INSIDE: A CONVERSATION WITH NCGA’S RICK TOLMAN april 2011
Negotiating
Permits Stay Engaged in Process, Say Air Quality Experts Like Piyush Srivastav Page 48
plus
Producers Prepare for EPA Greenhouse Gas Rule Page 42
USDA Revamps Loan Program Page 54
www.ethanolproducer.com
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THE NEW INDUSTRIAL REVOLUTION
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© Novozymes A/S · Customer Communications · No. 2011-00841-01
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contents
features 42
april issue 2011 VOL. 17 ISSUE 4
48
DEPARTMENTS 6
Editor’s Note
Counterproductive Competitiveness By Susanne Retka Schill
10 The Way I See It
Contradictions Abound,
REGULATIONS
PERMITS
Many ethanol producers will soon be required to comply with the EPA’s Tailoring Rule.
Negotiating the details of environmental permits is crucial.
Regulations on the Horizon By Kris Bevill
Permitting: A Big Ticket Item
11 Events Calendar
Upcoming Conferences & Trade Shows
By Holly Jessen
54
Vitriol at All-time High By Mike Bryan
60
12 View From the Hill Will Congress Answer
the Bell? By bob dinneen
14 Drive
Global Realities: How
Middle East Unrest Shocks US Economy By tom buis
16 Europe Calling
Will Europe Face a
FINANCE
Q&A
USDA is changing program rules to better aid advanced biofuels.
NCGA’s Rick Tolman comments on corn, markets and ethanol advocacy.
By Kris Bevill
By Kris Bevill
18 Taking Stalk
Partners for Progress
Listening and Learning
Blend Wall? By Rob Vierhout The Real Ground Zero for
Contributions
20 Business Matters
74
70
66
Renewable Fuels is Dirt By Craig Patterson RFS2 Advanced
Technology—Traversing the Corn Maze By Eric Triplett and Kenneth “Pete” Moss
22 Business Briefs 26 Commodities Report 30 Distilled POLICY
EMISSIONS
MEMBRANES
Union of Concerned Scientists offers policies to support advanced biofuels.
Most stationary combustion sources will need to report greenhouse gas output.
Reverse osmosis, ultra- and nanofiltration find new uses.
The Billion Gallon Challenge
By Jeremy Martin
Navigating the GHG Reporting Maze
Membrane Technology in Production of Biofuels
79 Marketplace 82 Ad Index INSIDE: A CONVERSATION WITH NCGA’S RICK TOLMAN april 2011
By Kamla Jevons
By Rich Hovan
Negotiating
pErmItS Stay Engaged in Process, Say Air Quality Experts Like Piyush Srivastav Page 48
pluS
Ethanol Producer Magazine: (USPS No. 023-974) April 2011, Vol. 17, Issue 4. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.
4 | Ethanol Producer Magazine | april 2011
Producers Prepare for EPA Greenhouse Gas Rule Page 42
USDA Revamps Loan Program Page 54
www.ethanolproducer.com
On The Cover NAQS President Piyush Srivastav advises ethanol plants on their air permits. PHOTO: NAQS
editor’s note
Growth Energy and RFA took swipes at each other in their respective winter meetings with subtle and not-so-subtle digs. We don’t usually report them, since there often is more
CounterProductive Competitiveness Susanne Retka Schill, Editor sretkaschill@bbiinternational.com
For industry news.
than enough important information needing to be covered. In this year, we worry that the infighting will detract from the critical battles to be fought on Capitol Hill to prevent the industry from being harmed by intentional and unintentional legislative changes. We won’t add fuel to the fire by reporting who said what, but well-placed phone calls from ethanol producers may remind our organizations to tone down the competition. In this issue, another voice is reaching out to the industry. Often an ethanol critic, the Union of Concerned Scientists contacted us about writing a piece laying out their ideas for policies benefitting cellulosic ethanol and advanced biofuels development. Jeremy Martin presents those ideas in his policy contribution and gives an outsider’s view on how the ethanol industry’s response is sometimes counterproductive. Reading his contribution, I was reminded of a lesson from the past when I managed a nonprofit organization of organic farmers. Several of those farmers made a concerted effort to have a dialogue with environmental groups who were often critics of agriculture and opposed to farm programs. The current National Sustainable Agriculture Coalition grew out of those discussions, which has put its fingerprint on such programs as the Environmental Quality Improvement Program and the Conservation Stewardship Program. What I remember best, though, are the stories about the early conversations where the farmers took the time to explain the dynamics and economics of farming and the sincerity of most farmers in truly caring for the land. It took some time, but the environmentalists became allies in advocating for program reforms. The farmers I knew wanted to find ways to benefit organic farmers, many of whom didn’t benefit from farm programs at all. They also advocated for policies that would work for the larger farming community. A similar approach would benefit the ethanol industry and perhaps is occurring behind the scenes.
Follow Us: twitter.com/EthanolMagazine
contributors Eric Triplett is a lawyer with the international law firm of Faegre & Benson’s Denver office focusing on environmental law. He collaborated with Pete Moss in writing this month’s Business Matters column regarding issues surrounding the renewable fuels standard.
6 | Ethanol Producer Magazine | april 2011
correction Kenneth “Pete” Moss is president of Frazier, Barnes & Associates, a biofuels consulting firm, and vice-president of marketing and a partowner of Cereal Process Technologies, a corn dryfractionation technology provider.
Some of the amounts for exported DDGS were labeled incorrectly in the story “Hot Destinations for DDGS Exports: China, Mexico, Canada” published in the March issue of EPM. China’s imports of U.S. DDGS started out modestly at 1,150 metric tons, not million metric tons. Through November of 2010 Canada imported 933,344 mt. In addition, the chart across pages 44 and 45 should have been labeled mt.
EDITORIAL EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com ASSOCIATE EDITORS Holly Jessen hjessen@bbiinternational.com Kris Bevill kbevill@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
EDITORIAL BOARD Mike Jerke Jeremy Wilhelm Commonwealth Agri-Energy LLC Mick Henderson Corn Plus LLLP Keith Kor Golden Grain Energy LLC Walter Wendland Chippewa Valley Ethanol Co. LLLP Cilion Inc.
Neal Jakel Illinois River Energy LLC Bert Farrish Lifeline Foods LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP Bernie Punt Siouxland Energy & Livestock Co-op
Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at (701) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to sretkashill@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 | Ethanol Producer Magazine | 7
Power your old ethanol plant with New Ethanol production.
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the way i see it
Contradictions Abound, Vitriol at All-time High By Mike Bryan
Contradiction rather than collaboration seems to be the order of the day with ethanol in Washington, D.C. Anyone who has been involved in this industry for a few years will be quick to point out that controversy has always swirled around ethanol. While true, it seems to me that the vitriol with which the controversy is currently being espoused is at an all-time high. In addition, the contradictions on ethanol occurring within the government itself are alarming. The EPA acted positively by allowing a 15 percent ethanol blend, but then provided a dismal report to Congress on the environmental impact of biofuels created by the implementation of the renewable fuels standard. The House of Representatives voted to stop the implementation of E15, claiming it was wasteful spending, while at the same time voting down a bill introduced by the Democrats to repeal tax incentives for big oil. The logic in voting down the bill expressed by Rep. Hal Rogers, R-Ky., was interesting, to say the least. “It would single out one industry and increase their cost of doing business,” he said. “This misguided policy can only lead to higher energy prices, continued reliance on foreign oil and economic hardship that hampers job
10 | Ethanol Producer Magazine | april 2011
creation." That argument does have a familiar ring about it. At the same time the House was voting to stop funding for blender pumps, a report commissioned by the Renewable Fuels Association shows that requirements of the RFS could be met with ethanol if just one-third of the nation’s 162,000 service stations installed blender pumps that dispensed 10 to 85 percent ethanol. Economist John Urbanchuck showed in a recent study that more than 70,000 jobs are directly attributable to the ethanol industry in America.
conflict and threatens to cause major oil disruptions and price hikes. At a time when the U.S. economy has been significantly weakened, $100 million dollars a day is more than significant, it’s catastrophic. Cutting wasteful spending is a noble goal indeed. Making a political sideshow out of it and targeting segments of the economy that one does not personally support is misrepresentation. We elect people to federal and state government to lead, to legislate, to represent the interests of their constituents. What we are experiencing rather than representation,
The Obama administration is pushing hard for continued development of the biofuels industry and at the same time, the Government Accountability Office is saying that the tax incentives provided the ethanol industry are wasteful spending. Billions of dollars are slated to be cut from programs that have high levels of redundancy, yet Congress doesn’t seem to see the billions of dollars in oil industry profits and the billions of dollars in tax incentives provided the oil industry as redundant. The ethanol industry tax incentives, however, are targeted as wasteful. Really! In a recent speech to the Growth Energy Leadership Conference Tom Buis of Growth Energy said it well: “In the past month, gas prices have increased 25 cents, costing Americans $100 million a day. How many times must we hit the snooze button before our nation begins to seriously reduce our addiction to foreign oil?” Northern Africa is teeming with
however, are personal and political vendettas being played out on a scale that is almost unequalled in history. Rather than conducting a well-thought out and serious effort to target wasteful spending, Congress has taken a wild, shotgun approach to budget cutting—if it moves, shoot it! Just don’t point the gun at my pet project. That’s the way I see it.
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com
events calendar
International Biomass Conference & Expo May 2-5, 2011 America’s Center | St. Louis, Missouri
Biomass Industry to Meet in St. Louis
05/02
As the world continues to switch from fossil fuels to renewables, 2011 could be a pivotal year for the biomass industry. Register now to attend the 2011 International Biomass Conference & Expo to be held May 2-5 in the America’s Center in St. Louis. Are you interested in growing or harvesting biomass crops or using biomass to produce bioenergy? If so, you won’t want to miss this event where future and existing producers of biobased power, thermal energy, fuels and chemicals go to network with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s where project developers converse with utility executives; where researchers and technology developers rub elbows with venture capitalists; and where Fortune 500 executives and influential policy makers sit side-by-side with American farmers and foresters. The conference will feature 30-plus expert panels and more than 100 speakers sharing information on topics ranging from anaerobic digestion to gasification and from pyrolysis to combined-heat-and-power systems. The agenda will be organized by feedstocks, but panels will also be organized for attendees who are interested in a program that focuses on electricity production, heat and power, biorefining or project development. The tracks include: • Track 1: Crop Residues • Track 2: Dedicated Energy Crops • Track 3: Forest and Wood Processing Residues • Track 4: Livestock and Poultry Wastes • Track 5: MSW, Urban Wastes and Landfill Gas • Track 6: Food Processing Residues The International Biomass Conference & Expo is the fastest-growing event of its kind, boasting 1,700 attendees in 2010, an 80 percent increase from 2009. As always, the event will include a world-class expo where venders can showcase their equipment, technologies, services, programs and solutions for potential customers. To show appreciation for supporters of the International Biomass Conference & Expo, BBI International is hosting a special event May 4 at Busch Stadium, where the St. Louis Cardinals will host the Florida Marlins. Golf enthusiasts will want to take part in the golf outing at Gateway National. This fourth annual conference is organized by BBI International and coproduced by Biomass Power & Thermal and Biorefining Magazine. For more information or to sponsor, exhibit and register for this important event, go to www.biomassconference. com.
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 Ethanol Workshop & Expo June 27-30, 2011 Indiana Convention Center | Indianapolis, Indiana The FEW is the largest, longest-running ethanol conference in the world. Focused on production of grain and cellulosic ethanol, operational efficiencies, plant management, energy use and near-term research and development, the FEW will attract 2,500 attendees. Register by the early bird deadline, May 16, and save $200. (866) 746-8385 | www.fuelethanolworkshop.com
International Biorefining Conference & Trade Show September 14-16, 2011 Hilton Americas – Houston | Houston, Texas The International Biorefining Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry. 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 Northeast Biomass Conference & Trade Show will connect current and future producers of biomassderived 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 | Ethanol Producer Magazine | 11
view from the hill
Will Congress Answer the Bell? By Bob Dinneen
Yogi Bera famously quipped that he was experiencing “déjà vu all over again.” For Americans,
the recent run up in oil prices and the corresponding price climb at the pump is leaving them with that strange feeling of having been through this before. When oil began its historic ascent to nearly $150 per barrel in the summer of 2008, gas prices soared to about $4 per gallon. It fundamentally changed America’s gasoline consumption patterns—but it didn’t end them. Speculation of gasoline prices touching $5 per gallon does not seem as far-fetched as it might have been even two months ago. Congress, known better for its reactive abilities than its proactive vision, will face increasing pressure to act to mitigate the damage from this current oil price spike. What will Congress do? There is no shortage of options to help America gain control of its energy future. Frankly, we need them all. We need to rapidly adopt all technologies that stabilize energy supplies while simultaneously conserving and greatly reducing our consumption of oil. That means more efficient cars, new car technologies like plug-in hybrids, responsible increases in U.S. oil production. And yes, an aggressive ramp-up in the use of American renewable fuels. The advent of the nation’s domestic ethanol industry was largely a response
12 | Ethanol Producer Magazine | april 2011
to the twin oil price shocks of the 1970s. President Carter and many in Congress were looking for domestic alternatives to imported oil. America’s farmers stepped up to the plate and an industry was born. As oil prices eased, however, the concern over America’s growing addiction to imported oil waned. As a result, we are more exposed and more vulnerable to volatility in oil markets than at any time in our history. To be fair, Congress has taken some measures that are helping to ease the impact on our economy today. The creation and ultimate expansion of the federal renewable fuels standard (RFS) has ensured that more of the nation’s gasoline supply is coming from domestic ethanol production rather than OPEC oil imports. The RFS helped usher in tremendous growth in American ethanol production and use, replacing nearly 10 percent of the gasoline we use with a renewable, costeffective alternative. The importance of the growth in American ethanol production and use cannot be trivialized in the current environment. Ethanol today is helping to keep prices at the pump lower than they would otherwise be for two reasons. First, ethanol is cheaper than gasoline. When it is blended with gasoline, it lowers the price drivers pay at the pump. Second, ethanol is replacing one-tenth of all the gasoline we use and displacing the need for more than 445 million barrels of imported oil a year. Without ethanol’s contribution, American demand for oil would be much higher and would drive the price of oil higher still. The current unrest and the turmoil in the oil markets is not an isolated or once in a lifetime event. It is not a question of if oil prices rise again (provided they ever come down), but one of when. History should
teach us that now is the time to implement forward-looking, thoughtful policies that put America in a place to better weather the oil storms of the future. In order to achieve those goals, Congress must stop wasting time on frivolous debates that do not address any pressing national issue. Recent votes and debate in Congress to limit the use of ethanol in the name of budgetary concerns are prime examples. None of the proposals would meaningfully reduce the federal budget. They would, however, ensure America continues increasing imports of oil. Congress must also refine its focus to ensure cutting edge technologies, such as advanced ethanol production, receive priority over investment in the energy technologies of the past. By partnering with private companies and implementing smart tax policy, Congress can dramatically accelerate the commercialization of technologies that turn everyday waste streams into the renewable fuels of tomorrow. Finally, Congress must have a grownup conversation about all energy tax policy. Both the House and the Senate have voted to continue providing billions of dollars to oil companies each year, even as oil prices (and oil profits) continue to rise. For its part, the American ethanol industry is willing to discuss transforming the current ethanol tax policy into one befitting of the dynamic and evolving industry we see today. The oil industry should be willing to do the same. Without meaningful reform of all energy policies, we will likely be right back here the next time unrest ripples through oil-rich regions. Author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835
Put BetaTecŽ natural hop extracts to work in your fermentation process to replace antibiotics and enhance yeast propagation. IsoStabŽ is the natural way to effectively control gram-positive bacteria while eliminating antibiotics and harsh chemicals. Plus, antibiotic-free DDGS adds value to your co-products. VitaHopŽ Silver yeast nutrient enhances yeast performance and vitality, inducing faster fermentations and larger yields. Combined with BetaTecŽ fermentation expertise and training, these technologies will significantly increase your plant’s efficiency. BetaTecŽ‌the natural hop to higher profits. For more information specific to fuel ethanol producers, visit www.bthp.info. 4HJ(Y[O\Y )S]K :\P[L >HZOPUN[VU +* ;! -! www.betatechopproducts.com
DRIVE
Global Realities: How Middle East Unrest Shocks US Economy By Tom Buis
For the past 40 years— across a span of eight presidents—the control of our nation’s economy has been in the hands of oil-producing nations. Every president since Nixon has warned that the influence of foreign
million to what the Navy pays annually
the sole alternative to oil from unfriendly
for fuel—just one more example of a
and unstable nations like Saudi Arabia,
cost borne directly by U.S. taxpayers.
Iran and Libya.
And for every 24 convoys that transport
It was 40 years ago that OPEC first
fuel to military bases in Afghanistan,
manipulated oil production and plunged
one American is killed and wounded.
the U.S. economy into an oil crisis.
As the Truman National Security
Since then we have had conflict in and
oil in our economy is a threat to both
Project points out, the majority of that
with the Middle East. We’ve invested
our national and economic security. Yet
hard-earned money flows out of the
generations of soldiers and untold
for 40 years, our federal government
wallets of everyday Americans and into
trillions in warfare in the Middle East
has failed to ultimately deal with the
the coffers of nations that are either not
over access to oil. We’ve experienced
problem of our national addiction to
interested in American values, or are
$4-gallon gasoline, gas lines and oil
foreign oil.
outright hostile.
shocks to our economy. Isn’t it time we
Today, we are reaping the bitter fruit of the seeds planted 40 years ago when OPEC first flexed its cartel
How many warning signs will it take for us to realize we are in trouble? As long as petroleum from
invested in ethanol? We have had the opportunity in the past to break this chain. Today we
muscles. Today we are seeing political
unstable, hostile regimes has undue
have the technology and the know-how
turmoil and unrest spreading across
influence over our economy, we will
to do something about it. But we must
North Africa and the Middle East. The
always be at threat. We need to change
get Congress to enact policies that will
market is responding to this by pushing
our policies, and embrace the biofuels
ensure access to clean, domestically
up oil prices to highs we have not seen
we have the capacity to produce here
produced alternatives like ethanol if we
in nearly three years—forcing more
in the United States if we are ever to
are ever to break the hold that Middle
Americans through misery at the fueling
break the hold that foreign oil has over
East oil has over our country.
station.
our country.
According to Navy Secretary Ray
Growth Energy is reminding
Mabus, every $10 increase in the cost
Congress that ethanol—made right
of a barrel of oil adds more than $300
here in America—is an engine for job growth and a critical part of our renewable energy future. It is not a someday fuel; it is replacing foreign oil today, and if we lift the artificial hurdles blocking access to the fuels market, it can replace more. American ethanol is
14 | Ethanol Producer Magazine | april 2011
Author: Tom Buis CEO, Growth Energy (202)545-4000 tbuis@growthenergy.org
For more information, visit www.fermentis.com or email fermentis@lesaffre.fr
Graphic design s Marie RIO
Our fermentation experts offer custom made recommendations to adapt to your process, your needs & your economics. From the selection of the yeast strain to the definition of its format up to onsite training of your staff, Fermentis offers your ethanol plant a global fermentation approach to maximize your efficiency & profitability.
