INSIDE: PRIMARY SCREENING TO DISCOVER, OPTIMIZE CATALYSTS april 2011
Groundbreaking Impact Ineos Bio Begins Construction in Florida, What Does it Mean for the Industry? Page 20
www.biorefiningmagazine.com
Plus USDA BioPreferred
Program’s Voluntary Product Labeling
Page 26
And
Project Development: Feedstock, Off-Take Agreements
Page 32
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contents |
April issue 2011 VOL. 02 ISSUE 04
features
20
26
32
project Development
bioproducts
BUsiness
Groundbreaking Impact
A Stamp of Approval
Contract Compatibility
An inside look at Ineos Bio’s groundbreaking By Luke Geiver
USDA-backed labeling to boost eco-sales By Erin Voegele
Lining up feedstock and off-take agreements By Bryan Sims
Contents DEPARTMENTS 4
Editor’s Note
9
Legal Perspectives
Tech License By Ron Kotrba
Four Steps to a Successful Joint Venture in China By Richard Weiner
6
Advanced Advocacy
Can We Talk? By Michael McAdams
10 Business Briefs
7
Industry Events
12 Startup
Upcoming Conferences & Trade Shows
INSIDE: priMarY SCrEENiNG TO DiSCOVEr, OpTiMiZE CaTalYSTS april 2011
People, Partnerships & Deals
Biorefining News & Trends
Groundbreaking Impact Ineos Bio Begins Construction in Florida, What Does it Mean for the Industry? Page 20
Plus
USDA BioPreferred Program’s Voluntary Product Labeling
Page 26
AnD
Project Development: Feedstock, Off-Take Agreements
Page 32
www.biorefiningmagazine.com
8
Talking Point
Primary Catalyst Screening By Jeff Yoder
ON THE COVER: Stakeholders participated in Ineos Bio’s groundbreaking ceremony in Vero Beach, Fla., in February, paving the way for construction of its advanced biorefinery.
april 2011 | Biorefining Magazine | 3
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editor’s note
If a biorefining project developer is looking to buy an existing, distressed first-generation biofuel plant with intentions of modifying the process to produce next-generation biofuels and biobased chemicals, here are some licensing considerations that should be addressed.
TECH LICENSE Ron Kotrba, Editor rkotrba@bbiinternational.com
John Eustermann, partner attorney with Stoel Rives, tells me some technology licenses have clauses that state if any modifications or upgrades are made, the licensor would own the rights to the modified process technology. He adds that there is really a lot involved in buying an existing process facility: signability provisions, contractual assets for technology and feedstock agreements, and the language of licensing regarding upgrades and modifications, to name a few. “If you’re buying assets, what representations are the sellers making, and what warranties are there?” he says. Do your due diligence. Eustermann says get the lay of the land on how to evaluate the deal, maybe get a letter of intent signed, or a nondisclosure agreement from the potential buyer so, if the sale is not public, no undue hardship is caused if others find out. He also says to maybe get a no-shop provision. But, he points out, there’s a cost to that. “Don’t just walk around the plant and say, ‘Okay, it’s running, let’s go!’ Look at the contractual assets and make sure there are no risks, or if there are risks, you know how to deal with them,” Eustermann says. Dean Edstrom, partner attorney with Lindquist & Vennum, tells me it is a very important part of due diligence work on behalf of potential buyers to scrutinize the terms of the technology license, and determine first if it is transferable. There might be several process technologies under license that a biorefinery project developer may want to continue using in the new, upgraded facility. There are ways to get around this, if the seller and the buyer can agree. For instance, a merger between the selling entity and the buyer, or a subsidiary of the buyer, may allow continued use of the technology license since there technically isn’t any “transfer” of ownership or use rights. If the license is drafted tightly, however, Edstrom says it could terminate on merger and/or bankruptcy. There’s also the possibility of a reverse merger. And, if the buyer is really in a jam, they can try to renegotiate with the technology licensor.
for more news, information and perspective, visit biorefiningmagazine.com/thebiorefiningblog
ASSOCIATE EDITORS Luke Geiver provides in-depth coverage of Ineos Bio’s recent onset of construction in “Groundbreaking Impact” on page 20.
4 | Biorefining Magazine | april 2011
Erin Voegele details the USDA’s BioPreferred Program’s new voluntary product labeling in “A Stamp of Approval” on page 26.
Bryan Sims covers the important aspect of feedstock and off-take agreements in “Contract Compatibility” on page 32.
EDITORIAL EDITOR Ron Kotrba rkotrba@bbiinternational.com ASSOCIATE EDITORS Erin Voegele evoegele@bbiinternational.com Luke Geiver lgeiver@bbiinternational.com Bryan Sims bsims@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com
ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com graphic designer Erica Marquis emarquis@bbiinternational.com
PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com
SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com Senior Marketing Manager John Nelson jnelson@bbiinternational.com Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Biorefining Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada or Mexico. To subscribe, visit www.biorefiningmagazine.com or you can send your mailing address and payment (checks made out to BBI International) to: Biorefining Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biorefining 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 Biorefining Magazine advertising opportunities, please contact us at (701) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Biorefining Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rkotrba@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
Please recycle this magazine and remove inserts or samples before recycling COPYRIGHT Š 2011 by BBI International
april 2011 | Biorefining Magazine | 5
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advanced advocacy
Can We Talk? Turmoil in the Middle East, rising fuel prices—the time to act is now BY Michael mcadams
M
any of you might recall Joan Rivers substituting for Johnny Carson on the original Tonight Show, and her distinctive delivery as she looked straight into the camera after the punch line, sarcastically asking the audience, “Can we talk?” I was reminded of this the other day as I prepared for an interview on a national radio show and the reporter asked if I could bring my discussion about the advanced biofuels industry and the policy and political landscape in Washington down a couple notches so listeners could understand. The reporter’s request got me thinking. The advanced biofuels industry, along with pretty much everyone in Washington, continues to feel its way through the change in the balance of power and policy priorities as a result of last year’s election. But during this mercurial time in D.C., have we got so caught up in a complicated labyrinth of acronyms, formulating our policy arguments based on millions of gallons here and there, renewable feedstocks and other industry jargon and technical information that we’ve lost the ability to effectively talk as everyday Americans and not policy robots? Our industry is at a crucial point as to whether the transition to clean, renewable energy alternatives will successfully happen. When Washington is frenetic as ever while industry and interest groups argue their own merits, we must effectively communicate the complexities and economic and environmental benefits of advanced biofuels to lawmakers—most of whom don’t have time or resources to get fully up to speed on the nuances. We are continuing to see results from
6 | Biorefining Magazine | april 2011
our progress last year, coalescing industry stakeholders around the idea that one voice is stronger than numerous competing ones. Last month, the Advanced Biofuels Association invited and was joined by the Biotechnology Industry Organization and the Algal Biomass Organization for a joint industry meeting on where we stand in Washington, and what the road ahead looks like. At this meeting we repeatedly heard that, this year, $6 billion will be spent on biofuels tax credits, but less than 1 percent will go to next-generation biofuels. Collaboration must begin in earnest if we are to build the next generation of biofuels. Most of Congress’ attention in the biofuels space is directed to what to do with the ethanol tax credit of 45 cents a gallon. Some in the corn ethanol industry would like to redirect the $6 billion-plus to building blenders pumps and perhaps shift the blender credit to a production tax credit like the one for cellulosics. Others prefer to hold the current number, or take a small haircut given the current situation concerning commodity prices. But for the advanced biofuels industry, whether that’s companies developing drop-in fuels, cellulosic ethanol or algae, the challenge is finding capital to build their first commercial facilities. The tax code can provide real certainty to the financial system, and that promise must be fulfilled. There is no question that the winds have changed in the House Ways and Means Committee and talk is clearly of how to rewrite the existing tax code including biofuels. The current discussion is exploring ways to broaden the overall tax payer base, lower rates and eliminate specific provisions granting credits or exemptions to pay for the changes, leaving the biofuels industry at somewhat of a crossroads. We certainly want to protect what we have built to date, and it seems reasonable
to consider diverting some of the resources flowing for the past 25 years to advanced biofuels technology platforms seeking to build the next generation of plants and fuels. This will be a challenge in an atmosphere of reduced federal money across the board. But there is no better time to make this investment in the future, as the Middle East is in turmoil and fuel prices are rising. The time is now. We must talk about not only infrastructure investments for one type of biofuel, but also about technology investments to modify existing assets to make fungible fuels that don’t require infrastructure investments, fuels that could reduce taxpayer costs and deliver more energy value to the driving consumer. We must recognize that a sound advanced biofuels policy will utilize a broad range of feedstocks requiring a diverse range of technology platforms, if the U.S. is to deliver on the promise of 36 billion gallons called for under RFS2. That means the biofuels industry has to play nice in the sandbox and share the available resources. Lastly, we cannot allow these technologies to be researched and developed here in the good ol’ U.S. of A. and exported around the world to our economic competitors. This is a time when our industry can create solid, well-paying jobs for our future. My hat’s off to firstgeneration biofuels, now it’s time for us all to create a plan to deploy the next generation. So Joan Rivers was right, we can and should talk, if we are to survive as a robust, state-of-the-art industry helping strengthen our nation’s economy, one other countries will jump to emulate. Author: Michael McAdams President, Advanced Biofuels Association (202) 469-5140 Michael.McAdams@hklaw.com
events calendar |
International Biomass Conference & Expo
May 2-5, 2011
America’s Center | St. Louis, Missouri The largest, fastest growing biomass event was attended in 2010 by 1,700 industry professionals from 49 states and 25 nations representing nearly every geographical region and sector of the world’s biomass utilization industries—power, thermal energy, fuels and chemicals. Plan to join more than 2,500 attendees, 120 speakers and 400-plus exhibitors for the premier international biomass event of the year. (866) 746-8385 | www.biomassconference.com
International Fuel Fuel Ethanol Workshop & Expo
June 27-30, 2011
Steel City to Host Northeast Biomass Event 10/11
With an exclusive focus on biomass utilization in the Northeast, from Maryland to Maine, the Northeast Biomass Conference & Trade Show is a dynamic regional offshoot of Biorefining Magazine and Biomass Power & Thermal’s International Biomass Conference & Expo, the largest event of its kind in the world. Taking place in Pittsburgh Oct. 11-13, the event will connect the region’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels and biobased chemicals, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers. The Northeast U.S. has vast forestry, agricultural and municipal biomass resources, and is home to hundreds of technologically progressive biomass power, biofuels and biomass thermal energy projects. This population-dense region plays host to several world-class research institutions engaged in the development, scale-up and commercialization of next-generation bioenergy technologies. The sustainable utilization of forestry and wood processing residues—from manufacturing wood pellets in Maine and New York to converting pulp and paper mills to next-generation biorefineries in New Hampshire and Vermont—is only the beginning. With the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions, the region’s utilities are expected to employ biomass cogeneration, gasification and advanced combustion projects in unprecedented numbers, while also supporting projects that generate electricity from on-farm methane, municipal biosolids and landfill gas. Likewise, countless research institutions are partnering with private industry in the region to develop next-generation biofuels such as cellulosic ethanol. The Northeast Biomass Conference & Trade Show program will include more than 60 speakers, including technical presentations on topics ranging from anaerobic digestion and gasification to combined heat and power and large-scale biomass combustion, within the structured framework of general session panels and four customized tracks: Electricity Generation; Industrial Process Heat and Power; Biorefining; and Project Development and Finance. The show is designed to help biomass industry stakeholders identify and evaluate solutions that fit their operations. It’s time to improve operational efficiencies and tap into the revenue-generating potential of sustainable biomass resources in the Northeastern U.S. To attend, exhibit, speak or sponsor, visit http://ne.biomassconference.com today.
