INSIDE: PRODUCERS VUNERABLE TO HACKER ATTACKS APRIL 2016
2ND-GEN UPDATE Gevo, Butamax Still Hard At Work Page 40
Cellulosic Industry Presses Forward Page 28
Iogen Reaches for Success in Brazil Page 34
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CONTENTS
APRIL 2016 VOLUME 22
DEPARTMENTS 6
EDITOR'S NOTE
7
AD INDEX
8
THE WAY I SEE IT
The Pain of Change By Mike Bryan
EVENTS CALENDAR
10
VIEW FROM THE HILL
12
DRIVE
16
I’ll Show You a Relic! By Bob Dinneen
28
CELLULOSIC UPDATES
34
PROFILE
Bringing Up the Throttle On Cellulosic Ethanol
The Quest For Reliability
40
44
Updates from nine U.S. plants producing, commissioning or in development By Holly Jessen, Susanne Retka Schill
Iogen reaches for success with cellulosic ethanol in Brazil By Susanne Retka Schill
A Reminder of What’s Important By Tom Buis
GRASSROOTS VOICE It’s All About RON By Ron Lamberty
GLOBAL SCENE
Cellulosic Ethanol: Brazil’s Next Chapter By Leticia Phillips
18
BUSINESS BRIEFS
20
COMMODITIES
22
DISTILLED
48
CLEARING THE AIR
50
FEATURES
Cellulosic Ethanol Will Get Back Up By Tom Bryan
9
14
ISSUE 4
BIOBUTANOL
License to Grow
Putting aside a painful court battle has allowed two butanol developers to move forward with development efforts By Holly Jessen
CONTRIBUTION
ON THE COVER
Construction at the Gevo isobutanol production line in Minnesota.
4 | Ethanol Producer Magazine | APRIL 2016
Chasing the Ever-nimble Hacker
Hacker attacks are becoming more common, and the ethanol industry is not immune By Joe Dysert
DATA MANAGEMENT
To Cloud or Not to Cloud
Are You Ready for the E30 Challenge? By Dave VanderGriend
MARKETPLACE
CYBERSECURITY
46
Points to consider when evaluating moving servers, email, other computing needs to cloud servers. By Zac Paulson
Ethanol Producer Magazine: (USPS No. 023-974) April 2016, Vol. 22, Issue 4. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
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EDITOR'S NOTE
Cellulosic Ethanol Will Get Back Up Our top story this month is a blunt reminder of how deeply U.S. policy uncertainty cut down and yanked back the progress of commercial-scale cellulosic ethanol over the past few years. The U.S.
Tom Bryan
President & Editor in Chief tbryan@bbiinternational.com
EPA’s epic indecision and sometimes indifference toward the law that is the renewable fuel standard (RFS), no doubt, seriously impeded the sector’s historic advancement. What’s more, it frightened away investors and contributed to the withdrawal of promising, wellfunded efforts. In the words of Brooke Coleman, executive director of the Advanced Biofuels Business Council, getting the RFS administered properly, fixing the bias in the federal tax code and continuing to expand the market for ethanol blends—doing all of that now—could bring back investors, but it’s a long road back. This month, we also hear from Brent Erickson, executive vice president of the Biotechnology Industry Organization. He, too, believes that stimulating investment in advanced and cellulosic ethanol starts with the federal government righting its biofuels ship and taking action to reverse the damage that’s been done. In fact, BIO estimates that the U.S. EPA’s delays in issuing its renewable volume obligation numbers, the famously delayed RFS blending rules, caused a $13.7 billion shortfall in the investment necessary to build cellulosic and advanced ethanol capacity. “While the first-of-a-kind cellulosic plants were being completed, new plants should have been started or planned—there were some, but too few,” he tells us. The projects that were built amidst all of this uncertainty are truly a testament to the resiliency and ingenuity of their developers. These contenders also represent the industry’s best shot at getting cellulosic ethanol done. In our page-28 cover story, “Bringing Up the Throttle On Cellulosic Ethanol,” we provide updates on nine advanced and cellulosic ethanol facilities, two colocated with corn ethanol plants, four in commissioning stages and others in development. While Abengoa Bioenergy’s 25 MMgy cellulosic ethanol facility in Kansas sits idle in the midst of the company’s high-profile financial restructuring, others are moving forward, some openly, others behind closed doors. Pacific Ethanol, in California, and Quad County Corn Processors, in Iowa, report substantive progress toward making advanced and cellulosic ethanol from residual corn kernel starch and fiber. DuPont, which has a completely finished 30 MMgy cellulosic plant in Nevada, Iowa, is getting very close. And Poet-DSM is moving towards production but keeping its work close to the vest. The EPA expects Poet, DuPont and others to produce relatively large volumes of cellulosic ethanol this year. Smaller players, like Indian River BioEnergy in Florida, are also projected to contribute. The pressure is really on. Expect these companies to give it their all.
FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US: 6 | Ethanol Producer Magazine | APRIL 2016
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VOLUME 22 ISSUE 4
ADVERTISER INDEX
EDITORIAL
President & Editor in Chief Tom Bryan tbryan@bbiinternational.com
3 & 26 2016 International Biomass Conference & Expo 49 2016 National Advanced Biofuels Conference & Expo 27 Buckman 37 CHS Renewable Fuels Marketing 5 D3Max 51 Direct Automation 19 Donaldson Torit 22 Fagen Inc. 17 Fluid Quip Process Technologies, LLC 23 Growth Energy 2 Hydro-Klean LLC 38 ICM, Inc. 9 J.C. Ramsdell Enviro Services, Inc. 25 Lallemand Biofuels & Distilled Spirits 15 Leaf-Lesaffre Advanced Fermentations 39 MPW Industrial Services 42 Nalco, an Ecolab company 43 Novozymes 13 POET LLC 50 Renewable Fuels Association 11 Thermal Refractory 24 Tower Performance, Inc. 18 Tramco 36 2016 Fuel Ethanol Workshop & Expo
Vice President of Content & Executive Editor Tim Portz tportz@bbiinternational.com Managing Editor Holly Jessen hjessen@bbiinternational.com Senior Editor Susanne Retka Schill sretkaschill@bbiinternational.com News Editor Erin Voegele evoegele@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com
ART
Art Director Jaci Satterlund jsatterlund@bbiinternational.com Graphic Designer Raquel Boushee rboushee@bbiinternational.com
PUBLISHING
Chairman Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com
SALES
Vice President of Operations Matthew Spoor mspoor@bbiinternational.com Sales & Marketing Director John Nelson jnelson@bbiinternational.com Business Development Director Howard Brockhouse hbrockhouse@bbiinternational.com Senior Account Manager/Bioenergy Team Leader Chip Shereck cshereck@bbiinternational.com Account Manager Jeff Hogan jhogan@bbiinternational.com Circulation Manager Jessica Beaudry jbeaudry@bbiinternational.com Marketing & Advertising Manager Marla DeFoe mdefoe@bbiinternational.com
Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for anyone outside the United States. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.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 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to hjessen@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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APRIL 2016 | Ethanol Producer Magazine | 7
THE WAY I SEE IT
The Pain of Change By Mike Bryan
The old saying “nothing changes until the pain of staying the same exceeds the pain of change” certainly applies to the automotive fuels market in America. The pain of staying the same continues
to mount as America struggles to reduce automobile emissions and meet its global environmental objectives. Yet, apparently the pain is not sufficient to convince some in Congress that there is a better way, a cleaner way, a less painful way forward. Objection to the renewable fuel standard (RFS) is simply a smoke screen, designed to confuse the issue, with the sole intention of trying to keep the ethanol industry on its heels. Much of what the oil industry is espousing regarding the RFS is not factually correct, nor in some instances even consistent with the intent of the law. Twists turns and tweaks, by those trying to stop the RFS, are all designed to impress on the U.S. EPA and Congress that the pain of moving away from oil is greater than that of moving forward on the path of renewable energy. I have written many times in this column about the contributions the ethanol industry makes not only to our fuel supply and our environment, but to rural communities all across the country. That message seems to get lost in the smoke and mirrors of the RFS debate. Anyone who thinks the diversion of attention from our contribution to agriculture and rural America is not intentional or, at the very least, collateral damage is not paying attention. Like the magician who keeps your focus on the handkerchief while he slips off your watch.
Dan Sanders, vice president of Front Range Energy, recently spoke out at the Growth Energy Leadership Conference in Orlando about the impact Front Range Energy has had on the local community and how they take pride and great care in making sure they are part of the community. Front Range Energy has raised more than $142,000 to help veterans with an annual golf tournament. We don’t seem to talk about that very much, but I’ll bet the farm that people in Windsor, Colorado, talk about it, as do the people in hundreds of other communities across the country where ethanol is produced. These are the kind of things that put pressure on Congress to keep pushing forward with ethanol. These individual acts of community involvement make the pain of continuing down the path of Big Oil harder and harder to justify. But only if we tell the story over and over again at every opportunity. As Dan Sanders pointed out, the ethanol story is much bigger than the RFS, and it’s much bigger than frivolous and diversionary lawsuits. The real story of ethanol lies in the community, in the contribution to agriculture and in the lives of hundreds of thousands of men and women who can now stay and work in those communities. The oil industry may yet not even realize it, but the pain of staying the same is mounting with each passing year, and as that happens the pain of moving to renewable energy gets less and less. That’s the way I see it.
