2022 August Ethanol Producer Magazine by BBI International

AUGUST 2022

STOVER’S

NEW

ARRIVAL Verbio Produces Cellulosic RNG, Corn Ethanol On Deck

PLUS

Maxing Out DCO Yield PAGE 16

State Policy On Hot Idle PAGE 32

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Contents

PHOTO: FLUID QUIP

PHOTO: VERBIO

PHOTO: STOCK

AUGUST 2022 VOLUME 28 ISSUE 8

DEPARTMENTS 4

AD INDEX/EVENTS CALENDAR

EDITOR'S NOTE Getting More from Corn—Kernel to Stalk By Tom Bryan

VIEW FROM THE HILL The Cure for High Prices

FEATURES 16 PRODUCTION

More Ways to Max Out DCO Casting a wider net for super high oil yield By Katie Schroeder

POLICY OF PROGRESS Let’s Give the Next Generation a Better Fuel By Doug Durante

BUSINESS BRIEFS

MARKETPLACE

Verbio Grand Opening Repurposed plant making RNG now, ethanol next

By Geoff Cooper

BIOREFINING

By Katie Schroeder

POLICY

Moving Stepwise Toward State Clean Fuel Standards Midwest states keep LCFS visions simmering By Susanne Retka Schill

ON THE COVER The recently commissioned Verbio biorefinery in Nevada, Iowa, once home to DuPont's unrealized effort to make cellulosic ethanol, is now producing corn stover-based renewable natural gas. The company intends to start making corn ethanol and other products by next year. PHOTO: VERBIO

MARKETS

Coastal Effect

Contiguous LCFS region emerges on Pacific Coast By Melissa Anderson

Ethanol Producer Magazine: (USPS No. 023-974) August 2022, Vol. 28, Issue 8. Ethanol Producer Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

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Editor's Note

Getting More from Corn—Kernel to Stalk A good source, Bill Griffiths of Flottweg, reminds us in this issue that while corn biorefining is becoming ultra-advanced, the grain’s utilization journey is still nascent, similar to where fossil fuels were 120 years ago. “Before cars were really a thing, they just wanted to get the kerosene out to light lamps,” Griffiths tells us in “More Ways to Max Out DCO,” starting on page 16. We’ve heard that analogy for years, but it still rings true. The corn kernel—indeed, the whole corn plant—is on a similar path as petroleum refining, but in an ultra-low-carbon way. And ethanol might just be our lamp oil—a gateway to myriad higher-value products. We’re seeing this already, of course with coproducts like protein and distillers corn oil (DCO) starting to financially outperform ethanol. Record-high DCO prices—80 cents a pound in some markets—are motivating ethanol producers to explore all available options to maximize recovery. And, man, are they ever doing it. Fluid Quip and Green Plains are together achieving as much as 1.4 pounds of DCO per bushel at a facility in Nebraska using the companies’ latest technology. Other producers are hitting very high numbers, too, not just through improved mechanical means, but by leveraging control points, optimizing foulant prevention, deploying informed enzymatic strategies and disciplined operational audits. This “no-stone-leftunturned” approach is not only boosting DCO yield but improving overall plant performance. As alluded to above, it’s not just the corn kernel that we’re getting better at refining, but the whole corn plant. Following the tumultuous corn stover ethanol production efforts of the past decade—which we are not giving up on, by the way—a German company has reinvented the site of DuPont’s former cellulosic biorefinery in Nevada, Iowa. That campus is becoming a diversified biorefinery that will soon utilize almost the entire corn plant. And they’re not starting with the kernel. As we report in “Verbio’s Grand Opening,” on page 24, the company named in the headline is already producing renewable natural gas (RNG) from corn stover, and intends to start processing corn itself—the kernel—to make ethanol. When that happens, thin stillage from the ethanol operation will be used as a supplementary RNG feedstock alongside stover. In true biorefining fashion, the plant will not only produce well-known products like DCO but less common outputs like nitrogen fertilizer and, eventually, synthetic natural gas from CO2. Time will tell what happens at Verbio, but even as an integrated cellulosic RNG/corn ethanol facility, the operation would be one of the fullest extractions of value from corn, kernel to stalk, ever built. It’s also an encouraging continuation of the bold corn stover logistics effort started in the Nevada area years ago. Picking up where its predecessors left off, Verbio is acquiring its stover within a 45-mile radius of the plant, not only contracting the necessary acres and paying by the bale, but carrying the cost of collecting, baling and transporting the feedstock to the biorefinery. Iowa Gov. Kim Reynolds, who attended the biorefinery’s grand opening in May, called it a “remarkable testament to the countless uses of corn and how many more are just waiting to be discovered and unleashed.” Governor, we agree.