Indiana Convention Center | Indianapolis, Indiana The FEW is the largest, longest-running ethanol conference in the world, and is renowned for its superb programming, which focuses on commercial-scale ethanol production—both grain and cellulosic—operational efficiencies, plant management, energy use, and near-term research and development. (866) 746-8385 | www.fuelethanolworkshop.com
International Biorefining Conference & Trade Show
September 14-16, 2011
Hilton Americas – Houston | Houston, Texas This event will unite bioconversion technology providers and researchers from around the world with agriculture, forestry, and refining professionals to discuss and examine the scale-up and commercial establishment of advanced biofuels and biobased chemicals. Organized by BBI International and produced by Biorefining Magazine, the event will bring together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry. Speaker abstracts are now being accepted online. (866) 746-8385 | www.biorefiningconference.com
Northeast Biomass Conference & Trade Show
October 11-13, 2011
Westin Place Hotel | Pittsburgh, Pennsylvania With an exclusive focus on biomass utilization in the Northeast—from Maryland to Maine—the event is a dynamic regional offshoot of Biorefining Magazine and Biomass Power & Thermal’s International Biomass Conference & Expo, the largest event of it’s kind in the world. The second conference will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. (866) 746-8385 | www.biomassconference.com/northeast april 2011 | Biorefining Magazine | 7
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talking point
Primary Catalyst Screening Accelerating catalyst development to advance biorefining process technology
T
he refining industry is currently being challenged along a number of fronts. Both the supply and quality of petroleum resources are being reduced with the feedstocks that are more readily available today being substantially heavier and more sour than desired. Rising public awareness of environmental issues is also forcing the industry to investigate the use of renewable resources to produce energy as well as transportation fuels. Catalysis is the most important technology used to convert raw feedstocks (either petroleum or naturally derived) into usable materials such as liquid fuels and chemicals. As refiners transition from standard feedstocks to more challenging ones such as heavy, sour petroleum fractions or biologically derived materials, new catalysts will be required. The sheer number of variables that need to be optimized to discover, develop, and commercialize these new catalysts will challenge researchers limited to using traditional R&D methods. High-throughput primary screening techniques can dramatically increase the number of experiments that one researcher can perform in a given amount of time. Higher experimental capacity means that many more variables can be tested including more compositional and catalyst preparation variations as well as process variables such as reaction temperature, pressure, and residence time. This frees the researcher to think more creatively and not limit the experimental window to narrow variations based on assumptions from previous results. This type of approach is necessary to discover catalysts for truly new
8 | Biorefining Magazine | april 2011
transformations such as those required to convert biomass-derived feedstocks into fuels and chemicals with existing markets. The primary screening approach requires an acceleration of all steps of the research process including catalyst synthesis, reaction screening, and analytical measurements. Fortunately, high-throughput research tools are available for all of these aspects. Catalyst Synthesis The first bottleneck that must be overcome is the speed with which catalysts can be prepared. A number of new technologies for high-throughput synthesis of heterogeneous catalysts have reached the market. These allow for the automated preparation of materials via incipient wetness impregnation, pH controlled coprecipitation, and hydrothermal synthesis allowing for facile exploration of a wide compositional as well as process space. Freeslate offers these workflows on a configurable automation platform known as The Core Module enabling researchers to customize a synthesis workflow to meet their specific needs while basing the workflow on proven capabilities. Reaction Screening The key to driving innovation and discovery is the ability to screen catalysts with an accelerated throughput matched to that of highthroughput catalyst synthesis. Researchers can then make and test hundreds of catalysts per week, limiting simplifying assumptions and making well-informed decisions from trends based on multiple data points instead of extrapolating conclusions from isolated experiments. Although technologies have been introduced that allow for modest improvements in the number of catalysts that can be screened, only recently has a reactor reached the market that allows for orders-of-magnitude increases in catalyst screening throughput. Freeslate developed the Screening Pressure Reactor as a true
By jeff yoder
primary screening reactor, dramatically increasing the number of reactions that can be performed in a day. The SPR is a parallel reactor for rapid catalyst and process optimization under a wide process window reaching to 400 degrees Celsius and 3,000 psig. The SPR software provides automated pressure, temperature, and stir rate control capabilities with easy programming of desired conditions and monitors these parameters over time, with the profiles stored in a database for easy reference of actual hardware performance. Characterization In order to accelerate decision-making from a high-throughput, workflow analytical throughput must also be matched to that of the synthesis and screening steps. Freeslate offers the powerful LEA software suite to meet this need. This software package provides the ability to integrate third-party analytics for the characterization of materials and the analysis of experimental reaction results. All data is located in a single, searchable database allowing for the correlation of information from an experimental run to the catalyst composition, reaction temperature, pressure, or any other experimental parameter. This necessary final step is the key to allow more informed research decision-making and more rapid catalyst development. If approached in a thoughtful way, primary screening approaches to catalyst discovery and optimization can result in the rapid discovery and optimization of new catalysts for novel processes such as those required for biorefining and petroleum refining. A number of new technologies can enable scientists to remove existing research bottlenecks and accelerate the timeline to commercialization. Author: Jeff Yoder Senior Manager-Technical Marketing, Freeslate Jeff.Yoder@freeslate.com
LEGAL PERSPECTIVE |
Four Steps to a Successful Joint Venture in China A less risky Chinese JV may be as simple as one, two, three, four By Richard Weiner
C
reating a joint venture with a Chinese company is a popular way for American biofuel companies to gain a foothold in China. Unfortunately, however, many of these Chinese joint venture companies fail and are ultimately liquidated and dissolved because the American biofuel company fails to understand how to take control of the joint venture company. In order to control the business activities of a Chinese joint venture company, an American biofuel company should take the following four simple steps:
1. Conduct thorough due diligence on the Chinese joint venture partner. Many Chinese companies operate honest, legitimate and professional businesses. Unfortunately, some do not. Thoroughly investigating the business activities of the Chinese company and the backgrounds of their executives will help the American biofuel company determine whether its joint venture candidate is one of the former or the latter. Since every joint venture relationship is built on trust, that trust cannot be established unless the American biofuel company believes that the Chinese company will treat it in an honest and professional manner. 2. Prepare and sign a complete and straightforward joint venture contract. The American biofuel company and the Chinese company must prepare and sign a complete, thorough and straightfor-
ward joint venture contract that lays out the rights and obligations of each of them in the joint venture company. The joint venture contract must be well-negotiated and well-drafted, and should not leave any important aspects of their relationship to future discussions or contradictory interpretations. This can make the negotiations between the companies tedious and, at times, uncomfortable. But it is far better to raise the difficult issues in the relationship at the outset and resolve them than to leave them to fight over another day. 3. Hold the chop. Every company in China has a chop, the corporate seal with which the company is required to sign contracts. The company that controls the chop determines the contracts that the joint venture company will sign, and to which the joint venture company will be bound. The American biofuel company should make every effort to control the use of the chop. Allowing the Chinese company to control the use of the chop relinquishes to the Chinese company the ability to determine which contracts the joint venture company will sign and the obligations to which it will be bound. 4. Appoint the representative director and the general manager. The representative director of the Chinese joint venture company oversees the business operations of the joint venture company. The American biofuel company should have the right to appoint and, if necessary, remove the joint venture company’s representative director, even if such right would require the American
biofuel company to transfer one of its own employees to China to take on this role. Ceding the power to appoint and remove the representative director to the Chinese company effectively cedes control over the business operations of the joint venture company to the Chinese partner. The general manager of the Chinese joint venture company operates its business affairs on a day-to-day basis. The American biofuel company should have the right to appoint and, if necessary, remove the joint venture company’s general manager, even if such right would require the American biofuel company to engage an employment search firm in China to assist it in finding a qualified and experienced general manager to run the business operations of the joint venture company. As with the joint venture company’s representative director, if the American biofuel company relinquishes to the Chinese company the right to appoint and remove the joint venture company’s general manager, the American biofuel company effectively hands the Chinese company the right to control the joint venture company’s daily affairs. Entering into a joint venture in China with a Chinese company can be a risky proposition. By following the four steps laid out above, an American biofuel company can take control of the joint venture company and make the operations of the joint venture a lot less risky. Author: Richard Weiner Vice President, Fredrikson & Byron (612) 492-7009 rweiner@fredlaw.com
april 2011 | Biorefining Magazine | 9
business briefs People, Partnerships & Deals
The Houston-based technology transfer company Terrabon announced that it has retained Tri Nguyen to act as general counsel on behalf of the company’s operations. Nguyen will manage legal standards, policies, procedures, initiatives and regulatory compliance within the organization. As part of Terrabon’s management team, he will work alongside other executives Legal Counsel to foster the achieveTri Nguyen ment of Terrabon’s joins Terrabon’s management team as business development general counsel. and goals. Nguyen’s experience includes advising entrepreneurs on entity formation and general corporate matters, and startups on angel and venture capital funding, private securities offerings, and general business and commercial transactions. He has also counseled midmarket and public companies on general corporate matters, commercial and business transactions, and acquisitions and dispositions of assets and entities. The American Society of Agricultural and Biological Engineers has revised its standard on biomass terminology and definitions. Revisions to the standard, titled “Terminology and Definitions for Biomass Production, Harvesting and Collection, Storage Processing, Conversion and Utilization,” or ANSI/ASABE S593.1, were completed based on positive feedback from standards users as well as intensified government interest and mandates regarding the production of bioenergy, biopower and bioproducts from biomass. The original standard was developed five years ago with the goal of providing those in the biofuels and biomass industries with a uniform set of terminology and definitions. According to Scott Cedarquist, ASABE’s director of standards and technical activities, the original standard established definitions for 69 10 | Biorefining Magazine | april 2011
biomass-related terms. The newly revised standard has defined 23 new terms, bringing the total to 92. In addition to adding new terms and definitions, Cedarquist also notes that the definitions of many of the original 69 terms have been revised or enhanced. Some of the new terms added to the standard include torrefaction, biochar, bone dry material, drop-in fuels, and fungible fuels. Pump technology company Blackmer recently announced that it has upgraded the 4-inch model of its NP Series sliding vane pumps with optional electric heating. The 4-inch model joins the previously upgraded 2.5-inch and 3-inch models, completing Blackmer’s line of NP Series pumps with this option. The electric heating option may be used in place of jacketed heads in order to provide pump heating for applications that normally require jackets, such as handling asphalt, bitumen, molasses, lube oils and more. Blackmer will Heat is Optional Blackmer’s NP Series sliding vane pumps now continue to come with an electric heating offer jacketed option. heads for customers who need NP pumps with steam and hot-oil capabilities. Blackmer NP Series pumps are specifically designed to offer maximum versatility for handling a wide variety of clean, noncorrosive liquids, including fluids of varying viscosities and temperatures. These pumps have been designed to minimize sheer and agitation while providing self-priming and dry run capabilities. California-based Aurora Algae has completed construction on its demonstration-scale facility in Western Australia. According to Scott McDonald, Aurora Algae’s chief financial officer, the facility is currently undergoing commissioning and inocula-
tion, and is scheduled to be fully operational by the end of March. The company has also established new corporate headquarters in Hayward, Calif. Aurora Algae’s technology is focused on the use of open raceway ponds to cultivate algae. The demonstration facility in Australia includes six one-acre raceway ponds, four 400-square meter ponds, and four 50-square-meter ponds. Aurora Algae was awarded a $2 million grant by the Australian government under its Low Emissions Energy Development Fund to support the project. To date, the company has received $750,000 of the funding. The company expects to begin construction of its initial commercial-scale algae production facility in early 2012.
