the company announced its intent to go public. KL Energy Corp.â€”The EPA listed KLâ€™s Upton, Wyo., plant as having the potential to produce 1 million ethanol-equivalent gallons of ethanol next year, but the company carried out an extensive overhaul of the plant earlier this year to begin testing sugarcane bagasse processes and has reduced its operating capacity to 500,000 gallons. The company said it is currently producing ethanol at the facility. ZeaChem Inc.â€”The EPA predicted that ZeaChem could produce 250,000 gallons of cellulosic ethanol next year, but in comments filed with the agency, the company said full capacity will not be reached in 2012 and requested that the EPA reduce its expected amount to 50,000 gallons.
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Metal Maintenance Tanks are the workhorses of the ethanol industry. Corrosion mitigation is important at critical stress points, and as the tanks age. PHOTO: HOLLY JESSEN, BBI INTERNATIONAL
62 | Ethanol Producer Magazine | november 2011
As the ethanol industry matures, potential corrosion issues call for a watchful eye By Holly Jessen
Compared to the oil industry, the ethanol industry is relatively young. That puts the ethanol industry on a steep learning
curve on matters already mastered by other industries. Jim Dooley, account executive for Corrpro Companies Inc., believes one of those areas is corrosion protection for tanks—including fermentation, water and fuel tanks. The reality is, he says, some ethanol plants were built with little to no corrosion protection. “When the ethanol industry had designed a lot of these sites, they were unaware of a needs basis when it came to controlling [corrosion,]” he says. As these plants age, ethanol producers are beginning to examine existing infrastructure to determine where corrosion protection is needed to prevent metal loss. That process starts with tank inspections. Corrpro, a corrosion solutions company with offices worldwide, has worked with ethanol plants that don’t have the special coatings or cathotic protection in place that they should have. In some cases, those ethanol producers are starting to have problems with leaks. “What they are seeing is that their structures are showing some signs of wear, with corrosion, things are starting to happen now, that maybe weren’t predesigned into their systems,” he says.
november 2011 | Ethanol Producer Magazine | 63
The bottom line is, corrosion might not be the sexiest subject, but it is one ethanol producers need to have on their radar. If not, it could mean costly repairs or possible contamination someday down the road, particularly for some older ethanol facilities.
Steel tanks containing fuel-grade ethanol develop leaks due to stress corrosion cracking, says Oliver Moghissi, president of the National Association of Corrosion Engineers. Corrosion can be an issue near vents and any external appurtenances exposed to air, allowing ethanol to pick up moisture. Storing hydrous ethanol can produce even more corrosion due to higher water content. There are a number of corrosion mitigation strategies, he adds, drawing on technical input from Narasi Sridhar, vice president of DNV USA, a classification society, and
a fellow member of NACE. Galvanic sacrificial coatings, such as zinc or aluminum, will protect steel tanks containing ethanol. The main limitation to this system of corroHelp Available sion mitigation is that API has two helpful guidance documents it could have a negaon inspection and tive effect on product maintenance of ethanol tanks, says quality. â€œAny dissolved Oliver Moghissi, metal species in the president of the ethanol can render National Association of Corrosion Engineers. the ethanol unacceptable to the automotive industry, its main customer,â€? he tells EPM. â€œAny galvanic coating therefore must be tested rigorously by the end-user, the automotive community, which can be time consuming and expensive.â€?