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View from the Hill

The Cure for High Prices

Geoff Cooper

President and CEO Renewable Fuels Association 202.289.3835

gcooper@ethanolrfa.org

It’s been said that “the cure for high prices is … high prices.” In other words, when prices for a product rise to an unbearable level, consumers reduce consumption or stop buying the product altogether. In turn, supplies of the product increase and prices eventually fall. But in the case of gas prices—which set a new record of $5 per gallon in June—there is a better cure available that won’t force Americans to cancel their daily commutes or abandon summer road trips. At gas stations across the country, the cure for high prices isn’t more high prices—it’s ethanol. Refiners and blenders can lower gas prices for consumers simply by adding more ethanol, which has been $1–$1.50 per gallon cheaper than gasoline for much of the summer. However, refiners don’t make ethanol and they don’t like the idea of blending more, even though market forces suggest they should. Fortunately, the Biden administration has taken action this summer to compel refiners to increase the availability and use of ethanol—the antidote to record high pump prices. Back in June, the Environmental Protection Agency took regulatory action to bring order and certainty to the Renewable Fuel Standard, giving our industry a solid foundation to grow production, boost energy security and expand the use of low-carbon renewable fuels. Specifically, EPA set the 2022 blending requirement for conventional renewable fuel at 15.25 billion gallons—the highest ever—and put an end to the abuse of the refinery exemption program. The Renewable Fuel Standard reduces the price of gasoline in two ways. First, the RFS drives greater usage of ethanol, which is less expensive than petroleum-based gasoline (recently selling at a discount of roughly $1.50 per gallon at the wholesale level). Additionally, RFS compliance credits, known as renewable identification numbers, or RINs, are attached to each gallon of ethanol sold domestically. These are provided free of charge and help offset the blender’s cost of gasoline. Second, the use of ethanol extends the overall fuel supply and reduces the consumption of petroleum-based gasoline, thereby lowering the demand for crude oil and refined products. In a 2019 study, Dr. Philip Verleger determined that by expanding fuel supplies, the RFS reduced the price of crude oil by $6 per barrel on average from 2015 to 2018. In turn, gasoline prices were reduced by an average of 22 cents per gallon, the equivalent of $250 annually for a typical household. The EPA and the Biden administration are restoring integrity and stability to the RFS program after several years of mismanagement and abuse by the previous administration. The combination of a strong RVO for 2022, restoration of illegally waived volume from 2016, and a new direction for the small refinery exemption program puts the RFS program on solid footing for the future. We thank Administrator Regan and President Biden for honoring their commitments to implement the RFS in a way that is fair, transparent and focused on growth—giving us a great steppingstone for moving forward in the future. In addition, President Biden, Regan and USDA Secretary Tom Vilsack worked to ensure lower-cost E15 is available all summer for consumers. Meanwhile, a group of Midwest state governors are also working to make year-round E15 permanent in their states. Summertime E15 will help lower the cost for consumers as they travel this summer and all year long. Clearly, the cure for high prices at the pump isn’t more high prices. The cure is opening the market to higher volumes of ethanol and spurring competition. RFA will continue to lead and advocate for a larger role for ethanol in the United States fuel supply. We could not be more hopeful for the opportunities in the future as we continue moving forward, and the action we’re seeing from the White House this summer gives us cause for more optimism.

8 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

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Policy of Progress

Let’s Give the Next Generation a Better Fuel

Douglas A. Durante

Executive Director Clean Fuels Development Coalition

cfdcinc@aol.com

Depending on when you came into the ethanol industry, you might think the driving force that took us from a handful of plants in the 1970’s to the burgeoning industry of today was energy security, or environment, or as an economic engine for agriculture and rural America, or as an octane additive to protect public health. At any given time, each was a factor that kept ethanol moving forward, but almost all of those drivers would come and go in terms of being your go-to argument. When we were flush with domestic oil, for example, energy security became a second-tier issue, today it is back at the head of the class in light of $5 gasoline. So things change, but one constant is the fact that ethanol is a clean alternative to the toxic, carcinogenic, carbon intensive aromatic compounds currently used by refiners for octane. That was known as far back as the Clean Air Act Amendments of 1990 when Tom Daschle, Bob Dole and others worked in a bipartisan manner to require that ethanol would replace these aromatics. For ethanol to continue an upward trajectory, it must assume its highest value of saving lives by replacing benzene-based carcinogens. Why the industry has not seized on that message is, quite honestly, a mystery to me. But we have a pathway that finally looks at that—and all the issues holding ethanol back—and puts the pieces of the puzzle together, rather than fighting for one thing at a time. The Next Generation Fuels Act (H.R. 5089) introduced by Rep. Cheri Bustos of Illinois, is game changing legislation that has been a bit obscured by the constant battles surrounding the RFS, climate change and the blather about EVs. With more than two dozen co-sponsors and 20 companies and trade groups supporting it, this is the most comprehensive, connect-the-dots, transformational fuels legislation seen since the Clean Air Act, which established oxygen requirements propelling ethanol into the big leagues. It recognizes vehicles and fuels must be viewed as an integrated system and tackles some of the most elusive issues automakers and fuel providers have been grappling with for years. It begins by raising the minimum octane standard, something long overdue and what the auto industry has been asking for. Higher octane fuels allow automakers to easily improve efficiency, the 98 research octane number (RON) the legislation calls for could provide a 7%-8% increase in mileage. It requires octane to be derived from sources with a GHG reduction of 40% or more, and importantly would require a reduction in aromatics—leaving the field wide open for ethanol. And lots of it. The legislation would effectively pave the way for 20% blends, then graduating to 30%, and establish RVP relief for all blends. It requires automakers to honor warranties for those levels. The net result means more mileage, less petroleum used, less carbon emitted, and less toxic emissions, with a bonus of lower fuel costs to consumers. So, there you have it: a true fuel for the next generation—high octane, low carbon, cleaner, lower cost and a domestic economic stimulant. With a time-to-market advantage over EVs, it can benefit the 270 million cars on the road today as well as the internal combustion vehicles that we will rely on for decades to come. EPA, the special interest environmental groups, and the oil industry cannot defend the continued use of benzene. The Next Generation Fuels Act needs the full support of the ethanol industry to realize the vision of those Clean Air Act provisions created more than 30 years ago.