Reaching Out Algenol CEO Paul Woods says the purchase of Cyano will help strengthen his company’s reach in Europe.
Algae-to-fuels developer Algenol LLC, the parent company of Algenol Biofuels Inc., has acquired Berlin, Germany-based biotech outfit Cyano Biofuels GmbH. Algenol previously held an indirect minority stake in Cyano Biofuels, working closely with the German company for the past three years. According to Algenol cofounder and CEO Paul Woods, Algenol’s acquisition of Cyano Biofuels is expected to increase Algenol’s research and development capacity and strengthen its reach into the European biotechnology community in the areas of algal growth development. In November, Algenol opened its new biofuels and green chemistry lab and research and development facility in Fort Myers, Fla. The 40,000-square-foot facility houses an advanced algae biology, engineering, carbon
business briefs |
dioxide and green chemistry laboratory, as part of its larger Lee Integrated Biorefinery currently under development.
Mega Plant Neste Oil’s renewable diesel plant in Singapore, for which the company recently held a grand opening ceremony, is the largest in the world.
Neste Oil celebrated the grand opening of its renewable diesel plant in Singapore in March. The startup of the Singapore plant took place in November, and the production at the world's largest renewable diesel plant has run smoothly since, the company says. Neste Oil's Singapore plant was completed on-schedule and on-budget and marks a major step in its cleaner traffic strategy. The plant produces NExBTL renewable diesel, has a capacity of 800,000 metric tons per annum and cost around €550 million ($768 million) to build. It uses a variety of renewable feedstocks to produce NExBTL, including palm oil and side stream products of palm oil production from Indonesia and Malaysia, as well as waste animal fat from Australia and New Zealand.
Monsanto Co. is entering the algae business after announcing a collaborative effort with Sapphire Energy to utilize Sapphire’s algae research abilities. Monsanto hopes to discover genes that could potentially increase crop yield or reduce crop stress in one of its core products, corn, cotton or soybeans. The new algae ven-
ture is a first for Monsanto, Kelli Powers of Monsanto’s public affairs department, tells Biorefining Magazine. “For us, we have a pipeline and obviously that first step in our pipeline is discovery,” Powers says. “We see algae research that Sapphire is doing as a promising tool to screen genes early in that discovery process and to identify promising traits that could help with yield and stress.” The research efforts will take place at one of Sapphire’s New Mexico locations, and according to Powers the work will begin right away. BlueFire Renewables Inc. announced that Joe Sparano has joined the company's board of directors. Sparano is former president and, subsequently, executive advisor to the chairman of the board of the Western States Petroleum Association, as well as former president of Tesoro Petroleum's West Coast Regional From Petro to Bio BlueFire Renewables Business Unit. He’s recently added retiring from WSPA petroleum veteran Joe Sparano to its board of at the end of March, directors. after completing a 15-month term as executive advisor to the association’s chairman of the board. BASF Corp. has created a tool the company calls the SELECT (Sustainability, Eco-Labeling and Environmental Certification Tracking) Eco-Label manager, a database that helps a user to search, analyze and compare “eco-labels, environmental claims, directories and rating systems,” states the company. The database includes 100 programs to review that range from North American programs like Built Green Canada, a residential construction checklist and energy rating system, and Green Guides, a Federal Trade Commission program that helps manufacturers make substantiated claims. “The demand for en-
vironmentally preferable products is rapidly evolving, influencing purchasing decisions along entire supply chains,” says Pat Meyer, senior product steward and program leader at BASF. “These purchasing requirements have spawned hundreds of eco-labels and programs from the federal government, large retailers, trade associations and thirdparty organizations, leading to a lot of confusion.” The tool is currently only available to BASF employees, preferred BASF customers, and stakeholders.
Lab analysis systems maker Metrohm and process analyzer company Applikon joined forces this year to bring the best of both brands to the process analytical industry. The Metrohm-Applikon alliance unites process technology with the precision of laboratory instrumentation to offer rugged systems that meet the demands of modern process plants. At-line and online analyzers feature automated sample preparation and continuous monitoring technology, which are integrated seamlessly into any process setup. In addition, each analyzer is customized to meet the exact needs of its environment. The partnership complements each company’s support offering, and now brings full application and product support to both the laboratory and process floor, the companies state.
Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Industry Briefs, Biorefining, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-8385, or e-mail it to rkotrba@bbiinternational.com. Please include your name and telephone number in all correspondence. april 2011 | Biorefining Magazine | 11
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Biorefining News & Trends
A Potential Indicator
PHOTO: COBALT
Hiring practices reveal a lot about the industry
Executive Engineering Cobalt isn’t only expanding its reach into butanol production, the California-based company is also building out its executive team.
There might not be a greater indication that a biorefining company, Cobalt Technologies in this instance, is creeping closer to its true potential than by the people the company is bringing on. Andrew Meyer, formerly with one of Cobalt’s competitors Amyris, is now California-based Cobalt’s senior vice president
of business development. Although Meyer got his start as a chemical engineer, and has worked with both BP and Chevron, his new role has nothing to do with technology advancement—a true testament to where Cobalt could be headed. Meyer’s main role is simple: tell the story of Cobalt. “If you think about
A Field of Promise
Viaspace reports independent test results of Giant King Grass evaluation Data gathered during independent evaluations of Viaspace Inc.’s Giant King Grass demonstrate the crop has essentially the same properties as corn stover and wheat straw. According to Viaspace, the third-party testing included evaluations of the crop’s sugar and lignin content, several levels of pretreatment and enzymatic hydrolysis to sugars. “These initial results show that a ton of Giant King Grass can yield as much bioethanol as a ton of corn stover,” says Viaspace Chief Executive Carl Kukkonen. “This validates Giant King Grass, a nonfood, dedicated energy crop, as a competitive feedstock for producing cellulosic biofuels.” 12 | Biorefining Magazine | april 2011
Cobalt,” Meyer says, “it has been principally focused on the technology aspect of things, and now is starting to evolve the commercial area of the company.” Meyer believes the company has been “flying under the radar,” and now is starting to have a “coming out party.” To this end, Meyer has been spending much of his time traveling, but not just to the main chemical companies. “It’s not only on the customer end of things, it’s also on the feedstock end of things,” he says. “It’s getting the sources of biomass waste (which the company specializes in),” adding that, “part of my role is to develop those relationships on both ends of the technology.” While Meyer believes the Cobalt story is unique, the biobutanol producer’s journey might only be part of a larger development, a more encompassing story, which ultimately could apply to the entire biorefining industry: showing that all those innovative ideas bred in the lab are finding their way into our everyday lives. —Luke Geiver
Composition (dry weight percentage) Glucan
Giant King Grass
Corn Straw
Wheat Straw
43
37.4
38.8
22.3
21.1
22.2
Arabinan
2.9
2.9
4.7
Lignin
17.4
18
16.1
Xylan
Perhaps most imAsh 4.5 5.2 5.8 portantly, Kukkonen notes that the per acre Yield (Dry matter) Giant King Corn Straw Wheat yields of Giant King Grass Straw Grass are up to 10 times Ton/acre 40 3.5-4.7 1.6-2.8 higher than those of source: Viaspace Green Energy Inc. corn stover. “With our high yield, we believe that Giant King Grass grown in colder climates, like corn and wheat can reduce biofuel feedstock costs by up to can, the perennial grass can be harvested sev40 percent, even when compared to projected eral times per year while leaving the soil ecoprices for corn straw as agricultural waste,” system relatively intact, providing advantages regarding soil erosion, carbon sequestration Kukkonen continues. While Giant King Grass has obvious yield and potential nitrogen fixation from the atmobenefits, Viaspace notes that the crop also has sphere. —Erin Voegele other positive attributes. While it cannot be
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Supplying Affordability For the past five years, Corvallis, Ore.based Trillium FiberFuels had sourced its biochemicals from big chemical suppliers such as Sigma Chemical Co., to conduct its experiments on biomass utilization. But, as the firm went from from bench-scale to pilot stage, the cost of buying mass quantities of the materials needed, such as xylose, became increasingly expensive, sometimes running up to tens of thousands of dollars, according to Chris Beatty, founder and president. “Like everybody in this area, we were buying xylose from Sigma Chemical Co., and it costs $160 per kilogram,” he says. “When you start doing hundreds of kilograms at a time, it becomes an untenable expense.” As a means to provide sugars and other biobased materials at more competitive prices, Beatty launched Cascade Analytical Reagents and Biochemicals, a Web-based business that offers about 15 products, ranging from biochemicals to various forms of biomass such as rice hulls and wheat straw. Beatty says he works with chemical suppliers to independently analyze and certify Trillium’s chemical products for quality, which helps keep prices down. By buying in bulk directly from a sup-
plier, Beatty says he’s able to reduce costs by 25 to 50 percent, depending on the product. “Sometimes you don’t need 100 tons, you need a kilogram to do your experiment and those are some things you can’t buy from the big chemical suppliers,” Beatty explains, adding that CARB offers the same, if not more of, what large Price Parity Trillium FiberFuels’ new Web-based business, CARB, offers a wide chemical suppliers would variety of plant-derived sugars and biomass, such as pine shavings, at a nominal price compared to other suppliers of the same material. offer. CARB also offers free samples before customers commit to buy- was to provide researchers affordable access to ing products. rare sugars, such as xylulose, an intermediate “We do more analysis of the materials we product in the metabolism of xylose, which sell, and give more data to the customer than can cost more than $500 a gram, Beatty says. the big suppliers do,” he says. “They say it’s 99 “It hasn’t been investigated as much as it could percent sugar, but they don’t tell you what else be because it’s so expensive,” he says. is in there. We needed to know that for our According to Beatty, CARB has already research and other people do too. We’re trying generated interest within the biomass research to give the customer more information for a community, and plans to add more products to cheaper price.” CARB based on those that are in high demand. Another reason Trillium launched CARB —Bryan Sims