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When corrosion or stress-corrosion cracking is observed, stress-relief annealing, a heat treatment, can be used to reduce weld stresses. In addition, chemical inhibitors can be added, water can be minimized and the entrance of oxygen minimized. The American Petroleum Institute also recommends internal polymeric coating. Water tanks need corrosion protection as well. Unlike tanks containing ethanol, cathodic protection can be used to protect tanks containing water. Cathotic protection involves either using sacrificial anodes that protect the tank by attracting corrosion to itself, or an impressed current from an external source. These same methods can be used to protect the bottoms and outsides of aboveground or underground tanks exposed to soil. Cathodic protection, however, doesnâ€™t work for the insides of metal structures containing ethanol, the corrosion engineers add. The fuel has low electrical conductivity when compared to water and, as a result, much of the applied voltage is insulated from the metal needing to be protected. â€œTherefore, impressed or sacrificial cathodic protection systems will not work in ethanol,â€? Moghissi says. â€œIn ethanol-gasoline mixtures, the situation is even worse since gasoline has a lower electrical conductivity than ethanol.â€? API offers two guidance documents detailing the inspection and maintenance of ethanol tanks and other infrastructure developed by an API task group: â€œTank inspection, repair, alteration and reconstructionâ€? and â€œIdentification, repair and mitigation of cracking of steel equipment in fuel ethanol service.â€? Moghissi says they provide helpful information. â€œThese documents provide a variety of inspection and mitigation methods as well as the latest results of the survey of industry on ethanol corrosion and stress corrosion cracking issues.â€? In addition, NACE has a technical exchange committee that meets annually to share information on corrosion mitigation methods for ethanol tanks, piping and pipelines. The committee also is working on a standard for stress corrosion cracking test methods for steel. Finally, Moghissi says,
Pipeline Materials Evaluated for Fatigue Crack Rates
SOURCE: NATIONIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY
the Steel Tank Institute holds regular meetings on the issue of ethanol storage tanks, typically from the perspective of ethanol storage at gas stations. For corrosion mitigation services, ethanol producers should work with a NACE-certified service provider, he adds, and for more information, they can also attend a NACE biofuels committee meeting.
Bacteria Bad News
Ethanol’s impact on steel requires a closer look for another reason, as more consideration is given to moving ethanol via
pipelines. This summer, new experimental evidence came out, showing that ethanol contaminated with a common bacteria boosts fatigue crack rates in pipelines by 25 percent when compared to air. (Researchers didn’t look at crack rates for petroleum in this study.) National Institute of Standards and Technology researchers presented their findings at the Department of Defense Corrosion Conference held Aug. 1 in La Quinta, Calif. The findings are the first to emerge from NIST’s biofuel test facility. Testing of tank materials is under way now, says NIST postdoctoral researcher Jef-
frey Sowards. Although funding received from the Department of Transportation Pipeline and Hazardous Material Safety Administration was used up in the first half of the study, researchers believe there is more to learn. “The timeframe of the project is actually over, but we’re continuing it on our own,” he says. The second half of the study will examine degradation of tank materials within the same parameters of the pipeline study, although fatigue loading isn’t as much of an issue for tanks as it is for pipelines. “I would say by the end of this calendar year
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we should have preliminary results,â€? he says, adding that researchers hope at some point to expand testing to other biofuels such as biodiesel and butanol. The pipeline study involved testing two common pipeline steels, X52 and X70. For the study, the pipeline steels were installed in hydraulic test frames and subjected to mechanical forces while immersed in fuel. Researchers observed fatigue crack growth over a period of up to 10 days.
When immersed in fuel-grade ethanol, crack growth increased significantly at stress levels found in typical pipeline operating conditions, but not at low stress levels. Finer-grained X70 pipeline steel is known to better resist fatigue and had lower crack growth rates at all stress levels. The ethanol solution that contained bacteria promoted crack growth at stress intensity levels found in typical pipeline operating conditions. â€œWe have shown that ethanol fuel can in-
crease the rate of fatigue crack growth in pipelines,â€? Sowards says. â€œSubstantial increases in crack growth rates were caused by the microbes. These are important data for pipeline engineers who want to safely and reliably transport ethanol fuel in repurposed oil and gas pipelines.â€? The bacteria was isolated from industrial ethanol storage tanks. Samples were provided by the Colorado School of Mines, he says. Preliminary testing suggested that a biocide used in oil and gas operations, glutaraldehyde, could help control bacterial growth.