10 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

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BUSINESS BRIEFS PEOPLE, PARTNERSHIPS & PROJECTS

Canada publishes final Clean Fuel Regulations

The Canadian government has published its final Clean Fuel Regulations, which will require fuel producers and suppliers to meet increasingly stringent carbon reduction goals for gasoline and diesel. The CFR, published in late June, sets a carbon intensity (CI) limit for gasoline at 91.5 grams of carbon dioxide equivalent per megajoule (gCO2e/MJ) in 2023. The CI limit decreases annually through 2030, when the ceiling is set at 81 gCO2e/MJ. For diesel, the limit starts at 89.5 gCO2e/ MJ in 2023 and drops to 79 gCO2e/MJ by 2030. Environment and Climate Change Canada estimates that approximately 2.2 billion liters per year (581 MMgy) of additional low-CI diesel and 700 million liters per year (184 MMgy) of additional ethanol will be needed by 2030 under the CFR. The government of Canada also announced it will invest $1.5 billion (CAN) through its Clean Fuels Fund to build new or expand existing clean fuel production facilities.

Carpintero joins ePURE as new director general Carpintero

David Carpintero has joined ePURE, the European renewable ethanol association, as director general. Carpintero has extensive experience in EU public affairs

12 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

in the agri-food sector, most recently as director general of the European Breakfast Cereal Association. “This is an important moment for the European renewable ethanol industry and for EU climate and energy policy in general,” Carpintero said. “The need for common-sense policy to achieve Europe’s decarbonization goals is urgent. Fortunately, there are domestic solutions that can work now, and in the future. I look forward to leading the ePURE team and working with policymakers and stakeholders to ensure that European bioethanol production— which generates not just renewable fuel but also protein-rich feed and food—can continue to make a strategic contribution to EU food and energy independence.” Carpintero replaces Emmanuel Desplechin, who left ePURE in March after more than five years leading the team.

ACE introduces carbon intensity calculator

The American Coalition for Ethanol has introduced a new carbon intensity (CI) calculator to help its members understand the CI of their farms and ethanol operations, along with a simplified version of the tool to raise awareness about factors impacting the CI of ethanol. The more detailed calculator allows users to break through CI confusion by using their own corn farming and ethanol production information to estimate a carbon score and compare it to the Argonne National Laboratory’s GREET model and average scores used by the California Low Carbon Fuel Standard.

“ACE is focused on highlighting how climate-smart farming practices, efficiencies at ethanol plants, and the capture and sequestration of CO2 from facilities puts ethanol on a trajectory to reach both netzero and net-negative emissions; a trajectory unique to ethanol,” said Brian Jennings, ACE CEO. “The calculator is not only useful for farmers and ethanol producers who want to know their CI score, it also helps ACE highlight the need for farmlevel practices to receive carbon benefits in clean fuel markets.”

Trucent launches new corn oil refining technology

Trucent Separation Technologies LLC has announced the launch of CORE, a technology that significantly reduces impurities in distillers corn oil (DCO), resulting in a cleaner oil called TruDCO, a high-quality feedstock suited for renewable diesel. The technology has been commercialized in conjunction with The Andersons Inc., which is currently producing TruDCO for direct sale to renewable diesel refineries at a premium above standard DCO. The CORE module for the ethanol industry features an operator-friendly, efficient, bolt-on skid-mounted process with a small footprint, low operating costs and a quick ROI. “We’re excited to introduce customers to the benefits of adopting this new technology to elevate and redefine distillers corn oil for direct use in renewable diesel refineries,” said Trucent’s Tara Vigil. “The CORE technology suite aligns well with Trucent’s global directive to max-

imize renewable resource use and drive profitability in ways that do good for our Earth while improving the quality of business operations.”

NREL names Logan chief financial officer Logan

The U.S. Department of Energy’s National Renewable Energy Laboratory has named Jennifer Logan its chief financial officer. Logan joined NREL in late June. “Jennifer brings extensive experience to the laboratory from her career in the national laboratory system, as well other roles in the federal government, and we are excited to welcome her to NREL’s leadership team,” said NREL Laboratory Director Martin Keller. “As the laboratory continues to grow, Jennifer’s leadership will play a critical role in financial planning and ensure that we have the resources we need to accomplish our mission toward a clean energy future.” Logan joins NREL from the Thomas Jefferson National Accelerator Facility (Jefferson Lab) in Newport News, Virginia, where she has served as chief financial officer. Prior to joining Jefferson Lab, Logan held various federal contracting and acquisition roles within the U.S. Department of Defense over nearly two decades.