Advanced Biofuel Pays Off
are “equitably” distributed to applicants, USDA announces producer payments based upon the A program established under Section 9005 amount of qualifying biofuel that is produced. of the 2008 Farm Bill recently paid off for The program is specifically designed to benefit producers of advanced biofuels. The program, smaller producers, as 95 percent of available titled the Bioenergy Program for Advanced funds are assigned to be paid out to facilities Biofuels, authorizes the USDA to make pay- with a production capacity of less than 150 ments to entities producing advanced biofuels MMgy. using certain forms of biomass. In late January, Agriculture Secretary Under the program, renewable biomass is Tom Vilsack announced that more than 120 defined as almost any biobased feedstock, with advanced biofuel producers in 33 states have the exception of corn starch. Eligible feed- been awarded payments under the program. stocks include cellulose, crop residues, animal, Biodiesel facilities account for the vast majorfood and yard waste, biogas, vegetable oils and ity of companies that are receiving payments animal fats. Funds assigned to the program under this round of funding. At least one
company received funding for advanced ethanol production, however. Abengoa BioEnergy Corp. was awarded $213,891 under the program. “The Obama Administration is working aggressively to bring greater energy independence to all of America by promoting the production of renewable energy in rural communities,” Vilsack says. “This funding will help the nation's advanced biofuel industry produce more fuel from sustainable rural resources, and in doing so create jobs, a new revenue stream for agriculture producers and stimulate rural economies across the nation.” —Erin Voegele
april 2011 | Biorefining Magazine | 13
PHOTO: TRILLIUM FIBERFUELS
Why access to biomass and their sugar content don’t have to cost a fortune
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Rubber Goes Renewable Lanxess, the world’s top synthetic rubber producer, is working to develop a dehydration technology that will allow it to use Gevo’s biobased isobutanol as a feedstock for butyl rubber production. “Today all our raw materials come from oil,” says Ron Commander, head of the butyl rubber business at Lanxess and Gevo board member. “We’re looking to diversify and employ sustainable, biobased materials in our butyl rubber production process.” Butyl rubber is commonly used to line the innermost surface of tires. “It’s impermeable, it doesn’t allow any air through and it doesn’t allow any moisture through,” Commander says. “It keeps the pressure in your tires.” Lanxess is currently working to develop a technology that would dehydrate Gevo’s isobutanol to produce isobutene, which is the primary raw material used to make butyl rubber. The company has three production plants in various parts of the world that produce the material, one of which is located in Canada. If development of Lanxess’s dehydration technology proceeds as planned, a dehydration facility will be added to the company’s Canadian butyl rubber production facility. Isobutanol produced by Gevo in Minnesota would be shipped to Lanxess’s Ca-
Striving for More
nadian site, where it would be dehydrated and used as a raw material for butyl rubber production. Commander says Lanxess intends to step up the biobased content of its butyl rubber incremen- Seeking Sustainability Lanxess plans to install dehydration technology at its facility in Sarnia, Ontario, which would allow the company to utilize Gevo’s biobased isobutanol as tally over time, a raw material for butyl rubber production. with an ultimate goal of biobased inputs accounting for 50 originally invested $10 million in the compercent of the feedstock. Once success is pany in May 2010, and made an additional achieved at the Canadian site, the company $17 million investment in Gevo’s initial pubintends to begin work to add biobased capa- lic offering. bilities at its other butyl rubber plants. “As the world’s largest purchaser of Lanxess and Gevo have already formed isobutene, it is only prudent that we seek otha nonbinding agreement to supply isobu- er supply options from renewable sources as tanol to the site. According to Commander, an alternative to traditional fossil fuels,” says his company expects to have completed Axel Heitmann, chairman of the Lanxess work on its dehydration process in mid- board of management. “This investment 2011. A binding off-take agreement between also sharpens our focus on ‘green chemistry’ the two companies will be negotiated once and sustainable production, which will gain development of the dehydration process is in significance in the coming years.” complete. —Erin Voegele Lanxess is also a minority shareholder in Gevo, with 9.1 percent ownership. Lanxess
8.5
20
As part of its commitment to report on the comWhy sustainability isn’t a moving pany’s environmental performance, Waste Management target for Waste Management detailed progress on four key sustainability goals in its 2010 RECYCLABLES MANAGED corporate sustainability report, titled “From (IN MILLIONS OF TONS) Waste to Resources.” From 2007 to 2009, the company increased 20 its renewable energy production by more than 6 percent. In 2009, the company managed 8.5 15 million tons of recyclables and, by 2020, plans 10 to process more than 20 million tons by expanding into new markets, and employ new technol5 ogy such as single-stream recycling. In those two years, fleet emissions dropped by 18 percent and 0 Waste Management is working to increase fleet 2009 2020 14 | Biorefining Magazine | april 2011
efficiency and reduce emissions by 15 percent by 2020. Finally, the company met its 2020 goal of having 100 facilities certified by the Wildlife Habitat Council for a total of 25,000 acres of conservation and wildlife habitat. Investments in firms such as Enerkem Inc., Genomatica, Terrabon, InEnTec Inc. and Harvest Power further reinforce Waste Management’s commitment to biorefining technologies that can bring value from waste materials, according to Wes Muir, director of communications at Waste Management. “It’s a great accomplishment,” Muir says. “We’re making investments in technologies that we think will pay dividends for us.” —Bryan Sims
PHOTO: LANXESS
Specialty chemicals company looks to Gevo to supply biobased inputs
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An Equation for Growth
High energy prices plus an improved investment outlook could equal a time for true growth The U.S. imports more oil today than it did before Sept. 11, 2001, a fact Sen. Richard Lugar, R-Ind., made note of in a February speech prepared for an appropriate topic: energy and our nation’s continued dependence of foreign-based fossil fuel. Almost a month later, the Indiana senator provided an opinion piece for a state newspaper on energy and where the majority of our oil originates. And why not? The price for a barrel of oil has again broken the century mark, and the main driver is again directly linked to political unrest in the Middle East (at press time Muammar al-Gaddafi was still in control of the Libyan government). Given the reality that how we live is possibly most affected by the entities that provide our fuel, what does $100-plus oil mean for the biorefining industry? The easy answer is that high energy prices, while unfavorable for economic stability, provide an unrivaled example of just how important the biorefining industry and the homegrown, advanced biofuels that come along with it, truly are to the country. “Saving energy means saving money,” Lugar says, noting that the present “is an age in which every barrel produced, every barrel replaced with an alternative … has outsized importance.” Lugar of course isn’t the only policymaker or individual to use high energy prices
Twice a Charm
as an indication of the U.S.’ reliance on foreign-based fossil fuels, but there are other indicators besides surging prices that show the industry is approaching another level of growth. The U.S. Energy Information Administration has already released its 2011 yearly overview, and according to its predictions, the high price of oil that may occur later this sum- Backup Data As if it weren’t known where energy prices are headed the EIA’s numbers show an upward trend. mer will someday be the norm. already, source: EIA The average price for gasoline in 2035 will start at $3.69 per gallon, accord- in the national economy are closely linked,” ing to the EIA. Several projections show a says Jessica Canning, global research director gallon of gasoline will surpass $5 this sum- for DowJones VentureSource, regarding the mer, and while the EIA can’t predict political NVCA survey. The uptick in the VC comturmoil, it did note in its report that “rising munity and predictions for 2011 is good for fuel prices also spur domestic energy produc- those looking to finance a project, but combined with the unfortunate but obvious benetion across all fuels.” But, if that is the case, will the indus- fits that high energy prices bring for an industry be able to truly take advantage of high try looking to make a permanent foothold, energy prices this summer? According to a there are indications now more than ever that survey conducted by the National Venture projections like Canning’s could come to pass. Capital Association, more than half of VCs “Raising capital also gives companies an opexpect investment to pick up in 2011, much portunity to grow, adding to their headcount of which may come in the clean technology and spending power as they try to become the sector. VCs (53 percent) also do not intend next Google or Apple.” Especially considerto invest outside the U.S. “An anticipated ing that, like Google, nearly everyone has a rise in venture investment and improvement use for fuel. —Luke Geiver
renewable chemicals to be used in P&G’s conHow LS9 is making progress bringing sumer products. “The fact that we’ve its renewable chemicals to market entered into a second partnership with P&G California-based biotech outfit LS9 is affirmation that the first one is going Inc. is working hard to commercialize its very well,” Dineen tells Biorefining Magazine, suite of biochemicals, and global consumer adding that he couldn’t disclose which speproducts company Proctor & Gamble wants cific biochemicals LS9 would be producing to help make that a reality. In February, LS9 for P&G as part of the agreement. “It’s a and P&G finalized the second tier of a stra- chemical product, and it’s something in curtegic partnership that was initiated in May rent use in their portfolio, but it’s something 2009. According to LS9 President and CEO that we can’t disclose at this point.” Ed Dineen, the second partnership with Dineen adds, “Having two programs P&G aims to broaden LS9’s portfolio of with P&G gives us access to those types
of markets, and that’s quite valuable to us. Those types of markets tend to have more stability, and I think P&G is a leader in most areas they are involved with in terms of the consumer markets.” Dineen says LS9 is exploring potential partnerships in the personal care products, lubricants, flavors, and fragrances industries. “We’re looking to broaden the spectrum of chemicals that we can bring to market,” he says. “We like the partnership model.” —Bryan Sims
april 2011 | Biorefining Magazine | 15
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Evaluating Diesel Alternatives
PHOTO: NESTE OIL CORP.
Neste Oil profiles diesel regenerative, releases renewable diesel test results
Profiling Benefits Henrik Erämetsä, Neste Oil (left); Jürgen Krahl, Hochschule Coburg; Melanie Huml,State Secretary from the Bavarian Ministry of Environment and Public Health; Osmo Kammonen, Neste Oil; and Helmut Theiler, Bavarian Ministry of Environment and Public Health, attend International Green Week in Berlin.