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Dooley acknowledges planning corrosion mitigation is a challenge when tight margins mean ethanol producers need to carefully evaluate expenditures. â€œEverything comes down to a cost basis,â€? he says. Take water tanks. With no danger of contamination, a water leak it may not seem concerning. However, Dooley points out, depending on plant design and water source, some plants use water tanks as backup systems, to provide a day or two of water supply for its ethanol production needs. If these water tanks need maintenance or even fail, this could disrupt production, something an ethanol plant can little afford in a time of tight margins. Protecting metal structures such as water tanks from corrosion, whether at installation or retroactively, can help save money. For example, it may cost $5,000 to put in a system of cathotic protection, Dooley says, but compare that to $50,000 to repair a damaged tank or the cost of completely replacing that tank. â€œ[Cathotic protection is] going to extend the life of their service infrastructure,â€? he says. Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 firstname.lastname@example.org
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E15: Cracking the RVP Nut
New blend won’t qualify for One Pound Waiver, presenting huge hurdle By Jeremy P. Greenhouse
When the U.S. EPA granted Clean Air Act fuel waivers allowing gasoline containing 10 to 15 percent by volume of ethanol (E15) for use in model year 2001 and newer light-duty motor vehicles, the agency included the following condition, as published in the Jan. 26, Federal Register: “The final fuel must have a Reid Vapor
Pressure not in excess of 9.0 psi [pounds per square inch] during the time period from May 1 to September 15.” This succinct requirement presents the single largest barrier to the successful introduction of E15. The situation has left the ethanol industry scratching its collective head on how to proceed and, in the words of Monte Shaw, executive director of the Iowa Renewable Fuels Association, “Very frustrated.”
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s). 68 | Ethanol Producer Magazine | november 2011
The Waiver Problem
The root of the problem is that E15, in spite of having almost identical physical characteristics to those of E10, does not qualify for a decades-old exemption for E10 from the Clean Air Act’s fuel volatility limitations. As gasoline evaporates, volatile organic compounds (VOCs) enter the atmosphere and contribute to ozone formation, a problem that is exacerbated by warmer air temperatures. To address this issue, EPA has promulgated regulations, under section 211(h) of the act, prohibiting the sale of gasoline with a Reid vapor pressure (RVP, a measure of volatility) that
exceeds 9.0 psi in “volatility attainment areas” and 7.8 psi in “volatility non-attainment areas.” These standards apply to all persons from June 1 to Sept. 15 and from May 1 through Sept. 15 for all refiners, importers, distributors, resellers and carriers. The act includes an important exception to these RVP limitations, providing that fuel containing “gasoline and 10 percent denatured anhydrous ethanol” can exceed the applicable RVP limitation by 1.0 psi. Congress passed this “One-Pound Waiver” in 1990 to accommodate the gasohol industry’s practice of “splash blending” 10 percent ethanol with conventional gasoline. When 10 percent ethanol is added to conventional 9.0-psi gasoline, the RVP of the mixture will rise to about 10 psi. Absent the One-Pound Waiver, gasohol would have required a base gasoline with a lower RVP—about 8.0 psi—to stay below the 9.0-psi statutory maximum. Producing a special low-RVP blendstock, the industry successfully argued, presented prohibitive expenses and logistical problems. EPA’s regulation implementing the One Pound Waiver is more specific than the statute, providing that the waiver applies only to blends containing “at least 9 percent and no more than 10 percent” ethanol—language that clearly excludes E15. Many have contended that it is illogical to treat E10 and E15 differently in this way because the primary policy reason for adopting the One Pound Waiver for E10—facilitating splash-blending with conventional gasoline—applies equally to E15. Moreover, as the accompanying graph demonstrates, E15’s RVP is essentially identical to that of E10 and should present no greater ozone concerns. Nonetheless, the One Pound Waiver, as currently written, does not apply to E15, which presents a problem: the ethanol industry will be unable to blend E15 with conventional 9.0 psi gasoline in the summertime months, as it has done for decades with E10, because the resulting fuel’s RVP will be too high. Many hurdles remain for E15—health effects testing, fuel registration, updating standards, vehicle warranty issues, among others—but as far as “one big swipe that could control a lot of volume,” says Ron Lamberty, senior
vice president of the American Coalition for Ethanol, the RVP issue is “probably the largest."
Pressure Problems There appear to be no simple solutions for the EPA’s Reid vapor pressure requirement for E15, says attorney Jeremy Greenhouse.