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COMPETITIVE SEPARATION: Fluid Quip's DCO+ technology takes whole stillage through two stages of screen separation and has achieved up to 1.4 pounds of corn oil per bushel. PHOTO: FLUID QUIP

16 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

Production

MORE WAYS TO

MAX OUT DCO

Record-high prices are motivating ethanol producers to explore all available options to maximize corn oil recovery. Advanced technology, specialized equipment and informed operational strategies are taking yields to new heights. By Katie Schroeder

Distillers corn oil prices have steadily risen in recent years, leading to sustained interest in maximizing DCO recovery. In late

April, Fluid Quip Technologies LLC (FQT) announced the potentially game-changing effectiveness of its DCO+ technology, getting up to 1.4 pounds of DCO, or “renewable corn oil”—per bushel of corn. FQT has achieved these results at Green Plains’ Wood River, Nebraska, biorefinery, which has fully integrated DCO+ into the plant’s Maximum Stillage Coproduct (MSC) system. “It’s all about the oil right now,” says Keith Jakel, FQT’s director of sales and marketing. Whether it be through the utilization of groundbreaking technology or an evaluation of obstacles that could be getting in the way of renewable corn oil recovery, producers are searching for ways to recover the most oil out of every corn kernel. FQT’s development process has benefitted from its relationship with Green Plains, allowing the company to expand and accelerate testing to optimize the technology. “We’re able to do this now on a regular basis; we’re able to take existing technologies and look at different ways of utilizing them,” Jakel says. Having Green Plains’ fleet

of biorefineries supporting product innovation means FQT can roll out new products that are “market ready” instead of having to find plants to conduct trials. Oil Opportunities In May, renewable corn oil prices averaged above 80 cents per pound, hitting 86 cents in Iowa, according to the USDA Daily Ethanol Report. These high prices are driving producers to look for ways to maximize their DCO production—and giving them a way to pay for it. “The higher the value that a product goes, the more capital is going to be put towards recovering that valuable coproduct,” Jakel says, explaining the value proposition of enhanced DCO extraction. He says corn oil had, and still has, value when retained in distillers grains but picks up considerably more value when separated from whole stillage to be marketed as a feed supplement or a feedstock for other renewable fuels. Bill Griffiths, industry manager with Flottweg, compares the evolution of corn utilization to the development of the oil industry. “At first, before cars were really a thing, they just wanted to get the kerosene out to light up lamps,” Griffiths says. At this time gasoline was seen as a low

value byproduct, but with the invention of the internal combustion engine all of that changed. The corn kernel is going down a similar path, he explains, starting with fuel and feed. “We realized we could take that starch, turn it into ethanol, but everything left was still food for livestock,” Griffiths says, explaining how producers started tapping into DCO 10 to 15 years ago, giving them a valuable new product just when they really needed it. “Corn oil was a big one because, especially [during that period], it was a difficult time economically and the ability to extract value was critical for a lot of plants staying afloat,” he explains. Balanced Maximization Producers have to navigate many issues when maximizing renewable corn oil recovery. The balance of an ethanol plant may be upset by tweaking process streams, which can have unintended consequences. “I would say that differing fat content and process upsets are probably the two biggest ones,” Griffiths says. Each corn crop may have different oil content, which plants need to adjust to. Griffiths also emphasizes the importance of uptime in DCO recovery equipment, whether it be a vertical centrifuge or a horizontal machine. ETHANOLPRODUCER.COM | 17

TECH TREK: Equipment like this Flottweg Tricanter has evolved alongside the ethanol industry's 15-year quest to maximize corn oil extraction. PHOTO: FLOTTWEG

Production

'You know what impacts corn oil production? Everything.' Dave Fowlie Phibro

Pedro Peña, lab and R&D director with CTE Global, explains that losing oil to the wet cake is another frequent hurdle to DCO maximization. “I would say the most common [area loss is the] decanter operation,” he says. “If it is leaving [the oil] with the wet cake, we can’t get that back, that’s gone.” Adjustments to decanter operation are a practical step that can make a difference in DCO recovery.

‘Game-Changing’ Technology FQT developed its DCO+ technology out of its MSC platform. The company was already able to achieve a pound or more of corn oil using MSC—due to its advanced fiber washing techniques—but they knew more was possible. Jakel says FQT developed DCO+ by leveraging the many control points in its MSC technology to figure out which parts of the washing process could be used to maximize oil production and separate those components. DCO+ takes the whole stillage through two stages of screen separation to wash the oil from the fiber fraction in the stillage. Liquid from the fiber washing steps is sent to a final separation step to separate free oil from residual solids to produce an evaporator feed high in oil and low in suspended solids. Jakel explains that DCO+ also provides producers the benefit of getting the high value coproduct of renewable corn oil while giving them an opportunity to move

toward MSC. The current high prices for corn oil could allow producers to earn back the investment in two years. The introduction of DCO+ has received a strong response from producers. “We’re having meetings every week with clients, so the industry itself is interested because they want oil,” Jakel says. He explains that the technology also provides producers with added benefits. “These benefits could include a potential decrease in unfermented solids out of the backset, organic acid reduction, lower suspended solids and energy savings.” Plant Procedures It is important to pursue a holistic approach to corn oil maximization throughout the plant. “You know what impacts corn oil production? Everything,” says Dave Fowlie, product manager for process aids with Phibro. Phibro provides clean-in-place and foulant prevention technologies which aid in oil recovery by improving operational