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com
8 | Ethanol Producer Magazine | APRIL 2016
EVENTS CALENDAR
2016 International Fuel Ethanol Workshop & Expo June 20-23, 2016 Wisconsin Center Milwaukee, Wisconsin Now in its 32nd year, the FEW provides the ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-tobusiness environment. As the largest, longest-running ethanol conference in the world, the FEW is renowned for its superb programming—powered by Ethanol Producer Magazine —that maintains a strong focus on commercial-scale ethanol production, new technology, and near-term research and development. The 2015 event drew about 2,000 people from 45 States, four Canadian Provinces and 25 countries. 866-746-8385 | www.fuelethanolworkshop.com
ACE Annual Conference August 8-10, 2016 Loews Hotel Minneapolis, Minnesota ACE’s annual conference is unique in the world of renewable fuels because it is specifically tailored to the interests and needs of the people of ethanol—the folks in the trenches. It’s a gathering of ACE’s commitment to connect ethanol producers with farmers, researchers, retailers, and support businesses to continue what all of them started a long time ago. It’s also an excellent place to learn and share ideas. And it has all the fun of a family reunion. Join us August 8-10, 2016, at the Loews Hotel in downtown Minneapolis, Minnesota. 605-334-3381 | www.ethanol.org/conference
National Advanced Biofuels Conference & Expo June 20-23, 2016 Wisconsin Center Milwaukee, Wisconsin The 6th annual National Advanced Biofuels Conference & Expo will take place June 20-23, 2016, at the Wisconsin Center in Milwaukee, Wisconsin. Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals— technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry. 866-746-8385 | www.advancedbiofuelsconference.com
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VIEW FROM THE HILL
I’ll Show You a Relic! By Bob Dinneen
There’s a rather pernicious meme making the rounds on Capitol Hill lately—that the renewable fuel standard (RFS) is no longer relevant because America is now producing more oil through fracking. Oil company lobbyists are scouring congressional
offices in a desperate effort to create the misplaced narrative that ethanol did nothing to make us more energy independent, that tight oil supplies from the Bakken are fueling a resurgence of the U.S. energy sector, and policies promoting renewable fuels are costly intrusions into the energy free market that hurt consumers and the environment. Seriously. I can’t make this stuff up. Indeed, in his state of American energy speech last month, American Petroleum Institute president Jack Gerard doubled down on the oil industry’s attack on ethanol and the RFS, calling it a “relic of our nation’s energy past.” He’s whistling past the graveyard, of course, ignoring the fact that an oil glut they helped create is wreaking as much havoc on the stock market and the economy today as the oil shortage that caused prices to skyrocket to $140 per barrel in 2008. He’s ignoring the fact that 2015 was the hottest year on record, caused in large part by greenhouse gas (GHG) emissions from fossil fuels, which are exacerbated by fracking and tar sands. And he dismisses the fact we still import more than 45 percent of the oil processed by U.S. refineries, much of it from hostile nations that pose an existential national security threat to our homeland. But here’s the point—the RFS was enacted to address several important policy priorities, not just energy security. It was passed at a time when corn farmers were selling their commodity for less than the cost of production and ag subsidies were necessary to avoid economic calamity. The RFS provided a value-added market that empowered farmers and allowed Congress to dramatically
10 | Ethanol Producer Magazine | APRIL 2016
reduce farm program support. The RFS was enacted at a time when Congress was looking for effective programs to address climate change. The RFS has provided significant GHG benefits, reducing GHG emissions by more than 354 million metric tons over the course of the program. The RFS was passed in recognition of the fact that consumers benefit by competition. One analysis concluded the use of ethanol through the RFS reduced gasoline prices by about $1 per gallon. Even in today’s market, with the unusually low oil price driving gasoline costs lower than ethanol for the first time in years, ethanol remains a bargain for refiners and consumers because it is still the cleanest and lowest-cost octane source available. API’s revisionist history notwithstanding, the RFS has also demonstrated its effectiveness in enhancing U.S. energy security. Net petroleum import dependence fell to just 25 percent in 2015, but would have been 32 percent without the addition of 14.7 billion gallons of domestically produced ethanol to the fuel supply. The surge in ethanol production has reduced gasoline imports from nearly 10 billion gallons in 2005 to almost zero today. Indeed, the ethanol produced in 2015 displaced an amount of gasoline refined from 527 million barrels of crude oil. That’s roughly equivalent to the volume of oil imported annually from Saudi Arabia and Kuwait combined. Not a bad relic. No, it is not the RFS that is a “relic of our nation’s energy past.” It is the very notion that prosperity can only be driven by petroleum without regard for the environmental, economic or national security implications of that dependency that is the “relic” world leaders need to recognize and relegate to the trash heap of history. Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835
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DRIVE
A Reminder of What’s Important By Tom Buis
Earth Day falls on April 22 and is a time for people to reflect on the importance of our planet’s well-being, while serving as a reminder that we have a responsibility to ensure that we have clean air and clean water for ourselves, our children and future generations to come. Across the globe, there is now more awareness than ever that we must change the way we do things and make a concerted effort towards producing and consuming our energy and fuel in a clean, sustainable fashion. Just last December, 195 nations agreed to the Paris Agreement, a pact drafted during the COP 21 United Nations conference on climate change, committing to combat global climate change by cutting greenhouse gas emissions. This agreement wasn’t a solution in and of itself, but was more a call to action. The biofuels industry stands ready to answer this call, and in fact has already been doing so for years. Ethanol plays a key role in reducing America’s greenhouse gas emissions, thanks in large part to the renewable fuel standard (RFS). Under the RFS, greenhouse gas emissions will ultimately be reduced by 138 million metric tons, which is the equivalent of taking 27 million cars off the road. The Paris Agreement noted that it will take a multitude of innovations and initiatives to meet the goals of reducing greenhouse gases, and ethanol will undoubtedly play a major role in that effort. According to the Argonne National Laboratory, first generation ethanol reduces greenhouse gas emissions by an average of 34 percent compared to gasoline. Looking at the picture more broadly, ethanol also lessens the amount of aromatics needed in motor fuel to increase octane. Many aromatics are dangerous chemicals known to cause serious health issues. Essentially, ethanol is the cheapest, cleanest source of octane that we have in the marketplace.
12 | Ethanol Producer Magazine | APRIL 2016
Ethanol production breeds innovation, and we are seeing dramatic improvements in production efficiency and emissions benefits each year. Less water, land and energy are being used to produce ethanol from corn than ever before. In February, a study published by the USDA’s Office of the Chief Economist showed that first generation ethanol has a net positive energy return by factors of more than two-to-one nationally, and as much as four-toone in parts of the Midwest. Clearly, ethanol production embodies the spirt of Earth Day, in that it’s both innovative and sustainable, providing both food and fuel for our country, while also reducing emissions. First-generation ethanol production has improved by leaps and bounds, while advanced biofuels show tremendous promise for the future. The Argonne National Laboratory study showed that advanced biofuels like cellulosic ethanol have the potential to reduce greenhouse gas emissions by more than 100 percent. These methods produce ethanol from breaking down plant waste, algae, woody biomass and grasses, opening a new door to untapped potential for sustainability. All of this innovation in our industry has come at a time when the negative environmental impact of extracting fossil fuels has actually increased. Newer “advancements” in the fossil fuels industry include fracking and the mining of tar sands, both of which pollute our air and contaminate our water. Earth Day is about innovation and hope for a better future. If the Paris Agreement of a few months ago is any indication of things to come, it’s clear that the world’s leaders recognize a need to demand change in the way we produce and consume energy. Our industry is ready, willing and able to help meet that demand. Author: Tom Buis Co-chairman, Growth Energy 202-545-4000 tbuis@growthenergy.org
GRASSROOTS VOICE
It’s All About RON By Ron Lamberty
People who know me or work with me will tell you sometimes it seems like all I ever think about is RON. I’m not sure that’s fair, but I have to admit; I think about RON quite a bit. And I don’t happen to think I’m unique in that sense. I mean, don’t a lot of you have RON on your mind almost every day? RON is very important. In fact, I think it’s fair to say one of ethanol’s most valuable assets is RON. Hang on a second. It just occurred to me that you could say almost exactly what I just wrote, if you were talking about the Research Octane Number (RON) of ethanol and blends of ethanol and gasoline! Ethanol’s high octane value is important and valuable, and it’s a part of most math and money discussions I regularly have with fuel station owners. In market conditions like we’re seeing today, as ethanol’s traditional price advantage versus gasoline shrinks, retailers need to be reminded to emphasize the higher octane of ethanol blends. Our industry is experiencing an octane lovefest of late, and even recent petroleum marketer events I’ve attended have talked about higher octane demand for future fuels. And we’re all talking about octane because the automotive world is talking about octane. Ethanol’s octane and a collection of other fuel chemistry advantages interest automakers as they develop vehicles that meet future government standards, running on a high-efficiency, “superpremium,” a 98 RON or 100 RON fuel. There it is again: RON. And there is a reason—beyond writing my own name 21 times in one column—I am irritatingly and repeatedly using the term RON instead of octane. In the U.S., when we use the term octane, we refer to the anti-knock index (AKI) of a fuel. AKI is calculated by adding RON and the motor octane number (MON) and dividing by two. That’s the (R+M)/2 equation you see on AKI octane stickers in the United States. RON is higher than MON or AKI, and in most of the world, owners’ manuals, gas
14 | Ethanol Producer Magazine | APRIL 2016
caps and octane stickers on fuel dispensers all use RON to express a fuel’s octane rating. And that’s how we should label midlevel ethanol blends, with each blend’s RON rating. Most of you are aware of the Federal Trade Commission’s recent final rating rule for gasoline blends with more than 10 percent ethanol. Starting July 14, stations offering higher ethanol blends will post orange and black labels much like the current E15 label, indicating the ethanol percentage in the nearest multiple of 10, or “51 percent to 83 percent ethanol” for blends above 50 percent. They’re also required to say ‘‘use only in flex-fuel vehicles/ may harm other engines.’’ While the FTC decided not to require octane rating as part of the midlevel or high-level ethanol blend rating rule, the ruling did not prohibit posting an octane rating. There are references to earlier octane rules that talked about ethanol’s high octane ratings confusing and misinforming customers (Really? Where has FTC been as the oil industry continues to confuse and misinform everyone about E15 and the RFS?), and that’s why the ethanol industry shouldn’t use AKI labels. We’ll embrace RON. Yeah, RON gives midlevel ethanol an unfair advantage—one we should absolutely use. And we will do so, properly. FTC says retailers “must possess a reasonable basis, consisting of competent and reliable evidence,” of the octane rating on a fuel dispenser, so we will have RON checked out by approved testing labs before we start putting RON stickers on dispensers across the nation. And then the RON age can begin. Author: Ron Lamberty Senior Vice President American Coalition for Ethanol 605-334-3381 rlamberty@ethanol.org
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GLOBAL SCENE
Cellulosic Ethanol: Brazil’s Next Chapter By Leticia Phillips
Advanced biofuels are sometimes considered an aspirational tale, one with the potential to cut greenhouse gas emissions and create green economic growth that is “just a few years down the road.”
But this overlooks companies improving energy security, helping the environment and leading the world’s transition to a sustainable future—especially when it comes to cellulosic ethanol. Multiple cellulosic ethanol plants have made news by going online across America recently, but Brazilian producers are also adding production capacity and trailblazing innovative approaches to this clean renewable fuel. Brazilian companies are poised to supply markets in America and around the world with advanced cellulosic ethanol, so let’s take a look at cellulosic ethanol’s potential, the state of Brazil’s production and how it could help contribute to low-carbon transportation. Cellulosic ethanol’s potential can’t be overstated. Cellulose is the most common organic compound found on Earth, containing the potential to convert unusable materials in agricultural residue like sugarcane straw and bagasse (what remains after sugarcane stalks are crushed) into high-value fuel. Second-generation (2G) biofuels like cellulosic ethanol reduce greenhouse gas emissions over 90 percent compared to gasoline and can increase Brazilian ethanol production 50 percent per acre without competing with food crops. Cellulose can also make ethanol plant operations more economically and environmentally sustainable by generating low-carbon electricity through a cogeneration process where cellulosic material is burned in high-efficiency furnaces capturing heat to drive steam turbines and provide district heating. Since almost all cellulose is considered waste material, turning it into renewable energy is an imperative if we’re going to ever make the switch away from petroleum-based transportation fuels and capture the full potential of renewable energy. Brazil’s economic and environmental success story with cellulosic ethanol holds lessons for other producers, especially as clean fuels policy is being debated in America at both the state and federal level.