No Easy Answers
dated, with only a handful of companies supplying any given terminal area, market forces alone are unlikely to compel refiners to supply a separate blendstock, explains Shaw: “[Local fuel purchasers] can only pull what is available at the terminal. The refiners are the customers of the terminal and the pipeline company, and the customers make the decision. It’s really up to the refiners what they do.” Considering these difficulties associated with obtaining a low-RVP blendstock for E15, another approach is to convince EPA to amend its rules to extend the One-Pound Waiver to E15 (and remove the RVP condition from the E15 Waivers). This would eliminate the need for a separate low-RVP blendstock for E15. There is a reasonable argument that the statutory One Pound Waiver—which applies to blends containing “gasoline and 10 percent denatured anhydrous ethanol”—can be interpreted to mean at least 10 percent ethanol. Accordingly, EPA could, consistent with the statute, amend its One Pound Waiver regulation to apply to E15. Unfortunately, EPA has soundly rejected this argument. In the preamble to its July 25 final rule on E15 misfueling mitigation, EPA explained in detail why it believes the Clean Air Act does not authorize extending the One Pound Waiver to E15. To challenge this decision would require formal legal action,
There are various potential solutions to this problem, none of them easy. The seemingly obvious answer is to use a lower-RVP blendstock for E15. But many areas of the country do not have low-RVP blendstock readily available, and obtaining one presents challenges, including the logistics of separately shipping and storing a special blendstock for E15 and increased cost. According to EPA staff estimates in 2002, creating a blendstock for E15 with a 1.0-psi lower RVP would require removing approximately 1.5 percent of the gasoline, most likely in the form of butane, which would add about 0.4 cents per gallon.1 However, the main challenge, according to Shaw, is that refiners are unwilling to supply a lower RVP blendstock. “They've already told us here in Iowa they have no intention of doing that. They don't want to sell E15.” Refiners are not required by law to provide a lowerRVP blendstock for E15, and the oil industry has made no secret of its opposition to E15, repeatedly suing EPA in an attempt to overturn the E15 waivers. Plus, refiners appear to have a financial disincentive to facilitate E15, which, after all, contains 5 percent less petroleum than E10. And because the Pressure Relationships The graph shows the relationship between Reid vapor pressure and different ethanol blends. Based on data in Issues Associated with the refining industry Use of Higher Ethanol Blends (E17-E24), prepared by National Renewable Energy is highly consoliLaboratory, October 2002.
november 2011 | Ethanol Producer Magazine | 69
which, given the deferential standard of review a court would apply to EPA’s interpretation, would be an uphill battle. Another potential solution is to bypass EPA and convince Congress to amend the Clean Air Act and make the One Pound Waiver expressly applicable to E15. As explained above, there are compelling arguments that the One Pound Waiver should apply to E15 as well as E10. But, obtaining a statutory amendment is difficult at the best of times, and even more so here, given the highly polarized political climate and the fact that the amendment would likely be controversial, opposed by the same groups that opposed the E15 waivers. A less controversial approach is to ask Congress to eliminate the One Pound Waiver altogether such that both E10 and E15 could be blended with a single low-RVP blendstock. With the RFS2 in place, eliminating the One Pound Waiver is unlikely to significantly impact sales of E10, and an amendment repealing, rather than extending, the One Pound Waiver would be an “easier sell” from an environmental perspective since it would result in fewer emissions of VOCs. The specter of increased gas prices associated with producing a lower-RVP blendstock for E10 and E15, however, would still likely be enough to scare off legislators, particularly in the midst of a recession. The industry could seek to eliminate the One Pound Waiver on a state-bystate basis—the act allows individual states to opt out of the One Pound Waiver, as Maine, New York, Pennsylvania and Texas have done through EPA-approved state implementation plans—but this piecemeal approach would be time-consuming, with myriad political hurdles.