A new diesel fuel produced from 100 percent German rapeseed oil, known as diesel regenerative, was profiled by Neste Oil Corp. and its German partners at Berlin’s International Green Week event in late January. The biobased fuel is a blend of either 93 percent or 89 percent Neste Oil NExBLT renewable diesel combined with either 7 percent or 2 percent conventional biodiesel. According to Osmo Kammonen, Neste Oil’s senior vice president of communications, marketing and public affairs, the two grades of diesel regenerative are currently undergoing a field trial in Germany. The fuel blend is not currently commercially available. “A total of 15 different vehicles are involved in the field trials,” Kammonen says. “The year-long project will test the performance of the new fuel and the contribution it can make to lower emissions. The trials will focus on the negative impact traffic has on busy city centers and the benefits that renewable fuel can bring to the urban environment. The tests will also enable the performance of renewable diesel produced using two different technologies to be compared 16 | Biorefining Magazine | april 2011
under field conditions in vehicles with different emission certification levels.” NExBLT for the trial is being produced at Neste Oil’s Porvoo refinery in Finland, while the biodiesel is being sourced from a German producer. The trial kicked off last summer and will conclude later this year. While evaluations to test the performance and emissions benefits of diesel regenerative are ongoing, in February, Neste Oil announced the results of a three-year trial of NExBTL. The evaluation, which was organized by Neste Oil, Helsinki Region Transport and Proventia, confirmed that NExBLT can significantly reduce local emissions, leading to a direct impact on urban air quality. Study data collected by the VTT Technical Research Centre of Finland demonstrated that NExBLT reduced particulate emissions by 30 percent when compared to petroleumbased diesel. In addition, NOx emissions were found to be 10 percent lower. According to VTT, no issues were detected with tailpipe emissions control systems on vehicles fueled with NExBLT. If all the buses in the greater Helsinki metro area were fueled with Neste Oil’s renewable diesel, VTT estimates that the
reduction of traffic-related particulate emissions would be comparable to taking onethird of the region’s buses off the road. According to Neste Oil, the trial represents the world’s largest renewable fuel field trial to date. Approximately 300 vehicles, representing about 20 percent of the region’s buses participated, drove more than 50 million kilometers (31 million miles) on NExBLT blended fuel. During the initial phase of the trial, the buses were fueled with a blend consisting of 30 percent NExBLT and 70 percent conventional diesel. Beginning in 2008, a portion of the participating vehicles was fueled with 100 percent NExBLT. Neste Oil says the buses running on pure NExBLT demonstrated the largest emissions reductions. “The results of the trial show that NExBTL renewable diesel is a good solution for reducing public transport local emissions,” says Sakari Toivola, Neste Oil's executive vice president, oil retail. “Bus fleets do not have to be replaced or upgraded to use the fuel, which is a major financial plus. The fuel also works very well in older buses and performs excellently even in challenging winter conditions.” —Erin Voegele
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For the ‘New Black,’ Think Biodegradable Last year the Italian-based bioplastics producer Novamont spent $115 million in research and development, allotting 30 percent of the company’s 200-plus employees to the task of refining existing products and finding new ones. Earlier this year, the company announced its intentions to create a larger presence in the U.S., and now its plan involves an expansion into Connecticut. The products, specifically the Mater-Bi plastic made from organic feedstocks and used in everything from packaging bags to children’s toys, may be unique and, as the company explains, “offer a range of products that goes from the field to the table.” Products made from the Mater-Bi bioplastic are also biodegradable in soil, water and composting systems, a label that may not sound as intriguing as the term’s more popular cousin: sustainability. While most corpora-
tions are touting their sustainability goals or efforts to reduce environmental footprints, Novamont points out why a biodegradable label may soon be a more popular term. According to Novamont, 3.6 million tons with Purpose Companies such as Novamont are focusing on organic waste and of traditional Moving touting the sustainability factor that comes with it. plastic are used in agriculture globally. Mulch film used in agri- for 40 percent of that use. That’s a lot of culture (in the traditional plastic form), which Mater-Bi. —Luke Geiver has to be removed and disposed of, accounts
Economic Evaluations
To develop the reports, Intratec delves through patChemical Market Associates and Intratec ents that have been Solutions develop market analysis tool filed for a respective chemical product. CMAI and Intratec have partnered to “They review the patents and develop the proleverage their respective expertise in chemical cess schemes and [conduct] detailed process markets and technology to develop a new of- simulations to come up with cost sets,” Glatzer fering in CMAI’s Technology Intelligence Pro- says. “What CMAI is providing is the market gram. The new offering provides customers side that’s used to develop and forecast the with a comprehensive review and evaluation costs and profitability side.” The TIP Technolof process technology, capital and production ogy Reports include a five-year historical patcosts, market overviews and profitability anal- ent review and data on emerging and up-toysis for products and production technologies date technologies and trends. Each report also that are of interest to those in the chemical contains a review of global supply and demand industry. for a particular chemical product as well as an While CMAI has traditionally been fo- outlook of capacity by producer and feedstock cused on petroleum-based chemicals and and pricing data that is sourced from CMAI’s processes, the company is now branching out proprietary capacity and price databases. into the biochemical industry. According to As part of the technology development Ed Glatzer, CMAI’s business director of com- and understanding, the companies also contact mercial development, his company has recog- the technology licensors for verification and nized that biobased chemicals and polymers validation purposes. “[In the biobased sector] are a hot topic for those in the chemical sector. there is definitely more of a challenge to find “We recognize that it’s an area of growth, and the more relevant technology holders because it’s of great interest,” Glatzer says, noting that of the fast changing technology landscape,” CMAI is also developing a practice in the area Glatzer adds. of renewables. The result is an analysis tool that can
aid those in the Topics for CMAI’s chemical indusfuture TIP reports try review and include: compare probioethanol cess technolobioethylene gies for a parbiomixed alcohols ticular chemical biopropylene product on cost green polypropylene and profitability perspectives. Glatzer says that the reports are specifically designed to be useful to professionals throughout a company, from the engineering team to executive management. We think it’s a perfect tool for planning purposes, he continues, noting the reports provide a strong evaluation in terms of both projected profitability and technical analysis. “[Our customers] will be pleased when they see the quality, rigor and in-depth nature of these reports,” Glatzer says. “We’re getting a lot of positive feedback from people who have seen them.” We’re very excited about this new product line and think the reports are going to be of great interest to members of the chemical industry, he says. —Erin Voegele
april 2011 | Biorefining Magazine | 17
PHOTO: NOVAMONT
There’s a reason bioplastic companies tout this specific quality
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startup
Licensed to Catalyze Elevance Renewable Sciences Inc. added XiMo AG to its list of strategic partners as the Bolingbrook, Ill.-based bioscience firm signed a licensing agreement with XiMo to use its proprietary molybdenum and tungsten metathesis catalysts with natural oils. XiMo will work exclusively with Elevance in the natural oils field during the term of a collaborative research program between the parties. According to Andy Schafer, Elevance’s vice president of sales and market development, the addition of XiMo’s catalysts will bolster Elevance’s existing portfolio of metathesis catalysts, such as ruthenium, and is expected to expand the company’s capabilities of delivering value-added solutions to a broader set of customers utilizing renewable feedstocks. “The catalysts from XiMo represent a different class of metathesis catalysts than
Entry Point
what has been available in commercial quantities before,” Schafer tells Biorefining Magazine. “We want to make sure that we assess where these new catalysts can fit and help us achieve things that we couldn’t do with Hand Demond Gilman prepares a specialty chemical sample for one of our current slate of Steady Elevance’s development partners at the company’s lab in Bolingbrook, Ill. catalysts.” XiMo’s catalysts are based on break- decrease cost and increase efficiency of prothrough scientific research of founders Amir duction of our customers’ products.” In addition to XiMo, Elevance has straHoveyda and Richard Schrock. “We look forward to working with El- tegic partnerships with Wilmar International evance to develop novel materials, processes Ltd., Stepan Co., Cargill Inc., Dow Corning and products in the natural oil field using Corp., Trent University, Tetramer TechnoloXiMo technology,” says XiMo CEO Georg gies, United Soybean Board and SaskCanola. Frater. “Our goal is to find catalysts that will —Bryan Sims
for the burgeoning North American market, we are confident in doing so with Mvera B5002 that our prodA new line of bioplastic readies uct line will have wide appeal to the to hit the market consumer and industrial compost bag segments alike.” A new line of bioplastic products is set to Metabolix Inc. and agrigiant ADM began hit the market soon as Telles, a joint venture commercial production of Mirel bioplastic at between Metabolix Inc. and Archer Daniels their 110 million pound per year commercial Midland Co., and British Columbia, Canada- facility in Clinton, Iowa, in March 2010. Mebased Lakeside Plastics Ltd. plan to launch a tabolix and ADM first announced the formacompostable bag product line based on Mvera tion of Telles and the launch of Mirel bioplasB5002, a compostable film product made from tics in April 2007. Metabolix’s trademarked brand Mirel, a family “Through Lakeside, we are bringing a of biodegradable, biobased natural plastics. tough and faster composting film material to Lakeside will purchase Mvera film grade un- the market,” explains Telles General Manager der a supply agreement with Telles for large- Bob Engle. “Mvera B5002 film for compost volume applications, including yard waste bags has the strength that consumers are askand consumer kitchen compost bags. Specific ing for. With the rapid composting and D6400 terms of the contract weren’t disclosed. certification to a thickness of 288 micrometers “We are very excited with the superior (11 milimicrons), Mvera is an excellent mateperformance of Mvera B5002 film in terms rial choice for both consumer and commercial of strength, rapid composting ability, and that organic waste diversion needs.” it meets or exceeds ASTM standard D6400 for Mirel is produced via a microbial fercompostable plastics,” says Stuart MacDonald, mentation process. The base polymer Polychief operating officer of Lakeside. “As we hydroxyalkanoate (PHA) is produced within commit to manufacturing compostable bags the microbial cells and harvested, according 18 | Biorefining Magazine | april 2011
to Metabolix. The company has developed industrial strains of the cells, which can efficiently transform natural sugars into PHA. The recovered polymer is made into pellets to produce Mirel bioplastics products. Mirel resins have the ability to biodegrade in natural soil and water environments, in addition to home and industrial composting systems. According to a report published by PIRA International in December, the global market for bioplastic packaging demand is forecast to achieve a 24.9 percent compound annual growth rate (CAGR) from 2010-‘15 and slowing to 18.3 percent in the five years to 2020. Further, the report notes that, from 2010, bioplastic technology is expected to change with the commercialization of bioplastics produced directly from natural or genetically modified organisms and the introduction of nonbiodegradable, bioderived polyethylene (PE). PIRA expects these materials will account for a quarter of total bioplastic packaging market demand by 2020. PHA is forecasted to achieve a CAGR of 41 percent and biobased PE a staggering 83 percent over the period. —Bryan Sims
PHOTO: ELEVANCE RENEWABLE SCIENCES INC.
Elevance broadens technology portfolio with XiMo’s catalysts
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A Startup’s Dream Come True
For future producers and technology developers, there’s a new must-know program In January, tax legislation dominated the country’s focus, overshadowing a program that might be just what the biorefining industry has been looking for. Spurred on by the current administration’s commitment to developing a U.S. clean technology industry that is second to none, the Startup America program was born. Touting its goal to “celebrate, inspire and accelerate high-growth entrepreneurship throughout the nation,” the program is one part project finance and one part project assistance, initially focusing on the clean technology sector. The Small Business Administration has already committed to the Startup America program, pledging an astounding $2 billion over the next five years to companies in underserved communities or early stage companies caught in the valley of death. The potential impact on future producers and technology developers ranges from the ability for project participants to tap into regional accelerators equipped to link industry leaders with startup firms, to that $2 billion available for firms to utilize. And the best part, it won’t cost taxpayers a dime.