16 | Ethanol Producer Magazine | APRIL 2016
Consider Raizen, the world’s biggest producer of cane ethanol, and Brazil’s fifth-largest company by revenue. Raizen is a joint venture between Shell and Cosan, launched in 2011, producing 4 million tons of sugar and 554 million gallons of sugarcane ethanol per year. The company maintains 5,400 service stations for retail distribution along with 63 distribution terminals and aviation fuel businesses at 59 airports across Brazil. Raizen is building the future of cellulosic biofuels through a joint venture with Canadian company Iogen. The JV’s first plant went online in December 2014, was officially inaugurated in July 2015, and once fully operational will produce around 10.5 million gallons of cellulosic ethanol per year from sugarcane bagasse and straw, with production costs expected to fall below first-generation ethanol within five years. The project is among the first commercial-scale plants in the world converting cellulose into 2G ethanol, and could lead to new plants after 2017. Raizen and Iogen may be trailblazers, but they’re not alone. Another Brazilian company, GranBio, launched Bioflex 1 in September 2014. This facility, the Southern Hemisphere’s first commercial-scale, secondgeneration ethanol plant, has a 22 MMgy annual production capacity. Last but not least, research is also expanding cellulosic ethanol output. The Sugarcane Technology Center, which revolutionized Brazil’s sugarcane industry, inaugurated a new biotechnology laboratory in October 2015. CTC’s lab will focus on second-generation ethanol technologies like “flex straw,” and its São Manoel plant is expected to process an additional 100,000 tons of sugarcane waste into bioelectricity and cellulosic ethanol when it reaches commercial operation by 2017. Today, cellulosic biofuels and 2G ethanol are still in their infancy. But once engineers and technical experts perfect commercial-scale manufacturing, production prices will come down, and cellulosic ethanol could dramatically increase the volume of renewable fuel using the same amount of arable land and no new competition for food supplies. That’s good news for everyone who cares about clean, sustainable and low-carbon transportation. Author: Leticia Phillips North American Representative, Brazilian Sugarcane Industry Association, UNICA 202-506-5299 leticia@unica.com.br
BUSINESS BRIEFS People, Partnerships & Deals
The U.S. Grains Council has added Dentham Chienpairoj as a local consultant based in Bangkok, Thailand. As part of his position, Chienpairoj will promote the use of distillers dried grains with solubles. Chienpairoj, who also works with other companies involved in the agricultural trade, previously worked directly in trading and importing including with Charoen Pokphand Foods’s feed ingredient business group. CPF is one of the world’s largest compound feed manufacturers. The Andersons Inc. has announced Neill C. McKinstray, who has served as the president of both the grain and ethanol groups, will retire in July. Corbett J. (Corey) Jorgenson will McKinstray replace McKinstray as president of the Grain Group, effective Feb. 1. McKinstray will continue as president of the ethanol group and provide strategic guidance and transition assistance for the grain group until he retires. Jorgenson has nearly 20 years of experience in general management, agricultural trading and risk management with Cargill Inc. Most recently he served as vice president and regional lead for the Americas with Cargill Transportation and Logistics.
ing his career, with a focus on business development and strategic alliances. He has worked in renewable fuels and chemicals for the past 18 years with Verenium Corp., Diversa Corp. and Genomatica Inc. Baum currently serves as a member of the board of directors of Genomatica and previously served as executive chairman of the board of Genomatica. Clariant was honored for its innovative sunliquid technology for the production of cellulosic ethanol from agricultural residues as part of the 2015 German Innovation Prize for Climate and Environment. The biotechnological process was awarded first place in the process innovations category.
The University of California Board of Regents has approved Michael Witherell, vice chancellor for research at UC Santa Barbara, as director of Lawrence Witherell Berkeley National Laboratory. Witherell is a leading physicist with a highly distinguished career in teaching, research and managing complex organizations. He has received numerous honors and recognitions for his scientific contributions and achievements. He is the former director of the Fermi National Accelerator Laboratory in northern Fox River Valley Ethanol LLC has Illinois and currently holds the presidenjoined the Renewable Fuels Association. tial chair in Physics at UC Santa Barbara. The ethanol producer has been operating LanzaTech has won the Young Global in Oshkosh, Wisconsin, since 2003. It is a wholly owned subsidiary of Ace Ethanol Leader Award for Circular Economy EnLLC that employs 45. The 65 MMgy plant trepreneur as part of the 2016 Circulars also produces coproducts such as carbon Awards program, organized by the World dioxide, dried distillers grains, along with Economic Forum’s Young Global Leaders 182,500 tons of wet distillers grains per year. in collaboration with Accenture. The award recognizes early-stage organizations at the Gevo Inc. has appointed William vanguard of the circular economy demonH. Baum to its board of directors. Baum strating innovation, market disruption and has worked in the chemical and biobased scalability. products and technology industries dur-
18 | Ethanol Producer Magazine | APRIL 2016
BUSINESS BRIEFS¦
The Sustainable Biomass Partnership has appointed Carsten Huljus as CEO. Huljus is experienced in forest management and chain-of-custody certification schemes. As CEO, he will be responsible for the leadership and management of SBP, including engagement with its many stakeholders, such as biomass supply chain actors, policy makers and environmental NGOs. The current executive director, Peter Wilson, will take up the new post of standards director with Simon Armstrong continuing as technical director. Phibro Ethanol Performance Group announced that it has achieved generally recognized as safe status for its proprietary PhibroBreak product. PhibroBreak is a next generation, nonpolysorbate formulation used in the recovery of corn oil from the ethanol process that provides cost-effective performance due to the low-dose application that optimizes corn oil yield under variable plant conditions. PhibroBreak continues PhibroEPG commitment to provide the highest quality products to the ethanol biorefinery that will be suitable for use under Food Safety and Modernization Act. The American Institute for Medical and Biological Engineering has announced the induction of Bruce Dale, Michigan State University professor of chemiDale cal engineering and materials science, to its College of Fellows. Dale was nominated, reviewed and elected by peers and members of the College of Fellows for outstanding contributions in the biological engineering of transforming plant biomass to food and fuel to achieve a sustainable bioeconomy. The College of Fellows is composed of the top 2 percent of medical and biological engineers in the country. AIMBE’s mission is
to recognize excellence in, and advocate for, the fields of medical and biological engineering in order to advance society. Tradition, an interdealer broker in commodity and financial products, has announced the launch of Tradition Green, a business hub that brings together all environmental products brokered by Tradition under one brand. Tradition Green will offer brokerage services in a range of environmental markets, including biofuels, CO2 allowances, U.S. regional emissions programs and renewable energy certificates, and is expanding its services to include brokerage of biomass, including wood chips and wood pellets. It will also offer execution services under the newly launched wood pellets contract on the Paris-based Euronext Exchange. In addition to brokerage services, Tradition Green will also offer specialist consultancy services within the environmental markets, and project finance for new renewable energy projects in Europe in coordination with its London-based affiliate, AllMerus Energy. Steve Hartig has joined ICM Inc. as vice president of technology development. Hartig will work with ICM’s research scientists, engineers, sales, marketing Hartig and leadership teams to evaluate and bring innovation of new technology and ultimately commercial opportunities to the company. Hartig has 35 years of experience leading global businesses, with much of his career spent working in biofuels, coatings, resins, biomedical materials and polymers.
SHARE YOUR INDUSTRY NEWS: To be included in the 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 email information to evoegele@bbiinternational.com. Please include your name and telephone number. APRIL 2016 | Ethanol Producer Magazine | 19
COMMODITIES
Prices & Market Analyses
Natural Gas Report
Forward natural gas pricing hits new lows Feb. 22—Following a three-week rally that surrounded year’s end, the natural gas market has retreated yet again, leaving prices across the forward curve historically depressed. A combination of stubbornly high domestic production, near-record February natural gas storage inventories, and lackluster heating demand has weighed significantly on the market. Even several intense cold snaps in the populous eastern half of the country proved insufficient to fuel upward market sentiment, given the overall context of an otherwise bearish winter season. In mid-February, natural gas deliverable throughout the coming summer season (April through October) plunged below $2.05 per MMBtu, breaching that NYMEX strip’s previous life-of-trading low set in December. The last time that summer natural gas settlements have been anywhere near as low was in 1998, when summer contract settlements averaged $2.08 per MMBtu. The low pricing goes beyond the immediate term; natural gas deliverable over winter 2016-’17 (November through March) dipped below $2.50 per MMBtu, the lowest offering for winter natural gas so far in advance this century. Indeed, pricing all the way across the NYMEX forward curve is historically low. As of Feb. 22, the first delivery that was priced over $3
by Andy Huenefeld
per MMBtu is in January 2021. The five-year strip has been at sub-$3 levels since the beginning of the year—pricing that has never occurred since the futures market was extended beyond 36 months in 2001. It is safe to say that the current environment represents the lowest long-term price environment on record. The power generation sector has responded to low pricing by ramping up consumption. Demand from this sector so far in 2016 has outpaced year-ago levels significantly, with natural gas favored over coal in the generation mix. This is especially impressive considering weatherrelated energy demand is down considerably, and could be an indication that demand from this sector is in position to build on the already record levels established in 2015. This is the sector that is in best position to respond quickly and effectively to low prices and help rebalance the oversupplied market. Some say that low prices are the best cure for low prices. As the market moves past the bearish nature of the immediate term, this axiom will be put to the test as we see whether a meaningful recovery is in the cards for natural gas in 2016.
Corn Report
Not a lot of movement expected on corn prices Feb. 22—It has been a slow late winter in the grains market. Corn has been slow to move due to slow flat price and no interest in selling at these values by the producer. The cash market has stayed relatively firm despite a carryout of 1.837 billion bushels. South America weather did not offer hope for the U.S. producer as the growing season, although there were some concerns at times, was fairly benign. The February WASDE report offered little new information. U.S. corn carryout increased to 1.837 billion bushels, up 35 million bushels from the December report. In comparison, in the last two years, carryout was 1.731 and 1.232 billion bushels, respectively. Demand was altered in this report. Export demand decreased by 50 million bushels in the February report. Ethanol demand increased by 25 million bushels to 5.225 billion bushels. One thing that did not catch trader’s eyes as quickly was the 10 million bushel increase in corn imports. Corn imports are projected to be 50 million bushels this year compared to 40 million bushels in previous estimates and 32 million bushels last year. The short crop in the Eastern Corn Comments in this column are market commentary and are not to be construed as market advice.
20 | Ethanol Producer Magazine | APRIL 2016
by Jason Sagebiel
Belt and firm cash market has led to more corn imports into the eastern and southeastern coast. Ultimately carryout was able to increase. Corn prices wait for spring weather with little bounces expected due to slow movement and short position covering by managed money.
Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.350
DDGS Report
DDGS buying at a steady clip Feb. 22â&#x20AC;&#x201D;Now that Chinese New Year is over, and traders are back in the office, we have started to see more buying, especially in the container markets destined for Asia. The Chinese antidumping case is progressing, and the possibility of tariffs being enacted any day has buyers proceeding cautiously, so as to not be caught with product en route when an announcement is made. Consequently, the nearby time slots are the most desired to get product in before an announcement. They should be worth more. There has been a lot more demand from Mexico lately. The country has been the steadiest U.S. customer for quite a while. California dairies are still not making much, if any, money, so that demand is hand-to-mouth. Domestic rail cars are
Region
Spot
Rack
West Coast
1.560
1.600
Midwest
1.390
1.585
East Coast
1.470
1.702 SOURCE: DTN
by Sean Broderick
moving very efficiently, allowing buyers to keep a thin pipeline, thus it has been a fairly easy winter. River barge service to the upper Midwest should commence around mid-March, and we expect to see some early tons move down the river to the Gulf. Domestically, DDGS are hovering right around 95 to 105 percent the value of local corn, which keeps demand pretty steady in the U.S. Internationally, vessel and container freight rates are literally at all-time lows. It is a very tough time to be a ship owner or container line. Looking ahead, China announcements will be sure to influence the market. Planting conditions and farmer marketing decisions will likely influence prices as well, but expect decisions from Beijing to impact prices the most this spring.