Finding a Way Forward
If the industry has to live with the RVP limitation on E15, this alone will not prohibit the sale of E15. Retailers can still sell E15 blended with conventional gasoline for general use between October and May, and yearround for flex-fuel vehicles. In the summer months, it may be possible (albeit with added cost) to ship a lower-RVP blendstock from parts of the country where it is available via
The One Pound Waiver, as currently written, does not apply to E15, which presents a problem: the ethanol industry will be unable to blend E15 with conventional 9.0 psi gasoline in the summertime months, as it has done for decades with E10, because the resulting fuel’s RVP will be too high. a “virtual pipeline.” In areas of the country using reformulated gasoline (RFG)—which accounts for 30 percent of gasoline sold in the U.S.—separate blendstocks should not be necessary since the RFG performance standards do not grant ethanol an RVP waiver. And in time, market forces may persuade refiners to make a lower-RVP blendstock more readily available. Unfortunately, for E15 to be effective, for it to make any significant impact on the blend wall (which by many accounts has already been reached), it needs to be widely available as soon as possible. “The quick ability to get retailers to offer consumers E15 is vital to the near-term viability of the ethanol industry,” Shaw says. The more limitations, expenses or logistics, the longer retailers will take to jump on board. In spite of the challenges, however, Shaw remains “very optimistic about the future of E15. The only question is whether we can ramp it up quickly.” Finding a quick, creative solution to the problem presented by the E15 RVP limitation would go a long way toward making this happen. Author: Jeremy P. Greenhouse Attorney, Greenhouse & Gram LLC (612) 623-2390 firstname.lastname@example.org 1 148 Cong. Rec. 9, S485 (2002), citing a draft EPA staff report, Supply Analysis of S. 950—The Reformulated Fuels Act of 2001.
,[OHUVS9LK\JLK.HZ7YPJLZ I` WLYNHSSVUPU Ethanol reduced the average American household’s gasoline bill by more than $800. If ethanol disappeared, gas prices could rise by as much as 92%.*
>LJHU»[HMMVYK[VWH`L]LUTVYLH[[OLW\TW Over 200 plants nationwide. 13 billion gallons of clean, renewable American energy, a year. Fueling the economy with over 400,000 jobs. Turning everyday abundant, renewable ingredients into clean sustainable energy.
www.EthanolRFA.org *Hayes, Dermot J., Du, Xiaodong (April 2011) The Impact of Ethanol Production on US and Regional Gasoline Markets: An Update to May 2009. Center for Agricultural and Rural Development (CARD).
When Product Development is Just the Tip of the Iceberg
Syngenta’s enzyme-producing corn variety requires redesigned farm-to-plant system By Tim Tierney
This past February, the USDA deregulated Syngenta’s trademarked Enogen corn for use in ethanol production. While the deregulation of this new technology was a key milestone, it reflects just the tip of the iceberg in terms of bringing it to market. Designing a system to manage Enogen corn in ethanol plants and on the farms of the growers supplying it was almost as extensive a process as the development of the technology itself. Enogen corn began as a unique organism discovered in natural marine hydrothermal systems. Years of development turned this organism into an amylase enzyme that could be expressed directly in corn grain— bypassing the need to add this key enzyme separately during conventional dry grind ethanol production. What rapidly became apparent, however, were two things. First, the technology was
so efficient that an ethanol plant needed just 10 to 20 percent of its total corn use to include Enogen corn while still realizing maximum benefits. The second thing that became obvious was that this technology was so well suited for ethanol production that the most value would be created by ensuring all the production was directed to ethanol plants. Specialty, high-value crops in need of identity preservation are nothing new in agriculture. The industry has been successfully handling such things for years. Toward that end, Syngenta worked with Novecta, a joint effort between the Iowa and Illinois corn growers’ associations that specializes in grower training on best practices and ISO purity standards. Meanwhile, Syngenta tapped its own expertise in seed production and stewardship of regulated corn traits to design the Enogen corn system. The result is a closed-loop produc-
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s). 72 | Ethanol Producer Magazine | november 2011
tion system that delivers a grain premium to growers for this specialty crop while allowing ethanol plants to improve ethanol throughput by 10 percent and reducing energy costs by approximately 8 percent. Best of all, ethanol plants need make only a few, if any, modifications to their existing grain storage and blending systems.