Europe Calling
Will Europe Face a Blend Wall? By Robert Vierhout
If there is one thing we in Europe can learn from the U.S.A. on tearing down the blend wall, it is that Europe should start addressing the issue now. Delaying the discussion could result in serious structural problems for the industry as we now see happening in the U.S. Kick starting the debate on changing the law that would allow a higher blending percentage beyond E10 percent to avoid such a wall is not that simple, however. Many will argue against it by saying that the 10 percent renewable energy target is only for 2020 and others would mention the relatively low blending levels achieved to date of less than 5 percent. So, why the rush? Car manufacturers would be cautious, of course, and oil companies might have some strong reservations as well. Finally, there is the group of stakeholders who would see the possibility of higher blending levels as a new incentive to increase biofuel production and use something that could cause unwanted effects in land use and food crop availability. The climate to start lobbying for higher blend levels is therefore not optimal. Still, there are some indications that waiting would not be the smartest thing to do. The EU member states have now
16 | Ethanol Producer Magazine | april 2011
all published their so-called renewable energy action plans telling us what sort of renewable energy sources they will use to fulfil the 10 percent target. Nothing spectacular came out of this exercise. As to be expected, it was an extrapolation of existing practice: the majority share for biodiesel, around 25 percent for ethanol and a marginal share for electricity and second generation fuels. This very big share of biodiesel and very low share of other green sources could prove an opportunity for ethanol, however. In the EU, the most questioned biofuel is biodiesel because of the high volumes of vegetable oil needed, typically rapeseed, soy and palm. Using higher blends of ethanol could provide a way out of this feedstock dilemma. Interestingly enough, this also seems to be a serious option for the both car and oil industries. The scientific branches of these two industries, together with the EU Joint Research Centre, embarked on a joint biofuels program looking at the potential for biofuels and other alternative energy sources to achieve the 10 percent target. They built an analytical tool called the Fleet and Fuels Model that projects the vehicle fleet until 2020 based on historical road fleet data, resulting in fuel demand projections. In several of the nine fuel demand scenarios modelled, targets could only be achieved if ethanol use would go beyond 10 percent volumetric blending. Whether one of these ethanol-friendly scenarios will materialize soon is unlikely if it depends on the researchers. Even
though all cars from 2005 onwards can run on an E10 blend, compatibility with higher blends would require “time, testing efforts and investment” according to the report, soon to be published in its final form. In other words, the auto and oil industries are saying don’t expect any time soon that we can go beyond what is now possible under the law. This rather reluctant stance on blends greater than E10 could convince regulators that the targets are overly ambitious and might need to be re-assessed. Knowing that the car industry will likely go for the filibuster-strategy, the ethanol industry should not adopt a let’s wait-and-see-option. It took years to go from an E5 standard to E10. We now see the slow introduction of E10 in several countries such as France, Germany and Sweden, but it will take until at least 2017 before E10 will be the standard gasoline. If we do not start working on an E15 or E20 standard now, we will not have anything beyond E10 in place before 2020 besides, of course, E85. But knowing how little E85 is beloved by oil companies it doesn’t seem a promising way forward. E85 is and will stay a niche market. I am certain that in a few years from now, the blendwall will be our main issue to deal with. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org
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taking stalk
The Real Ground Zero for Renewable Fuels is Dirt By Craig Patterson Every day seems like the dawn of a potential new era in biofuels. Technology announcements of advancements in enzyme efficiencies, fast pyrolysis reactors, new thermochemical methods and cellulosic ethanol breakthroughs pepper the news. The race to convert biomass to fuel on a commercial scale is a dizzying and important one if we are to truly replace fossil fuels. The most important race is not in conversion of biomass, however, but in the actual growing of biomass. The market for new, high-performance energy crops suffers from “the chicken or the egg” conundrum. End users won’t commit to utilizing energy crops without large-scale availability of feedstock. And growers won’t commit to planting it without large-scale demand from end users. Someone must take the risky first move, and it’s going to have to be the growers. I recently watched a planter demonstration in a field of miscanthus on a farm in central Georgia. Miscanthus, alongside switchgrass, is a perennial energy grass with great promise as a biofuel crop, especially in the Midwest and Southeast. The crop produces up to 20 tons per acre—far more biomass than trees or switchgrass— so it seems to be an easy answer to the problem of reliable, efficient and environ-
18 | Ethanol Producer Magazine | april 2011
mentally friendly feedstocks. The problem with miscanthus is in establishment. The crop only reproduces from cuttings called rhizomes—actual pieces of the underground plant system that must be dug up and replanted, at the rate of around 5,000 rhizomes to the acre. The speed and cost of planting, it turns out, is a large bottleneck in viability of this crop as a successful feedstock. Here is a quick bit of math to illustrate this bottleneck. Current planting technology can plant, at best, 20 acres per day. Let’s assume that a biorefinery needs 3,000 acres of crop on which to run. That 3,000 acres would take 150 days to plant. By the time planting was done, the planting season would be long over. Putting five pieces of equipment on site reduces the
engineering, but he’s at the forefront of the race towards commercially viable biofuels. This is just one example of the hurdles my industry is working on in bringing the best biofuel feedstocks to market. Add to this equation weed control, fertilizer optimization, harvesting efficiencies, proper storage and handling and you can quickly see the array of potential bottlenecks to cellulosic feedstocks. There are only a handful of companies tackling the problem of commercializing energy crops. And, fortunately, we enjoy the fact that we are technology independent. It doesn’t matter which conversion “wins” in the end, whether pyrolysis, gasification, enzymatic conversion or microwave bombardment. No matter what, the crops must be in the ground and grow-
planting to 30 days, but imagine that the planting is going on in five different states, on 15 different farms. Suddenly you need 75 teams planting all at once, across several states. In this scenario, 45,000 acres—a drop in the bucket of what is required—would require millions of dollars of equipment and labor to achieve. And that is a bottleneck. Back at that farm in central Georgia, the planter we watched might double the speed of planting. A planter my company is working on might triple or quadruple that speed. It’s a vital point in the energy supply chain. Farm machinery, it turns out, is critical to the ability to make the feedstock affordable, and therefore critical to the race to renewable biofuels. The inventor of this particular machine isn’t wearing a lab coat and doesn’t have a degree in chemical
ing at maximum efficiency. Fortunately for the U.S., we have some of the most savvy, creative and crafty innovators in the history of man working on these problems—the American farmer. The American farmer has already commercialized growing on a monumental scale through innovations that rival that of the information technology industry for speed of change. Corn, soybean, cotton and wheat production yields are oftenignored testaments to this fact. This same dedication and quickness is critical now to America’s energy independence. Author: Craig Patterson Manager of Commercial Operations, REPREVE Renewables (888) 447-6938 cpatterson@repreverenewables.com
business matters
RFS2 Advanced Technology—Traversing the Corn Maze By Eric Triplett and Kenneth “Pete” Moss
The U.S. EPA continues to clarify and modify its regulations implementing the renewable fuels standards (RFS2) almost one year after first publishing its final rule. Significant questions still surround
whole stillage and/or derivatives of whole
Although corn oil extraction is perhaps
stillage and results in recovery of corn oil at
the most attractive of the five technologies
an annual average rate equal to or greater
because of its relatively low cost, the 1.33
than 1.33 pounds oil per bushel of corn
pounds-per-bushel minimum is not achiev-
processed into ethanol.
able at this time. In fact, the corn oil extrac-
• Membrane separation in which at least
tion requirement joins membrane separation
the technical and economic feasibility of the
90 percent of ethanol dehydration is carried
and raw starch hydrolysis as technically
advanced technologies required to obtain
out using a hydrophilic membrane on a
unfeasible stand-alone options, leaving
renewable identification numbers (RINs)
calendar year basis.
only CHP and fractionation as alternatives.
for the production of ethanol from new or
• Raw starch hydrolysis that is used for at
Concerns exist, however, regarding the eco-
expanded corn starch-based ethanol plants.
least 90 percent of starch hydrolysis used
nomic feasibility of CHP with one comment-
to produce ethanol instead of the traditional
er informing EPA that the cost necessary
on the life-cycle greenhouse gas (GHG)
high-heat cooking process, calculated on a
to meet the CHP advanced technology stan-
emissions of each renewable fuel and
calendar year basis.
dard would make it “commercially unviable.”
mandated that ethanol produced from corn
• Combined heat and power (CHP) such
In response, EPA noted that it did not con-
starch at new or expanded facilities must
that, on a calendar year basis, at least 90
sider cost in its considerations of applicable
meet a 20 percent GHG reduction threshold
percent of the thermal energy associated
advanced technologies. Without considering
by adopting specific production process
with ethanol production (including thermal
cost or commercial availability (EPA focused
requirements. For a dry mill facility, these
energy produced at the facility and that
on technology requirements that would be
requirements include the use of specified
which is derived from an off-site waste heat
in place by 2022), dry mill facilities have few
advanced technologies, unless it dries no
supplier), exclusive of any thermal energy
realistic compliance options. Fortunately,
more than 50 percent of the distillers grains
used for the drying of DGS, is used to pro-
EPA recently confirmed that it would allow a
with solubles (DGS) that it markets annually.
duce electricity prior to being used to meet
plant to use fractionation and extraction to-
If the facility dries between 50 to 65 percent,
the process heat requirements of the facility.
gether to meet the 1.33 pounds-per-bushel
The EPA based RFS2 RIN eligibility
it must use at least one technology, and if it
EPA made an important change to the
threshold to meet the advanced technology requirement.
dries more than 65 percent, it must use two
corn oil extraction technology requirement
technologies. This requirement applies to
in its December rule revisions, removing
all new facilities and, for existing facilities,
earlier language that limited extraction to
December RFS2 revisions and evaluate
to the ethanol volume produced beyond the
thin stillage and DGS. EPA decided that “a
how the advanced technology requirements
grandfathered baseline volume (defined
more straightforward approach to specifying
may affect their ability to obtain RINs. Un-
as 105 percent of the permitted volume, or
the required application of corn oil extraction
fortunately, the rule provides little flexibility
if a permitted volume is unavailable, 105
in the regulations would be to identify the
for dry mill facilities at this time given the
percent of maximum annual volume). The
amount of oil that must be extracted.” This
technical and economic limitations of the
advanced technologies allowed by EPA for
approach allows producers to apply corn
advanced technologies identified by EPA.
use at new or expanded dry mill facilities are
oil extraction “as they see fit, providing only
limited to the following:
that the requisite quantity of oil is extracted.”
• Corn oil fractionation that is applied to at
Although it provides more flexibility to the
least 90 percent of the corn used to produce
producer using this technology to generate
ethanol on a calendar year basis.
RINs, there is some question regarding its
• Corn oil extraction that is applied to the
feasibility.
20 | Ethanol Producer Magazine | april 2011
Dry mills should carefully review EPA’s
Authors: Eric Triplett Environmental Attorney, Faegre & Benson etriplett@faegre.com Kenneth “Pete” Moss President, Frazier, Barnes & Assoc., Vice-President Cereal Process Technologies pmoss@cerealprocess.com
business briefs People, Partnerships & Deals
Tony Newton joined Verenium Corp. as an ethanol plant field technician. He is an expert in all facets of dry grind and wet mill operations, including fermentation, distillation, evaporation, corn oil extraction and drying. Newton also has extensive experience in construction, start up, and engineering functions at multiple dry grind New at Verenium and wet mill facilities With over a decade and was instrumental of experience in ethanol plants, Tony in developing high Newton has joined the yielding corn oil exVerenium team. traction and plant syrup evaporation technologies in his previous roles. As a field technician, he will work closely with customers ensuring that Verenium’s grain processing enzymes meet their needs and expectations. Prior to joining Verenium, Newton spent more than 10 years in engineering roles and as plant/area manager of various ethanol plants including Center Ethanol Company, Ace Ethanol and Tate and Lyle in Loudon, Tenn. The Renewable Fuels Association and Propel Fuels have seats on an advisory panel of the California Air Resources Board. Geoff Cooper, vice president of research and analysis for RFA and Jim Iacoponi, vice president of operations for California biofuels retailer Propel Fuels, will participate in periodic reviews of the state’s low carbon fuels standard (LCFS) program and provide input on issues related to implementation. The first was held Feb. 16. Specifically, the topics addressed by the advisory panel will include the program’s progress against LCFS targets, possible adjustments to the compliance schedule, lifecycle assessments, advances in fuels and production technology, fuel and vehicle supply availability, the program’s impact on the state’s fuel supplies, and other issues. 22 | Ethanol Producer Magazine | april 2011
Growth Energy added seven professionals to its growing staff. Hillary Price, public affairs associate, previously was deputy press secretary for Rep. Earl Pomeroy, D-N.D. Ryan Welsh, account manager assisting with membership development and outreach, spent 12 years at KSFY Television, in Sioux Falls, S.D., in advertising. Cynthia Witkin director of state government affairs, has 15 years on the hill representing trade associations and most recently the U.S. Chamber Institute for Legal Reform. Nicole Schofer, research coordinator, previously worked on Defense Secretary Robert Gates’ speechwriting team as senior researcher, and for U.S. News and World Report. Chris Bliley, director of regulatory affairs, most recently was a director at The Nussle Group and served as the associate administrator of the U.S. EPA from 2007-’09 running the agency’s office of congressional and intergovernmental relations. John Fuher, director of government relations, previously served as Budget Analyst for Agriculture and Trade for the U.S. Senate Budget Committee and worked as legislative assistant to Sen. Kent Conrad, D-N.D. Carrie Emert, American Ethanol sponsorship manager, previously managed partnerships for Richard Childress Racing. Ryan Carlson joined the BioAg Group of Novozymes. Based in Sioux Falls, S.D., he is assuming all sales responsibilities in the state working with the distribution channel as well as growers. A native of Lakefield, Minn., he worked on local farms before S.D. Representative attending Augustana Based in Sioux Falls, College, in Sioux Ryan Carlson will handle sales for Falls, and working in Novozymes. sales. “We are pleased to have Ryan join our dynamic sales team
and begin to utilize his natural sales abilities to grow our business in South Dakota,” says Dorn Severtson, business manager of the U.S. Novozymes BioAg Group. Lars Herseth, board president of the American Coalition for Ethanol, received the Excellence in Agriculture award from the South Dakota Corn Growers Association and the Corn Utilization Council. The award honors an outstanding leader who exemplifies excellence through significant contributions to the agricultural industry as a whole. A thirdgeneration farmer from Houghton, S.D., Herseth became president of ACE in No- Honored Leader board president vember 2009. “Lars is ACE Lars Herseth was indeed an outstanding recognized by the S.D. Growers and leader, dedicated to Corn Corn Utilization Council both agriculture and to ethanol. His contributions have greatly advanced both industries,” said Brian Jennings, executive vice president of ACE. OPW Fuel Management Systems supplied and upgraded its fuel control systems to assist Propel Fuels in developing its self-contained fuel island terminals. The card readers and customizable color screens are integrated with high speed internet connections to allow customers to link their renewable fuel purchases to their CleanDrive account. The system allows consumers to see how their purchases of
BUSINESS BRIEFS Sponsored by
ethanol or biodiesel blends have lowered their carbon profile and see the barrels of imported oil their purchases displace over time. The upgrades to OPW’s software also support Propel’s gift card/promotional card system that is used to attract new business and get drivers to try renewable fuels for the first time. Dresser Inc., the parent company of fuel pump manufacturer Dresser Wayne, has been acquired by GE with the closing of the $3 billion transaction early this year. The move significantly expands GE’s offerings for energy and industrial customers worldwide and is the latest in a series of acquisitions over the past 10 years that have transformed GE’s global energy portfolio. Dresser, based in Addison, Texas, has 6,300 employees worldwide and delivers compression, flow technology, measurement and distribution infrastructure and services to customers in more than 150 countries. Its portfolio includes valves, actuators, meters, switches, regulators, piping products, natural gas-fueled engines for compression, retail fuel dispensers and associated retail point-of-sale systems and air and gas handling equipment.
ExperTune’s PlantTriage can now share information with maintenance planning and other enterprise resource planning tools. PlantTriage’s diagnostics can be used to initiate work requests for instrument repairs, control tuning and valve replacements. The new integration tools can be applied to any of the 20 Problem-Solver reports that come with PlantTriage as well
as in customized reports. “One key to delivering bottom-line results is to use control performance data in the daily workflow at each plant,” said John Gerry, president of ExperTune. “These tools streamline the workflow process, accelerating the pace of improvement.” Pittsburgh-based HK Instrument Systems is promoting its microwave-based measuring system for the ethanol process. Efficiency of the ethanol process is directly related to how tightly the total solids are controlled after the first slurry tank, the company explains. Its HK-2 microwave analyzer facilitates tight control, and is not affected by changes in viscosity, flow and pressure, is easy to install and calibrate, relatively inexpensive, and does not drift, the company says.
GreenShift Corp. has signed a licensing agreement with Marquis Energy-Wisconsin for the use of its patented corn oil extraction technology in the 50 MMgy plant in Necedah, Wis., the second agreement for Marquis, which also installed the technology at its 110 MMgy plant in Hennepin, Ill. In Pixley, Calif., Calgren Renewable Fuels is licensing the technology for its 57 MMgy plant, with GreenShift providing engineering and construction services for the replacement of the existing tricanter-based extraction equipment with an Alfa Laval disc stack centrifuge in order to increase yields and reliability. Calgren will use GreenShift extraction systems for both thin and whole stillage. GreenShift recently announced it had received a Notice of Allowance from
the U.S. Patent and Trademark office on the method for recovering oil from thin stillage. It also received a similar patent notice on its trademarked One Kernel: Two Fuels corn oil refining process. The company says the process “drastically reduces refining times using off-the-shelf components, allowing smaller, integrated biodiesel systems to be built, installed and operated directly on-site at ethanol production facilities more costeffectively as compared to larger, off-site greenfield facilities.” Fluid Components International is calling attention to its ST51 Air/Gas Flow Meter as a solution to greenhouse gas (GHG) monitoring, supporting the U.S. EPA’s best available control technology initiative. The company pointed out that EPA has identified 13 states needing to update their clean air plans, incorporating GHG emissions including Arizona, Arkansas, California, Connecticut, Florida, Idaho, Kansas, Kentucky, Nebraska, Nevada, Oregon, Texas and Wyoming. The ST51 Flow Meter is ideal for the measurement and monitoring of industrial plant GHG, the company said, with a no-moving parts design that’s nonclogging and operating over a wide flow range with low-flow sensitivity.
Applied Process Technology International LLC of Williamsburg, Va., has been accepted into the Virginia Economic Development Partnership’s two-year Virginia Leaders in Export Trade program. Currently 40 companies are participating in the program, which offers incentives and assistance from a private-sector team of attorneys, Web designers, bankers, translaapril 2011 | Ethanol Producer Magazine | 23
BUSINESS bRIEFS
tors and freight forwarders. VEDP, which has assisted more than 140 companies in the past decade, has offices in Virginia, Belgium, Hong Kong, Mexico and Japan and representation in another 40 countries. APTI, a wholly owned subsidiary of Bateman-Litwin, is the new company formed after the demise of ethanol process-provider Delta-T.