Regional Gasoline Prices ($/gallon)
Front Month Futures Price (RBOB) $0.967 Region
Spot
Rack
West Coast
0.756
1.286
Midwest
0.887
1.159
East Coast
0.941
1.476 SOURCE: DTN
DDGS Prices ($/ton) LOCATION
Mar 2016
Feb 2015
Mar 2015
Minnesota
120
110
160
Chicago
140
140
192
Buffalo, N.Y.
120
130
195
Central Calif.
187
178
246
Central Fla.
152
153
228 SOURCE: CHS INC.
Corn Futures Prices
(May Futures, $/bushel) Date
close, bu.
close, ton
Feb 22, 2016
3.7225
132.95
Jan 22, 2016
3.7475
133.84
Feb 23, 2015
3.8675
138.13 SOURCE: FCSTONE
Cash Sorghum ($/bushel)
Ethanol Report
by Rick Kment
Ethanol demand starting to rise Feb. 22â&#x20AC;&#x201D;Ethanol demand slowly grew at the end of February, even as supplies continued to expand. Corn futures of $3.80 per bushel allowed ethanol production to remain strong, even though margins were extremely limited to negative. However, the focus continues to be on support through the spring and summer, not on immediate demand. It is typical at this time for production and inventory to well-outpace demand. The expectation is that low gasoline prices and increased driving as the weather warms could spark aggressive product movement in the coming months.
Ethanol continues to carry a large premium over RBOB gasoline futures, currently 44 cents per gallon. With frontmonth March RBOB futures still under $1 per gallon, the wide spread limits additional buyer support for ethanol. Crude oil futures hover at $30 per barrel. Looming uncertainty in financial markets makes it extremely unlikely buying will move back into the energy sector. But prices will not move significantly lower unless a total economic meltdown occurs, which at this point does not seem likely.
Location
Feb 19, 2016
Jan 15, 2016
Feb 20, 2015
Superior, Neb.
4.65
3.08
3.16
Beatrice, Neb.
4.00
3.13
3.15
Sublette, Kan.
4.38
3.09
2.99
Salina, Kan.
4.78
3.26
3.28
Triangle, Texas
3.98
3.13
3.11
Gulf, Texas
5.55
0.19
4.23
SOURCE: SORGHUM SYNERGIES
Natural Gas Prices ($/MMBtu) LOCATION
Feb 19, 2016
Nov 30, 2015
Feb 18, 2015
NYMEX
1.80
2.34
2.831
NNG Ventura
1.77
2.37
4.92
Calif. Citygate
1.9
2.75
2.83
SOURCE: U.S. ENERGY SERVICES INC.
U.S. Ethanol Production (1,000 barrels) Per Day
Month
End Stocks
Dec 2015
1,002
31,075
21,438
Nov 2015
986
29,594
19,945
995
30,831
18,739
Dec 2014
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION
APRIL 2016 | Ethanol Producer Magazine | 21
DISTILLED
Ethanol News & Trends
2015 RIN data (in millions) Total RIN generation
Ethanol RINs
D3
139.91
2.18
D4
2,794.00
D5
146.84
113.79
D6
14,825.71
14,377.43
D7
0.25
EPA publishes 2015 RIN data U.S. EPA renewable identification number (RIN) data published in January shows nearly 17.89 billion RINs were generated last year. A net total of 127.39 million D3 cellulosic RINs were generated last year. Approximately 2.18 million D3 RINs were generated for cellulosic ethanol, with 72.77 million generated for renewable compressed natural gas and 53.16 million generated for renewable liquefied natural gas. Approximately 146.84 million D5 advanced biofuel RINs were generated last
year on a net basis, with nearly 113.79 million generated for ethanol. The net total for D6 renewable fuel RIN generation was 14.82 billion last year, with 14.38 billion of that volume generated for ethanol. A net total of 247,785 D7 cellulosic diesel RINs were generated in 2015, all of which were generated for cellulosic heating oil. In addition, a net total of 2.78 billion D4 biomass-based diesel RINs were generated last year, with 2.26 billion of that volume generated for biodiesel.
USDC study demonstrates carotenoid pigments value in corn distillers oil A U.S. Grains Council research project conducted in conjunction with North Carolina State University has successfully demonstrated the added value of carotenoid pigments, a naturally occurring pigment used to enhance egg color and the skin color of broilers, from including corn distillers oil in poultry rations. The 56-day feeding trial was performed in broilers to determine if the carotenoids in corn distillers oil could be transferred to them. At the end of the study, researchers found the carotenoids in corn distillers oil add an additional value of 5 cents of value per kilogram of corn distillers oil. For a 100 million gallon ethanol plant, this could translate into an additional $500,000 in revenue annually. “What makes this study unique is that most ethanol plants sell corn distillers oil on an energy value basis,” Kurt Shultz, USGC senior director of global strategies. “However, if they are able to find customers who value the carotenoids, there are new opportunities to create additional value.”
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22 | Ethanol Producer Magazine | APRIL 2016
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DISTILLED RFA: Automakers approve most 2015 vehicles for E
Poet expansions (MMgy)
The Renewable Fuels Association has analyzed Autodata statistics, determining automakers sold a record 17.47 million vehicles in the United States last year, with an overwhelming majority explicitly approved by the manufacturer to use E15. RFA estimates that E15 was unequivocally identified by auto manufacturers as an approved fuel for slightly more than 60 percent of model year (MY) 2015 vehicles sold, equating to some 10.7 million automobiles. This number is expected to grow in 2016, as strong sales are expected to continue and more than 70 percent of MY 2016 vehicles carry the manufacturers’ explicit endorsement of E15. Recent analysis by RFA showed that Fiat Chrylser, General Motors, Ford, Toyota/Lexus, Audi/Porsche/Volkswagen, Honda/Acura, Jaguar, and Land Rover all clearly identify E15 as an approved fuel for MY 2016 vehicles. While automakers only began identifying E15 as an approved fuel for new vehicles following registration of E15 as a legal fuel in 2010, the U.S. EPA has approved the use of E15 in all vehicles built since 2001. This means more than 85 percent of the vehicles on the road today are legally approved to use E15.
Current capacity
Expansion capacity
Poet Biorefining - Hanlontown
58
64
Poet Biorefining - Hudson
58
65
Poet Biorefining - Caro
55
67
Poet announces capacity expansions Poet LLC has announced three of its biorefineries will expand ethanol production capacity by a combined total of 25 million gallons this year. According to the company, Poet BiorefiningHanlontown in Iowa, Poet BiorefiningHudson in South Dakota, and Poet Biorefining-Caro in Michigan each filed separate expansion permits within their respective states and will soon be producing at the level their renewable identification number (RIN) permit allows. “Poet is always looking for ways to expand production capabilities and im-
Project Solutions Ove Optim r 60 iza Projec tion Availa ts ble
prove our processes across our entire network,” said Jeff Lautt, Poet president and chief operating officer. “Not only will the expansions allow these three biorefineries to produce more ethanol, but each will also be expanding their coproduct volume as well.” “We set production records at 17 of our biorefineries in 2015,” Lautt continued. “This industry is ready to give drivers even more opportunities to use clean-burning, American-made biofuel.”
Plant Expansions Process Technologies Fermenter Additions
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DISTILLED
NE
IA
Iowa
• Arthur, Iowa • Fairbank, Iowa • Iowa Falls, Iowa • Menlo, Iowa • Shell Rock, Iowa
Nebraska GA
• Fairmont, Nebraska
Georgia
• Camilla, Georgia
Edeniq licenses cellulosic technology to Flint Hills Edeniq Inc. has signed an agreement to license its Pathway Technology to Flint Hills Resources for use in all of its ethanol plants. Edeniq’s Pathway Technology integrates Edeniq’s Cellunator high shear equipment with cellulase enzymes to convert corn kernel fiber to cellulosic ethanol. The technology utilizes existing fermentation and distillation equipment to produce up to 2.5 percent cellulosic ethanol and a 7 percent increase in overall ethanol yield. According to Edeniq, its technology also includes a proprietary techni-
cal validation process that enables customers to quantify the amount of cellulosic ethanol produced at their plants and comply with U.S. EPA required registration, record keeping and reporting for the generation of D3 cellulosic biofuel renewable identification numbers, (RINs). Flint Hills owns seven corn ethanol plants with a combined capacity of approximately 805 MMgy. Flint Hills has been an investor in Edeniq since April 2012 and a customer since June 2012.
CARB approves coproduct pathway developed by Trestle Energy The California Air Resources Board has approved a fuel pathway developed by Trestle Energy LLC that could shave 18 points off an ethanol plant’s carbon intensity (CI) rating. According to James Rhodes, co-founder and president of Trestle Energy, the new approach creates a new coproduct credit from using corn stover for electric generation, either at an ethanol plant with biomass boilers or at a partnering utility cofiring biomass with coal. “By being very careful about the way we structure those supply chains and working with producers to integrate those supply chains, we’re able to engineer the integrated production of solid coproducts from the stover and liquid biofuels from the grain.” Data for the life-cycle analysis of the pathway was collected in a demonstration project conducted in 2012 and 2013 with Iowa-based Golden Grain Energy and a local utility. The utility, Rhodes explained, has been evaluating the possible use of biomass in one of its coal-fired boilers for several years. The life-cycle analysis used for the CARB CI score took into consideration the additional use of farm equipment for stover removal, additional inputs to offset nutrients removed and feedstock transportation, among other factors. The biggest CI reduction was the result of avoided emissions from using the crop residues.
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DISTILLED Report: Iowa well-positioned to be leader in biobased chemical development A white paper published by Iowaâ&#x20AC;&#x2122;s Cultivation Corridor and the Iowa Biotechnology Association shows that Iowa is better positioned than many domestic competitors to capitalize on the next frontier of bioprocessing in the U.S. The report details how statewide economic development incentives can address the unique needs of the budding industry and allow Iowa to emerge as a leader in biorenewable chemical investment and job creation. The report notes that project opportunities in the biobased chemical sector exist today. At least five potential biobased chemical products were identified through an industry interview process conducted as part of the report. Representatives of these projects indicated a production tax credit for renewable chemicals would be fundamental to the decision of whether to locate those projects in Iowa. In addition, the report lists several competitive advantages associated with developing biobased chemical projects in Iowa, including the availability of biofuel byproducts, such as glycerin and distillers oils. Other advantages include the existence of several underutilized wet mills, and the fact that firstgeneration biofuels can be upgraded into higher value chemicals.
SECURE.