Many in the ethanol industry have the misconception that an ethanol plant needs to convert to 100 percent Enogen corn to realize all benefits of the technology. Beginning in a corn field instead of in a stainless steel vat, Enogen corn can “dose” the ethanol plant with alpha amylase far more efficiently than adding microbial-derived enzymes. Because Enogen corn delivers a dose of amylase that is multiple times more potent than any liquid enzyme that can be added, the plant requires only a portion of its corn to be Enogen corn. For ethanol plants, the only modification may be finding a separate storage bin
for Enogen grain so it can be blended with regular dent corn at an approximate rate that is determined during the technology demonstration and testing process. Mind you, this is an approximate rate. Thanks to the forgiving nature of this technology, there is no need to rely on complex mixing technology that measures out product volume loads in micro level increments. A simple grain mixing system is all that is required, and it means adding Enogen corn to a plant is practically a drop-in. Once in the plant, Enogen corn makes the process hum. The technology enables unprecedented solids loading—a change which has to be seen to be believed. In working with plants to incorporate the technology, we have seen cleaner pipes, less pressure on pumps and cleaner filters. Also, because the Enogen alpha amylase enzyme is thoroughly disbursed throughout the mash, formation of dough balls in the slurry mixer is avoided.
Of course, before plants can begin experiencing the benefits of Enogen corn, it must be produced in the field. Syngenta knew there were concerns about keeping Enogen grain separate from grain destined for other uses, including food products. That is why we worked with Novecta and others to create a comprehensive stewardship program that addresses how this source: SYNGENTA grain is handled every step of the way. This system is thorough and well thought-out, and it is not difficult growers with an executed Enogen contract can access the seed. To qualify for the conto implement. Not every grower will have the op- tract, growers must have on-farm storage. portunity to produce Enogen corn. Only Syngenta estimates few growers will put ethanol plants that license Enogen technol- more than half of their acres in Enogen ogy from Syngenta will contract with local corn because of this requirement. While producers for their Enogen corn, and only that may limit what they can contract, it also
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helps with managing ble delivery options. Because corn pollen can the technology on and does move, Syngenta requires growers to plant border rows of non-Enogen corn. Due their farm operation. The contract to the flexibility of Enogen corn in ethanol also specifies produc- production systems, however, these border tion by the acre rather rows can be harvested, stored and delivered than the bushel to together with the Enogen grain. Here, the help protect growers process differs from other identity-preserved Top Performaner against adverse con- grain products that require border rows to Ethanol producers ditions that might re- be harvested and handled separately. A minihave to see Enogen in action to believe duce per-acre yields. mum of 12 border rows is required, but due its performance, says As it is, Syngentaâ€™s to planter configurations, growers can use up Tim Tierney, Enogen marketing manager for Enogen hybrids have to 16 border rows if that works better for Syngenta. been shown to yield them. Growers are required to clean out their around 195 bushels per acre on average on planters and combines to make sure their irrigated acres. Enogen hybrids also include Enogen corn remains contained. Not surprisingly, this new technology insect protection and herbicide tolerance traits and elite genetics. Growers do not have requires some training for maximum bento sacrifice yield or performance to get this efit. Plants entering into Enogen technology licensing agreements first go through a tech30- to 50-cent-per-bushel premium. Other contract terms include steward- nology demonstration trial, which typically three months. This enables the ship provisions andEthanol a buyerâ€™s call1/1/11 with flexiLWC627-RJS-0445 Ad #1 7:43 AMtakes Pageabout 1
plant to gain valuable processing experience with Enogen corn and allows the Enogen technical support team to help tailor processes for maximum benefit to the plant. Once an ethanol plant signs a licensing agreement, an Enogen account manager will continue to work with the plant on recruiting contract growers, training and stewardship, and will also liaise with the local Syngenta sales team including professional agronomists. Each plant also is assigned an Enogen technical support specialist with experience in fermentation and enzymes. These technical specialists work with the plant managers on the demonstration trial, and also provide ongoing process optimization and technical support once the technology has been adopted.
Author: Tim Tierney Enogen Marketing Manager, Syngenta Group Co. (612) 801-9775 email@example.com
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