California-based EdeniQ Inc. will be supplying the 50 MMgy E Energy Adams ethanol plant in Adams, Neb., its third Cellunator devise. After a year in operation with two units processing the plant’s slurry, the company is installing a third unit to allow the processing of 100 percent of its feedstock. EdeniQ’s Cellunator is an advanced, industrial-grade milling device that cost-effectively reduces the average particle size of milled corn without increasing fines that can foul downstream processes. Plant manager Robert Miller said they expect yield increases greater than 4 percent once the third unit is installed. Ribbon cutting took place Feb. 4 on the University of Tennessee’s Bioenergy Science and Technology Laboratory, part of its Center for Renewable Carbon. The new CRC Bioenergy Science and Technology Laboratory includes specialized facilities for biomass preprocessing and processing measurement, biomass characterization, and biomass conversion to fuels and potentially useful coproducts such as adhesives and carbon fiber. Additional CRC research capabilities include life cycle analysis and a biomass fractionation reactor. The CRC consolidates existing bioenergy and biomaterials research programs. The UT Biofuels Initiative will continue working to demonstrate the technical and economic feasibility of cellulosic 24 | Ethanol Producer Magazine | april 2011
fuels. This effort involves a well-known collaboration between UT and Genera Energy, the State of Tennessee, and DuPont Danisco Cellulosic Ethanol. Other continuing programs under the new umbrella include the SunGrant Initiative and a wood utilization program. California-based CoolPlanetBiofuels will be among the first receiving investments from a new investment fund, Energy Technology Ventures. ConocoPhillips, General Electric and NRG Energy have pooled $300 million in the joint venture to support clean-technology projects over a four-year period. CoolPlanetBiofuels is working on a biomass-based drop in gasoline replacement using a thermal/mechanical/catalytic process. In November, the company announced GE Energy Financial Services joined an $8 million funding round led by North Bridge Venture Partners. Viaspace Green Energy Inc. reported results of recent independent testing of Giant King Grass as a feedstock for producing second-generation cellulosic biofuels that included sugar and lignin content, pretreatment and enzymatic hydrolysis to sugars. The tests showed a ton of Giant King Grass yields as much ethanol as a ton of corn stover, said CEO Carl Kukkonen. An acre of Giant King Grass yields up to 10 times greater tonnage than an acre of corn stover, he added. "With our high yield, we believe that Giant King Grass can reduce biofuel feedstock costs by up to 40 percent.”
Dyadic International Inc. announced it has received its seventh patent for its novel beta-glucosidase gene and its corresponding enzyme which when used in combination
with other enzymes converts lignocellulose into glucose. The gene and corresponding enzyme was isolated from Dyadic’s patented and proprietary C1 fungus and was also identified through the genome annotation project conducted in conjunction with Scripps Florida. The traits have been incorporated into several advanced C1 biofuel strains resulting in higher levels of glucose production, lowering the cost of conversion.
Illinois-based Lechler Inc. announced a product release for headers and tank cleaning lances, including the option for customization to meet specific tank cleaning needs. The standard lance is fixed-length, plus a retractable lance that provides more protection from process fluids for the cleaning nozzle is also offered. Spraying Systems Co. has published a 72-page “TankJet Tank Cleaning Products” catalog providing complete information on automated tank cleaning equipment. The catalog reviews key selection factors such as spray distance, impact, flow rate, coverage and more, and offers guidelines to ensure proper specification. Several optimization tips are provided to ensure users maximize equipment cleaning efficiency. Also included are technical specifications on high-impact fluid-driven tank cleaners, motor-driven tank cleaners, a wide range of tank cleaning nozzles and spray balls for cleaning tanks with diameters up to 100 feet (30 meters). Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 7468385, or e-mail it to sretkaschill@bbiinternational.com. Please include your name and telephone number in all correspondence.
commodities Natural Gas Report
When will oil prices impact natural gas prices?
Btu (MMBtu), expressed as a Oil ($/bbl)/NatGas ($/MMBtu) ratio, was under 20. As of late 28 February, the ratio increased to 26 approximately 26, a 30 percent 24 relative price increase. If oil 22 20 prices continue to rise, will the 18 relative price of natural gas 16 continue to drop or will natural 14 gas prices finally start to move 12 up in tandem with oil prices? 10 1/3 1/10 1/17 1/24 1/31 2/7 2/14 2/21 Our view is that the natural gas market will continue to be well-supplied relative to demand. If oil prices some defensive hedges. On the other hand, move above $100 per barrel for a sustained if you believe the oil price run-up is shortperiod, however, natural gas prices will likely lived, natural gas market fundamentals will move up irrespective of the strong underlying likely prevent dramatic upward movement in natural gas fundamentals. natural gas prices. Bottom line, if you believe oil prices are going higher, it may make sense to layer in Ratio
Feb. 25—Oil prices again topped $100 per barrel! In addition, depending upon what has happened in the Middle East and North Africa between when I wrote this article and when you read it, oil prices could be well above that level now. Much of the oil consumed in the United States comes from countries currently in political upheaval which creates tremendous uncertainty and risk. Even though oil supplies are still flowing, even from Libya, we are one incident away— intentional or not—from severe supply constraints and roaring upward prices. Fortunately, natural gas prices have not followed oil prices up. The accompanying chart shows the relationship between oil and natural gas prices since the beginning of the year. In early January, the oil price per barrel compared to the natural gas price per million
By Casey Whelan
Corn Report
Carry out-to-use ratio for corn at all time lows Feb. 28—Middle East unrest on top of world weather conditions that were already inflating commodities fueled the energy complex and thus fueled the corn market, no pun intended. Global concerns grow
5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0
regarding rising food costs—not just grains, but protein as well. Globally, coarse grains are the lowest since 2006 and while global corn stocks are not at all-time lows, the carry out-to-use ratio is the lowest. Corn usage is outpacing US Corn Carryout (million bushel) corn production. World corn carry out is projected at 122.51 million metric tons (mmt) in February, down from the previous estimate of 127 mmt as a result of lowered U.S. carry out and less production in Argentina. Argentina is projected to produce 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 22 mmt of corn down
26 | Ethanol Producer Magazine | april 2011
BY JASON SAGEBIEL
from 22.8 mmt even though acreage in Argentina is up. In the U.S., carryout was reduced another 70 million bushels due to a 50 million bushel increase from ethanol demand and 20 million bushel in other industrial usage. Carry out is projected at a very cautious 675 million bushels or a 5 percent carry out-to-use ratio. Traders will be looking to the March 31 planting intention report. Reports at the USDA 2011 Outlook Forum in February called for 92 million acres of corn and 78 million acres of soybeans. Lower feed and higher ethanol demands are projected. With corn yields estimated at 161.7, corn carry out is projected at 865 million bushels or a 6.4 ratio, keeping the market volatile. In the meantime, corn trends higher. Profit taking shall not be unexpected—enhancing the overall market volatility.
report
Regional Ethanol Prices Front Month Futures (AC) $2.544 REGION
SPOT
RACK
West Coast
$2.570
$2.620
Midwest
$2.473
$2.450
East Coast
$2.585
$2.770 SOURCE: DTN
Regional Gasoline Prices
DDGS Report
World events the wild card for DDGS exports BY SEAN BRODERICK Feb. 28—DDGS has continued to follow corn prices for the past month, maintaining a typical winter level of 80 to 85 percent of corn. With corn moving up 78 cents, DDGS has maintained its value—the barge market has rallied $27 per ton and domestic buyers are keeping up. Good milk prices will keep dairymen engaged with DDGS. In exports, Chinese container demand has picked up though bulk inquiries are sparse, most likely to avoid attention from authorities. Also, with no announcements on the dumping case, traders are wary of having too big a position on the water. We’re seeing demand from France, Spain, and the UK—destinations that were once
quite common, but not for five years. Turkey, which ended DDGS imports in November due to GMO issues, is expected back soon. Countries that had short crops are beginning to consider DDGS. Looking ahead, domestic DDGS demand will remain steady as corn futures continue to dominate. Events in China, Europe, and North Africa will be the wild card. With the upper Mississippi soon to open, any continued strength in corn will pull product to the export channels, and tighten up the rail markets competing with trucks going to the river. Very few recent summers have been boring, and this year looks to have some upcoming fireworks.
($/gallon on Jan. 31) Front Month Futures (RBOB) $2.7395 REGION
SPOT
RACK
West Coast
$2.961
$3.021
Midwest
$2.746
$2.759
East Coast
$2.718
$2.803 SOURCE: DTN
DDGS Prices ($/ton) location
apr 2011
mar 2011
Minnesota
205
185
apr 2010 95
Chicago
210
195
122
Buffalo, N.Y.
210
205
125
Central Calif.
245
237
159
Central Fla.
219
214
146 SOURCE: CHS Inc.
Corn Futures Prices Date
(May corn, $/bushel)
High
Low
Close
March 1, 2011
7.36 1/4
7.25 1/4
7.35 1/2
February 1, 2011
6.77 1/4
6.66 1/4
6.76 1/2
3.92
3.80 1/4
3.81 3/4
March 1, 2010
SOURCE: FCStone
Cash Sorghum Prices ($/bushel) LOCATION
Ethanol Report
Tensions push prices higher Feb. 28—Over the past weeks, the ethanol and gasoline markets have been dealt a one-two punch, moving prices to the highest levels in more than two years. Ethanol prices continue to be firmly grounded in the corn market, seeing volatility as corn prices rose to 30-month highs based on expected tight supplies of corn and strong overall demand. Corn prices pushed over $7 through February with the potential to post record highs this spring and summer, especially if Corn Belt weather fuels production concerns. Although ethanol margins have not been keeping up entirely with the corn price rally, the ethanol market remains a solid follower of corn prices through the first quarter of the year.
BY RICK KMENT
The sharp rally in the gasoline market is just as explosive, but has a totally different origin. Middle East turmoil raises concern for short- and long-term oil supplies, additional political activity and disruption of recovery from the recent recession. Oil prices are the highest since September, and likely to remain volatile. Although the rally in the energy sector is not based on the immediate supply of either crude oil or gasoline, the overall uncertainty is creating additional caution among market investors holding a sizable piece of the total open interest. This will likely drive additional buying support into both the crude oil and RBOB gasoline market over the near future.
FEb 24, 2011
jan 27, 2011
feb 12, 2010
Superior, Neb.
6.06
5.76
3.12
Beatrice, Neb.
6.19
5.83
3.02
Sublette, Kan.
6.04
5.71
2.80
Salina, Kan.
6.31
5.83
3.26
Triangle, Texas
6.37
6.03
3.11
Gulf, Texas
6.68
6.38
3.91
SOURCE: Sorghum Synergies
Natural Gas Prices
($/MMBtu)
LOCATION
mar 1, 2011
feb 1, 2011
mar 1, 2010
NYMEX
3.79
4.34
4.82
NNG Ventura
3.90
4.43
4.99
CA Citygate
4.06
4.31
5.10
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production
(1,000 barrels)
Per day
Month
End stocks
Dec. 2010
918
28,457
17,940
Nov. 2010
925
27,745
18,029
Dec. 2009
811
25,134
16,594
SOURCE: U.S. Energy Information Administration
april 2011 | Ethanol Producer Magazine | 27
THANK YOU TO OUR SPONSORS
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Ethanol News & Trends
Bridge Building Towards Ethanol’s Future Dinneen says industry can meet challenges ahead The continuing turmoil in North Africa and the Middle East has sent oil prices rising, underscoring the importance of domestic ethanol production in the United States, said Renewable Fuels Association President and CEO Bob Dinneen in his opening remarks at the National Ethanol Conference in Phoenix on Feb. 21. The industry needs to convince lawmakers of the importance of tax incentives for the nation and the industry, he said. "We need to go to Capitol Hill, speaking as one voice, educating the more than 100 new members of Congress who are new to this debate." While current challenges may seem insurmountable, facing such a situation is not new to the ethanol industry, Dinneen said, quoting from a memo written by RFA’s first president Dave Hallberg in 1981: “While always volatile, the environment affecting alternative energy technologies has been in an acute state of turmoil and uncertainty… The administration has embarked on an economic revival program based on massive budget cuts, new tax laws, and market oriented policies that have either totally eliminated, or put in great doubt, existing federal government commercialization programs and tax incentives. Last, but not least, press treatment of the alcohol fuels industry has been generally shallow and uniformed, and the general public is receiving an increasingly negative view of its value and potential.” The first attempt to eliminate a federal ethanol program was by the Reagan administration, Dinneen pointed out, and the industry has seen it extended four times since with ethanol being seen as a tool for reducing carbon monoxide as a pollutant in metropolitan areas, replacing MTBE when the oxygenate used in reformulated gasoline designed to fight urban smog turned out to be contaminating the nation’s drinking water. Later it was seen as a way of decreasing oil imports. The challenges today are as complicated as any faced in the past, Dinneen said, “We need to rise to these new challenges. We need to step up our game. We need to build new bridges, forge new coali30 | Ethanol Producer Magazine | april 2011
tions and offer new ideas. We need to be flexible in our approach, disciplined in our message and recognize the limitations of government support in an era or unimaginable debt and competing priorities.” Dinneen cited the economic contribution made by the ethanol industry to rural communities and the national economy, before stressing the contribution the industry makes to the nation’s energy security. With a $1.5 trillion budget deficit, and the proposals for cutting many programs, Dinneen said, “few programs will be spared. Everything is on the table; or should be.” A recent proposal to strip certain tax incentives from the petroleum industry failed, he pointed out, although efforts to end ethanol subsidies still abound. The lessons learned in the effort to extend VEETC for one year were unambiguous, he added. “Our industry needs to work with Congress and the administration to reform the tax incentive moving forward. We will. Indeed, I welcome a dialogue about the future of the ethanol tax incentive.” “I can assure everybody in this room that an expiration of the tax incentive is a very real possibility this year,” Dinneen warned, saying the mixed messages from the industry and agriculture are not helpful. “While this outcome is possible, it is by no means predetermined. We need to unite.” Dinneen called for a more comprehensive approach to policies regarding incentives, looking at all energy tax policy in general and addressing the permanency of tax incentives for the mature and profitable energy industry compared to the “extenders games” played with renewable energy technologies. He mentioned several reform proposals, saying that all need to be fairly considered, including: • A refundable producer tax incentive rather than market-based incentive. • An incentive limited to the gallons above the renewable fuels standard obligation, or make it available to only midlevel ethanol blends and E85.