2015 ethanol exports Volume (million gallons)
Percent of U.S. exports
Canada
249.2
30%
Brazil
116.4
14%
71.5
9%
Philippines China
70.5
8%
South Korea
59.6
7%
India
47.0
6%
Netherlands
34.0
4%
Mexico
33.7
4%
Oman
32.8
4%
Tunisia
25.9
3%
SOURCE: RENEWABLE FUELS ASSOCIATION
RFA: Ethanol exports reached 836 million gallons last year The Renewable Fuels Association has released a summary of ethanol trade statistics, reporting the U.S. ethanol industry exported 836 million gallons of ethanol last year valued at $18 billion. When compared to 2014 exports, volumes were identical and tied for the second-highest annual total on record. The current record for ethanol exports was set in 2011 at 1.193 billion gallons. The RFAâ&#x20AC;&#x2122;s report indicates approximately 5.7 percent of total U.S. ethanol
production was exported last year, the third-highest share in history. Exports accounted for 8.6 percent of production in 2011 and 5.8 percent in 2014. According to the report, U.S. ethanol was exported to all six inhabited continents last year, reaching 76 countries. Canada, Brazil, the Philippines, China, and South Korea were the top five destination countries for U.S. ethanol exports.
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CELLULOSIC UPDATES
Bringing Up the
THROTTLE On Cellulosic Ethanol
Although there are challenges facing the second generation ethanol industry, progress is being made. By Holly Jessen and Susanne Retka Schill
28 | Ethanol Producer Magazine | APRIL 2016
U.S. EPA data shows 2.18 million cellulosic ethanol D3 RINs (renewable identification numbers) were generated in 2015. That news was one of three main highlights of 2015, according to Brent Erickson, executive vice president of the Biotechnology Industry Organization’s industrial and environmental section. “For the first time, our industry exceeded EPA’s projections,” he says. “That development should prompt EPA to raise its estimates of the industry’s ability to produce fuel.” For this issue, EPM talked to Erickson and Brooke Coleman, executive director of the Ad-
vanced Biofuels Business Council. The story will also provide updates on nine facilities: two colocated with corn ethanol plants that have already produced cellulosic ethanol, four plants commissioning and some still in development. In the discussion on cellulosic biofuels in the Nov. 29 final rule for the renewable fuel standard (RFS) for 2016, the agency named just two companies as reaching consistent production—Quad County Corn Processors and Ensyn, a producer of cellulosic heating fuel. The two are expected to produce a combined total of 5 million gallons in 2016. The list of those expected to produce some gallons is much longer. The EPA is estimating 19 million
gallons could be produced in 2016, which is 25 percent of the projected maximum. In the meantime, two of the big three U.S. cellulosic developers are in transition while work continues to debug and debottleneck the first-of-their-kind facilities, with the companies reluctant to provide details. Erickson focuses on the positives, pointing to work to scale up cellulosic biorefinery operations from pilot and demo scale to completing construction on commercial facilities. “That is a clear signal that cellulosic and biorefinery technologies have reached the next stage of commercialization,” he says, “where plants can be replicated based on proven
and tested designs and incorporating lessons learned from large-scale production.” He points out that anytime a new technology is scaled up from R&D to full commercialization, there are bound to be bumps in the road. “These companies have all built first-of-a-kind, commercial-scale biorefineries—the point of such facilities is to fully vet the process at scale and learn from engineering and market challenges so that additional biorefineries can be improved and engineering costs can be lowered,” he says. Policy uncertainties may be restricting progress on the projects that have been built, Coleman suggests. “If you’re not sure you’re
APRIL 2016 | Ethanol Producer Magazine | 29
2011
IneosBio: Broke Ground 1Q Abengoa: Broke Ground 3Q Poet-DSM: Broke Ground 1Q
TIMELINE RESEARCH BY KASSIDI ANDRES SOURCE: COMPANY INFORMATION, U.S. EPA FINAL RFS FOR 2014, 2015, 2016
going to have a customer, there’s not a huge push to be the first to market,” he says. “Some are laying back and working out the kinks waiting until the kinks are worked out in Obama administration’s approach to the legislation.” Policy is the critical driver in energy markets, he says. “For the most part there is no such thing as a free market when it comes to energy. Utilities have monopolies all over this country. Oil companies control the supply chain when it comes to motor fuels.” Federal policies aid the oil industry in multiple ways, he says, from protecting overseas oil assets and shipping lanes down to preferential treatment in the tax code. Getting the RFS administered properly, fixing the bias in the tax code and continuing to expand the market for ethanol blends are critical, he says. “We need to make sure we continue to develop new markets for these products. Investors invest in growth markets. They don’t invest in stagnant or shrinking markets for any product,” Coleman says. The industry’s Prime the Pump program and the USDA’s latest blender pump program are important. “The RIN credits are a huge part of creating an incentive for opening up the market,” he adds. “Getting the RFS back on track opens up the marketplace for new types of renewable fuel.” Successfully challenging the EPA’s interpretation of its authorities in the final rule is needed to keep the advanced and cellulosic biofuels industries moving forward, Coleman says. “There’s really two big waiver issues. One affects the entire RFS and gives the oil industry too much power to avoid the obligations of the program by refusing to distribute renewable fuel,” he explains. A law suit has been filed by several organizations representing renewable fuel sectors to challenge the EPA’s attempt to broaden its waiver authority from 30 | Ethanol Producer Magazine | APRIL 2016
2012
IneosBio: Commissioning Begins 2Q DuPont: Broke Ground 4Q
advanced and cellulosic biofuels, which it has done every year, to include the general renewable fuel category. The second issue surrounds the cellulosic waiver credits, which can be purchased by an obligated party in lieu of buying the fuel. “EPA has a very difficult job in trying to assess every year how much cellulosic biofuel will be available,” he says, and the waiver credits are intended to be the solution if the volumes are set too high. “The solution to that uncertainty is to use a good, flexible methodology in predicting those numbers as opposed to what they’re doing right now, which is flooding the market with cellulosic waiver credits and allowing the oil industry basically to sit on the sidelines, buy waiver credits and not sign longterm offtake agreements for our fuel.” It has a chilling effect on investments, he explains. “If the oil industry does not feel like it has to sign long-term offtake agreements for cellulosic biofuels, it becomes significantly more difficult to build projects because financial capital markets want to see there’s going to be a customer for the fuel before spending money on the project.” Moving forward, Erickson believes the biggest challenge the cellulosic ethanol industry faces is reviving investment so that more biorefineries will continue to be built. “BIO has estimated that EPA’s delays in issuing the RFS rules caused a $13.7 billion shortfall in the investment necessary to build cellulosic and advanced capacity,” he says. “While the firstof-a-kind cellulosic plants were being completed, new plants should have been started or planned—there were some, but too few.” Erickson also addresses the industry’s need for long-term stable policies. “Each of these companies has been working for more than a decade on the challenges. We sometimes forget that, in comparison to other
technologies, this is a remarkably fast pace,” he says. “It’s unfortunate that policymakers’ attention spans are even shorter than that.” The good news is that there are lawmakers who do seem to be interested in helping the industry start, once again, to attract investment. “I believe it is realistic to expect some policy proposals to be brought forward and I believe it is realistic to expect cellulosic ethanol production to continue to ramp up,” he says, “which will generate some interest and excitement around this industry again.” Another highlight of the past year is that the EPA began considering whether cellulosic sugar producers, rather than only biomass-tofuel producers, could participate in the RFS and generate RINs. “There could be efficiencies in allowing one biorefinery to convert biomass to sugar, while another ferments the sugar to fuel,” he says. “EPA has indicated it will consider rules to enable this new pathway. And after years of unconscionable delays in approving pathways, this is another positive sign that EPA intends to make progress on approving new cellulosic biofuels.” Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com Author: Holly Jessen Managing Editor, Ethanol Producer Magazine hjessen@bbiinternational.com 701-738-4946
2014
Poet-DSM: Grand Opening 4Q
CELLULOSIC UPDATES
Abengoa: Grand Opening 4Q DuPont: Grand Opening 4Q Abengoa: First Production 4Q
2015
DuPont: First Production 4Q Poet-DSM: First Production 4Q
Plants in Operation Pacific Ethanol Stockton LLC Stockton, California In December, the California ethanol plant was the first to use Edeniq Inc.’s Pathway technology to produce cellulosic ethanol from corn kernel fiber. Pacific Ethanol said at the time that it expected to receive EPA approval to qualify the gallons for D3 cellulosic RINs in the first quarter of the year. “Since the Pacific Ethanol announcement in December, we have seen a marked increase in customer interest in the Pathway technology,” Edeniq said in a written statement. By mid-February the company announced it had signed an agreement to license the technology for all of Flint Hills Resources’ seven ethanol plants. Edeniq customers that have already installed the Cellunator technology, a colloid mill which frees up additional starch and pretreats fiber making it more susceptible to enzyme hydrolysis, can be producing
cellulosic ethanol in three to six months after signing a contract, with no capital expenditures, the company said. So far, a total of 29 Cellunators have been installed at six U.S. ethanol plants, three of which are Flint Hills facilities, the company said. Edeniq’s second
business model, a bolt-on technology to convert corn stover, sugarcane bagasse or other cellulosic feedstocks to cellulosic sugars, can be used to produce ethanol, other biofuels, biochemicals and, or biobased products.
Quad County Cellulosic Ethanol Plant Galva, Iowa Quad County Corn Processors, a 35 MMgy corn ethanol plant, also has the capacity to produce 2 MMgy of cellulosic ethanol from corn kernel fiber and in November passed the 2 million gallon production mark. By the end of January, the company reported it had generated 2,991,096 D3 RINs since inception. That has helped expand sales into racing fuels. “At least one racing company is committed
to using cellulosic ethanol to reduce their carbon footprint,” said Delayne Johnson, CEO of Quad County Corn Processors. “I expect there will be other markets develop, now that we have had stable production for over a year.” The company’s next steps are continued testing of the higher-protein distillers grains in poultry, swine and dairy in 2016, and, once the EPA approves a yeast, conversion of C5 sugars to ethanol. APRIL 2016 | Ethanol Producer Magazine | 31
Commissioning Stage Abengoa Bioenergy Biomass Hugoton, Kansas Abengoa Bioenergy’s parent company in Spain is going through financial restructuring. In late January the company said it planned to sell its noncore assets, including its first-generation biofuel plants and about a month later Abengoa Bioenergy U.S. Holdings filed for Chapter 11 bankruptcy, with the exception of two of its corn ethanol plants and its cellulosic ethanol plant. The fate of the company’s second-generation investments—including a demonstration plant in Spain and its first commercial-scale 25 MMgy facility in Kansas—was unknown at press time. Neal Gillespie, economic devel-
opment director of the Stevens County Economic Development Board, confirmed only five or six employees were at work at the Hugoton plant, performing maintenance tasks. “We think this negative could be turned into a positive if the right buyer comes along,” he said. Although Abengoa did not provide up-
date information for this story, Fulcrum Bioenergy Inc. confirmed to EPM that Abengoa will be moving forward with the $200 million engineering, procurement and construction contract for Fulcrum’s first waste-to-jet fuel facility, which was awarded in May.