ETHANOLPRODUCER.COM | 19

Summer Drives

B E Y O N D

C H A N G E

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performance and run time of the plant as a whole, including corn oil recovery systems and evaporators. “If a plant can significantly reduce the rate of fouling from happening in the first place, equipment can run for longer periods of time between cleaning events,” Fowlie says. “Instead of shutting systems down to clean more often, reducing the rate and degree of foulant buildup allows operations to maintain optimized operating parameters for extended periods of time. This allows for more operating time and less down time to CIP equipment like evaporators and corn oil recovery systems.” Phibro’s foulant prevention products include PhibroDC, which controls organic deposit buildup, and PhibroSI, which controls inorganic scaling throughout the plant. Their PhibroTCP clean-in-place products include PhibroAC, an acid plus detergent CIP concentrate, and PhibroClean, which is applied in the process condensate rinse cycle to remove deposits more efficiently prior to CIP. Fowlie explains that Phibro also provides technical support including data analytics to help customers optimize foulant prevention and CIP strategies to positively impact corn oil recovery. “Everything from optimizing fermentation kinetics to improving evaporator efficiencies, allowing plants to run better and longer between CIP events while adopting effective and efficient CIP strategies creates an operational environment that has a significant positive impact on corn oil production.,” Fowlie says. Measurement of DCO is a simple way to examine the quality of the oil and see if it fits your plant’s goals.““You can’t improve what you can’t measure’ is what I would say,” Griffiths says. “So, making sure the measurement tools that are available are sufficient for what you’re trying to accomplish with maximizing your recovery.” Checking the oil for color and consistency is important since it allows producers to make sure that they are producing oil which is suited for their market. Griffiths explains

STAY CLEAN TO STAY UP: Phibro provides clean-in-place and foulant prevention technologies that aid in oil recovery by improving operational performance and facility run time. PHOTO: PHIBRO

that producers who are selling the oil into a renewable diesel or biodiesel market need their oil to be without impurities, however a producer selling the oil as a feed component may want some germ particles in the oil. “It depends on who the plant is selling to and what the goals are,” he says. Oil optimization studies allow plants to identify parts of the ethanol process that are not working as efficiently as possible. “It could be something as simple as adding a heat-and-hold system to make sure that the oil is available for them to be able to recover,” Jakel says. FQT offers oil optimization studies to help plants determine

Production

where they might be able to improve plant efficiency while also recovering more oil. “We utilize our knowledge of dry mill and wet mill operations and look at where you can get added benefits—no matter how small,” Jakel says. “We compile the information into a report which outlines what is working, not working and recommended changes, with project cost and ROI projections.” CTE Global takes a three-pronged approach to helping its customers maximize corn oil recovery, including enzymatic strategies, operational audits and analytical testing. “We’re committed to take advantage of this great opportunity with the de-

mand for corn oil, whether it’s for biodiesel [or] renewable diesel,” Peña says. The first prong of enzymatic strategies utilize the implementation of a protease portfolio into the liquefaction and fermentation to break up the protein matrix, freeing up the oil. The proteases also have an impact of improving the yeast health. “That’s one of the things on the enzymatic strategy, under that same umbrella we also have advanced heavy cellulases and cellulases that break up that fiber matrix and then that opens up the oil as well for downstream extraction,” he says. The second prong of the approach, operational audits, “leaves no stone unturned” in examining the plant’s operations, examining decanter operations, tricanter separation and more. This process usually takes anywhere from a couple of days to a week, depending on the plant. They are launching their third prong, analytical testing, this summer. Peña explains that analytical testing allows them to track the oil to make sure that their efforts are effective, and the oil is going to the right place. “By taking examples of each of those streams and testing for oil content we can follow where the oil is going through the back end,” Peña says. “If we see enough opportunity for improvement, our operational team is there to make the right changes to make that happen, to make that into a reality.” These different strategies give CTE Global an opportunity to maximize oil recovery by looking for ways to improve efficiency. “It can’t just be one thing, it has to be, you know, a combination of things, it has to be no stone unturned,” Peña says. Optimizing oil recovery may look a little different for each ethanol plant, but high oil prices could make an investment in new technology or a plant optimization study well worth the cost.

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Biorefining

VERBIO and

Gr ing n e p O

Germany’s Verbio has unveiled its first North American biorefinery in Iowa. After completion of its second phase of construction next year, the plant will produce both RNG and ethanol, using stover and stillage for the former, and corn for the latter. By Katie Schroeder

RENEWABLE RESIDUE: Verbio acquires its corn stover within a 45-mile radius of the plant in Nevada, Iowa, not only contracting the necessary acres, but carrying the cost of collecting, baling and transporting the RNG feedstock to the biorefinery. PHOTO: VERBIO

Towering over the skyline outside Nevada, Iowa, the sprawling Verbio biorefinery is an impressive anomaly, not by its appearance but its capability. In early May, a grand opening was held for the first-of-its-kind renewable natural gas plant, the only industrial-scale RNG operation in the U.S. using corn stover as a feedstock. “This marks the formal launch of our company as an emerging leader in the renewable energy field, [and specifically] in the production of renewable natural gas,” Greg Northrup, president of Verbio North America Holding Co., told the government 24 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

officials, community members and corporate representatives on site for the startup celebration and plant tour. “This is the third leg of the stool in renewable fuels for Iowa. You’ve been doing ethanol for years; you’ve been doing biodiesel. Now, we add to this piece of the equation, renewable natural gas.” Earlier this year, the plant started producing stover-derived RNG at what it calls the “ethanol-gallons-equivalence” rate of 7 MMgy. When the second phase of its plan is complete early next year, the biorefinery will be producing RNG at the equivalence of 19 MMgy while, notably, also producing 60 MMgy of ethanol—actual ethanol—