Economic Impact • Added $36 billion to household income • Contributed $53 billion to the gross domestic project • Contributed $7 billion in federal tax revenue • Contributed $4 billion in state tax revenues • Contributed to rural revitalization and improved infrastructure and emergency response capacity • Employed more than 70,000 in direct employment with jobs that won’t be exported • Contributed to indirect employment resulting in more than 400,000 jobs
Source: RFA
• • •
A phase down of the incentive while phasing in mandates for FFVs and blender pumps. A carbon-based performance credit favored by environmentalists. A variable tax incentive tied to the price of oil and/or crush margins to provide a consumer safety net, assuring ethanol demand if oil prices fall, but being dropped if not needed. “Frankly, each of these has both advan-
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The American Ethanol Industry • 209 biorefineries in 29 states • Produced more than 13 billion gallons in 2010 (It took the industry its first 16 years to produce 13 billion gallons of ethanol ) • Exported a record 350 million gallons of ethanol in 2010 • U.S. ethanol production uses 3 percent of the world’s grain supply and none of its food grain supply • Produced a record 32.5 million metric tons of feed coproduct, the equivalent of the total amount of grain consumed by all cattle on feedlots • Exported approximately 9 million metric tons of DDGS to more than
50 countries
tages and disadvantages. But we must allow a dispassionate debate, based on fact and market analysis, and guided by political reality,” he said. “Ultimately, the arbiter will be Congress, and we will all have to live with the consequences.” Similarly, there are competing proposals for the best way to catalyze investment in cellulose and advanced ethanol technology, Dinneen added. “The industry needs to rally around a specific proposal soon, or existing
policy will be the default and investment may continue to languish.” Shortly before the annual event, the RFA announced the formation of an Advanced Ethanol Council to work towards such policy. Beyond the work to be done in the halls of Congress, Dinneen addressed the work needed on the federal and state levels to clear the way for the adoption of E15, including labeling issues, state level challenges and a project in cooperation with Growth Energy on health effects testing. Finally, Dinneen revisited the food versus fuel discussion, which is heating up again with the increase in corn prices, pointing to the 12.5 billion bushels of corn raised last year, and the fact that it was the fourth consecutive year that the U.S. crop topped 12 billion bushels. U.S. corn yield has more than doubled since the RFA was founded, Dinneen said, which he attributed to the demand created by ethanol enabling innovation and driving increased productivity. “We need to start taking credit for it,” he said. “And we need to tell people that it is innovation and advanced technology that hold the key to meaningful economic development in impoverished parts of the globe. The biggest threat to food supplies isn’t biofuels, it’s underinvestment in agriculture and, more significantly, it’s skyrocketing energy costs.” Last year, despite poor weather in some areas, the global supply of grains was the second largest ever, trailing last year’s record global production by 1 percent. “There is simply no justification for blaming ethanol for world food prices,” he said. He added that the food versus fuel “canard” is as important to cellulosic ethanol producers as it is to grain processors. “The reason is, the debate really isn’t about food,” he said. “It’s about land.” Some environmentalists, he pointed out, have criticized cellulosic proposals for their use of land and water resources. Progress has been made on refuting the poor science in the calculations surround-
ing indirect land use change penalties to grain ethanol, he added. “Facts are stubborn things. Last year, Brazil released data demonstrating that deforestation has dropped precipitously since 2004, and shows no correlation to increased ethanol production in the U.S. whatsoever. In fact, Amazon deforestation rates in 2010 were at their lowest point since the Brazilian government began collecting data in 1988.” Dinneen also addressed the differing points of view in the ethanol and agricultural industroes. “We will have no chance whatsoever if divisions within the industry, across agriculture, and among biofuels continue to distract from the bigger picture. We need to spend less time arguing about who is right and more time doing what is right. As long as we’re more focused on what trade association you belong to than what the right policy should be, as long as ranchers are pitted against farmers over the price of grain, and food processors ignore the price of oil, as long as we’re arguing the relative merits of a ‘drop-in’ fuel vs. an ethanol molecule and whether investments in infrastructure help or hurt, we’re going to condemn our children to a future ever more reliant on imported petroleum.” Change is coming to this industry, he said, saying the question is what the response will be. “We need to do what the RFA has done for 30 years—build bridges. We need to build a bridge wide enough for the entire biofuels industry to cross to a more sustainable energy future. We need to build a bridge to our customers and consumers so the road to increased ethanol use is paved with understanding. We need to build a bridge to lawmakers so that we end up with a motor fuel policy befitting a 21st century energy industry. And we need to stride confidently across this bridge with enough vision, strength and innovation to conquer the insurmountable opportunities of our time.” —Susanne Retka Schill
april 2011 | Ethanol Producer Magazine | 31
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Defending All Fronts
Early attacks on ethanol policy underscore new challenges ahead Ethanol industry representatives knew the extension of the blenders credit and ethanol import tariff would be areas of contention this congressional year. They were likely also prepared for a battle over some of the aspects related to the implementation of E15. But the immediate and forceful attacks delivered by members of Congress in the early weeks of the session, challenging the U.S. EPA’s authority to approve E15 and the USDA’s ability to assist in blender pump installations, appeared to be unanticipated by the industry and have served to indicate just how challenging this year could truly be. Growth Energy CEO Tom Buis told members of his group this much during his State of the Organization speech delivered March 3 at Growth Energy’s second annual leadership conference in Las Vegas. “Thanks to a pair of amendments adopted by the House of Representatives as part of the Continuing Resolution, the ethanol industry has a new set of challenges,” he said. The House Continuing Resolution, which passed by a vote of 235-189 on Feb. 19, contained an amendment proposed by Rep. John Sullivan, R-Okla., which would prevent the EPA from implementing E15 for the remainder of the year. It also included an amendment proposed by Rep. Jeff Flake, R-Ariz., that would stop payments to USDA employees working on blender pump installation plans and would also not allow the EPA to funnel any of its funds into blender pump installations. On March 2, Congress passed a two-week funding bill that did not include the ethanol-related amendments, but Buis sees the reprieve as a temporary. “We are already working with the Senate to ensure these provisions are stripped from the final legislation,” he told Growth Energy members. “We will face these challenges again as Congress debates long-term federal funding legislation.” In a Feb. 25 letter sent to every senator, a coalition of ethanol supporters including the American Coalition for Ethanol, the Ameri32 | Ethanol Producer Magazine | april 2011
can Farm Bureau Federation, Growth Energy, the Renewable Fuels Association, the National Corn Growers Association, the National Farmers Union and the National Sorghum Producers, urged them to oppose any measure that would prevent the EPA from implementing E15. “Such a prohibition would only contribute to our nation’s reliance on foreign sources of oil,” the letter stated. “Extensive testing has been done on E15, and it has been found to be a safe and effective fuel for use in the vehicles approved in the waiver. There has been no evidence that would indicate problems in any vehicle regardless of vintage.” E15 Implementation The renewable fuel standard was also in jeopardy early Infrastructure expansion in the session through ConTax credits gressional attempts to prevent the EPA from regulating Research and new plant financing greenhouse gas (GHG) emissions from stationary sources. Draft legislation floated in the House in early February sought to prohibit for the industry to join together to engage the EPA from enforcing any regulation con- their representatives with discussions about cerning GHG emissions, but EPA Adminis- the benefits of ethanol and said he looks fortrator Lisa Jackson warned that it would also ward to the challenges ahead. “It’s a rough prevent the EPA from establishing renewable life in Washington right now, but we’re going fuel volumes as required under the renewable to win,” he said. fuel standard beginning in 2012. The agency The USDA appears unfazed so far by the would also not be allowed to approve new recent political attacks on ethanol and vows types of renewable fuels. A bill unveiled in to continue working to advance the domesboth the House and Senate on March 3 cor- tic biofuels industry. Secretary of Agriculture rected that action and exempts the renewable Tom Vilsack said during a recent speech that fuel standard from being affected by the leg- “now is not the time to take the foot off the islation. gas” in terms of support for renewable fuels Buis attributed the new Congressional and announced plans to sign a memorandum challenges to ethanol’s image problem. “Our of understanding with the Governors’ Biocritics have spent millions of dollars to de- fuels Coalition to encourage the continued fine us in a negative light,” he said. He called development of biofuels. —Kris Bevill
Challenges Ahead
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The Real Culprit
Food vs fuel debate points at wrong industry It doesn’t take much for ethanol critics to start waving the food versus fuel flag. The blame ethanol game started again during unrest in Egypt, Libya and other areas of the world. Environmental attorney Tim Searchinger stirred up the debate with an op-ed piece published Feb. 11 in the Washington Post, which blamed biofuels for food riots. It’s true global food prices went up for the eighth consecutive month in February, according to the Food and Agriculture Organization of the United Nations. FAO made no mention of biofuels as a factor, however, instead pointing to growing demand, declines in world cereal production in 2010 and a 70 percent increase in export prices of major grains. “Unexpected oil price spikes could further exacerbate an already precarious situation in food markets,” said David Hallam, director of FAO’s Trade and Market Division. Food vs. fuel is a myth, says Gal Luft, coauthor of “Turning Oil into Salt” and a proponent of an Open Fuel Standard, legislation to mandate increasing numbers of flex-fuel vehicles that run on any combination of ethanol, methanol and gas. It’s a myth perpetuated by an “orchestrated campaign” against etha-
nol that was financed by Big Oil, food makers and other anti-ethanol groups, he says. Who is the real culprit? “Food prices go up, not because of ethanol. Food prices go up because oil prices go up. We saw this very clearly in 2008,” Luft tells EPM. “The major factor in the production of food is oil, the shipping, the packaging, the fertilizer and everything that goes into making food.” In 2010, the World Bank reversed its 2008 report that biofuels caused a spike in commodity prices and later said financial investors were likely culpable. Another report Source: USDA and RFA by the United Kingdom’s Department for Environment, Food and Rural Affairs said biofuels role in higher food In addition, ethanol production is a major prices was small. source of livestock feed, turning one-third of The U.S. ethanol industry uses only 3 every bushel of corn into DDGS. “In 2010, percent of net world coarse grain supply, the U.S. exported nearly 10 million metric says Bob Dinneen, president and CEO of tons of feed and still had 23 million metric the Renewable Fuels Association. That leaves tons available for domestic feed uses,” the 97 percent of global grain supply of corn, RFA said. —Holly Jessen wheat, rice and other grains for other uses.
One for the Record Books 2010 exports of ethanol, DDGS grow dramatically It’s a good news/bad news situation. The good news is U.S. ethanol producers are finding a ready market overseas for domestically produced ethanol. The bad news is that those gallons of homegrown renewable fuel aren’t being used domestically. Final volumes for 2010 show a nearly 400 percent increase in U.S. ethanol exports when compared to 2009, according to government data released in February. The dramatic surge can be attributed to two factors, says Geoff Cooper, who tracks exports for the Renewable Fuels Association as its vice president of research and analysis. No.
1 is that U.S. ethanol has been priced competitively compared to other markets. In addition, the domestic market for E10 is currently saturated and moving to E15 will take time. “The U.S. ethanol industry would prefer not to have to export any product at all, but current market conditions don't allow the U.S. market to absorb the amount of ethanol America is capable of producing today,” he says. In all, 397 million gallons of U.S. ethanol were exported in 2010. Of those gallons, 270 million, or 68 percent, were denatured ethanol. The remaining 27 million gallons
were undenatured, nonbeverage ethanol, of which some were probably used for industrial uses other than fuel. The exported gallons aren’t eligible for the Volumetric Ethanol Excise Tax Credit, also known as the blenders credit, Cooper adds. DDGS exports were also up. The numbers doubled from 2008 to 2009 and increased 60 percent from 2009 to 2010. In all, 9 million metric tons of DDGS were exported in 2010, with China as the top importer at 2.5 million metric tons, or 28 percent of the total. —Holly Jessen
april 2011 | Ethanol Producer Magazine | 33
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Tailor-made for Ethanol
Syngenta amylase corn gets full approval It’s something the ethanol industry has been asking about for awhile now—corn that’s genetically modified to produce more ethanol without the use of enzymes. In February, Syngenta Seeds Inc. came through with corn amylase Event 3272, which will be sold under the Enogen seed brand. Production tests of Syngenta Seeds Inc.’s new amylase corn at Western Plains Energy LLC showed an 8 percent increase in ethanol production and an 8 percent decrease in natural gas use. It’s enough to make Steve McNinch, general manager and CEO of the Oakley, Kan., plant, never want to go back to a liquid amylase enzyme ever again. “What that means for us is more profits, with less expense,” he says. “And there are no ‘gotchas’ for the plant either.” Syngenta announced Feb. 11 that it had received full deregulation for the amylase corn product. The corn variety—which has been a decade or so in the making—has an alphaamylase enzyme engineered right into it, says Jack Bernens, head of technology acceptance for Syngenta Seeds. It’s the first genetically modified corn seed tailor-made for the ethanol industry. “Enogen corn is a breakthrough product that provides ethanol producers a proven
means to create more value per gallon while offering targeted corn growers an opportunity to cultivate a premium specialty crop in a contracted, closed production system,” says David Morgan, president of Syngenta Seeds. “Also, Enogen corn can substantially reduce the energy and water consumed and the carbon emissions associated with ethanol production.” A 100 MMgy ethanol plant using Enogen corn can save 450,000 gallons of water, 1.3 million kilowatt hours of electricity and 244 billion Btu of natural gas annually, according to a 2008 study by John Urbanchuk, technical director for Cardno Entrix. That amount of power is enough to heat several thousand homes while simultaneously reducing CO2 emissions by 102 million pounds. Full deregulation basically means the company has USDA approval to sell the corn with no conditions, Bernens says. In addition, the variety has had Food and Drug Administration approval since 2007. “It is perfectly as safe for food and feed as conventional corn,” he tells EPM. The only areas for which the amylase corn could cause a functionality concern are in some industrial and food processes. Still, Syngenta plans to only allow contracted corn growers with an ethanol plant
in their area to plant Enogen seed corn. The company will use a tightly managed track-andtrace system, grower training and auditing to ensure that the corn will be used in the industry for which it will provide the most benefit. “It’s a high value crop and it only has additional value if it goes into the dry grind ethanol industry,” he says. “It can be fed to cattle, it could be used for other purposes, but it doesn’t really add value there.” The company is also working to establish an advisory council, which will be made up of stakeholders including corn growers, food processors and the USDA. The objective, Bernens says, is to get input from those along the value chain while providing assurance that the product will work as promised. The company also plans to work with ethanol plants to test the grain at additional facilities, giving those plants a chance to see the potential benefits of amylase-engineered corn. Because it’s already relatively late in the year, few acres of the amylase corn will likely be planted in the 2011 season, Bernens says. It’s likely to ramp up in 2012, but not as quickly as other corn traits are typically accepted. “It’s a much slower gear up from a commercial perspective.” —Holly Jessen
Share the Knowledge Interactive website seeks industry collaboration A newly launched interactive website created by the U.S. DOE’s Oak Ridge National Laboratory is focused on eliminating “information silos” in the biofuels industry with the intent of advancing the entire industry. The Bioenergy Knowledge Discovery Framework allows registered users to share large data sets and research information and is designed to encourage user on the web generated data and The Bioenergy Knowledge feedback. Geographic Discovery Framework mapping capabilities can be accessed at www. allow users to bioenergykdf.net. 34 | Ethanol Producer Magazine | april 2011
identify feedstock production potential, energy demand patterns and available infrastructure for potential biorefinery locations. Inspiration to develop the site came from the realization that while a significant amount of money has been invested in gathering bioenergy-related data, a relatively insignificant amount of effort has been spent in sharing that data, according to ORNL researchers. “This new tool connects data, knowledge and people in what we expect will become a catalyst that allows interested
parties to come together and accelerate the process of developing homegrown, sustainable and plentiful biofuels,” Budhendra Bhaduri, ORNL’s principal investigator of the project, says. —Kris Bevill
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Advancing Ethanol
The advanced ethanol industry forms a united front A group of advanced ethanol producers, in conjunction with the Renewable Fuels Association, have formed the Advanced Ethanol Council to focus on the commercialization of advanced ethanol. Mascoma Corp. CEO Bill Brady will serve as the group’s chairman. Vice-chairmen include Chris Standlee, executive vice president of Abengoa Bioenergy and John McCarthy, CEO of Qteros. Other founding members include BlueFire Renewables Inc., Coskata Inc., Enerkem, Fulcrum BioEnergy Inc., Inbicon A/S, Iogen Corp. and Osage Bio Energy. Executive Director Brooke Coleman says the group was formed to re-establish advanced ethanol’s voice within the marketplace. “There are a lot of ways to produce ethanol, and the companies that are trying to diversify the technologies and feedstocks available to the industry have a unique story to tell and unique interests from a policy and messaging perspective,� he says. “We want to stand out and make clear how close we are to getting that accomplished.� Coleman stresses that while cellulosic ethanol technology certainly qualifies as an advanced ethanol technology, it is not the only technology that meets the group’s eligibility requirements. Pending board approval, any technology that produces advanced ethanol— meaning it meets the renewable fuel standard’s advanced biofuel definition of reducing greenhouse gas emissions by 50 percent when compared to gasoline—could qualify for membership. —Kris Bevill
A Canadian Co-op
Atlantic bioenergy gains a voice A small group of Canadian bioenergy industry representatives and researchers has formed the Atlantic Council for Bioenergy Cooperative Ltd. to represent the interests of biofuels, biomass and biogas in Newfoundland, Nova Scotia, New Brunswick and Prince Edward Island. The group plans to work with local and federal government officials to form consumption markets in Atlantic Canada for their products and will promote the advantages of Canadian renewable energy to media and consumers. “The creation of an industry association is critical for progressive, positive development in the bioenergy industry, in order to take greater advantage of the opportunities here in this region,� Stephen Davies, chair of the ACBC board of directors, says. “This new association will give us the vehicle to speak directly and collectively on how Atlantic Canada can carve out its share of the economic and environmental benefits in the emerging green economy.� Other founding members include Kevin Shiell, scientific director for the Center of Excellence in Agricultural and Biotechnological Sciences, Ron Coles, communications manager for sugar beetto-ethanol producer Atlantec Bioenergy Corp., and Ken Magnus, president of Salveo Enterprises Inc. —Kris Bevill
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Leaving Lag Behind
GM brings a turbocharged, direct injection engine to the U.S. What do you get when you combine twin turbochargers, direct injection and flexfuel capability? The Buick Regal Turbo, the first U.S. engine to combine all three elements in a flex-fuel vehicle. The result is a more powerful engine that uses less fuel and has lower emission numbers—previously conflicting goals. “It makes a four cylinder in a Buick a great product,” says Coleman Jones, General Motor’s biofuels implementation manager. The company has been selling vehicles with all three elements combined in Europe but for technical and marketing reasons this is its first direct-injection, turbo charged FFV in the U.S. It won’t be the last, however. “I think you’ll see more of these, particularly in the smaller displacement engines,” Jones tells EPM. “It’s easier to take advantage of it with a small engine.” A flex-fuel engine needs a higher flowrate injector due to the fact that ethanol requires a richer air-fuel mixture than gasoline. Because a flex-fuel engine can have any combination of gasoline and up to 85 percent ethanol in its tank, a sensor in the fuel system measures the current
blend. “This allows the engine management system to automatically adjust the mixture to provide improved performance and reduced emissions and fuel consumption,” the company says, adding that the vehicle also has stainless steel fuel lines. A previous problem with lag in turbocharged engines has been fixed with twin-scroll turbos. Drivers familiar with those vehicles remember hitting the gas and not getting an immediate response until the vehicle suddenly took off. Another problem was that the vehicles sometimes surged forward without the driver requesting more power. “By having a twin-scroll turbo, what we do is we have two little turbos instead of one big turbo, it has a lot less inertia, so it spins up to boost much faster,” Jones says. That gives the engine pick-up-and-go without it feeling at all like a turbo powered engine. "The 2.0-liter Ecotec turbo produces 258 pound-feet of torque from 2,000 to 5,500 rpm making it feel like a much-larger V6 engine while still delivering four-cylinder efficiency," says Ecotec chief engineer Mike Anderson. The engine is downsize boosted, which
Power Components The basic component set makes up the Buick Regal's 2.0L direct injection fuel system including fuel rail and injectors, high pressure camdriven fuel pump and the important E39 engine control module (cover removed) containing the “Viper” 32 bit microprocessor. PHOTO: GM
Jones described as making a little engine look big with the use of a turbo. “You have the efficiencies of small engine most of the time and then when you need the additional power for passing, or what have you, it’s there through the turbo,” he explains. “We’re going to be doing a lot of small turbos because this is one way to meet the coming fuel economy targets.” —Holly Jessen
Waste Not
Ineos New Planet BioEnergy, a joint venture between Ineos Bio and New Planet Energy, broke ground on its waste-to-fuel commercial plant Feb. 9 in Vero Beach, Fla., with local dignitaries on hand for the ceremonies. The $130 million Indian River BioEnergy Center will produce 8 MMgy ethanol as well as renewable power from local yard, vegetative and household wastes by mid-2012. The plant will provide 205 direct and indirect jobs as well as 175 construction jobs during the next two years. —Holly Jessen 36 | Ethanol Producer Magazine | april 2011
PHOTO: INEOS
Ineos Bio breaks ground
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Georgia Plant Files Chapter 11 Operations to continue during reorganization
High corn prices, feedstock delivery delays via rail and operational issues were cited as reasons for a bankruptcy filing by Southwest Georgia Ethanol LLC. The 100 MMgy ethanol plant in Camilla, Ga., announced in early February that it had filed for bankruptcy protection. The company also said it would continue to operate as a debtor-in-possession and will continue to purchase corn. The plant’s parent company, First United Ethanol LLC, did not file for bankruptcy and will continue to manage the plant. A reorganization plan is being devised to restructure its debts and pay off creditors. To accomplish that, the company is working with Morgan Keegan & Company Inc., McKenna Long & Aldridge LLP, its banking syndicate and the court, says Alicia Shirah, director of communications. —Holly Jessen
Trimming the Fat
Iowa pork producers weigh in Virtually every industry that participates in the corn market has a stake in the future of corn ethanol support, but contrary to what some industry groups would have the public believe, not all are unequivocally opposed to continuing federal ethanol subsidies. Members of the Iowa Pork Producers Association recently passed a resolution that resembles proposals being put forth by the ethanol industry. The group is unsurprisingly supportive of allowing both the blenders credit and import tariff to expire at the end of this year, but it also supports shifting those subsidy dollars to the buildout of ethanol infrastructure. Greg Lear operates a swine farm in northwest Iowa and is currently serving as vice president of operations for the IPPA. He says the consensus among IPPA members is that they support ethanol but believe current subsidies are driving up corn prices to levels that would not have to be endured otherwise. He’s currently paying about $60 for corn to raise each 280-pound pig, he says. Ten years ago, his corn costs were about one-third that price. Diverting ethanol subsidies toward infrastructure could help level the playing field for corn while continuing to support three of Iowa’s top industries—corn, ethanol and pigs, he says. “It’s getting to the point where [ethanol] is not a struggling industry anymore,� Lear says. “If they’re going to have those monies gathered, use them in something that will be helpful instead of a hindrance.� Of the two ethanol subsidies set to expire this year, Lear believes eliminating the import tariff could have the greater impact on corn prices by opening up the possibility for non-grain-based ethanol to take up more of ethanol’s market share. —Kris Bevill
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Shift in Growth
From greenfield to acquisition-based model With its latest ethanol plant purchase Green Plains Renewable Energy Inc. now owns more plants purchased out of bankruptcy than plants the company has built itself. Otter Tail Ag Enterprises LLC, a 55 MMgy ethanol plant located in Fergus Falls, Minn., is GPRE’s fifth plant purchased out of bankruptcy since 2009. The company was formed in 2004 with the goal of constructing and operating dry mill ethanol plants. Between August 2007 Plants built by Green Plains Location
Start Up
Shenandoah, Iowa
65 MMgy
August 2007
Superior, Iowa
60 MMgy
July 2008
Bluffton, Ind.