Elizabeth Echols, regional administrator for the SBA, says, “This is an area that I’m very passionate about, clean energy and green business—encouraging and helping U.S. companies to be at the forefront of this global industry. I want to make the U.S. a leader in innovation.” The SBA is focused on several key areas that will help companies bring their innovations to market. Through the Impact Investment Fund, the SBA has committed $1 billion for companies located in underserved communities, or companies in the clean energy sector. “Underserved markets, we believe, have a lot of potential,” Echols says. “There is a lot of potential there and so far so much of the startup activity and venture capital has been focused on the coasts. There is a lot of people with good ideas in between.” Another focus area is the market gap for early-stage companies. That market gap, commonly known as the valley of death that happens for financing rounds of roughly $1 million to $5 million, according to Echols, can be overcome by tapping into the $1 billion available for
financing set aside by the SBA. “The goal is to jumpstart these companies, and help them on their path towards growth and creating more cleantech jobs,” she says. In addition to the $2 billion worth of funding, the SBA has also set up the Entrepreneurial Mentor Corps. The program will initially help 100 cleantech startups by linking them with industry experts, university laboratories and other applicable partners, giving early-stage firms access to what Echols calls “entrepreneurial ecosystems.” Initially, she says, the program will cater to 100 cleantech startups (which have already received funding from the U.S. government), but “we want to grow that to 1,000.” The EMC clean energy pilot is a collaboration between the U.S. DOE, the Advanced Research Projects Agency-Energy, and the SBA. A company can apply to one of four designated accelerators. Each accelerator was chosen, Echols says, for its geographic location and expansive reach. “Anybody can go and apply,” she adds, noting that the accelerators will be looking for companies and entrepreneurs with a clear plan to where they want to go. “We believe it is absolutely critical for the economy, for national security purposes and for the environment,” she says, explaining the program’s main drivers. —Luke Geiver
Membrane filtration technology is finding a home in the biorefining industry The biorefining industry isn’t built solely on big dreams and novel ideas. Several of the process approaches are based on technology and experience from other industries ranging from wastewater treatment plants to wineries. Koch Membrane Systems is one of those companies that has transferred nonindustry knowledge to a unique, biobased technology well-suited for biorefining. The KMS filtration technology—based on experience in everything from dairy plants to wine-making facilities—is a membrane filtration approach that is compatible with virtually every production stream including butanol, polylactic acid, succinic acid, acetic acid, 1,3 propanediol, amino acids and many more, according to Kamla Jevons, European business development manager. Jevons says KMS has
worked with membrane filtration technology for other processing streams that contain starches, protein, peptides, sugars and others. Already Available Technology like the KMS Reverse Osmosis unit is One process technology available and ready for biorefining use. based on reverse osmosis that is provided by KMS can offer roughly 75 per- nologies, another membrane filtration specialcent lower cost of ownership when compared ist, verifies that those in the biorefinery industry to a multieffect evaporator with thermal vapor believe in what KMS is saying. “The renewable compression, according to a recent white pa- fuels market is challenged with solid separation per issued by KMS. As KMS suggests in the issues,” says Kim Davis, chairman and CEO paper, membrane filtration technology holds of SmartFlow. Ineos Bio will use a SmartFlow great promise for the biorefining industry’s ef- solids separation and cell separation unit at forts to curb wastewater and further separate its Indian River BioEnergy Center in Florida, and clarify process streams in continuous flow something that Davis says shows SmartFlow’s distinctive ability to separate substances previfermentation facilities. North Carolina-based SmartFlow Tech- ously thought inseparable.” —Luke Geiver april 2011 | Biorefining Magazine | 19
PHOTO: KOCH MEMBRANE SYSTEMS
Don’t Forget the Filter
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project development
Grou
When the Dust Settles Ineos Bio’s Indian River Bioenergy Center could be a blueprint for biorefineries of the future.
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oundbreaking Impact Ineos Bio has begun construction on a commercial-scale biorefinery. What does it mean for the industry? By Luke Geiver PHOTOS BY STEVE MARTINE
To pin the significance of Ineos Bio JV’s groundbreaking day to a single individual, group or community may be nearly impossible. To start, there’s James Gaddy who, in 1989, discovered a biochemical process and a special strain of bacteria that possessed the improbable ability to produce ethanol. Gaddy’s find is arguably one of the major reasons that 200 attendees converged at the future site of the Indian River BioEn-
april 2011 | Biorefining Magazine | 21
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ergy Center, where the only discernible scenery was the expansive tract of leveled ground where the plant will someday stand, with vultures circling over a massive landfill off in the distance. In 1994, Gaddy and a team of researchers put the microorganism to the test at a pilot facility in Fayetteville, Ark., and the results from that work are the main driver behind the Ineos process today, which combines syngas technology with the super bug. But Gaddy, who said there were times he thought the day would never come, also said “a lot of good people helped along the way,” signaling that one man’s work wasn’t enough to transform a special microorganism into a commercial facility near the coast of Florida. And Gaddy was right. Sitting alongside him in the front row of the reserved seats at the event were several members of the Ineos team
who, as they said, spent a lot of “blood, sweat and tears” to make the project happen. There was David King, the joint venture director between Ineos and partner New Planet Energy, who admitted to the crowd that his work in developing plans to design and build the plant that will someday produce 8 MMgy of next-gen ethanol from MSW and nearly 6 megawatts of renewable energy had become more of a passion than a job. There was also Peter O’Bryan, Indian River county commissioner, who, according to King, was present at nearly every Ineos event or meeting in Florida. “I think it’s fitting that we are here on such a brilliant day to groundbreak the beginning of a bright future for bioenergy,” O’Bryan said during his short speech. Pointing to his dedication to the project, O’Bryan noted that for
Applaudable Effort The event created a positive buzz that those from Ineos may never forget. 22 | Biorefining Magazine | april 2011
Visionaries James Gaddy (right), the researcher who developed the Ineos platform, witnessed his work become a reality.
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Mutual Respect Tex Carter (left) of NewPlanet Energy and David King praised the efforts both sides put forth on the project.
every Ineos-based vote held in the county, the tally was always an overwhelming “yes” in favor. Along with O’Bryan, it’s possible the day was also about Richard Machek from the USDA Rural Development in Florida. Mechak, who explained to the crowd that the USDA has invested almost $1 billion in Florida in the past year for roads, schools, fire departments and energy, opened his remarks to those in attendance by saying,
“Welcome to the future,” adding that he was excited to be a part of the project’s development. “This is going to plant a seed today,” he said. “By standards, it is not the largest plant that there is going to be, but it is probably the first plant that is going to be completed. Everybody in the world will be watching what happens here in Vero Beach.” Like O’Bryan and Machek, or Jay Levenstein from the Florida Department of Agriculture, several others there under the shade of the white tent had major stakes in the project. There were members from local hotel chains, excited at the new business opportunities. The demolition company that helped to clear the former citrus processing plant to the bare ground showed undeniGovernment Perspective Paul Bryan (left) earned a round of cheers after he pointed able support of and out jobs created at Ineos can’t be outsourced.
As for future projects, Bryan said that the Southeast and the Midwest are some natural places early on to kick these off, but projects like Ineos’ will still be difficult to pull off. pride in the project, abruptly handing out celebratory plaques to each member of the Ineos team.
The Outsiders Even with so many insiders from the project in attendance at the ceremony, it’s possible that the groundbreaking day was actually more about those on the outside, or those who were not in attendance. Tex Carter from New Planet Energy highlighted that possibility in his speech. “The emphasis here is that we are trying to build a new vista for the people buying motor fuel and april 2011 | Biorefining Magazine | 23
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buying electricity by taking the stuff that no one wants and converting it. If you are a taxpayer, you are invested in this project,” he said. Paul Bryan, the U.S. DOE’s Biomass Program director who formerly worked with Chevron in the company’s biofuels business unit, opened his own remarks by reading a statement from the DOE’s Secretary Steven Chu. In a letter to Ineos, Chu wrote, “This waste-to-bioenergy project will create new jobs, reduce carbon pollution, provide advanced biofuels and renewable power to local residents, and spur the creation of America’s biomass industry.” Bryan also highlighted that sentiment, helping to elaborate on the idea that a facility like Ineos’ isn’t just about those who made it happen. The project, he said, is providing a number of jobs, “and one of the greatest things about the bioeconomy is that these jobs can’t be outsourced,” he said. “You can’t harvest American feedstock and convert it somewhere else in the world.” Rep. Bill Posey, R-Fla., also conveyed his excitement about the project in a statement he sent. “It is my hope that this new facility will aid in the efforts to reduce our dependence on foreign oil and encourage the creation of an American biorefining industry by taking what otherwise would be landfill waste and, instead, using it to generate new energy,” he wrote. Joe Mueller, program director of rural business services for Florida’s USDA, also pointed out the significance of this project to the state. “Every project that we get in Florida is going to spur interest in renewable energy and biorefining,” adding that “it will lend credibility to the industry” and the farmers because, he explained, “they will be more willing to start growing feedstocks.”
Even with so many insiders from the project in attendance for the ceremony, it’s possible that the groundbreaking day was actually more about those on the outside, or those who were not in attendance. tent to the bare soil where the facility will someday stand, an array of Ineos members and others including Paul Bryan, stood for photos holding gold shovels. Following his brief time spent posing for photos, Bryan spoke with Biorefining Magazine on the effect of Ineos on the local community, and the biorefining industry’s future. “We had a number of these biorefinery projects going before the Recovery Act,” Bryan said. “And then the Recovery Act really enabled us to accelerate that. And this is
one of those investments that is really paying off. It’s paying off in economic terms here locally, but it’s also paying off in terms of demonstrating technology that’s portable to lots of other places.” Bryan, who earlier pointed out the importance of having several elements involved in a project to make it a success, also said that this project “checked all the boxes.” The federal government provided the project with research support early on, Bryan said, “and then you had the USDA and the DOE providing real serious money for construction of a plant in the nearer term, but you also had the state, the county and the local people.” As for future projects, Bryan also said, “I don’t think any of these projects are any stronger then the weakest links. I think that is why it (Ineos) is one of the first out of the box.” As for future projects, Bryan said that the Southeast and the Midwest are some natural places early on to kick these off, but projects like Ineos’ will still be difficult to pull off. “But, I believe we will have a number of plants breaking ground by the end of the year, and maybe even some producing on a similar time scale to this one.” There is no doubt there was a biore-
The Implications If Carter is right, and we are all “invested” in the facility, then the potential celebrated on this day could have a massive effect on an emerging industry, including for those who develop new facilities and utilize the renewable energy and power from that work. After the event moved from the 24 | Biorefining Magazine | april 2011
Just the Beginning Following the ceremonies, the crowd noise rose with speculation regarding the potential of the Ineos process.
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a statement from Machek may, in the end, speak the loudest and clarify why a superbug developed years ago by Gaddy, the passion of King, or excitement by Paul Bryan surrounding a semi-intimate ceremony on a sunny day in February in a place that most “investors,” as Carter called the attendees, will never go, really matters. The goal now, Machek said, is “to get financial partners that we can work with, and guarantee loans with. That, he said, “is a thing of the future, and it is where we want to be.” Author: Luke Geiver Associate Editor, Biorefining Magazine (701) 738-4944 lgeiver@bbiinternational.com
Florida’s Take Richard Machek from Florida’s USDA Rural Development program told the crowd, “Welcome to the future.”
fining-based buzz lingering in the warm biofuels industry is at a crossroads,” WilFlorida air, and although passersby most liams said. “This facility will help to change likely had no idea what the same site two that view.” A lot of people have been talkyears from now will look like, Peter Wil- ing about things happening, he said, “but liams, CEO of Ineos Bio, touched on one this is happening.” Ethanol Ad 7:43 AM Page 1 Combining Williams’ sentiment with ofLWC627-RJS-0445 the major implications of #1 the1/1/11 day. “The
on the web For Web-exclusive bonus content from behind the scenes of the Ineos ground breaking event, visit the online version of this story at www.biorefiningmagazine. com.