from corn itself. The ethanol and RNG processes will be integrated; thin stillage from the ethanol process will be used as a supplementary feedstock for RNG alongside corn stover. “Integration of the ethanol production process with the renewable natural gas process will result in higher efficiencies and improved sustainability,” Verbio’s founder and CEO, Klaus Sauter, said at the grand opening. “No one has a higher output of renewable sustainable energy per metric ton of biomass than Verbio.” The company currently has 10 locations across Asia, Europe and now, North America. Sauter explained that the integration of these processes allows Verbio to achieve

lower emissions, giving them opportunities in low-carbon markets. The company also plans to produce corn oil, nitrogen fertilizer and, eventually, synthetic natural gas from CO2. The RNG Process “Sometimes I’m asked, when did we start injecting renewable natural gas?” said Greg Faith, general manager of Verbio Nevada. “It was Saturday, November 6, at 9:43 in the morning. I was standing out there with the Alliant guys as they were valving us in, and I texted … and DESTINED TO DIVERSIFY: In addition to RNG, Verbio will soon produce 60 MMgy of ethanol along with distillers corn oil, nitrogen fertilizer and, in the future, other products. PHOTO: VERBIO

ETHANOLPRODUCER.COM | 25

I said, ‘We did it.’” As the biorefinery produces RNG from corn stover while making progress on the ethanol plant and preparing its systems to incorporate thin stillage, it continues to enhance its feedstock supply network.

Eric Phipps, agronomy and operations manager at Verbio, explained that Verbio acquires its stover within a 45-mile radius of the plant. Phipps’ department contracts the acres, chops and bales the stover, and transports it to the biorefinery. He

explained that they also deal with humus management. “Basically, the farmer gets paid for the bale, we’re responsible for all the other expenses,” Phipps said. “We do all the trucking, we do all the baling, we do all that kind of stuff. So, once the contracts are

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Biorefining

GREEN ENERGY: Iowa Gov. Kim Reynolds (left) cut a ribbon to commemorate the biorefinery's grand opening in May. Right, stover bales are unloaded from a delivery truck. PHOTO: VERBIO

cess stream, going to separate fermentation tanks than the crop residue RNG. “Ultimately, we’ll take that thin stillage, and we’ll concentrate it up into a syrup product and that’ll get mixed into our wet cake [and fed] into our digesters,” Verbio chemical engineer Blake Logan explained. The fermenta-

tion tanks have 10,000 cubic meters capacity with space for 3,000 cubic meters of gas at the top. “The pressure from fermentation as it’s producing will actually push it to the header and then ultimately to gas refining,” Logan said. Any unfermentable material in the tanks will float to the top and be removed and sent to solids separation. He explained that this material becomes digestate which has a variety of uses including biofertilizers and bioplastics. Sauter explained that

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in, it’s kind of a one-stop shop, the grower is off the hook on any of that.” Verbio plans to bale at least 40,000 acres of corn stover this year, while using some bales left over in storage from the facility’s previous purpose. Production manager Aaron Chadwick said that once the bales are put in storage, the material handler will come and check the moisture percentage of the bale. “Once he checks the moisture, it will determine which line it’s on,” Chadwick explained. “We have two lines, we have a south line, which is our line one, and a north line, which is our line two. Our south line will run our lower moisture bales, 25% and under, while our north line will run 25% up to 45%.” The corn stover is then loaded onto the conveyer belt and sent through the hammer mill to break up the large pieces, which is then filtered through a screen. The hammer mill was a source of plugging early on, but these issues have been worked through. “At this point, we add water to it, mix it up and send it out to our digesters for food,” Chadwick said. “Right now, we’re running about five tons an hour, we want to get to 10 tons an hour in the future.” The particles then spend 25 days in the fermentation tanks, switching between tanks every half hour. Corn ethanol wet cake, when used for RNG, will be treated as its own proETHANOLPRODUCER.COM | 27

the digestate—also known as humus—will be “principally returned” to farmers and used as a fertilizer. When the biogas comes off the fermentation tanks, it is made up of 50 to 60 percent biomethane, 40 to 50 percent CO2 and some moisture and other impurities, according to a Verbio engineer onsite. The plant then cleans the CO2 until it is 99 percent methane, the same purity as natural gas derived from fossil fuels. After the majority of the CO2 is removed, the biomethane is run through an activated carbon filter and zeolite mole seize beds. Verbio then uses an online gas analyzer to measure the product’s purity and make sure the gas meets specs before it is compressed to grid pressure using a screw compressor. The gas is analyzed again before it is injected into Alliant Energy’s grid. The RNG is then used both regionally and throughout the country. Some RNG will also be used onsite as Verbio plans to utilize the low-carbon fuel to power clean-burning CNG vehicles at the complex, according to Sauter. “I’m proud of the teamwork between Verbio and the many employees at Alliant Energy to develop standards and regulations for renewable natural gas, as well as construct interconnection options for this site,” said Terry Kouba, senior vice president of Alliant Energy. “We’re finding new ways to provide reliable, renewable natural gas service for our natural gas customers.” Lawmaker Support Government officials at the local, state and federal level were present to offer their support and congratulations for Verbio’s ac28 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