120 MMgy
September 2008
Obion, Tenn.
120 MMgy
November 2008
Capacity: 365 MMgy
and November 2008 Bankruptcy acquisitions the company started Location Acquired From producing ethanol at Central City, Neb. 100 MMgy VeraSun Energy Corp. July 2009 four plants in Iowa, Ord, Neb. 55 MMgy VeraSun Energy Corp. July 2009 Indiana and TennesLakota, Iowa 100 MMgy Global Ethanol LLC September 2010 see. Riga, Mich. 60 MMgy Global Ethanol LLC September 2010 The shift startFergus Falls, Minn. 55 MMgy Otter Tail Ag Enterprises LLC March 2011 ed in 2009, when Capacity: 370 MMgy GPRE purchased its first two distressed plants from VeraSun Energy Corp. The purAll told, GPRE now owns and operates chase of plants in Central City, Neb., and Ord, 735 MMgy of ethanol production, a number Neb., made the company the fourth largest that is likely to go up as the company works ethanol producer in North America. In 2010 to increase efficiency and capacity at its plants. GPRE added two Global Ethanol LLC plants However, if GPRE’s goal is to pass up Valero to its list. The latest acquisition came only a Renewable Fuels, which currently holds the few months later in early 2011 when it pur- No. 3 ethanol producer spot, it still has a ways chased the 55 MMgy Fergus Falls plant for to go. The 2010 fall map put Valero at total $55 million, or $1 million per million gallons capacity of 1,100 MMgy. —Holly Jessen of production.
Safety Assurance
Producers often play key role in providing ethanol safety training In February, a 62-car Norfolk Southern Corp. train hauling ethanol from Chicago to North Carolina derailed near Arcadia, Ohio, sparking a huge blaze and bringing to light again the important role ethanol producers play in providing safety training for first responders. Ethanol’s chemical properties make it a unique challenge for fire fighters and given that most ethanol facilities are located in rural areas serviced by volunteer fire departments, producer participation in training is crucial to safety efforts. Following the Ohio train incident, local emergency management director Garry Valentine credited nearby ethanol plants for previously providing basic information to volunteer firefighters which contributed to a smooth response during the incident. “I won’t say we had hands on the web on experience, but Information on ethanol we did have verbal training and upcoming safety knowledge,” he events can be found at www. ethanolresponse.com. said. “I think that 38 | Ethanol Producer Magazine | april 2011
helped us out a lot because some of those things come back to our minds real quick when we’re out there.” Ethanol training for first responders can be as basic or elaborate of a project as a plant is willing to tackle. Many ethanol plants host training sessions to familiarize first responders with the plant layout in case of emergency and provide basic information related to ethanol’s unique properties. Tom Slattery, environmental health and safety manager for Poet LLC, says maintaining a close relationship with local emergency service providers is part of the safety procedure at each Poet plant. Kansas Ethanol LLC, a 55 MMgy plant near Lyons, Kan., went as far as to host a live ethanol burn in 2009, providing first responders with hands-on training in actual ethanol fire situations. The Renewable Fuels Association has been heavily involved in providing ethanol safety training for several years and coordi-
nates annual training sessions held at various locations throughout the country. In collaboration with various Clean Cities Coalitions, the RFA is hosting a series of Ethanol Safety Seminars this year with upcoming events in Charlotte, N.C., Houston and Beaumont, Texas, Portland, Ore., Stockton, Calif., Indianapolis, Ind., and Ohio. Funded through a $1.6 million grant from the U.S. DOE, the events are focused on providing a comprehensive ethanol emergency response training experience, based on a training guide created by the Ethanol Emergency Response Coalition. “America is nearing a 100 percent saturation point with E10 in our nation’s fuel supply,” says Robert White, market development director for the RFA. “As ethanol continues to flow across the country through railways and trucks into fuel retail stations, it is important for first responders to be well-prepared and trained for ethanol-related emergencies.” —Kris Bevill
distilled
Making it Work
When a 108 MMgy ethanol plant in Clatskanie, Ore., went bankrupt after only operating six months, one creditor was JH Kelly Holdings LLC, a contractor that had to Restart Repairs are ongoing at been hired to build the Preparing this 108 MMgy corn-to-ethanol ethanol plant in plant. Today the com- Oregon, in preparation for restarting. pany owns the plant and is working to restart it. “We fully anticipate that the plant will be ready to start by late spring or early summer,� said Mark Fisler, partner and managing director of Ocean Park Advisors, retained to develop strategic alternatives for the facility. The new company, Cascade Kelly Holdings LLC, is a subsidiary of JH Kelly Holdings LLC. Fisher confirmed that the company would like to sell the plant at some point but added that isn’t the immediate concern. “Their primary goal today is to do the minor repairs and start the plant up and operate it.� —Holly Jessen
Hit the Ground Running Former Gateway to receive grain again April 1
A 55 MMgy ethanol plant in Pratt, Kan., is being extensively renovated by its new owner, The Scoular Company, with a goal of receiving grain by April 1 and being fully operational in the second or third quarter of 2011, says John Heck, senior vice president. Scoular acquired Gateway Plant LLC along with an adjoining 1.8 million bushel shuttle train facility. The newly dubbed Pratt Energy LLC plant is located on the Union Pacific Railroad and is capable of loading 100-car shuttles. The primary purpose will be to bring in feedstock for the plant, Heck says. It will also be used to load outbound trains with distillers grains and ethanol. Although Scoular is in discussions with other companies about partnering in operating the plant, the company is prepared to start on its own. “It is economically feasible to run this plant, and that’s what we want to do,� says CEO Chuck Elsea. Terms of the sale were not announced. The $100 million plant started producing ethanol in October 2007 but filed for bankruptcy a year later after several shutdowns for repairs and due to limited working capital. Scoular will reinstall a boiler as well as do significant work in the distillation, dehydration and evaporation areas of the plant. —Holly Jessen
PHOTO: CASCADE KELLY HOLDINGS LLC
Construction company purchases plant it helped build
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regulations
Heavy Hitters Large facilities, such as the 100 MMgy Homeland Energy Solutions LLC plant, were subject to emissions permitting regulations prior to the U.S. EPA’s Tailoring Rule for greenhouse gas emissions and are not expecting much change in their compliance activities. PHOTO: MATTHEW PUTNEY
42 | Ethanol Producer Magazine | april 2011
regulations
Regulations
Horizon on the
What impact will the U.S. EPA’s Tailoring Rule regulations have on ethanol producers? By Kris Bevill
When the U.S. EPA finalized its Tailoring Rule for greenhouse gas (GHG) emissions last spring, it made painstaking efforts to reassure the industry that the regulations would only affect a small percentage of U.S. facilities. Most of the af-
fected facilities were already required participants of emissions permitting programs, the agency said, so compliance would not be detrimental to business. Industry representatives remained skeptical, however, including the ethanol industry, which was stunned to learn that the EPA had incomprehensibly included biogenic emissions in its final rule. Inclusion of these emissions, defined by the EPA as emissions that occur as a result of combustion of decomposition of biological materials, would mean that most, if not all, ethanol facilities would become subject to the newly modified permitting requirements because the majority of an ethanol plant’s emissions stem from the fermentation process. The industry refuted the EPA’s inclusion of those emissions, stating that biogenic emissions have historically been deemed carbon neutral worldwide because CO2 emitted during the conversion to ethanol is equal to the CO2 absorbed during the feedstock’s growth.
april 2011 | Ethanol Producer Magazine | 43
regulations
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Can’t Stop Like many ethanol plants, Homeland Energy Solutions employs the use of thermal oxidizers and dryers at its facility which produce a significant portion of the facility’s greenhouse gas emissions.
It wasn’t until Jan. 12 that the EPA finally decided to defer permitting requirements for biogenic emissions for three years while it conducts scientific analysis and develops a rulemaking to specifically address those emissions. The decision was a huge relief for the industry, and will likely save some producers from participating in the regulatory program, but it will not eliminate ethanol’s participation in the rule entirely. The second stage of the three-legged Tailoring Rule will become effective July 1 and will require any existing facility that has the potential to emit at least 100,000 tons annually of GHGs to obtain operating permits. New construction projects that may emit at least 100,000 tons of GHGs will also be subject to the rule. Ethanol facilities will be affected, but how many? And what economic burden will these facilities bear?
The Numbers
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It is not exactly clear how many of the 200-plus U.S. ethanol plants will be affected by the EPA’s regulations in July, but indications are it will be most large facilities. The Iowa Department of Natural Resources Air Quality Bureau has been collecting GHG emissions data since 2007 and, based on that information, believes that 20 or 21 of
the state’s 27 operating minor source ethanol plants will be subject to the regulations. The remaining six facilities may not be impacted, as a result of the EPA’s delayed inclusion of biogenic emissions, according to Marnie Stein, a senior environmental specialist with the bureau. Judging from that data, the Tailoring Rule will likely impact the majority of U.S. ethanol facilities, but it’s also important to note that the regulations will not be new to many of the affected parties. “We have 10 dry mills and five wet mills that are already subject to Title V, so there is some experience in the industry with Title V compliance,” Stein says. Facilities are required to obtain Title V operating permits if they have potential emissions over a certain threshold. Permits are typically issued by state agencies, as is the case in Iowa. Stein says she doesn’t anticipate major changes for those previously affected facilities when the EPA’s regulations take effect on July 1. “The way facilities are permitted in Iowa is you get a construction permit for each individual piece of equipment and your Title V permit takes all those permits and combines them into one document,” she explains. “So, maybe other than some additional monitoring requirements like additional stack testing and
regulations
compliance and monitoring reports, the requirements in the Title V permit are not going to be different than what they’re already subject to in their construction permit.” One potential change could be the addition of a Prevention of Significant Deterioration permit, she adds, which would only be necessary if the plant makes changes that increase GHG emissions by 75,000 metric tons or more annually. If biogenic emissions were still included in the Tailoring Rule, this permitting requirement could have affected any facility undergoing an expansion project. Rita Dunn, environmental manager for the 100 MMgy Homeland Energy Solutions LLC plant in Lawler, Iowa, and the 80 MMgy Golden Grain Energy LLC plant in Mason City, Iowa, says both facilities are already subject to Title V requirements, so compliance in July should not be an issue. Both facilities, like most ethanol plants in the U.S., are also required participants of the EPA’s Mandatory Reporting Rule for GHG emissions. Dunn says compliance with the MRR has also so far mostly been a non-issue. “Any Title V facility in Iowa already has to report greenhouse gases as part of their emissions inventory, so that tracking and calculating has not been a big deal for us,” she says. Minor differences between the state and federal programs have included the requirement for a monitoring plan, which Dunn says was completed by a consulting firm, and a few additional details. The EPA requires facilities to provide high heating values from natural gas suppliers,
for instance, whereas facilities previously were only required to track the amount of natural gas used by the plant, she says. Facilities also need to determine the amount of biogas combusted in the dryers if the facility cofires biomass fuels from biomethanators. This has been burdensome for ethanol plants with biomethanators that produce relatively miniscule amounts of methane compared to industrial wastewater treatment plants. In her role as environmental manager, Dunn is most concerned with the EPA’s electronic system for reporting GHG emissions, known as e-GRRT. “It’s almost like it’s being developed as we speak,” she says. “We all had to register by Jan. 31 and they were actually having training into late-2010 as to how to register.” Reporters must file their first annual emissions inventory with the EPA through e-GRRT by March 31.
Cost of Compliance
It is somewhat unclear what the total cost of compliance will be for new participants of the Tailoring Rule. Affected facilities will be required to cover the cost of preparing the applications and will be subject to annual fees on non-GHG pollutants. The 10 Iowa dry mill ethanol plants previously subject to Title V permitting requirements paid average fees of $11,891 in 2009, according to Stein. She says newly affected facilities will likely be smaller plants, so their fees may be less than the 2009 average. Pollutant fees are set by the state Environmental Protection Commission and
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Who will be affected?
Iowa’s Department of Natural Resources Air Quality Bureau says the following rule-of-thumb fuel capacities can be used as a good indicator of whether a facility will be impacted by the July 1 Tailoring Rule regulations. Fuel
Natural Gas Diesel Bituminous Coal
75,000 tons per year CO2e
100,000 tons per year CO2e
102 MMBtu/hr
136 MMBtu/hr
81 MMBtu/hr
108 MMBtu/hr
144 MMBtu/hr
DATA: IOWA DEPARTMENT OF NATURAL RESOURCES AIR QUALITY BUREAU
192 MMBtu/hr
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regulations
are capped at $56 per ton, which was the fee price in 2009, she says. Homeland Energy and Golden Grain are accustomed to paying Title V permit fees, Dunn says. “For our facilities I don’t see an additional cost, but for smaller facilities— definitely,” she says. “Submitting a Title V application usually requires a consultant and that takes a lot of money and a lot of time.” Geoff Cooper, vice president of research for the Renewable Fuels Association, says states may implement additional fees per ton of emissions to cover the additional administrative burden of implementing the EPA’s rule. “There are a lot more sources that they’re regulating now under the Tailoring Rule, so they’re going to have more of a burden and, in order to cover those costs, many states are looking at implementing a fee,” he says. “There’s also the requirement for best available control technology [BACT], which no one really knows at this point what that may mean economically for an ethanol pro-
46 | Ethanol Producer Magazine | april 2011
ducer because it isn’t really clear what EPA will consider to be BACT.”
Remaining Issues
The EPA issued an initial BACT guidance last fall, but as of mid-February it had not yet finalized the guidance, which will be used by affected entities and state permitters to assist in determining preferred GHG emissions-reduction methods at facilities. During a Congressional hearing in early February, EPA Administrator Lisa Jackson told legislators she expected energy efficiency to become a primary form of BACT, but the RFA believes that term is too vague to be a useful compliance tool. “What is energy efficiency and how is that defined and measured?” Cooper says. “There’s so many implementation questions that go along with BACT.” Aside from energy efficiency, the RFA takes issue with the EPA’s broad evaluation of other technologies that it believes could
be available for reducing GHG emissions and therefore deemed as BACT. “They specifically called out carbon capture and sequestration [CCS] as a BACT option for an ethanol plant and it isn’t an option,” Cooper points out. “There’s no one in the industry today doing CCS, the costs of CCS are prohibitive—the technology is not there, necessarily.” Cooper said he expects the EPA to issue at least a second draft of its guidance in the near future, ideally correcting some of the vagueness of its earlier draft. It is unclear how many affected ethanol plants would be able to lower their emissions to levels below the EPA’s thresholds, even if the agency decides that relatively simple energy efficiency measure can be used to mitigate emissions. Homeland Energy and Golden Grain each exceed the 192 million Btu per hour (MMBtu/hr) natural gas Tailoring Rule threshold by more than 8 MMBtu/ hr, according to Dunn, and have no current
regulations
Defining Regulations
Mandatory Reporting Rule: The Mandatory Reporting Rule for Greenhouse Gases (MRR) requires facilities that emit 25,000 metric tons or more of CO2 equivalent (CO2e) annually to monitor their emissions and file annual reports with the U.S. EPA. The goal of the program is to provide the EPA with a better understanding of where GHGs are coming from, according to the agency. Data compiled as a result of the MRR will be used to guide the development of policies and emissionsreduction programs. Tailoring Rule: The Tailoring Rule established thresholds for GHG emissions that define when Prevention of Significant Deterioration and Title V operating permits are required for new and existing facilities. Prior to the creation of the Tailoring Rule, facilities emitting 25,000 metric tons or more of CO2e would be required to obtain permits. The Tailoring Rule increased the emissions threshold and established three phases of participation for the rule.
plans to attempt to reduce emissions. “It would not be economically feasible with today’s margins to add emission control for GHGs,” she says. The delay of biogenic emissions was an important step for the ethanol industry, but because the EPA will not decide until 2013 whether those emissions will be permanently excluded from the Tailoring Rule, producers may be hesitant to install energy efficient measures such as biomass cofiring. “I think the uncertainty over how the EPA will handle these biogenic emissions will have some effect on what ethanol producers decide to do in terms of adopting these technologies,” Cooper says. Another lingering issue is the fate of the Tailoring Rule and the EPA’s ability to regulate GHG emissions. Several lawsuits have been filed, challenging the agency’s authority to impose emissions regulations under the Clean
Air Act. Legislators have also stepped in, drafting bills that would delay or permanently halt the EPA’s ability to regulate emissions. The Iowa DNR Environmental Protection Commission pointed out in its final Tailoring Rule that states are obligated to implement the Clean Air Act and cannot wait for challenges to the federal regulation to be resolved, which could take years. In the event that legal or other federal actions modify the federal Tailoring Rule, states may conduct emergency rulemaking, which would allow state agencies to react relatively quickly to those changes, the department stated. In the meantime, state agencies and producers must continue to prepare to comply with the July 1 start date. Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
april 2011 | Ethanol Producer Magazine | 47
permits
Permit Checkup NAQS President Piyush Srivastav and Joe Oswalt, environmental health and safety manager for E Energy Adams, discuss permit compliance as they tour the plant in Adams, Neb. PHOTO: NAQS
48 | Ethanol Producer Magazine | april 2011
permits
Permitting: A Big Ticket Item
An overly restrictive permit can cost an ethanol plant more than just fines for noncompliance. By Holly Jessen
Imagine an ethanol plant that requires grain trucks to follow a scripted route: Trucks must enter by taking a right turn, drive in a counterclockwise direction, and then leave by taking a left turn. Now imagine that it’s a permitted requirement that, if violated, could result in noncompliance and hefty fines. It’s a real example of what one ethanol plant faced as it went through the permitting process, says Jessica Karras-Bailey, an associate with RTP Environmental Associates Inc., which provides environmental consulting services. With Karras-Bailey’s help, the plant was able to find out why the state wanted to include such a restrictive requirement (air dispersion modeling reasons), explain why that wouldn’t work from an operational standpoint and negotiate a more flexible requirement in the final permit. “But it’s not always easy,” Karras-Bailey tells EPM. Although some states are more restrictive than others, permitting that goes above and beyond what the state or federal regulations require affects many ethanol plants nationwide, says Piyush Srivastav, president of Nebraska-
april 2011 | Ethanol Producer Magazine | 49
permits
based National Air Quality Specialties LLC. While it’s true that states do have the authority to set more restrictive regulations than the federal requirements, what’s at issue here is when state agencies write permits that are more restrictive than their own state regulations, Srivastav explains. When that happens, state agencies are reaching beyond their regulatory authority. “Congress and the EPA laid out these regulations and the intent of the regulations was put in place with the big picture of protecting the environment,� he says. Karras-Bailey characterizes the problem as over regulation on the part of the state agencies. She doesn’t believe states are necessarily incorrect in regulating certain things at ethanol plants, but agrees that their methods of regulation can cause problems for the plant. “They are lookNegotiating Permits Jessica Karra-Bailey ing at it in such a way of RTP Environmental that there’s no flexAssociates explains overly restrictive ibility for the facility,� requirements can be she says, pointing out negotiated in permits. that some plants are required by their permits to shut the doors while corn is being unloaded, which can slow down operations dramatically.