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BIOPRODUCTS
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Stamp of Approval A
USDA’s BioPreferred voluntary labeling program provides consumers with a clear way to distinguish biobased products from those derived from petroleum By Erin Voegele
The BioPreferred program was established by Congress in 2002, with the intent of increasing the quantity of agriculturebased raw materials used to make industrial products. “It was an economic development program,”
says Ron Buckhalt, program manager for the USDA’s BioPreferred program. “It wasn’t necessarily an environmental program, but of course it has some environmental parts to it.” The program has two discrete components, the federal procurement and the new voluntary labeling programs. While the federal procurement aspect requires federal agencies to preferentially purchase biobased products when available, Buckhalt says the voluntary labeling program is designed to grow market demand for certified products while increasing the use of agricultural commodities in industry. “More biorefineries, if you will, will be able to spring up across the
countryside to produce more biobased products,” he says. In other words, the voluntary labeling program, which was announced Jan. 19, is designed to increase consumer awareness of biobased products, while also encouraging consumers to purchase and use them. The USDA estimates that there are 20,000 biobased products currently manufactured in the U.S., supporting more than 100,000 jobs. Under the federal procurement component of the BioPreferred program, more than 5,000 products have already been certified. This means the USDA has verified the biobased content of those products, and has certified them for federal procurement purposes. Under the BioPreferred program, biobased products are considered to be those composed wholly or significantly of biological ingredients, whether renewable plant, animal, marine or forestry materials. The new label will indicate that a product has been certified to meet the USDA standards for a prescribed amount of biobased content. A wide variety of minimum biobased content levels have already been set for certain product categories under the federal procurement portion of the program. For example, disposable containers must contain at least 72 percent biobased content by weight to be certified. Similarly, minimum levels for semidurable films, disposable tableware, and disposable cutlery have been respectively set at 45 percent, 72 percent and 48 percent. As established in the final rule for the Bio-
april 2011 | Biorefining Magazine | 27
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Preferred labeling program, a product must meet or exceed the minimum biobased content percentage in its given category to use the BioPreferred label. For product categories where biobased minimums have not yet been established, the USDA has set a minimum biobased content level of 25 percent. According to Buckhalt, applicants to the labeling program are encouraged, and expected, to apply for a label based on the actual biobased content their product contains. For example, if a company that wants to use the label on its plastic cups containing 80 percent biobased content by weight, the 80 percent should be noted on the label, not the minimum 25 percent requirement. The certified percentage will be included on the logo designated for each product. “Do the real numbers,” he says. “Go with what you’ve got.” To qualify for the program, the biobased content of a product must be tested using ASTM standard D6866. The test method essentially measures the amount of carbon-14, a naturally occurring radioactive carbon isotope found in trace amounts, present in the material. The isotope decays over time, and is commonly used to estimate the age of ancient artifacts. Biobased materials, which are new sources of carbon, contain significantly higher concentrations of carbon-14 than fossil-based carbon sources. The test method can determine the percent of biobased materials found in a product by evaluating how much carbon-14 it contains. Products that are awarded certification under the voluntary labeling program will be given access to a secure USDA website, where they can download applicable BioPreferred logos, Buckhalt says. “You will only have access to the document that will let you download the label [applicable to the percentage you’ve been approved and certified for],” he says. This restricted access to the label is expected to help reduce fraudulent use, but Buckhalt notes it is unlikely to completely solve the problem. Fraudulent use of the label ultimately hurts consumers by misinforming them, and also provides a market disadvantage to companies that really do include biobased content in their products. Buckhalt notes the Federal Trade Commission is gearing up to prosecute those who fraudulently use the label. “We have some friends at the FTC who would love to make an example out 28 | Biorefining Magazine | april 2011
PHOTO: CEREPLAST
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Branding Opportunities The USDA’s BioPreferred voluntary labeling program will help provide members of the public with an easy way to differentiate between products made from traditional plastics and those employing biomass-based materials, such as Cereplast’s bioplastics.
of some of these companies [that mislabel their products with BioPreferred label],” he says.
Marketing, Branding
Once consumers become familiar with the label and what it means, it should help drive consumer demand for biobased products by increasing awareness and visibility. The label will also provide biochemical producers, product manufacturers and retailers a new way to differentiate their offerings from petroleum-based counterparts, through both branding and marketing opportunities. According to Rina Singh, policy director for the Biotechnology Industry Organization, BIO recognizes how important the BioPreferred labeling program will be for the biotech industry and has lobbied extensively to support development of the program. BIO specifically worked to ensure the label could be applied to intermediate biobased products, such as the biobased chemicals and polymers that are used to produce consumer goods. “That label can now be put on an intermediate chemical,” she says, noting that as a certified intermediate biochemical moves through the manufacturing and supply chain, resulting products will also be eligible to use the label as long as the 25 percent minimum content is maintained. It’s really designed to benefit the entire value chain, she says. Singh says the label will be important to industry because it allows for market-pull demand from consumers. “Anytime you can associate [your product] with a label that
can generate or increase visibility that would improve market awareness, you would definitely embrace it, especially in this (industrial biotechnology) sector where we definitely want to be recognized in this space for our existence,” she says. “This is huge for the renewable chemicals and biobased products, a huge landmark.” DuPont Applied Sciences has spoken out in support of the voluntary labeling program, and intends to pursue certification for all its product lines that meet the programs requirements. According to DuPont Applied Sciences President Craig Binetti, a primary benefit of participating in the program is that it will increase the visibility of biobased products and the technology behind them in the marketplace. “We believe that increasing the visibility can only help increase the demand for this unique product line,” he says. While Binetti notes there are several “eco labels and certifications” currently in the marketplace, the USDA BioPreferred program will lend much more reliability to the space. “This one is backed by the government, so that lends credibility,” he says. “The ongoing challenge will be to increase the understanding around what the label means and signifies. Demand should increase as awareness and understanding of the label, and what it represents, increases.” To date, manufacturers of biobased biodegradable/compostable plastics were able to certify and label their products under ASTM standards and a program established by the Biodegradable Products Institute. While the BPI certification program is an obvious ben-
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With a standardized, government-backed program, consumers will now be able to accurately compare similar materials produced by different companies and make more informed purchasing decisions. efit for those producing compostable materials, Jim Lunt, managing director of Jim Lunt & Associates LLC, notes that the program leaves out a significant component of the bioplastics industry—those who are making durable, noncompostable goods. “Since presently the BPI logo only applies to compostable materials, a significant portion of the biobased industry is left without an option to visibly market the biobased attributes of their product with any kind of third party certifi-
cation other than being tested for renewable carbon content using ASTM D6866,” he says. Lunt has extensive experience in both the petroleum-based and biobased plastic industries. He says that while the bioplastics sector is still represents an extremely small portion of the plastics industry, it is growing at a rapid rate. Although compostable bioplastics are popular, demand for durable biobased plastics is also growing. The USDA’s program, he says, will allow companies that make durable products, such as cell phone casings, printers and other durable plastic items, a way to capitalize on the biobased attributes of their offerings. However, some companies, such as Cereplast Inc., plan to utilize both labeling options for applicable products. “Cereplast will dual-label if appropriate and certify for both the USDA BioPreferred label and the BPI label for compostability,” says Kelvin Okamoto, Cereplast’s senior vice president of research and development. “We are anticipating,” Okamoto says, “that the program will finally provide consumers with a readily
recognizable mechanism to identify products made from biobased materials, and easily distinguish what the actual biobased content of that product really is.” Before this program, he says, there was no common method for companies to evaluate the biobased content of their products. With a standardized, government-backed program, consumers will now be able to accurately compare similar materials produced by different companies and make more informed purchasing decisions.
Next Steps
“This is only a first step, but it’s a very important first step for our industry,” Singh says, noting that the minimum content level is expected to increase in the future as the biobased industry becomes more established. In fact, Buckhalt notes plans are already underway to expand and refine the BioPreferred labeling program. “We are actually doing some work on new guidelines that will deal a little bit more with intermediates and complex products,” Buckhalt says. The guidelines will apply to
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april 2011 | Biorefining Magazine | 29
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products like cars, mattresses and other products where measuring the biobased content, and prescribing a minimum, can prove challenging. “We have done the initial legwork on putting together guidelines and guidance on how we are going to deal with complex products,” he continues, noting the results could be published early next year. “[We are] basically looking at some sort of mathematical formula based on the amount of carbon that can be new carbon,” Buckhalt says. In other words, there are parts of a car that could never be made of biobased materials, such as the engine and most metal components. The weighted formula being developed by USDA would determine by weight how much of a complex product, in this case a car, could potentially be made out of biobased materials. According to Buckhalt, the 25 percent minimum is likely to be increased incrementally in the future as the market matures and more biobased products—with higher biobased content—become commonplace in the market. Although, he says, if you are going to make people reapply for the program and certify their products for a new label, good data would be needed to back up that decision. That said, Buckhalt stresses that it will likely be several years before any action is taken to increase the minimum requirement. As for now, members of industry are working diligently to support the voluntary labeling program. “DuPont Applied Sciences is ready to support the USDA in its efforts to
identify and promote biobased products, and the education and communication that will help build understanding, awareness and acceptance of these products in the marketplace,” Binetti says. Members of the biorefining industry and their customers are working quickly to achieve USDA certification for their products. According to Buckhalt, the USDA received 40 applications for the labeling program the first day. As of March 4, 52 companies had submitted a total of 176 product applicaMultiplying Benefits Cereplast intends to dual label its products that tions. According to Okamoto, qualify for certification under both the USDA’s BioPreferred labeling Cereplast has already begun the program the Biodegradable Products Institute’s compostability program. application process and has been receiving calls from customers interested in a new concept—not a new idea—but I think the time has come now to make biobased the program. “Aside from it giving consumers a way products part of mainstream America once to have a better understanding of what’s actu- again. Look back historically. At one time all ally biobased, the program is also a way and of our products were made from biomateria channel for the federal government to en- als. The advent of petroleum changed that, courage consumers to buy biobased, and to but we’ve come full circle and I’m just excited consider and think about biobased,” says Ni- we can be part of this, and begin to hopefully cole Cardi, Cereplast’s head of marketing and leave a little bit better world where we use suscommunications. “I think it is a very powerful tainable, renewable resources to produce our force behind a lot of the growth that we’ll see industrial products.” into the future for biobased materials.” Author: Erin Voegele Associate Editor, Biorefining Magazine “We are very, very excited to be a part (701) 540-6986 of this program,” Buckhalt says. “This is not evoegele@bbiinternational.com
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PHOTO: CEREPLAST
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business
Demonstration Station Rentech’s Product Demonstration Unit at the Rentech Energy Technology Center is a fully integrated synthetic transportation fuels production facility operating in Commerce City, Colo. The plant is designed to produce more than 400 gallons per day of ultra-clean synthetic jet fuel, aviation fuel, ultra-low sulfur diesel and specialty waxes and chemicals. PHOTO: RENTECH INC.