complishment. “I couldn’t be more grateful to Verbio for choosing to invest in our state. And I can promise, without hesitation, that you will not be disappointed that you did,” Iowa Gov. Kim Reynolds said at the event. She outlined the importance of biofuels to Iowa’s economy, explaining that renewable fuel makes up $4 billion of the state’s annual GDP. She also referenced the technology used to make RNG at Verbio. “It’s a remarkable testament to the countless uses of corn and how many more are just waiting to be discovered and unleashed,” Reynolds said. Senator Chuck Grassley planned to visit the grand opening but had to stay in Washington D.C. due to scheduling conflicts. He sent a video with his comments and congratulations. “As many of you know, this is the first of its kind plant in the United States and will surely benefit Iowa farmers. It will provide good paying jobs in central Iowa,” Grassley said. Other government officials in attendance included U.S. Reps. Randy Feenstra and Marionette Miller-Meeks, as well as Brett Barker, mayor of Nevada. MillerMeeks highlighted Iowa’s reliance on renewable energy, noting that the state produces 50 percent of its energy from renewable sources. Feenstra praised the cooperation between the government, private industry and local stakeholders, and said that Verbio’s refinery should serve as a “blueprint” for plants across the state. A member of the German Parliament, Oliver Grundmann, was also in attendance to support the Germany-based Verbio.

PARSING FOR PURITY: Verbio runs its biomethane through an activated carbon filter and zeolite mole seize beds to achieve a 99 percent methane, the same purity as fossil-based natural gas, before analyzing the gas prior to compression and pipeline injection. PHOTO: VERBIO

Moving Forward In the future, Verbio hopes to build more plants throughout the U.S. as well as expand its coproducts at the Nevada biorefinery. One of the things the company hopes to make in the future is synthetic renewable natural gas. “With renewable hydrogen, pro-

duced from electricity coming from wind and solar farms in Iowa, Verbio will produce synthetic natural gas and hopefully in near future, synthetic chemicals with another big German chemical company,” Sauter said. “It’s the next challenge on our trip for a decarbonized and a sustainable global economy.” In closing, Sauter expressed his excitement about being a part of the U.S. biofuels market and commitment to growth. “I am very excited about the future here and knowing that what we are doing is a winwin-win-win, for farmers, rural communities, the environment, sustainable renewable energy, our partners and, finally, the shareholders.” Verbio represents a unique example of how the versatile corn plant can be as a feedstock for multiple renewable fuels. Sauter mentioned that Verbio is “examining potential cooperation arrangements with other ethanol manufacturers in order to increase the production capacity of renewable natural gas in the United States.” If successful, Verbio’s forthcoming integration of ethanol production with stover-based RNG may be one of the fullest extractions of value from corn, kernel to stalk, achieved to date.

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Author: Katie Schroeder Contact: katie.schroeder@bbiinternational.com

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presents 2022 Faces of Ethanol

AMANDA MARQUIS

Director of Process Operations MARQUIS ENERGY

Amanda Marquis is Director of Process Operations at Marquis Energy in Hennepin, Illinois. She believes her professional success is closely tied to her passion for understanding people.

When Amanda Marquis got her degrees in chemistry at Illinois State University, she didn’t know it would result in a 15-year career in the ethanol industry. Marquis grew up in Princeton, Illinois, where she currently resides, working a few miles away in Hennepin. She was recruited by Pfizer out of college and moved to Michigan to work as an analytical chemist. After getting married, the two of them wanted to move back home, but she had a difficult time finding a good technical job in that area until her husband’s relatives decided to open an ethanol plant. She entered the ethanol industry at Marquis Energy as a lab manager but has moved up to be Director of Process Operations. Throughout her time in the industry, Marquis made some great discoveries and advanced the ethanol industry through the development of the Marquis exclusive product, ProCap Gold. She headed up the research team which created the ProCap process, which has the capability to boost corn oil recovery by 20 percent as well as creating a high protein animal feed. “I just really fell in love with understanding people, what motivates them, how to bring a team together, and it’s just what I ended up being passionate about even though my background is very technical,” Marquis says. Her knack for understanding people has helped her grow as a leader in her workplace. She started in the industry as a lab manager which relied solely on her technical skills. In her current position, she has the opportunity to use both her interpersonal skills as well as her technical skills. “My focus is talking to my team members, making sure that we’re collaborating, making sure that we’re communicating, and that each individual department’s priorities and goals are aligned,” she explains. When she’s not at work, Marquis spends her time with her family, learning and having fun. “First and foremost, I am a mom,” she says. “I spend a lot of time with my kids, and I like to have as much fun as possible at work and at home.” She has two children, ages 10 and 12, and says jokingly that her kids would say that her favorite hobby is cleaning. Marquis also enjoys singing karaoke, especially to Janice Joplin’s “Bobby McGee,” and has a passion for understanding people through taking leadership and coaching classes in family system dynamics. Throughout her 15 years in ethanol, Marquis says she’s been able to build strong friendships with other women in the industry. At this year’s 2022 FEW, she found it encouraging to see more women at the event than ever before. The collaborative atmosphere of the ethanol industry is one of the things she loves most. Amanda has a passion for understanding people through taking leadership and coaching classes in family system dynamics. “There’s such a great feeling of collaboration across the industry that’s really nice. I’m super impressed with the R&D facilities and their R&D group at BASF,” Marquis says. “Asfia Qureshi is fantastic and just incredibly smart and has such a great team. We really enjoy working with them.”