NAQS has worked with ethanol plants whose air permits were written to allow plant emissions in terms of pounds per hour, rather in tons per year, as the federal air regulations allow, Srivastav says. A permit with pounds per hour limits is much more restrictive than tons per year. “In some sense, you are having to meet the standard on an hourly basis,� he says. If a plant goes over those pounds per hour limits it could be fined for violating its permit, even if it didn’t violate the underlying regulations. There are some limited circumstances where pounds per hour limits could be justified, but not in many cases, he adds. Other examples of unnecessary permit conditions include redundant limits that include both emissions limits and throughput limits, requiring spare bags for baghouses or treating the capacity of a boiler or engine as a permit limit. Someday down the road, an ethanol plant with a very restrictive permit may find itself in violation of its permit conditions. What if an inspector drops by and there are no spare bags in the baghouse or testing shows the plant has exceeded its pounds per hour limits? At that point, many states look at it in black and white, turning it back on the plant by pointing out that it accepted the limits it has now violated—“Even though you may not have violated any of the underlying
regulations, which is really what you should be held accountable for,� he says. Tory Kort of Chief Ethanol Fuel Inc. in Hastings, Neb., confirms that ethanol plant permits have become more and more complicated and prescriptive over time. The environmental engineer and environmental health and safety manager has worked at the 62 MMgy plant for more than five years. In 1982, when the plant was first constructed, its first air permit was Growing Complexity Ethanol’s first air only two pages. “To- Chief permit was two pages day it’s a lot different,� long, says Tory Kort, a cry from the current he says, estimating that far 30-page document. the plant’s current air permit is more than 30 pages long. Kort also cautioned against accepting permit conditions that have no regulatory basis. A permit that limits the amount of ethanol produced at the facility, for example, could limit profitability. Other conditions limit operational flexibility, opening ethanol plants up to potential violations. “If there is not regulation in place that says we have to do it that way, then it’s just an additional compliance risk,� he says. In 2009, Chief Ethanol was fined for
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permits
exceeding air emission limits set in its operating permit, according to information from the Nebraska Department of Environmental Quality. Just as the example given by Srivastav, the plant’s air permit was written in terms of pounds per hour, not tons per year. “All we had to do is change the permit and we were back in compliance, with no changes in the plant,” Kort says, adding that it’s frustrating because the state shouldn’t have written in the condition in the first place, making some compliance enforcement actions feel excessive and unjustified. Buffalo Lake Energy, a 110 MMgy BioFuel Energy Corp. ethanol plant, was fined $285,000 for air quality violations and discharging wastewater that failed to meet acceptable levels of toxicity. The water violations happened mainly during the start up of the plant, explains Rick Yabroff, director of environmental health and safety for BioFuel Energy. They were caused by design and construction flaws that were corrected in order for the plant to meet the conditions of its water permit. As for the air permit violations, the company realized at start up it would need a perPermit Challenges mit modification to Buffalo Lake Energy change some minor was fined for things in its air pernoncompliance during the time it sought mit. The violations permit modifications, were recorded in the says Rick Yabroff. six months before the modified permit was approved by the state agency. A future concern for the company is at its plant in Wood River, Neb. The state agency is now requiring frequent air control tests on scrubbers. Instead of one test per performance term, the agency is now asking for several tests a year, way above and beyond what the regulations require. This will open the plant up to possible liability as well as increased costs for more frequent testing. “It’s always controversial whether it is really necessary or not,” Yabroff says.
“Get permits that are written accurately and protect you. They should provide you flexibility and not hamstring your operations. Once it’s in your permit, that’s the law for you.” –Piyush Srivastav, NAQS
Offense, not Defense
In a situation where the regulatory agency seems to hold all the cards, what can an ethanol plant do to avoid overly restrictive
permit conditions? That starts long before a permit is finalized. It’s key that ethanol plant management understand the underlying regulations, Srivastav says. Without understanding what state and federal regulations it is held to, how can a plant negotiate changes to the permit suggested by the state? The plant may assume that the limits in the permit are required by the regulations, which may not always be the case. Employing an environmental consultant can be helpful, Karras-Bailey says, but it’s not enough to leave permitting up to them. Consultants might know a lot about permitting but they won’t know everything about how a permit might affect the day-to-day operation of an ethanol plant. “I can’t tell you how important it is that when you get a draft permit from an agency, that the facility reviews it,” she says. It’s critical that ethanol plant personnel
april 2011 | Ethanol Producer Magazine | 51
permits
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“If you don’t have your environmental permits, your facility doesn’t run. And to me, that’s a big ticket item—it could sideline your business very quickly.” –Jessica Karras-Bailey, RTP Environmental Associates are involved from the get-go, Kort agrees. He scrutinizes every word of a draft permit, trying to understand how it should be interpreted and making sure all requirements are clear. If something is unclear, he goes to the permit writing agency and asks for clarification. In some cases, Chief Ethanol has even taken the initiative to write and submit its own draft permit to the state. The final permit may not contain everything that the company suggested in its draft permit, but it is a good way to help make sure that the permit contains language with which the company is comfortable.
On the air regulation side, Srivastav strongly suggests that ethanol plants work with a consultant who specializes in air permits. Air regulations are extremely complicated and can have a big impact on the bottom line of an ethanol plant. Once a permit has been finalized, the plant has the ability to review and negotiate changes, but this is best done before a permit is issued. “Get permits that are written accurately and protect you. They should provide you flexibility and not hamstring your operations. Once it’s in your permit, that’s the law for you,” he says, adding that it’s crucial to stay engaged in the permitting process. Changing a permit once it has gone through the public comment period and has been finalized can be very challenging. “I’ve seen permits take two, three years to get a condition changed,” Kort says, “and that makes it difficult to operate a plant at times.” If a plant reaches a stalemate with the state agency, it’s sometimes helpful to go to the EPA for an opinion on the matter, Srivastav says. He’s seen cases where the EPA has agreed with the plant on issues being negotiated with a state agency. Still, it’s important to remember that, in most cases, the state agency has the ultimate authority.
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52 | Ethanol Producer Magazine | april 2011
PHOTO: NAQS
1-800-279-4757 Permit Consulting NAQS President Piyush Srivastav visits E Energy Adams in Adams, Neb., one of the many plants for which the company has done air permit consulting work.
permits
Culture of Compliance
As any ethanol plant manager knows, permitting isn’t a do-it-once-and-you’redone job. Once a plant obtains a permit it must stay in compliance, which means conducting on-site or third party testing and fulfilling yearly, monthly and sometimes daily reporting requirements. Plant expansion or installation of new equipment requires permit modification. Finally, permits must be renewed periodically. “If you don’t have your environmental permits, your facility doesn’t run,” Karras-Bailey says. “And to me, that’s a big ticket item—it could sideline your business very quickly.” Typically, ethanol plants employ an environmental manager whose job it is to keep an eye on permitting and compliance issues. It’s also common for that person to wear other hats at the facility, including that of safety manager. When sometimes daily compliance checks are required, such as daily pressure drops and visible emissions checks at the plant baghouse for dust collection, the environmental manager will have to rely on other employees to do the checking and record the data. “If it’s not something the entire facility is behind, specifically the managers, what if those daily checks don’t get done?” Karras-Bailey asks. The environmental manager needs the support of all the plant employees, from the top down, to foster a culture of compliance. Some plants use positive reinforcement, such offering employees a company barbeque or profit sharing when the plant reaches certain milestones without encountering any compliance or safety issues. On the other hand, Karras-Bailey says she has also been at ethanol facilities where the attitude is “whatever” or “it’s not my job.” It is possible to correct that, she says, but it’s very hard.
Calculating the Cost
Noncompliance with permit conditions can cost an ethanol plant in a variety of ways. The first, and most obvious, is penalties, which can come from the state or the EPA. The fines can be stiff. In 2009, the Minnesota Pollution Control Agency issued more than $2 million in fines to Minnesota
ethanol plants. The EPA can impose penalties of up to $42,500 per day, per violation. “If you’ve had noncompliance for an extended period, those numbers can add up to millions of dollars right there,” Srivastav says. Other costs include working with a lawyer and consultants to resolve the matter. It also takes up a lot of time for the ethanol plant staff and management team. That’s why it’s so important to tap into the needed expertise to make sure the facility’s permits are written correctly. “The facility can definitely save large sums of money in the long run, mostly from an operational and a liability standpoint,” he says. Finally, an environmental violation can cost the facility in terms of giving it a black eye in public perception. It’s difficult to put a price on that. “The general public doesn’t understand that, yes, they violated the permit, but they didn’t break any law,” he says. The community’s reaction to an environmental violation depends on the ethanol plant’s relationship with that community. The Buffalo Lake plant has a great relationship with the public in Fairmont, where it is located, Yabroff says. “They know we’re trying to do the right thing.” On the other hand, the company doesn’t have the same reputation in neighboring communities where people sometimes assume the plant must be bad or irresponsible due to the violations. The plant’s supporters in Fairmont, though, are quick to come to its defense. That’s something he’s noticed with other plants as well. An open relationship is key to fostering community support, Yabroff says. A plant that doesn’t make that a priority and is seen as isolating itself from the community can do itself a disservice. “It can cause you to spend a lot of time and effort trying to correct misconceptions,” he says. “It really highlights how you have to have a good relationship in the community that you are in.” Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com
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april 2011 | Ethanol Producer Magazine | 53
finance
Firsthand Experience Agriculture Secretary Tom Vilsack and Ohio Gov. Ted Strickland talk with an employee during a tour of the Poet Biorefining facility in Marion, Ohio, on July 20. PHOTO: USDA
54 | Ethanol Producer Magazine | april 2011
finance
Listening and
Learning Revamps to the USDA’s loan guarantee program are a direct result of industry input. By Kris Bevill
It’s no secret that financing continues to be the advanced biofuels sector’s largest hurdle to overcome before widespread commercialization. Producers have been filing comments and testifying be-
fore Congress for years on the difficulty in acquiring financial backing for their first-of-a-kind, and often extremely expensive, projects. Finally, a federal agency has actually made progress in putting the ball in motion to reform program guidelines to enable greater federal support for these projects. In mid-February, the USDA announced proposed changes to three of its 2008 Farm Bill programs—the Repowering Assistance Program, the Bioenergy Program for Advanced Biofuels and the Biorefinery Assistance Program—all geared toward giving a needed boost to build out the next generation of domestic biofuels production. The Repowering Assistance Program provides payments to eligible biorefineries that replace fossil fuels with renewable biomass fuel sources. Proposed changes
april 2011 | Ethanol Producer Magazine | 55
finance
will allow payments to be distributed during cant are the proposed changes to the 9003 of “refinancing” as an eligible project, the the construction phase of a project. The Biorefinery Assistance Program, the USDA’s elimination of a pre-application requirement, Bioenergy Program for Advanced Biofuels loan guarantee program. Created to provide the removal of an element requiring a projprovides payments to biorefineries for the financial support for the development and ect to be located in a rural area, broadening amount of qualifying advanced biofuels pro- construction of commercial-scale advanced applicability requirements to allow foreignduced on-site. The first round of these pay- biofuels projects, the program has come to owned projects to apply, and allowing bond ments was distributed in January. More than be considered a key component of the cel- markets to be used to finance loans. $15 million was distributed to producers in lulosic ethanol build-out. The USDA made USDA Rural Development Under Sec33 states for the advanced biofuels they had marked progress in January when it awarded retary Dallas Tonsager says the proposed produced from noncorn renewable biomass. three loan guarantees to cellulosic ethanol changes to 9003 were spurred by the recent Meant as a financial incentive for biorefin- projects. Many believe the program revamp recession. “The economy has caused a lot of eries, the payments are part of the Obama will further that initial success for the indus- people to be very cautious about investments Administration’s plan to bring greater energy try and say it provides financing hope for fu- in biofuels plants,” he says. “What we’re tryindependence to the country, Agriculture ture advanced biofuels producers. ing to do is provide more assurance to lendSecretary Tom Vilsack says. Proposed changChanges to the 9003 program are exten- ers, particularly in taking the risk necessary to es to the program are relatively minor and sive. Among them, an increase to the maxi- construct these plants. The USDA is looking include definition provisions for determin- mum loan guarantee percentage, the addition for ways to work with the existing finance ing whether a producer of biogas or solid advanced biofuels is a “larger producer” or a “smaller Changing Definitions To Broaden Applicability producer,” and clarifies that eligible advanced biofuels may Foreign Ownership The 9003 loan guar- eliminate a requirement be produced at facilities other antee program previously required at least that applying projects be 51 percent of the applying company to be do- located in areas with popthan biorefineries.
Loan Guarantee Modifications
While the continuation of these programs is essential to many advanced biofuel producers, even more signifi-
mestically owned. The USDA has proposed to eliminate this requirement, stating that it’s in the best interests of furthering the goal to increase advanced biofuels production if foreignowned refineries are also allowed to apply for funding. Rural Area The USDA has also proposed to
56 | Ethanol Producer Magazine | april 2011
ulations of 50,000 or less. Projects located in rural areas will be the only ones allotted points for potential rural economic development, however, and the agency expects that most projects will continue to be located in rural areas, in close proximity to feedstock supplies.
finance
“It is an absolute mantra in the USDA to keep moving forward on every front in biofuels.” –Dallas Tonsager, USDA Rural Development Under Secretary market to a larger degree, and do things they need to have in order to take up the opportunity to finance biofuels plants.” He says the most significant change to the program is the increase of the maximum guarantee—from 80 to 90 percent—and the move to a minimum retention requirement for lenders. “So if we guarantee 80 percent and there’s 20 percent left, we don’t make the lender keep quite so much of that unguaranteed risk,” he explains. “We allow them to sell that off. So lenders can take on bigger projects because they get other lenders to participate and they get to spread the risk out. We think that’s really important.” For investment banking firms such as St. Louis, Mo.-based Stern Brothers & Co., modifications to allow the use of the bond market will be the most significant changes to the program. John May, managing director for the firm, says he initiated the change to open up the program for bond market financing two years ago after witnessing failure on the part of commercial lenders to provide financing for cellulosic ethanol projects. “That proved to me that banks were not going to lend into this market in a major way anymore,” he says. “Certainly not where there was a technology risk or an offtake risk. The idea of a program that was willing to take those risks but was dependent upon a commercial bank to be the lead lender was flawed.” Stern Brothers pioneered the use of bonds in biofuels and waste-to-energy, he says, so the concept of bringing in the bond market to advanced biofuels projects was an easy leap for him to make.
The bond market is more willing to take risk associated with first-of-a-kind technologies and offtake agreements, he says, and therefore is the most efficient mechanism to finance advanced biofuels projects. He believes allowing the use of the bond market to finance these projects could transform the way they are funded, in a positive way. The USDA takes a more neutral stance toward the change and likens it to its Business and
Industry Guaranteed Loan Program, which requires a lead lender who can participate out a percentage of the bond issue. “We believe you have to have a lead lender,” Tonsager says. “You have to have a responsible party. What we’ve done is make it more possible for banks to put together projects where they can participate out the various aspects of the loan. We didn’t make any particular exceptions for bond companies.”
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PHOTO: USDA
finance
Learning from Industry Poet CEO Jeff Broin speaks with Agriculture Secretary Tom Vilsack at the Poet Biorefining facility in Marion, Ohio, during a visit by administration officials July 20.
Here Today, Gone Tomorrow?
Comments to the proposed program changes will be accepted by the USDA until April 15, but the race to receive available
funds will begin as soon as the agency releases a Notice of Fund Availability. USDA officials said in mid-February the announcement would come “soon” but couldn’t offer an
exact date. The agency has $365 million of available funding for the 9003 program. Tonsager says it’s possible all the money could be used for fiscal year 2011 project applications, depending upon the scale of application requests. Previous application requests have ranged from $30 million up to a few hundred million, he says. The maximum allowable loan guarantee is $250 million. “My guess is we’ll probably see between five and 20 projects as a pretty broad range,” Tonsager says. “If we get a lot of small apps we could do a greater number. If we get a few big ones that are really qualified it could consume a lot of that money pretty quickly.” Among other considerations, the USDA uses approximately 12 scoring criteria to weigh applications against each other. For example, while the agency is proposing to remove the requirement that projects be located in a rural area (defined as having a population of 50,000 or less) rural projects will receive more points than those located
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finance
in urban areas. Job creation, types of feedstock used and greater amounts of financial participation on behalf of the applicant will also boost an applicant’s chances of receiving funding. Biobased chemical projects will also now be eligible to apply for loan guarantees, but Tonsager assures that the agency is not veering from its goal of using the loan guarantee program to accelerate the commercialization of fuels such as cellulosic ethanol. “We’re very anxious to move cellulosic ethanol forward,” he says. “We think it’s important to take that next step. Congress recognized that by giving us these programs initially. We’ve tried to learn from the industry; we took lots of comments on this and these changes are a direct result of the input we’ve received during the comment period.” But while the program modifications are encouraging, the future of the 9003 program hangs in the balance as Congress shows signs of waffling on its commitment
to expanding the domestic renewable fuels industry. The U.S. House of Representatives took steps early in the session to eliminate the USDA’s ability to participate in building out the nation’s blender pump infrastructure, leading to speculation that appropriations for biofuels-related programs, including the 9003 loan guarantee program, could end up on the chopping block. May says eliminating funding to the 9003 program would be a disaster. “Here you have a government agency that really understands the particular space it’s trying to serve and if money that’s been allocated to it is raided, it’s just a shame. We’re going to try to get the 2010 projects funded in the first half of the year so that we can show the USDA, Congress and the administration that the program does work and, hopefully, that will be the basis for Congress to decide to continue to appropriate funds to the program.” Tonsager says the USDA will continue to be bullish on the importance of biofu-
els and use all of its available resources to support the industry. The industry holds regular meetings with biofuels organizations, is planning its strategy to make good on a previous commitment to expand biofuels infrastructure and will be seeking applications for biofuels-related research projects under another 9000 program within the next few months, he says. “It is an absolute mantra in the USDA to keep moving forward on every front in biofuels,” he says. “I can’t think of an element at USDA that isn’t somehow looking strongly at biofuels projects. We’ll look for every resource we can. We have certain resources now for funding that we’re using the best way we can. I’m sure for the duration of this administration that we’re going to be absolutely committed to moving forward on biofuels projects.” Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
april 2011 | Ethanol Producer Magazine | 59
Q&A
60 | Ethanol Producer Magazine | april 2011
Q&A
artner for
rogress
A conversation with NCGA leader Rick Tolman about markets, corn advancement and advocating for ethanol By Kris Bevill
The stories from the '80s of “the still on the hill” built by farmers looking for a use for their piles of surplus corn are legendary. Corn growers and their organizations have been staunch promoters
of ethanol since the beginning. EPM recently sat down with National Corn Growers Association CEO Rick Tolman to discuss the group’s current role in the ethanol industry and what lies ahead for corn growers and ethanol producers. USDA’s most recent supply and demand report showed the carryout-to-use ratio is at a 15-year low. How significant is this and should ethanol producers be concerned about their feedstock supply?