DuPont Cellulosic Ethanol LLC Nevada, Iowa DuPont told EPM it expects to produce its first cellulosic ethanol at the 30 MMgy Nevada plant in 2016. The company’s Vonore, Tennessee, pilot facility “fulfilled its purpose of scaling up our cellulosic technology on multiple feedstocks” and was closed at the end of 2015, the company confirmed. “We are focusing our energy and resources on bringing our Nevada biorefinery into operation this year,” DuPont said in a written statement. While there are some question marks surrounding DuPont’s cellulosic ethanol in-
vestment due to the announced merger with Dow Chemical, reports from Nevada, Iowa, indicate there’s activity at its recently completed cellulosic ethanol plant and meetings with feedstock growers were recently held. “DuPont remains committed to the com-
mercialization of cellulosic biofuel,” a company spokesperson said in a written statement responding to a question about the merger, “and will focus its resources on its Iowa facility and securing technology licensing opportunities around the world.”
Indian River BioEnergy Center Vero Beach, Florida IneosBio completed construction on its facility in June 2012. The plant is designed to produce 8 MMgy of cellulosic ethanol from vegetative and yard waste and municipal solid waste, along with 6 MW renewable power. The first power was generated in September 2012, and the first ethanol was produced in June 2013. IneosBio’s hybrid technology gasifies biomass, generating power in the process, then uses the syngas to feed an ethanol-producing microorganism. In a presentation last spring to the U.S. DOE, the company said it had overcome an initial barrier of power out32 | Ethanol Producer Magazine | APRIL 2016
ages caused by integration issues with the grid. The company had to go back to pilot scale to explore options to deal with the second issue, cyanide poisoning of the biocatalyst. It shut down to install a hydrogen cyanide scrubber and debottleneck the plant in December 2014. In the March presentation, the company said
performance testing was scheduled for the second half of 2015. An EPA table of cellulosic ethanol producers in the final rule indicates ethanol production starting in the first quarter of 2016, with a range of expected production for 2016 of zero to 5 million gallons.
CELLULOSIC UPDATES
Poet-DSM Advanced Biofuels LLC Emmetsburg, Iowa Construction on the 25 MMgy plant was completed in mid-2014 and a grand opening held in early September of that year. Among the celebrants was the king of the Netherlands, the home base for joint venture partner DSM. The EPA’s list of cellulosic ethanol producers shows Poet DSM as beginning produc-
tion in the fourth quarter of 2015, with the expected range of production for 2016 between zero and 15 MMgy. The plant is reportedly nearing the end of the extended commissioning period that has been the experience of all second-generation developers soon to begin continuous operations.
Projects in Development Carolina Cellulosic Biofuels LLC Clinton, N.C. BetaRenewables and Biochemtex, companies in the M&G Group, are working with North Carolina partners to develop a 20 MMgy cellulosic ethanol at Clinton, N.C. Initially dubbed Project Alpha, the project duplicates the company’s first plant in Crescentino, Italy, pictured at right. “CCB has secured the supply chain, completed the permitting activities and is now finalizing all the remaining requirements to
complete the project financing,” says Silvia Sacco, M&G spokesman. The project received conditional approval for a $99 million loan guarantee under the USDA 9003 Bio-refinery Assistance Program and nearly $4 million in BCAP funding for perennial crop establishment on 4,000 acres. Site preparations have begun, Sacco says, and construction is slated to begin later this year when finances are closed.
Enerkem Alberta Biofuels Edmonton, Alberta Enerkem has begun producing biomethanol from nonrecyclable MSW. “We recently added equipment to double our methanol capacity in Edmonton and we are now resuming operations,” says spokewoman Anne Pare. “A module converting our biomethanol into advanced ethanol will be added during 2016, which will give us the flexibility to sell both products.” Ethanol
production at the 10 MMgy Enerkem Alberta Biofuels is expected to begin in 2017. Enerkem has two proposed projects waiting to duplicate the model once the Alberta facility is fully operational. That includes Vanerco, a joint venture with GreenField Specialty Alcohols in Varennes, Quebec, and Enerkem Mississippi Biofuels in Pontotoc, Mississippi.
ICM Biofuels pilot plant and R&D facility St. Joseph, Missouri In July, ICM hit a major milestone when it completed the second of two 1,000-hour performance runs of its Gen 2 technology, using first switchgrass and then energy sorghum as feedstocks. Since then, the company has been working to prepare a final report for the U.S. DOE. The company had previously
proved out its trademarked and patent pending Gen 1.5 Grain Fiber to Cellulosic Ethanol Technology in 2012. The company predicts this technology will “create the most cost-effective pathway to commercialization with anticipation of a first commercial adopter occurring in 2016,” it said in a written statement. APRIL 2016 | Ethanol Producer Magazine | 33
PROFILE
The Quest
FOR RELIABILITY Iogen’s Brian Foody addresses the challenge of commercializing cellulosic ethanol. By Susanne Retka Schill
Five years ago, when Ethanol Producer Magazine interviewed CEO Brian Foody for a cover story, he described the key to realizing success in cellulosic ethanol development as being like having a hotel with a thousand rooms that need to be cleaned, each with its own key.
Today, the company has its first commercial-scale facility built in Brazil and, like most other first-round cellulosic ethanol developers, is systematically finding the keys to the remaining issues. The path to commercialization has been long and circuitous. Iogen Corp. was one of the first out of the gate to reach demonstration phase for its cellulosic ethanol technology at its Canadian headquarters in Ottawa. In 2004, the company announced it was selling cellulosic ethanol commercially from the plant and, in 2009, said it was the first to sell cellulosic ethanol at a retail station, albeit only for a month. In 2010, Iogen had more than 300 employees and was actively working on project devel34 | Ethanol Producer Magazine | APRIL 2016
opment in western Canada. The company formed Iogen Energy, a joint venture with deep-pocketed partner Royal Dutch Shell. “At the time, oil prices were high and western Canada was a very hot construction market,” Foody recalls. “We faced construction challenges but were hopeful we could bring a project forward. We did quite a bit of work, came up to the decision point and Shell top management reached a conclusion that it was too expensive in that location and not the right choice. So they canceled our project in western Canada, which led to a layoff of a large number of people here at Iogen, which was well-reported.” Shell transferred its share in the joint venture, Iogen Energy, to Raizen, (pronounced hi-ee-san), its Brazilian joint venture with one of the country’s largest sugar producers, Cosan SA. Iogen shifted its focus to bagasse and sugarcane straw and the design of a 10 MMgy bolt-on facility. Initial startup of the facility colocated with Raizen’s Costa Pinto mill in Sao Paulo began SEARCHING FOR SUCCESS: Brian Foody reflects on the past and looks to the future of cellulosic ethanol production for Iogen and the industry as a whole. PHOTO: JANA CHYTIL
PROFILE
BRAZIL JV: Iogen's first commercial-scale cellulosic facility is colocated with Raizen's Costa Pinto sugarcane ethanol facility in Brazil. PHOTO: COURTESY OF NOVACANA.COM
in October 2014 and the official opening ceremonies were held last July, with the president of Brazil presiding. Like all cellulosic developers, the commissioning process is taking months. “We’ve made very good progress,” Foody says. “We still can see success from where we’re at, but there’s a lot of holes to be but-
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harvest seasons. Since December, Iogen has been working through bugs and trying to simplify things, anticipating start-up for the season in late March or early April. “We have periods of continuous operations and periods of intermittent operations, and there are more intermittent periods than we would like,” Foody says. There are unique synergies with Brazil’s sugarcane ethanol industry, he adds. “We believe we can reduce operating costs and capital significantly by integrating closely with mills in Brazil.” Addressing the long path Iogen has traveled to get to this point, Foody says, “I would say I’m an optimist. When I started in this business nobody talked about second-generation biofuels and we’re involved and one of the key competitors in a business that has seen billions of dollars of investment now. We’re driving hard with great partners to make a success of this in Brazil. Is it hard work? Sure. Have we had to persevere? Sure. We have a commercial
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plant up and running. We still have some work to do, but it’s up and running. We’ve made tremendous strides. Surely, not in the simple linear way we originally thought. We’ve made tremendous strides and we’re looking forward to real success.” Foody is confident the operational challenges being faced by all second-generation companies will be met, and operational costs will meet their targeted goals as everyone turns the focus on reducing capital costs. There are storm clouds, though. “I think that the collapse in oil price creates concern among anybody doing energy development, even though the [renewable fuel standard] offers some well-structured insulation from exactly these kinds of events.” In spite of the talk about investment dollars moving to Brazil and other countries as a result of lagging support for the RFS, Foody defends the policy. “I’m very upbeat and positive about the renewable fuel standard. It’s beginning to provide honest price signals for producers. There are now 200
BAGASSE BREAKER: Hydrolysis alley at the Iogen Energy 10 MMgy cellulosic ethanol facility in Brazil. PHOTO: COURTESY OF NOVACANA.COM
million gallons worth of cellulosic biofuels made in the United States, although largely made by biogas and not cellulosic ethanol. The market signals now are working. They’re solid. I know many people in the field will complain about shortcomings on the EPA’s part. And, I think there are things they could address for more efficient opera-
Some chemical companies focus on this
tion of the RFS, but I think it’s powerful and it’s the best legislation in the world for cellulosic biofuels.” The heightened focus on global climate change is a positive, he says. “The initiatives to reduce greenhouse gases are good for cellulosic ethanol and they will be good for corn-ethanol business, which has a lower
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APRIL 2016 | Ethanol Producer Magazine | 37
PROFILE
PARTNERS IN DEVELOPMENT: Raizen's management team is pictured at the new, colocated facility. PHOTO: COURTESY OF NOVACANA.COM
greenhouse gas profile than gasoline. Iâ&#x20AC;&#x2122;m sure youâ&#x20AC;&#x2122;ve heard or read that last year was the hottest year on record and the year before that was the second hottest on record. To the extent that there is a growing public
challenge to reduce greenhouse gas emissions, as there is in California led by the Low Carbon Fuel Standard, we will see cellulosic biofuels playing a really positive role. Itâ&#x20AC;&#x2122;s these macro forces that will allow large
companies to make strategic commitments and to have the resources and commitment to see them through.â&#x20AC;? The best thing the nascent cellulosic ethanol industry can do, he stresses, is get these first-of-their-kind facilities running smoothly. â&#x20AC;&#x153;You have a group of companies that have put down a lot of money and theyâ&#x20AC;&#x2122;re trying to get their processes to run in a reliable way. Each group has come at this in a different way, with different amounts of investment and somewhat different process and technology strategies. In the end, right now, the principal challenge is to get steady reliability in operation so these technologies can be deployed. I think that particular challenge trumps almost everything else.â&#x20AC;? Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine sretkaschill@bbiinternational.com 701-738-4922
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Global Developments The Italian chemical company, Mossi & Ghisolfi Group, lays claim to being the first to bring a large, 20 MMgy cellulosic ethanol plant online at Crescentino, Italy, in 2012. “Crescentino is now operating at industrial scale and on a daily basis, producing large quantities of cellulosic ethanol that are shipped into Europe, thanks to a long-term contract with an oil company,” says company spokesman Silvia Sacco. “The hurdles found during the first 15 months of prolonged start-up have been overcome and the actual configuration of the plant proves to be sustainable for steady state production.” Beta Renewables is the company within the M&G group formed to license the trademarked Prosea technology. Chemtex International and Biochemtex are companies within the M&G Group developing projects, including Project Alpha in North Carolina. A Brazilian company, GranBio, was the first to license the Prosea technology and has brought its commercial-scale facility online. GranBio’s cellulosic ethanol production began in September 2014, at Bioflex Agroindustrial in Sao Miquel dos Campos, Alagoas, Brazil. The company is using Prosea pretreatment technology from Beta Renewables in the 20 MMgy plant, enzymes from Novozymes and started up with yeast from DSM. In mid2015, GranBio announced it had received approval for its own proprietary yeast capable of fermenting both C5 and C6 sugars present in sugarcane straw and bagasse.