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Contract Compatibility How long-term feedstock and off-take agreements are negotiated, and the role they play in project development By Bryan Sims
A biorefining firm that’s in search of funding, whether from commercial banks, institutional lenders and investors or the federal government, to advance its project to the next stage of development can typically expect to hear the following three questions before any money is doled out. Is there a long-term fixed feedstock supply? Are there medium- to long-term fixed off-take agreements for future finished products? Can the conversion technology perform at a level efficient enough at commercial-scale to support long-term fixed capital and operating expenses to satisfy repayment of debt? The investment and institutional lending communities know how capital-intense biorefining projects can be, which underscores their inherent risk. Ultimately, lenders and investors want to see price certainty, both for feedstock and off-takes of future product offerings, to ensure that debt coverage service ratios—the amount of cash flow available to meet annual interest and principal payments on debt—are high enough to support debt repayment.
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business
For a biorefining developer, the goal is to “derisk” the project as much as possible. One way of doing this is to satisfy two of the three aforementioned variables within the overall project development model, specifically as it relates to feedstock and off-take contracts. This increases the chances of an investment bank or federal government entity backing to consider lending funds, according to Michael Butler, chairman and CEO of Cascadia Capital LLC, a boutique investment bank headquartered in Seattle, which serves private and public growth companies in sustainable markets, including advanced biofuels and biobased chemicals. “Both are very important from an investor standpoint, but I would say in today’s environment the feedstock agreements are probably the most important element to getting a deal done,” Butler tells Biorefining Magazine. The amount of debt provided by a bank or federal debt service provider, like the U.S. DOE or USDA, can hinge on the term or length of Cost Coverage a feedstock arrangeInvestors are more apt to finance biorefining ment. Other factors projects that have play into it as well, multiple feedstock suppliers, says Michael such as feedstock Butler, chairman and type, access to feedCEO of Cascadia stock relative to the Capital. Financing of $150m Capital Costs
PHOTO: ZEACHEM
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Work in Progress Construction continues at ZeaChem’s 250,000 gallon per year demonstration biorefinery plant in Boardman, Ore. The facility, expected to come online later this year, will produce cellulosic ethanol, in addition to limited quantities of acetic acid and ethyl acetate, from woody biomass.
distance of a plant, creditworthiness of the feedstock supplier, transportation costs, labor costs associated with harvesting, collecting and transporting feedstock, tipping fees and overall economic viability of the feedstock that can sustain a margin high enough to repay debt. Although additional equity can reduce risk exposure by the lender, Butler says he’s typically seeing a 50/50 or 60/40 debt-to-equity ratio for biorefining projects today. “Under equity, certain mezzanine debt can be factored in as equity, depending on Breakdown of Operational Costs, $m Equity Return $5 15%
Equity, $45 30% Debt, $105 70%
Typical capital costs will include 10% financing costs, 15% profit margin, plus a contigency to cover the risk that the EPC contract is priced above initial expectations.
SOURCE: CASCADIA CAPITAL
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Debt Service $12 38%
Opex $15 47%
Minimum contracted revenue needed to ensure a project is bankable will cover debt service and operating expenses. Total expected revenue must satisfy the condition that revenues minus opex are equal to 140% of debt service.
how the loan is structured,” Butler says. “We’re finding that can comprise 10 to 20 percent of the total capital structure.” An increasing number of investors, according to Butler, are showing preference to projects that have multiple feedstock suppliers, as opposed to those that rely on just one big feedstock company. In other words, he says, investors are attracted to projects that don’t take more than 30 to 50 percent of the available feedstock within a given radius where a project is located. “Investors have been burned by projects in the past where the developers have signed up 80, 90 or 100 percent of the available feedstock within the area of that plant,” Butler says. “If you can’t get a big guy that has the creditworthiness to stand behind you, you have to have a diversified mix of feedstock suppliers. You almost have to overcompensate by having 120 percent availability. Investors and lenders will go along with that. That’s more financeable than just having one or two suppliers that aren’t creditworthy.” For biorefining firms like Lakewood, Colo.-based ZeaChem Inc., the advantage lies in locating a plant near abundant feedstock supply, and leveraging existing infrastructure such as the wood products industries, as opposed to convincing multiple feedstock suppliers to grow a dedicated energy crop or aggregate agricultural residues, says president
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and CEO Jim Imbler. In 2008, ZeaChem locked up a long-term feedstock agreement with Portland, Ore.-based GreenWood Resources Inc. to supply poplars from its tree farm to ZeaChem’s integrated demonstration biorefinery currently under construction in Boardman, Ore., sized at 250,000 gallons a year. When operational, the plant is expected to primarily produce cellulosic ethanol, including limited quantities of biobased acetic acid and ethyl acetate. “I think that one of the challenges of feedstock supply is actually finding a market mechanism that works, so that you don’t have to reinvent the wheel,” Imbler says. “These farmer-oriented models, not that they’re impossible, but there’s just a degree of difficulty much higher than our model with woody biomass.” Wood Works Fulcrum BioEnJim Imbler, president ergy is making progand CEO of ZeaChem ress to break ground Inc., says tapping into the existing wood later this year on its products industries 10.5 MMgy cellulosic for feedstock supply helps lower risk prior to ethanol and biofinancing a project. chemical plant near Reno, Nev., and it is tapping into the municipal solid waste (MSW) stream. The company, which has been awarded DOE funding for its project, has secured a 15-year agreement with Waste Management and a 20-year agreement with Waste Connections for its Sierra BioFuels project. “We think that, by locking up these feedstock contracts, it provides enormous value not only to the project, but also to Fulcrum,” says Rick Barazza, vice president of administration at Fulcrum BioEnergy. While locking up long-term feedstock agreements are a necessary step to obtain funding so a project can advance to the next stage of development, negotiating off-take agreements, although equally arduous, are also critical to success.
Any Takers?
Negotiating and securing off-take contracts can be a little more complex than arranging feedstock agreements. One reason for this is that it’s nearly impossible
Butler says, to the investment community, involving one or more offtake parties can also increase the chances of financing a project where relying on one deep-pocketed offtaker like Valero may not be enough. to obtain a fixed price off-take contract that goes out 10 to 15 years, according to Wes Bolsen, chief marketing officer and vice president of government affairs for Coskata Inc. “You might be lucky to get a long-term off-take contract that is based on either a benchmark or simply at market price,” Bolsen says. Coskata is developing a 55 MMgy cellulosic ethanol facility in Greene County, Ala., using woody biomass feedstock. “This is critical in the overall aspect of the financing, and it’s critical to the USDA and DOE as they’re looking for the commercial viability of the technology.” Arnold Klann, Purchaser Considerations Wes CEO of BlueFire Bolsen, chief marketing Renewables, says officer and vice president for Coskata that the mentality Inc., says locking up for many potential off-take agreements is a key element for off-takers, such as obtaining federal loan the oil blenders or financing. refiners, is to not go long, but rather to go short on these types of contracts, which has been a bane to the industry for gaining any financial footing. “If you look at the electricity markets, you enter into a very creditworthy contract with a utility to buy the electricity, and that contract will be good for 10 to 20 years,” he says. “The lending institutions want to see the same thing in advanced biofuels like cellulosic ethanol. Many of these projects have
been slowed down or even stopped because they can’t get those long-term take-and-pay contracts.” Imbler echoes Klann’s comments, saying, “You can get a fixed off-take [contract] for a period of time, but the further it goes out, the more challenging it can get to lock it up. Three- to five-year off-takes aren’t a big deal because there is a market for that. But it’s easier for me in my business to get a 20-year feedstock contract on a reasonable basis than a 20-year off-take. Everyone involved in Long Hurdle BlueFire Renewables the biorefining space CEO Arnold Klann is going to have this says that the norm for off-takers is to secure same challenge.” short-term contracts Involving an rather than go long because of price established oil comuncertainty. pany such as Valero Renewable Fuels LLC, a subsidiary of Valero Energy Corp., can help mitigate some of the uncertainty involved in the price structure when introducing cellulosic ethanol, biobutanol or any other biofuels to market. Valero, which already owns more than 15 corn ethanol plants in the Midwest, also has a vested interest in off-taking advanced biofuel. This is evidenced by its active participation in several projects, including a 40 MMgy proposed cellulosic ethanol project in Kincross Charter Township, Mich., jointly developed by Valero, Mascoma Corp. and Mascoma’s operating subsidiary Frontier Renewable Resources LLC. Additionally, the DOE offered a conditional commitment in a $241 million loan guarantee to Diamond Green Diesel LLC, a joint venture project between Valero and Darling International Inc., to build a facility capable of producing more than 10,000 barrels per day (more than 153 MMgy) of renewable diesel on a site adjacent to Valero's St. Charles oil refinery near Norco, La. “What a company like Valero brings to the table is a certain amount of size, the investment involved and name recognition,” says Bill Day, Valero’s media relations director. “That’s typically attractive to some of the advanced biofuel companies because they’re looking for established names to partner with.” april 2011 | Biorefining Magazine | 35
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Butler says, to the investment community, involving one or more off-take parties can also increase the chances of financing a project where relying on one deep-pocketed off-taker like Valero may not be enough. “What we’re finding is that when there’s more than one potential off-take, you have a much better shot at getting funding and locking up that off-take to get your product to market,” Butler says. Rentech Inc. President and CEO Hunt Ramsbottom tells Biorefining Magazine that negotiating off-take contracts in the jet fuel market can be just as difficult as negotiating off-take contracts for advanced transportation biofuel. Last year, Solena Group Inc. based in Washington, D.C., signed a letter of intent with Rentech to incorporate Rentech’s proprietary Fischer-Tropsch synthetic fuel technology platform in Solena’s proposed BioJetFuel project, called GreenSky, in the U.K. The project is expected to convert more than 500,000 metric tons of waste Sky’s the Limit Hunt Ramsbottom, biomass feedstock president and CEO annually into synof Rentech Inc., says gas using Solena’s locking up off-takes with airliners for bio proprietary plasjet fuel can be as ma gasification arduous as those for transportation fuels, technology. From which are dependent there, the syngas on future oil prices. will be converted into 16 million gallons of synthetic biojet fuel using Rentech’s Fischer-Tropsch technology. Construction on the facility is expected to begin in 2012, with commercial operations anticipated by 2014. Ramsbottom says that potential offtake contracts for the biojet fuel to be produced at the future GreenSky facility depends on oil prices, and how Europe’s impending emissions trading scheme, which is expected to go into effect next year, goes. “One avenue may be a collared arrangement where we’re protected on a floor and [the airlines] are protected on a ceiling,” Ramsbottom says. “If crude oil flies to a certain number, then they’re 36 | Biorefining Magazine | april 2011
protected and we still make a margin and, likewise, we’re protected on the downside. That’s one way to move forward, I think, in this environment.” The nuances of negotiating off-take contracts for advanced biofuels apply much the same way for off-take contracts of biochemicals, according to Imbler, as it comes down to one principle that both the off-take party and the biorefining firms want and need for a mutually beneficial and lasting partnership. “People want longer term pric-
ing stability for their product,” he says. Imbler adds, “Banks just don’t finance these projects because they’re cool. It’s all about identifying risk and either eliminating it, mitigating it or letting someone else have it so that, at the end of the day, your project looks the most risk-averse as possible to lenders.” Author: Bryan Sims Associate Editor, Biorefining Magazine (701) 738-4974 bsims@bbiinternational.com
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