Q
:
A: It is very significant. It's a situation that I don't think farmers are very comfortable with or ethanol producers. I'm not sure there's anybody that would like it to be quite that tight. It isn't cause for panic and unneeded policy response, it's very tight. We still have carryover. The nice thing about grain production is we have a Northern Hemisphere and a Southern Hemisphere so every six months we have the opportunity to replenish supplies. Even though we won't have a crop again until next fall, the Southern Hemisphere will be bringing in crop in the next few months. I'm assuming they will increase their production and that will help some. But it's tighter than I'm comfortable with and tighter than the majority of our farmers are comfortable with. It creates an opportunity—obviously it's good prices, good revenues, good returns. But in the long run, having it that tight stimulates the potential of policies and reaction that won’t be constructive. Call for Action NCGA CEO Rick Tolman tells members of the North Dakota chapter that de-bunking ethanol myths will require each member's participation. PHOTO: KRIS BEVILL, BBI INTERNATIONAL
april 2011 | Ethanol Producer Magazine | 61
Q&A
Speaking of that, what role are speculators playing right now? Are we seeing a repeat of 2008?
In 2008, prices went up quickly, but dropped quickly. Will it be the same this year?
A: I think we're seeing a repeat. There's striking parallels. We have seen speculation in a lot of other commodities—gold, silver, copper—and I think it reflects that the margin between having too little and too much, particularly in grains, is very narrow. We have available somewhere around 14 billion bushels of corn this year. If we had just a half billion more, that stocks-to-use ratio wouldn't be considered tight at all and prices would be a lot softer. It's a very narrow margin and I think speculators are smart enough to see an opportunity to help exacerbate that and make it swing another way. So I think they're playing a big role in this.
A: Unless there are other events that are out of the ordinary, it'll be the same pattern. Farmers respond to high prices and produce more, not only here but around the world. I expect in 2011 we'll have a huge crop and produce enough to rebuild the stocks. Other countries will produce more grains because the prices are high and we'll have the same pattern. We get these wide swings because of that. It's a knife's edge between having too much and too little.
Q
:
Q
:
You’ve talked quite a bit about the food versus fuel debate. Is this an issue that will ever be resolved? A: I think anytime we are above $5 to $6 a bushel it's going to raise the issue because
Q
:
it's an opportunity for the critics to draw on an emotional string with consumers. Probably in 2012-2013 it'll die down again, but I think we're going to have heck to pay over 2011.
Corn and Crops Syngenta just announced approval for its genetically modified corn variety containing an enzyme used in the ethanol process. What do you think the approval of corn amylase will mean for corn growers and the ethanol industry?
Q
:
A: For a long time, corn growers have had this vision of differentiating their product. As commodity producers they've done very well, but there's always been this desire to move up the value chain and differentiate. Amylase appears to be an opportunity, at least for some farmers, to partner with ethanol plants and produce what I'll call loosely a value-added product. It has more value than commodity corn, it's for a specific use, and employs some specialized management skills and techniques, and isn't something that has to meet industrial specifications. They can keep it in a closed-loop system and be rewarded for what they can do to add value. The value the ethanol plant gets, some of that can be shared with the farmer and they can move up the value chain. The other thing that's important about it is it's really our first commercial biotechnology product that's not an agronomic product. While the other agronomic products have been great, they've been waiting for something beyond agronomics that gives more intrinsic value. So a lot of farmers see it as very symbolic.
Q
How much outreach will need to be conducted to educate growers about this variety of corn and what role will ethanol plants play in this? :
A: My understanding is that ethanol plants use the amylase in very small quantities with traditional corn. It acts as a catalyst and it takes relatively small 62 | Ethanol Producer Magazine | april 2011
Q&A
amounts of it. So there's not going to be a lot of growers growing it in large amounts. It seems, again, more symbolic than really having a big impact for a large amount of farmers. But I think the way it'll work is the ethanol plants that want to use it will go out and contract with the individual farmers, so they'll do the training. They'll close the loop. It absolutely cannot get into the commodity channels, so there has to be very clear training. Growers have to grow it for a specific use. I think that'll kind of work itself out and I don't think it'll disrupt the other farmers who are doing commodity corn because whatever ethanol plants are using, the majority of corn that they buy will still be commodity corn. They just will buy certain small amounts of this amylase as a catalyst. What is your take on corn stover as a feedstock? Are growers interested in utilizing it?
Q
:
A: I think there's some tremendous opportunities there. There's some parameters and guidelines that we need to keep in mind. Obviously there is fertilizer value and organic material value in stover, so we have to figure out the sustainable amount that can be taken and used. Given our productivity, there is an increasing amount of biomass
coming off each acre, so there’s an upside in certain situations to taking some of it away. It's going to vary by region and geography and climatic zone. But the advantages are we know there's already harvesting equipment going over the corn, so you don't have to create a new set of equipment or take another pass across the field. In some ways, it has a leg up on some of the other cellulosic systems because some of the infrastructure is already in place. I think, just like corn ethanol has been, it can be another catalyst to open up the market for other forms of cellulose. We're pretty optimistic about it. One more source of revenue for farming. Do you have an opinion on other energy crops, like switchgrass or miscanthus, as a way for corn growers to utilize marginal land?
Q
over. I think there are some exciting opportunities, but you have to find the right niches not rutways to make it practical. So far, I haven't heard of many cost-effective ways to do dedicated energy crops on marginal land. And if you do it on land that's not marginal, then you're back into the food versus fuel argument because you're producing a crop that doesn't have any food value, it only has fuel value.
Promotions and Policy
Q
What goals do the NCGA hope to achieve through the American Ethanol campaign? :
:
A: In concept, it has a lot of appeal. There are still some significant practical constraints that need to be worked out. You say “marginal land” and there's a reason it's marginal. It's either difficult to get to, not flat terrain, and the dilemma is: while some of these crops may grow well there, getting to them and harvesting them without damaging the environment is challenging. Those are some of the challenges we need to get
A: It was a nice marriage because NASCAR is an American sport. The industry has had a relationship with the Indy Racing League which has been great, but that's an international sport. NASCAR has American values, they are rooted in American jobs, energy security, national security, so there was some nice dovetailing there with their messages and ours. They have loyal fans—70 million to 75 million. Before we signed on with them, they did a poll and asked what their fans thought about ethanol. And they got a lot of negative stuff back. So they said, "What if we at NASCAR told you that it is
april 2011 | Ethanol Producer Magazine | 63
Q&A
energy efficient, that it helps keep American jobs? What would you think now?" A very high proportion of the people said, “If NASCAR says that, we believe it." They have a lot of influence with their fans. They truly believe in ethanol, they've tested it. So we think it's a great opportunity for them and us to share messaging. Another objective that's important to me personally is, we've continued to hear from the auto mechanic fraternity. They blame ethanol for everything. Now we can have the best mechanics in the world that work on these engines who are using it and who understand it. They're going to say, “Look, we use E15 in our 850 horsepower engine. Our engines cost $100,000. It works. It makes sense. It gives us more horsepower.” I think it'll add a lot more credibility to that auto mechanic fraternity and, I hope, squelch some of that scrutiny.
64 | Ethanol Producer Magazine | april 2011
Q
Do you feel you’ll be reaching a new audience through the American Ethanol campaign? :
A: Yes. We looked carefully at [NASCAR’s] demographics and they're not very strong on the Coasts, but they’re very strong in the South, which is not our strong area. They're somewhat strong in the Midwest. They're hoping their relationship with us strengthens some of their audience in the Midwest. We're hoping to have more penetration in the South. And a lot of their listeners come from small towns and rural areas, but they're not farmers per se. So a lot of it will be a new audience. It'll be folks that have some affinity for the values that we're talking to them about, so we think we'll have an opportunity to have them respond positively to what we want to do. Plus, when you're talking about an audience of 70 million to 75 million fans, they're a group that's very passionate. When there's a need to do advocacy work, we think they'll be responsive to do that.
Q
With Growth Energy now advocating for ethanol along with the established Renewable Fuels Association and American Coalition for Ethanol, how do you view the situation among the groups and what role does the NCGA want to play in ethanol policy? :
A: The good thing is they all have individual strengths and their strengths are all complimentary. So when we can get everyone marching in the same direction there's great power there. I think that was shown in what we were able to do last fall when we four got together and decided we wanted a VEETC extension. And when we all marched up to Capitol Hill there was great power in a relatively short time in a dysfunctional Congress. We got that done. So we need to move to the next step. There's very strong opinions among the groups, so our role is trying to bring them together, to be the sounding board for them and get them talking to one another. We meet
Q&A
as all four groups once a month and those [meetings] have been very useful.
Q
What is the NCGA’s position this year on eliminating the blenders
:
credit? A: We and the ethanol groups went on record last year saying that we supported reform of the blenders credit. So now we're all trying to figure out what “reform” means. There are several proposals among the groups that are being championed and we're carefully reviewing those and weighing the pros and cons of each. Things like a phase-out or a variable credit or changing it to a producers credit are all things that are under discussion among the group. While we have opinions and ideas, the most important thing to us is unless all four groups get behind it, nothing's going to go anywhere. We're trying to bring some discussion down there and get some principles that everybody can sign off on and go together and work on it. The reform is
there, we've committed to that. Now we just have to figure out what form that takes. There’s been some movement in Congress to halt implementation of E15 and federal support for blender pump infrastructure build-out. Do you see these challenges gaining steam this year?
Q
:
A: You can never discount any of those things that happen in Congress. This is a new Congress that we don't fully know the personality of yet. So you have to be very, very careful. Strange things happen in a dysfunctional Congress. Logically, I wouldn't think they'd go very far because blender pumps, for example, are nearly the ultimate opportunity for consumer choice. All along, the critics of ethanol have said, “Get away from government intervention and let the consumers choose.” We're saying, ”Yeah, let's do that. Let's get the infrastructure for market access and let the consumers choose.” Blender pumps are a key
component of that. I think it's hard for them to find an argument against that. But on the other hand, the critics are well-funded and seem to be well-organized, so you always have to be vigilant. I believe there are some very well-funded campaigns by those who are disadvantaged by renewable fuels and alternative energy and they're spending a lot of time and money looking for ways to stop the progress. Some of the craziest ideas, like indirect land use change, you think will never go anywhere, and they do. They seem to be throwing stuff up and if it sticks to the wall, they're going to go with it. Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com
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april 2011 | Ethanol Producer Magazine | 65
policy
CONTRIBUTION
Renewable Fuels Standards Mandates
The Billion Gallon Challenge The Union of Concerned Scientists shares its vision for incentivizing greener biofuels. By Jeremy Martin
Energy security, jobs, and a healthy environment—Americans can’t agree on much these days, but we all want these three things. We’ve even named them: a clean energy economy. The biofuels industry has an opportunity to help build America’s clean energy economy, but not without a significant shift in biofuels policy—a shift that will require the support of the whole industry. Whether you’re a scientist like me or make
your living developing fuel from corn, soy, municipal waste or perennial grasses, we all want an abundant supply of domestic energy that supports large numbers of jobs, reduces our dependence on oil and protects the environment. Over the past decade, supportive federal and state policies have allowed the industry to grow rapidly and biofuels now represent nearly 10 percent of all transportation fuel sold in the United States. These
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s). 66 | Ethanol Producer Magazine | april 2011
policies were enacted in many cases using an argument that “what is good for the father is good for the son.” In other words, support for first-generation biofuels would help launch second- and third-generation technologies, such as cellulosic biofuels. Unfortunately, while existing policies have expanded production of corn ethanol and other conventional biofuels, advanced biofuels have been left behind. Shaky financial markets, volatile fuel prices and the uncertainty inherent in commercializing a new technology have also helped stifle advanced biofuels development. But the country’s economic forecast is improving. There is now an opportunity
policy
Performance Tax Credit Proposal Fuel
GHG Reductions vs. Typical Corn Ethanol
Energy Content per Gallon vs. Gasoline
Biofuels Performance Tax Credit
Typical Corn Ethanol
0%
66%
N/A
Improved Corn Ethanol
27%
66%
$.20/gallon
Cellulosic Ethanol
85%
66%
$.65/gallon
Soy Biodiesel
44%
100%
$.50/gallon
Waste Grease Biodiesel
89%
100%
$1.03/gallon
SOURCE: UCS
cause of advanced and cellulosic biofuels. As corn ethanol boomed and cellulosic biofuel was stuck in a holding pattern, industry trade groups like Growth Energy and the Renewable Fuels Association have been perpetually on the attack: attacking the science behind life-cycle accounting, especially indirect land use change; pushing to change the ethanol blending rules before the testing was complete; using all their political capital on getting a short term extension of the Volumetric Ethanol Excise Tax Credit, a policy even they acknowledge has outlived its usefulness. While I realize industry insiders may think they were fighting the good fight, to those outside the biofuels industry, it read like a page from the Exxon-Mobil playbook. These aggressive tactics unified and galvanized a powerful opposition, from the Wall Street Journal to the New York Times; from Friends of the Earth to the Tea Party. The tide of public opinion turned against the industry. Suddenly the biofuels industry was isolated and identified in the public eye as part of the problem, rather than part of the solution. UCS joined the voices opposing VEETC extension because, while we believe biofuels are vital to reducing our oil dependence, we can’t get there with the failed policies of yesterday. Meeting the Billion Gallon Challenge will demonstrate that biofuels are part of our clean energy future.
Bil. Gal. Cellulosic Ethanol Equiv.
Bil. Gal. Cellulosic Ethanol Equiv.
to move cellulosic biofuels out of the labo- be moving away from today’s volume-based ratory and into our fuel tanks. It is time to biofuel tax credits towards performanceadopt a new set of policies that will help get based policies. Since the RFS already manadvanced biofuels back on track by launching dates biofuels, it makes sense to craft our the first billion gallons of cellulosic biofuels tax credits to reward producers who go production and meeting the new challenges beyond the bare minimum required by the facing the industry today. RFS to provide cleaner and higher energy The challenge is indeed daunting. Most density fuels. We propose a unified Biofuels sober analysts recognize that we can’t reach Performance Tax Credit, which supports all 36 billion gallons in 2022, as mandated in the the different biofuels based on their ability renewable fuel standard (RFS), based on corn to displace oil and surpass the minimum and soybeans alone. We need to rapidly ramp standards of the RFS. But a unified policy up production of cellulosic fuels to meet our does not mean one size fits all. All biofuel energy security goals. Despite the mandate, producers can benefit, but the size of the the U.S. EPA (which administers the RFS) tax credit will depend upon cleaning up was forced to lower the 2010 requirement their production processes. Corn ethanol for cellulosic biofuels from 100 million gal- producers will be rewarded for adopting the lons to a mere 6.5 million gallons. Without latest production technologies and low carnew policies, this disappointing trend is not bon energy sources, and all biofuel produclikely to change any time soon. ers will have an incentive to invest in energy Last summer, the Union of Concerned efficiency. Scientists published a report, “The Billion Over the past three years, ethanol inGallon Challenge,” in which we laid out our dustry trade groups have not helped the policy proposal that will allow the biofuels industry to play a leading 2010 - 2022 First Billion Gallons role in the clean energy future for 18.00 1.00 the United States. We need a set of 16.00 0.90 new policies to create the financial 0.80 14.00 climate for investors to fund the 0.70 12.00 RFS Cellulosic first 20 cellulosic biorefineries and 0.60 Mandate 10.00 0.50 enable production of the critical EIA 2010 8.00 0.40 Cellulosic+BTL first billion gallons. To help com6.00 0.30 panies secure financing, UCS is 0.20 4.00 0.10 calling for an investment tax credit 2.00 0.00 of 30 percent and loan guarantees 0.00 10 11 12 13 14 15 16 17 for the first billion gallons of cel2010 2012 2014 2016 2018 2020 2022 20 20 20 20 20 20 20 20 lulosic biofuel production (phasing out rapidly as the technology Comparsion of RFS mandates for cellulosic biofuels with projected production levels from EIA 2010 (including biomass to liquids (BTL) fuels in energy equivalent gallons of ethanol). A delay of three to four years in reaching the first billion-gallon milestone is proven). leads to a shortfall of more than 10 billion gallons in 2022. At the same time, we should SOURCE: UCS april 2011 | Ethanol Producer Magazine | 67
policy
A comprehensive tax credit that encompasses all the different biofuels, such as the Biofuels Performance Tax Credit, will drive improvements in conventional biofuels Food for Thought while also providing Jeremy Martin offers policy ideas to support for the next incentivize biofuels generation. from the Union of Over 1,000 scienConcerned Scientists. tists and economists have signed a statement in support of the Billion Gallon Challenge, but scientists don’t build biorefineries, so obviously industry needs to play a leading role. In the current political climate, it is going to be tough to get significant support for anything, and our best hope is to pull together. Your colleagues struggling to establish advanced
68 | Ethanol Producer Magazine | april 2011
biofuel technology need your support. Yet, despite the difficult circumstances, the future for biofuels and its role in America’s clean energy future is bright. If you agree with us that biofuels have a bright future that involves both conventional and cellulosic biofuels, then let’s get behind smart, on the web cost effective policies that Read about “The Billion Gallon Challenge” build on the www.ucsusa.org/smartbioenergy RFS and invest in the next generation. Together we can chart a practical, navigable course to reduced oil dependence, stable jobs and a healthier climate. I hope you will join us in working to meet the Billion Gallon Challenge. Author: Jeremy Martin Senior Scientist, Union of Concerned Scientists (202) 223-6133 jmartin@ucsusa.org
Regional Policies The renewable fuels standard (RFS) is the main federal policy support for the biofuels industry but has failed to kick-start advanced biofuels production. Regional policies such as low carbon fuel standards (LCFS)—already in effect in California and under development in 11 Northeastern and Mid-Atlantic states—can help fill the void. Under an LCFS, benefits are based on performance. The policies don’t mandate one type of fuel or another, but they put a premium on the fuels that make the biggest reductions in emissions. A corn ethanol producer with life-cycle emissions 10 percent lower than gasoline will see a small benefit.
policy
A cellulosic biofuel producer, who can reduce emissions by as much as 80 percent compared to gasoline, will see a much bigger benefit. And it’s working. Companies are responding, with Poet LLC, Archer Daniels Midland Co. and others submitting the paperwork to make sure they get credit for the efficiencies they have developed. These and other regional policies can provide much-needed incentives for cellulosic biofuels, and give investors confidence to build the facilities that will
displace oil with new feedstocks. These policies also send a signal to federal policymakers: Americans support clean energy development, and biofuels are part of the clean energy future. That is why it has been so disappointing to see the scorched earth approach the trade groups have taken with the California LCFS; they’re focusing on killing the policy rather than fixing it. California regulators invited the industry to participate in the rulemaking process, providing seats for industry experts on technical advisory groups and on the web committees. Still, the RFA and Growth Energy sued to stop its Learn more about these innovative regional policies: implementation. When the rubber California LCFS: http://www.arb.ca.gov/fuels/lcfs/lcfs.htm met the road, the trade groups opted Northeast States for Coordinate Air Use Management ’s LCFS: http://www.nescaum.org/topics/low-carbon-fuels to oppose a policy that looked beyond
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today’s biofuels to support innovation in the cleanest, next-generation varieties. Meanwhile, the Northeast States for Coordinated Air Use Management will release their LCFS framework and begin soliciting stakeholder feedback over the next several months. We hope the tone of this process will be more constructive in the Northeast than it was in California. This is a great opportunity for the biofuels industry to demonstrate that it is looking ahead and prepared to be part of the solution on America’s clean energy efforts.