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GranBio’s plant was the only foreign facility registered to generate D3 RINs for cellulosic ethanol on the U.S. EPA’s Part 80 list in February. In its discussion of projected cellulosic volumes for 2016 in the final rule, EPA included GranBio in its table of plants that had not yet achieved consistent commercial-scale production. The agency projected a conservative range from zero to 2 million gallons from GranBio to be applied to the 2016 RFS volumes in the U.S. Other projects were announced in 2014. In Europe, Energochemica, a Slovak company, bought the second license from Beta Renewables. Its plant is under construction, with startup expected in 2017. In China, M&G Chemicals and Anhui Guozhen created a joint venture to produce cellulosic ethanol and bioMEG, a base chemical used in plastics. With the big drop in oil prices affecting fuel and MEG prices, the project is being reviewed to ensure profitability is still attractive, Sacco reports. “M&G Chemicals decided that in order to optimize certain costs and yields, it is necessary to integrate design changes to the process that have been made and tested in Crescentino. Expectations are to be able to update the project economics in the second half of this year and to get the green light to start execution by year end.” Start-up is projected for late 2017. Two other projects are in earlier stages of development. One in India with CVC Infrastructures Ltd., and another in Malaysia with Brooke Renewables Sdn. —Susanne Retka Schill
reliability
performance
yield
GO TIME: Construction on the 1.5 MMgy isobutanol production line at Gevo's Luverne, Minnesota, facility is expected to wrap up this spring. PHOTOS: CHRIS REISTROFFER
40 | Ethanol Producer Magazine | APRIL 2016
BIOBUTANOL
LICENSE TO
GROW
Gevo, currently increasing its production capacity to 1.5 MMgy of isobutanol, and Butamax, still in active conversations with its Early Adoptors Group, are no longer expending energy on their patent dispute, leaving both companies with a clearer path to commercialization. By Holly Jessen
Once adversaries in the fight to commercialize bio-based isobutanol by retrofitting ethanol plants, Gevo Inc. and Butamax Advanced Biofuels LLC now stand stronger, together, thanks to the worldwide patent and settlement agreements announced in late August. “It was years of pain and agony,” says Patrick Gruber, Gevo’s CEO. “I think the pain and agony got to such a point on both sides, where finally we said, ‘“This is just really stupid. Can we stop?’” As things stand now, Gevo and Butanol present a much higher barrier to other companies looking to enter the isobutanol development space, Gruber told Ethanol Producer Magazine. The agreement, which he calls balanced and fair, gives the two companies room to develop their own distinct technologies while allowing the two companies to cross license each other’s patented intellectual property. In fact, in the months following the announcement of the agreement, Gevo entered into two separate a licensing agreements. Praj Industries Limited agreed to adapt Gevo’s technology to retrofit sugarcane and molasses ethanol plants, enabling Praj’s global ethanol plant customers to license Gevo’s technology. The vision, Gruber says is to build out to about 250 MMgy isobutanol production in about 10 years, although the first retrofit project won’t likely happen for another year or two. The second agreement is with Porta Hnos S.A. to construct multiple corn-based isobutanol plants in Argentina to supply the petrochemical market.
APRIL 2016 | Ethanol Producer Magazine | 41
BIOBUTANOL
CLEAR SKIES: The agreement forged between the companies gives royalties to Gevo in some fields and Butamax in others, with some left royalty-free. Both companies can sell up to 30 MMgy royalty-free in any field.
Stuart Thomas, CEO of Butamax, also had good things to say about the agreement. “Butamax sees the settlement agreement as being beneficial to both parties,” he told EPM. “Reaction from existing and potential commercial partners has been consistently positive.” Butamax, a joint venture between BP and DuPont, first formed an Early Adoptors Group in 2011. Today, the group is made up of seven ethanol production companies representing 10 facilities. Ray Defenbaugh, president, CEO and chairman of Big River Resources LLC, told EPM the company has met recently with Butamax. “We’re continuing dialogue on it,” he says. Big River joined the Early Adoptors Group in 2012, meaning the company is considering a retrofit to isobutanol production. The goal of the group, Thomas told EPM, was to get more information about the needs of the industry and potential early licencees of the technology. “These conversations have proved invaluable in developing and refining our commercialization plans,” Thomas says. “All of this
has led us to the place where today we have completed the development of our technology, are developing the design of our first commercial plant and have made great strides in developing the value proposition we can offer to both licensees and biobutanol buyers.” Highwater Ethanol, the first company to join Butamax’s Early Adoptors Group, installed the company’s corn oil separation technology in 2013. It can be installed independently or as a first phase in retrofitting a plant to isobutanol production. When asked about the company’s timeline for retrofitting plants, Thomas says the company is “currently in detailed discussions regarding this,” and adds that the hope is Butamax will have an update in the near future. Gevo, on the other hand, purchased a 22 MMgy ethanol plant near Luverne, Minnesota, in 2010 and first produced isobutnaol there in 2012. At press time in February, the company was in the midst of construction on a $5 million update, which will allow for 1.5 MMgy isobutanol production side-by-side with ethanol
production. “That gets us in the realm where we can make money on isobutanol, at least a contribution margin,” Gruber says, adding that the company anticipates margins of 50 cents to $1, once the plant is operating at full scale, and low production cost. Until now, Gevo has produced isobutanol intermittently during campaign runs to prove out its technology. “It was brutal to run isobutanol in a dry mill, because it’s such a large scale fermentation system,” he says. “You can’t do it in the lab, you have to do it in real life and figure out the issues and solve them. And we did that.” The construction project, which is expected to be completed this spring, will add distillation equipment so the isobutanol no longer has to be sent off site for that step. Additional fermentation equipment is also being put in place to allow for the scale up in production. Gruber has a few words for the critics. “I hear people say, ‘Oh, Gevo can’t run the isobutanol process. They are having trouble with the fermentation.’ That’s just not true. That’s crap,” he says. “In the past we did not have the equipment installed in the plant to be able to do that economically.” In reality, the company is knows what to do and is simply working toward getting there. “We’re in the phase where it’s not technology risk,” he says. “It’s not even scale up risk. It’s just implementation.” The next step is to decide if the Luverne facility will continue to produce ethanol and isobutanol, or if the company wants to covert completely to isobutanol production. Another option is building a colocated jet fuel processing facility, which would further process isobutanol to jet fuel. “With ethanol margins way they are, I think getting out of ethanol is not a bad thing,” Gruber says, although he clarified that he is not antiethanol. “Ethanol has a place,” he says. Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946
BRIGHT FUTURE: Bio-based isobutanol production, shown under construction here at Gevo's facility, is expected to fulfill about 20 percent of global gas and diesel requirements, according to a report from Research and Markets.
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APRIL 2016 | Ethanol Producer Magazine | 43
CHASING THE EVER-NIMBLE
HACKER After many hacker break-ins last year, there will be even more sophisticated capers in 2016, according to reports released by top cybersecurity firms. By Joe Dysart
Security experts say the image of yesteryear's hacker—the pimply faced teen on a lark for grins and giggles—has given way to organized crime teams, hell-bent on stealing and monetizing stolen data.
“Organizations should expect to be hit,” says Tom Kellermann, chief cybersecurity officer, Trend Micro, a security software maker that released a cybersecurity report in November. “Preparing to overcome this challenge will become the mantra in the winter of 2016.” The impact of hackers’ antics has never been greater. “The evolution of breaches is beginning to take a turn toward real-world 44 | Ethanol Producer Magazine | APRIL 2016
effects on enterprises’ bottom lines and people’s lives,” says Raimund Genes, chief technology officer, Trend Micro. The ethanol industry would do well to pay attention to the latest hacker threats, given that their company's computer networks—and their process control systems—are vulnerable. “We have a healthy respect for what hackers can do,” says Lyle Schlyer, president, Calgren Renewable Fuels LLC. “Our accounting and laboratory data servers have been subject to such attacks.” All ethanol producers need to do what they can to protect against hackers, he adds. One way Calgren does that is by not allowing its distributed control system (DCS) system at the plants—the computers and software that controls the plant’s process-
ing—to be connected to the internet in any way. And, control valves are hardwired to the DCS rather than being wireless. “I doubt anyone is truly ‘ready’ for an attack,” Schlyer says. “But we do what we can to both protect against them and be able to recover should one occur.” High on the list of hacks to watch out for in 2016 will be a spike in ransomware showing up on Apple computers, which previously had been bypassed by hackers in favor of more prevalent Windows machines, according to Kaspersky Lab, a security software maker. More vulnerable, too, will be mobile devices, including those running the Android operating system, according to the Trend Micro Report. Plus, hackers are expected to spend more time plundering computers
CYBERSECURITY
workers use at home. Such personal computers and smartphones can often serve as easy knock-offs to what hackers are really looking for: easy entry into the corporate networks they’re linked to, according to the “McAfee Labs Threats Predictions Report,” released in November by Intel Security. The coming year is also expected to give rise to the hacker-as-information-broker, with hackers amalgamating data they’ve stolen from more than one database, repackaging it, and then selling the resulting much more dangerous and much more potent invasion of privacy at a higher price. For example, instead of simply selling stolen credit card info, an enterprising hacker could combine that data with other info stolen from an individual’s health insurance plans, tax returns and company records.
Intel researchers say hackers in 2016 will also be using personal data stolen from major security breaches during the past few years to steal even more data by phone or over the Internet—given that the same data is often used in challenge questions companies use for identification. Essentially, challenge questions like “What’s your social security number?” or “What street did you grow up on” will be child's play for hackers, who may already have this info from previous data breaches. But even while increasingly sophisticated attacks appear inevitable in 2016, IT security experts don’t plan to take the onslaught lying down. Major hardware and software makers are hard at work developing new technologies companies can use to defend digital perimeters. Google has announced that it will issue regular security updates for its Android software, after being repeatedly stung by a series of hacks in 2015. Plus, antivirus makers like Symantec—which has candidly admitted that antivirus software is becoming increasingly ineffective against hackers—have added Behavioral Analytics to their arsenal. Essentially, Behavioral Analytics scouts personal computers for signs of unusual behavior or the installation of unknown programs and offers tools and, or advice for how to (hopefully) neutralize the problem. “Integrating breach detection systems with intrusion prevention systems is fundamental to decreasing the time hackers dwell on their networks,” says Trend Micro's Kellermann. Cybersecurity experts also advise ongoing employee awareness training programs. Unfortunately, the human factor is often the weakest link in an otherwise wellsecured company network, the experts say. Even now, when headlines report of millions of IDs and passwords regularly stolen from major corporations, the most commonly used passwords are “123456” and “password,” according to Splash Data, a cybersecurity firm. If passwords were created using 32-characters and featured let-
ters, numbers and special symbols, there would no need for technological alternatives. Such passwords, according to security pros, are virtually uncrackable. Chipmaker Intel has a free, online password checker, which tells how many years it takes to crack any password. Type in a gobbledygook mishmash of 32 letters, numbers and special symbols and it takes stupid amounts of computer power—plus approximately 25 years—to crack it. Unfortunately, too few people are willing use 32-character passwords made from gobbledygook inputs. And, many cyber-techologists are busy creating alternatives. Apple Pay users, for example, can already rely on their thumbprint to make a purchase using their iPhones—not an ID and password. Mastercard is currently pilot-testing Identity Check, an online ID verification system for shopping, that relies on a selfie taken by the shopper, or a fingerprint scan, to authenticate a purchase. And users of Microsoft’s Windows 10 can replace ID and password access to their computers with Windows Hello. It's software that offers users the ability to sign-in using fingerprint readers or facial recognition, although the facial recognition option requires a highend, depth-perception camera. Meanwhile, Lawrence Livermore National Laboratory licensed an advanced anti-hacker software tool to Cambridge Global Advisors this past summer. It’s designed to pinpoint suspicious behavior by hackers, once they’ve compromised a system’s ID and password, and are freely roaming a computer network. “The future of authentication is free from traditional passwords,” says Geoff Sanders, CEO, LaunchKey, which sells ID authentication technology that includes fingerprint verification, geofencing, facial recognition and other verification alternatives. Author: Joe Dysert Internet speaker, business consultant 646-233-4089 joe@joedysart.com APRIL 2016 | Ethanol Producer Magazine | 45
DATA MANAGEMENT
To Cloud or Not to Cloud Businesses must evaluate their comfort level, flexibility, redundancy and security requirements when comparing in-house vs. cloud solutions. By Zac Paulson
Technology can be an expensive, unwanted hassle in the business worldâ&#x20AC;&#x201D;very necessary, but causing so much frustration that we often chalk it up to the expense category. When evaluating
lars are sunk. Migrating to the cloud shifts IT solutions from capital expenditures to operating costs. A business has to consider the up-front cost of the equipment, its business needs, as well as the time and cost involved to maintain and upgrade hardware. The cloud option provides a virtual infrastructure with a complex set of capabilities that allows apinformation technology (IT), the infrastruc- plications and data management without the ture and software are where most of the dol- massive burden of physical servers and ap-
plications. Moving to the cloud reduces the typical IT complexity and gives a business a competitive edge. Individual employees also have the freedom and flexibility to work from anywhere in the world. We need our technology to be convenient and we want the best protection and security. Cloud providers such as Microsoft, Google and Amazon, all provide responsive infrastructures, massive scalability and sup-
CONTRIBUTION: 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).
46 | Ethanol Producer Magazine | APRIL 2016
DATA MANAGEMENT
port resources. Cloud services are very flexible since they are hosted on servers that feel and scale as one. The entire data center may be leveraged, or you can leverage just one single service on a server in the cloud using virtual server technologies and clustering. The technologies used in your own environment add layers of complexity, cost and high level support. When used in the cloud environment, they are simple and straightforward with a low-cost monthly payment, and generally much easier to support than in-house systems.
Advantages
How do you know your data is secure? Actually, there are several levels of security to consider. First, physical security. To evaluate this, let’s imagine your office or plant and think where your servers and computers are, and what stands between them and the outside world. Are they in a separate locked room? Are they in a locked cabinet in a locked room? Are the server chassis themselves locked, in the locked cabinet, in the locked room? Are the persons who can access all those locks documented and cleared for accessing all that secure data? You get the point. Most companies have a server in a storeroom, maybe in a cabinet, and often not locked. In addition, the people that go in and out, maybe even accessing the server hardware, are not cleared or designated in any special way. The cloud providers typically take security very seriously. Workers in a data center go through extensive background checks and are given permission to access things only when needed, and only for limited time periods. Additional security measures include that locked server, locked cabinet, retina scanners and armed guards at the facility doors. There are audits and logs and tools that run regular tasks automatically, rather than by human beings. Last, the data stored in the cloud is encrypted and the only person with the key is the customer. If hackers succeeded in getting into the server, they wouldn’t be able to read the data without the proper decryption code, which is not available without that key.
Avoiding data loss from natural disasters or accidental deletions is another consideration. Even with the most robust backups, each situation will cost money and time for recovery. The common options offered by cloud providers include archiving, user- and admin-level recycle bins and tombstoning where data is preserved for 90 days at no cost unless retrieved. Some providers, such as Microsoft, offer a geo-redundancy option where copies of your data are spread through different data centers should a natural disaster occur. Perhaps one of the biggest elements to consider when evaluating a cloud option is cost. As technology seemingly gets less expensive over time, the cloud can provide a very reasonable substitute for physical hardware. Basically, you’re renting a portion of a hard drive to store your data. Cloud providers charge for services as needed, thus you pay only for what you use. In contrast, if you opt for new physical hardware, you need to plan for the future, perhaps doubling the equipment to run one as backup to minimize downtime should the network crash. There’s also the possibility of over-buying, with the capital expense and a depreciating piece of equipment. With the cloud, you only pay for the resources needed today, with the freedom and flexibility to change the resources later. The cloud has a low up-front cost, becoming an operating expenditure like phone service that is relatively small and predictable.
Transition Path
Businesses typically follow a common path to the cloud, migrating common services such as the email server, file server, chat and video conferencing, Web and database servers, and even some application servers. We see most of our clients start with email because the migration process is very seamless, and end users notice the least disruption. The migrations are quick and the payout is great for small businesses. Running email internally can heavily tax a system, so offloading email is the first step to increasing the life of onsite server equipment.
Next, most businesses will move the file server to either a file server in the cloud, or a file sharing system, like Microsoft SharePoint. The reason this is a good next move is that files are often needed by many in the organization who are not at the main office. Having the data in the cloud allows anyone in the company with the correct permissions to access that data via a Web connection—perfect for people on the go or multiple office locations. Other common cloud solutions include popular chat and video, such as Microsoft Skype for Business, allowing a small business to accomplish enterprise level communications without the heavy hardware and software costs that used to be required. Web and database servers are natural candidates for the cloud too, avoiding the heavy security and maintenance required for on-premises solutions. Additionally, the cloud allows for “burst ability” for capacity or speed. Cloud servers can literally be cranked up for seasonal or daily peak business loads. Finally, we see businesses use the cloud for their physical applications and business software that don’t have cloud versions, tapping into the cloud’s anywhere access and scalability A good rule of thumb is, if it runs on modern hardware, it will likely work just fine in the cloud, if implemented by a skilled technical engineer. Using the cloud really allows you to take your business to the next level and keeps you connected with the world. If you have multiple business locations, you can chat, share your desktop, video conference, and share data to solve issues in a matter of minutes as opposed to hours or days. You also save time to deployment and overall support costs, not to mention that reliability generally hits five nines. Author: Zac Paulson
CEO, TrueIT zac.paulson@trueit.com 701-205-4506
APRIL 2016 | Ethanol Producer Magazine | 47
CLEARING THE AIR
Are You Ready for the E30 Challenge? By Dave VanderGriend
Who would have ever thought that a place like Watertown, South Dakota, might be a trend setter for the rest of the nation? No, not for the latest fashion or a new dance craze, but for a fundamental change in the way we fuel our automobiles. Watertown is challenging conventional wisdom in order for biofuels like ethanol to finally realize their true potential. Conventional wisdom says our nonflex autos can only operate on 10 percent ethanol blends and, at most, 15 percent. But those of us in the ethanol industry are well aware that the original Model T built by Henry Ford was designed to run on high blends of ethanol. Its high octane would allow for higher compression and increased efficiency, an elusive brass ring we continue to reach for today, more than 100 years later. It took the Iranian oil embargoes of the late 1970s to spark a renewed interest in ethanol and “gasohol” was born as a mix of 10 percent ethanol and 90 percent gasoline. But 10 percent volume blends should never have been the baseline—cars then and now are capable of using much higher blends and the auto industry knows it. In fact the optimum blend to maximize octane and energy content is in the 25 to 40 percent volume range, according to the U.S. DOE. So what does this have to do with Watertown? Well, a revolution has to start somewhere and ethanol producer Glacial Lakes Energy is spearheading an "E30 Challenge," encouraging everyone to use blends up to E30 regardless of whether they have a flex-fuel vehicle. The goals are to increase the amount of ethanol chosen at the local blending pump and to show the U.S. EPA that midlevel blends work in nonflex vehicles. Glacial Lakes Energy is collecting data on how E30 responds in 50 makes and models. Education and promotion of the E30 Challenge on the community level will be done with print and radio ads, as well as seminars and clinics with dealerships, technical colleges, automotive technicians and Farmers Union members. Retailers will also be educated on the value of octane, clean air and local jobs. At the Urban Air Initiative, we are actively engaged in this project as it completely supports our push for higher ethanol blends to improve fuel quality, reduce emissions and protect public health.
48 | Ethanol Producer Magazine | APRIL 2016
First and foremost, we want to demonstrate that the so-called blend wall is a myth. Auto makers are helping us prove that point. For instance, in its 2016 Mini-Hardtop owners’ manual, BMW endorsed the use of E25 higher octane blends in its standard (nonflex fuel) vehicles. Mercedes-Benz engineers have urged the EPA to approve the use of high octane E30 blends because they have “ridiculous power and good fuel economy.” All gasolinepowered vehicles in Brazil efficiently operate on blends of at least 27 percent ethanol. And, a recent study by Ford, GM, and Chrysler found that E30’s higher octane could improve vehicle performance and mileage and that even noncalibrated standard vehicles could benefit from ethanol’s superior octane properties. So, why don't American motorists have access to these higher blends? Because the EPA refuses to certify E30 test fuels for commercial use and prohibits the use of E30 blends in standard vehicles, even though many experts confirm that such vehicles are identical to so-called flex-fuel vehicles. Local legend Andy Wicks, who owns the high-performance shop, DynoTune, in Watertown, has led the effort to educate his fellow mechanics about the value of E30. Wicks makes a great point when he says, "If you've ever dealt with an engineer, they are very quick to tell you something is not possible simply because they do not have sufficient test data. It has been instilled in them to never apply a stamp of approval to a limited knowledge basis. The testing we have done leads us to believe blends up to E30 will not only be tolerated, but embraced by our vehicles we drive every day." With a focused message, the E30 Challenge will provide positive and accurate information. Once this education method is refined, Urban Air Initiative intends to take the package to the next town, and the next. Today, all vehicles are approved for E10 blends, nearly 80 percent are approved for 15 percent, and we may be on our way to 30 percent, thanks to a little place called Watertown. Are you ready for the E30 Challenge in your town? Author: David VanderGriend CEO, ICM Inc., President, Urban Air Initiative DaveV@icminc.com 316-796-0900
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