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Spray Spray Spray Spray | Ethanol Producer | 69 Nozzlesapril 2011 Control Analysis Magazine Fabrication
EMISSIONS
CONTRIBUTION
Navigating the GHG Reporting Maze Know what to expect and how to prepare for upcoming greenhouse gas emissions regulations. By Rich Hovan
Greenhouse gas (GHG) reporting rules vary region to region, state by state, and sometimes, even town to town. To make matters more confusing, the U.S. EPA’s national GHG reporting requirements are in flux and will continue to change over the coming years. Because these reporting rules lay the groundwork for upcoming GHG emissions-control regulations, including common industrial emissions, it’s important
to have some foresight into what an ethanol producer can expect and what it can do now to prepare for future reporting requirements.
Off the Hook, for Now
The EPA mandatory GHG reporting rule, 40 Code of Federal Regulations (CFR) Part 98, as first promulgated on Oct. 30, 2009, was estimated to cover about 85 percent of total U.S. emissions. It applied
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s). 70 | Ethanol Producer Magazine | april 2011
to more than 10,000 facilities in 31 source categories, such as iron and steel, glass, cement, engines, pulp and paper. Coverage of certain industrial sectors, however, was postponed to allow the EPA time to consider additional commentary and options. Source catagories not included in the rule for 2010 reporting include: Electronics manufacturing, ethanol production, florinated GHG production, food processing, magnesium production, oil and natural gas systems, sulfur hexafluride for electronic equipment, underground coal mines, industrial landfills, wastewater treatment and suppliers of coal.
EMISSIONS
PHOTO:Jim Ekenstedt
bustion fuel sources? They’re devices that burn any solid, liquid or gaseous fuel generally to produce electricity, steam, useful heat or energy for industrial, commercial or institutional use, or to reduce the volume of waste by removing combustible matter. These devices include, but are not limited to: • Boilers
Stationary Source Requirements
Leaders for facilities not yet required to follow the rule for 2010 should be aware, however, that they might still be required to report their GHG emissions on stationary combustion sources, if the emissions could exceed 25,000 metric tons of CO2 equivalent per year (mt CO2e ). Facilities that contain stationary fuel combustion units, but do not contain a combustion source in any other category covered by the rule, are not required to submit a report if their aggregate maximum rated heat input capacity from all stationary fuel combustion units is less than shown on the accompanying table. No industry, manufacturer or commercial application is exempt from stationary combustion-source reporting if they surpass the measurements in the table on page 72. So, what exactly are stationary com-
• •
Combustion turbines Stationary internal combustion engines • Incinerators • Process heaters The rule excludes flares (unless otherwise required by another sub-part), portable equipment, emergency generators, emergency equipment, agricultural irrigation
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EMISSIONS
pumps and combustion of hazardous waste (except for cofired fuels). Electricity generating units that are subject to the EPA’s Acid Rain Program (40 CFR Part 75) or that report CO2 emissions year-round through Part 75 are covered under 40 CFR Part 98, Sub-part D (Electricity Generation). If a facility contains only general stationary fuel combustion sources, in lieu of annual reporting, it can submit an abbreviated report for 2010 if the GHG emissions from existing facilities were in operation as of Jan. 1. The abbreviated report will include only total GHG emissions aggregated for all stationary combustion units. If this is the case, it must report annual carbon dioxide (CO2 ), methane (CH4 ) and nitrous oxide (N2O) emissions from each fuel combustion unit. For each unit, CO2, CH4 and N2O emissions must be reported separately for each type of fuel combusted, including bio on the web EPA GHG Reporting Program: www.epa.gov/climatechange/emissions/ghgrulemaking.html EPA Regulatory Initiative Resources and Tools: www.epa.gov/climatechange/emissions/resources-tools.html Electronic Code of Federal Regulations: http://bit.ly/fraTxG
• Energy recovery/biogas utilization • Renewable energy source • Energy cost reduction • Waste-to-energy
Stationary Fuel Thresholds Combustion Units with Potential to Emit 25,000 mt CO2e per year: Fuel Type
Coal Fuel Oil Natural Gas
Design Capacity (threshold for reporting)
30
10,600 tons
mmBtu/hr.
2.3
35 mmBtu/hr.
million gal.
50
460
mmBtu/hr.
million cu. ft.
mass fuels. In addition, these facilities must report any CO2 emissions from sorbent use in air-pollution control equipment.
Monitor and Report
Emission sources subject to the GHG reporting rule for 2010 can use a hybrid approach to GHG monitoring. Certain units already are required to collect and report emission data using continuous emissions monitors (CEMS) under other EPA programs such as the Acid Rain Program, New Source Performance Standards, Na-
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72 | Ethanol Producer Magazine | april 2011
Annual Fuel Use
tional Emission Standards for Hazardous Air Pollutants and state implementation plans. CEMS use is optional for other source categories not subject to these EPA Tracking GHG programs. Rich Hovan, manager The EPA is al- at Rockwell Software lowing sources to use Environmental Solutions, cites the a source category-spe- regulations surrounding reporting to the cific GHG calculation GHG EPA. method. Monitoring is based on other parameters and fuel use, which might vary given the specific source category, such as mass balance, site-specific emissions factor or default emissions factor. All sources have to monitor emissions effective Jan. 1. Mandatory reporting of all 2010 GHG emissions will need to follow the design format stated in 40 CFR Part 98 by March 31. Author: Rich Hovan Manager, Rockwell Software Environmental Solutions (512) 438-1598 rahovan@ra.rockwell.com
• Increase process volumes • Reduce operating costs • Reduce GHG emissions • Eliminate odors
• Treatment quality to: • Meet stringent regulations • Permit reclamation/reuse • Eliminate/reduce solids disposal costs • Waste digestion
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membranes
PHOTO: KMS
CONTRIBUTION
Membrane Technology in Production of Biofuels Membrane filtration technology, a tried and proven method used in many industrial process streams, is now being adopted in biofuels production and integrated biorefineries. In particular, membrane filtration technology shows promise to improve second-generation cellulosic ethanol processes. Operators of second generation processes seek to optimize fuel recovery and secondary products from the feedstock. In addition, these operators want to obtain a better value fuel than first-generation bioethanol processes, which focused exclusively on fuel production and simply disposed of everything else as waste or animal feed material. Companies can utilize membranes to improve bioprocesses, lower overall energy costs and increase valuable product recovery.
Tested technology improves new biofuel processes By Kamla Jevons
Membranes are highly engineered, physical barriers that are used in processes for liquid/liquid and liquid/solid separation. They permit the passage of materials only up to a certain size, shape or character. Membrane filtration has been used extensively in industry for years, especially in the dairy, sugar, food, starch, wine and enzyme manufacturing sectors. For example, membrane use is rising in biodiesel processes that facilitate water reuse, particularly in areas where water is scarce. Membrane technology shows promise for concentrating and purifying organic acids, commonly used as the base for a variety of new biodegradable plastics. In addition, integrated biorefineries are using a variety of membrane technologies, including microfiltration, ultrafiltration, nanofiltration and
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s). 74 | Ethanol Producer Magazine | april 2011
reverse osmosis. Particular attention is being paid to using membrane filtration techniques that facilitate continuous, rather than batch, fermentation. In the next few years, dozens of second-generation cellulosic ethanol and integrated biorefinery pilot and demonstration plants will be placed online as the biofuel industry seeks to improve its processes before implementing full-scale production facilities.
Optimizing Recovery
In North America, the conventional starch hydrolysis process is used throughout cereal-growing regions to convert corn and wheat into first-generation ethanol. In the first-generation process, owners focus almost exclusively on producing fuel, and aside from distillers grains, supplied for animal feed, consider all nonfuel material as waste to be disposed or used for low-value products. Enter the new generation of biofuel hopefuls. Spurred by concerns about the environmental impact of these early biofuels, as
membranes
well as massive federal spending for energyrelated research and development, secondgeneration biofuel developers are seeking to optimize the recovery process to get better value and reduce waste. Makers of second-generation cellulosic ethanol are taking corn stover and other agricultural residues and using acid/ alkali pretreatments and enzymes to extract fermentable material. During the process, they are using a variety of membrane filtration techniques to improve recovery, reduce waste and lower energy costs. Because first-generation bioethanol facilities were focused on producing fuel rather than optimizing feed stock utilization, there was very little use of or demand for membranes. With second-generation cellulosic bioethanol, a tremendous amount of work is going into using membrane filtration. For example, ultrafiltration is used for clarifying the process stream after turning it into sugars during the saccharification process. Some processes use acid/alkali pretreatment along with nanofiltration to recover and concentrate useful sugars from the hemi-cellulose that are also used in the fermentation process. Reverse osmosis is used for recovery of high quality water for reuse. Membrane filtration is also used for
the production of fermentation derived organic acids that are used as base material for biodegradable plastic.
Future Adaptations
Membranes are being used in continuous and batch fermentation processes to produce biofuels, organic and amino acids The adaptations being considered include: • Ultrafiltration and microfiltration used for biomass retention or fermentation broth clarification and product purification. • Nanofiltration used for low-molecular weight component fractionation and desalting applications, where the process streams may have high concentrations of acids and base chemicals and organic solvents/water mixture. • Reverse osmosis used for product concentration and water recovery for reuse. Using membrane technology has the potential to greatly reduce operating costs compared to the traditional method of using energy-intensive evaporators to recover or remove water. Companies can use membrane technology to supplement their process to reduce energy costs. Reverse osmosis can
Biofuels Schematic Membranes can be used in the conventional starch-based biofuel process. SOURCE: KMS
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membranes
Membrane Type Ultrafiltration,
Ultrafiltration Ultrafiltration, nanofiltration Nanofiltration Ultrafiltration, nanofiltration
Ultrafiltration, nanofiltration Reverse osmosis Nanofiltration Reverse osmosis
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SOURCE: KMS
offer about 75 percent lower capital and operational Membrane filtration uses costs compared to a five multi-effect evaporator with Application thermal vapor recompression. Reverse osmosis, which Upstream from the fermentation process can be applied as a stand-alone process or in conjunction with an evaporator, offers recovery of high qualClarification or fractionation of feed stock material going to the fermenter ity water for reuse. Nanofiltration allows the recovery of proteins, peptides, amino acids and sugars, while Microfiltration allowing salts to pass through the membrane. Protein recovery/removal from hydrolyzed prepared biomass One process parameter driving interest in memAcid and alkali recovery and reuse brane technology is its ability to operate at higher Separation of lignin from hydrolyzed biomass temperatures. Operators seek ways to run continuConcentration of sugars to enable product yield ous fermentation, rather than a batch process. With enhancement in the fermentation process a thermophilic process using micro-organisms which Continuous enzyme reactors retain enzyme and substrate, display optimum activity at 70 to 78 degrees Centipermitting removal of reaction-inhibiting components grade, operators could continually run product and Downstream from the fermentation process feedstock to the alcohol distillation columns. In that Biomass/microbial cell retention that enables continuous type of process, the membrane plays an important recovery of the target product component or removal of role as part of a membrane bioreactor because it helps fermentation inhibitor molecules retain microbial biomass in the fermenter, while allowConcentration of organic acids with water recovery for reuse ing liquid to be drawn out of fermenters continuously. Amino acid concentration and desalting. This has the potential to reduce the hardware investEvaporator condensate treatment for water recovery and ment cost (by reducing the number of cyclic fermentreuse enabling environmental compliance ers) and also reduceBiorefining operating Ad costs. LWC629-RJS-0446 #3 1/11/11 1:46 PM Page 1
membranes
The next few years will see a great increase in demonstration plants working on continuous fermentation, and membranes are poised to play a significant role in this important advancement.
Wastewater Treatment
Membrane technology has long been used in wastewater treatment plants and it is now being used more and more in biodiesel production, which produces wash water very high in contaminants. In the past, facility operators could spread this wastestream on land or discharge it untreated to a wastewater treatment plant or local water source such as a river. Today, this is not permitted in many areas. In addition, water-constrained areas are trying to encourage water conservation and reuse rather than disposal. Anaerobic digestion is often used to remove biochemical oxygen demand and chemical oxygen demand from the waste stream. Ultrafiltration may be used to concen-
trate the biosludge, followed by a water recovery and reuse reverse osmosis system. This is especially important in areas where water is limited. For example, Koch Membrane Systems’ membrane filtration technology is being used as part of a membrane bioreactor at an Australian ethanol facility where the waste streams go through biological treatment and use membranes to recover water for reuse.
More R&D Ahead
A tremendous amount of government research and investment is being done on biofuels and integrated bio-refineries, much of it focused on increasing product recovery, reducing waste, lowering energy costs and improving the greenhouse gas profile of biofuels. According to 2009 data from the U.S. DOE, 19 second-generation pilot and demonstration cellulosic bio-refinery facilities are either on the ground or in the works. These integrated biorefinery projects will receive up to $564 million for pilot, demonstration, and
commercial scale facilities. Many of them are looking to gain the benefits of membrane technology. Pilot plant process development will feed into the demonstration plant installations. As the membrane technology processes are improved in preparation for integrating future process scale and production facilities, they can provide biofuel manufacturers with cost-effective solutions and significant benefits. Although new to biofuel developers, membrane technology for filtration and separation has been used effectively for years in other starch- and sugar-based industries, and while new processes must be developed to take advantage of this promise, but they will be building on successful technology. Author: Kamla Jevons European Business Development Manager, Koch Membrane Systems Inc. (978) 694-7000 JevonsKK@Kochmembrane.com
april 2011 | Ethanol Producer Magazine | 77
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ICM, Inc. 877-456-8588
Consulting
ICM, Inc. 877-456-8588
Cooling Towers
Agra Industries, Inc. 715-536-9584
Agra Industries, Inc. 715-536-9584
L&M Ethanol Maintenance Contracting, Inc 515-955-2010 www.lmethanol.com
Centrifuges
Design/Build
Tanks
www.icminc.com
Safety
Plant Construction www.agraind.com
Catwalks
www.buhlergroup.com/us
Cereal Process Technologies 217-779-2595 www.cerealprocess.com Crown Iron Works Company 651-639-8900 www.crowniron.com ICM, Inc. 877-456-8588
www.icminc.com
EPM MARKETPLACE Grain Handling & Storage
Pipe-Flanges
Agra Industries, Inc. 715-536-9584
Robert-James Sales, Inc. 800-666-0088
www.agraind.com
Sukup Manufacturing Co. 641-892-4222
www.sukup.com
Laboratory-Testing Services Foundation Analytical Laboratory 712-225-6989 www.foundationanalytical.com
Loading Equipment Bear Boring LLC 309-695-5150
www.bearboring.com
Used Equipment
ICM, Inc. 877-456-8588
www.icminc.com
PeopleFlo Manufacturing 847-929-4774 www.peopleflo.com
H2O INNOVATION 763-566-8961 www.H2OINNOVATION.com
Structural Fabrication
Finance www.agraind.com
ICM, Inc. 877-456-8588
Agra Industries, Inc. 715-536-9584
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erisolutions.com
Moglia Advisors 847-884-8282
www.mogliaadvisors.com
Marketing CHS Renewable Fuels 651-355-6271
www.agraind.com
Molecular Sieves
www.chsinc.com
Miscellaneous
Maas Companies 507-424-2640 www.maascompanies.com
www.icminc.com
Parts & Services
www.icminc.com
Pipe L&M Ethanol Maintenance Contracting, Inc 515-955-2010 www.lmethanol.com Robert-James Sales, Inc. 800-666-0088
• 60 Years of Experience
Research & Development
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• 100% Uptime Guarantee • 24/7/365 Emergency Response Service Guarantee
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www.roush.com
Transportation The Arnold Company 800-245-7505 www.arnoldcompany.com
Clean Air & Energy Technology www.hammertek.com
Robert-James Sales, Inc. 800-666-0088
Roush Industries 734-779-7736
Railcar Gate Openers
Pipe-Fittings
ERI Solutions, Inc. 316-927-4294
Fuel Ethanol
Agra Industries, Inc. 715-536-9584
Hammertek Corp 717-898-7665
Insurance
Mergers & Acquisitions
Thermal Oxidizers
ICM, Inc. 877-456-8588
www.icminc.com
Water Treatment
Tanks
ICM, Inc. 877-456-8588
Pumps
Maintenance Software
Millwright
www.upmmachine.com
ICM, Inc. 877-456-8588
L&M Ethanol Maintenance Contracting,Inc 515-955-2010 www.lmethanol.com
www.icminc.com
Wastewater Treatment Services
L&M Ethanol Maintenance Contracting, Inc 515-955-2010 www.lmethanol.com
UPM Machine 713-440-8200
Productivity Enhancements
Agra Industries, Inc. 715-536-9584
Maintenance Services
www.rjsales.com
www.eisenmann.com/usa Email: es.info@eisenmann.com
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EPM MARKETPLACE
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1/31/2011 11:45:54 AM
april 2011 | Ethanol Producer Magazine | 81
AdIndex 41
2011 Fuel Ethanol Industry Directory
29
2011 International Biomass Conference & Expo
78
2011 International Biorefining Conference & Trade Show
35, 37 & 39 28
2011 National Ethanol Conference
73
2011 Northeast Biomass Conference & Trade Show
82
2011 Southeast Biomass Conference & Trade Show
19
Distllers Grains Production & Markets magazine
72
ADI Systems Inc.
50
Agra Industries
13
BetaTec Hop Products
47
BrownWinick Law Firm
58
Cashco Inc.
65
CIT
57
Cloud/Sellers Cleaning Systems
44
CPM Roskamp Champion
53
Eisenmann Corporation
51
Encore Business Solutions
77
Fagen Inc.
45
FCStone, LLC
15
Fermentis - Division of S.I. Lesaffre
68
Freez-it-Cleen
25 & 84
GENENCOR速 - A Danisco Division
2
Growth Energy
5
ICM, Inc.
8&9
Inbicon
46
Indeck Power Equipment Co.
21
Lallemand Ethanol Technology
71
Lindquist & Vennum PLLP
62
Merrick & Company
52
Natwick Associates Appraisal Services
63
Nelson Engineering, Inc.
83
North American Bioproducts Corp.
3
82 | Ethanol Producer Magazine | april 2011
2011 International Fuel Ethanol Workshop & Expo
Novozymes
17
Phibro Ethanol Performance Group
40
Pioneer Hi-Bred International, Inc.
76
Robert-James Sales, Inc.
64
Scherer Corrugating
69
Spraying Systems Co.
56
Vogelbusch USA, Inc.
75
Wabash Power Equipment Co.
59
WINBCO