Policy

Moving Stepwise Toward State Clean Fuel Standards From Minnesota to Nebraska, discussions around performance-based fuel standards are bringing a broad range of stakeholders together. Progress requires coalition building and compromise. By Susanne Retka Schill

Movement towards state clean fuel standards in the Midwest inspired by a broader regional vision continues, albeit slowly. Brian Kletscher, CEO of High-

water Ethanol and board president of the Minnesota Biofuels Association, is content with the pace. “This is one bill I’m okay with it taking its time to get done. We need to make sure it gets done right.” The Minnesota state legislature has held hearings on the Future Fuels Act in two sessions now. “It’s not uncommon that we see bills like this take some time to work through because there’s lots of policy to be developed,” Kletscher says. Many groups are cautious about giving full support, having questions about policy language, concerns about which state agency would administer the program and uncertainty about the policy itself. The educational effort is substantial— not only with legislators themselves who

32 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

Kletscher

hear conflicting viewpoints, but with farm groups leery of new regulations, environmental groups suspicious of anything promoting corn ethanol and other stakeholders seeking favorable in-

centives. “I would say our progress slowed somewhat in 2022 in Minnesota, but it’s the nature of trying to enact a comprehensive, significant new piece of legislation,” says Brian Jennings, CEO of the American Coalition for Ethanol. “After making really great progress in 2021, more than we should have anticipated, in 2022 the opponents sharpened their knives a bit and were more prepared.” The bill was successfully amended in the Democrat-controlled house to satisfy critics, but lacked momentum in the Republican-controlled senate. “We need to reevaluate what the senators

are concerned about, what they need and want. We may have to make some changes to accommodate that,” Jennings says. “But despite the slow progress in Minnesota, I’m still Jennings very encouraged by the overall trajectory of our work in the Midwest.” “The coalition continues to grow,” says Brendan Jordan, vice president transportation and fuels at the Great Plains Institute. “We’ve had strong support from a lot of different organizations ranging from forest products industry stakeholders interested in utilizing wood residuals for biofuels production to the auto industry, the electric vehicle sector, and strong support from the ethanol industry. We have very broad support, but it’s a big policy and it takes a few years.” There are groups, he adds, that are skeptical of anything involving ethanol, “but they

Jordan

also understand this is a policy that can help commercialize new biofuel crops, such as cover crops that would have substantial water quality and soil building benefits. That’s a positive, and a coalition building

opportunity.” Minnesota’s Future Fuels Act emerged from the Midwest Clean Fuels Policy Initiative’s white paper published two years ago outlining a policy framework. GPI and ACE convened a stakeholder group that spent nearly two years building consensus around the policies all could support. The coalition included biofuel proponents, electric vehicle supporters, environmentalists, automakers and more—25 organizations in all. The white paper, “A Clean Fuels Policy for the Midwest,” proposes Midwestern states set carbon reduction goals, requiring all transportation fuels be evaluated with life-

cycle carbon accounting. Those that achieve lower carbon intensity (CI) can earn carbon credits that can be purchased by fuel providers to offset fuels with high CI ratings. The program is deCaldwell signed to be technology neutral, supporting a portfolio of clean fuels that are compensated based on their carbon performance, without favoring or discriminating against any one fuel. One unique feature of the Midwestern proposal is the recommendation to include farm-level CI reduction efforts in lifecycle analyses. Existing clean fuels policies like the California Low Carbon Fuel Standard (LCFS) and Oregon’s Clean Fuels Program do not currently recognize or compensate farmers for climate-smart farming practices (see “Coastal Effect” on page 38). Instead, these programs assign average values for biofuel feedstocks.

In June, the Farm Greenhouse Gas Accounting Committee, a subcommittee of the Midwestern Clean Fuels Policy Initiative, released a framework for including farm-level GHG Koehler emissions in CI accounting. With biofuel feedstocks like corn and soybeans comprising a sizable portion of biofuel emissions, incorporating farm-level emissions would provide economic incentives to growers to implement best practices. The committee called for voluntary farmer participation, laying out the principle that any carbon credit revenues should benefit farmers, feedstock processors and biofuel producers. The committee also recommended the protocol design should strike a balance between precision and cost. A USDA-funded research effort is getting underway in South Dakota to inform the protocol development for farm-level carbon ETHANOLPRODUCER.COM | 33

Policy

'The project is precisely designed to help show that farmers and farm practices are part of the solution to reducing ethanol’s carbon footprint.' Brian Jennings CEO, American Coalition for Ethanol

accounting. While quantifying fertilizer and fuel use, cover crops and tillage methods are fairly straightforward, determining the amount of carbon being sequestered in the soil on an annual basis is not yet solidified in scientific circles. South Dakota State University researchers will evaluate soil samples from cooperating farmers and compare the results to validate models. Another goal is to verify cost-effective, accurate data collection protocols. Two-thirds of the $7.5 million, fiveyear grant is earmarked to pay farmers for adopting carbon-reduction practices such as cover crops, minimum or no-till practices and advanced nutrient management methods, working with SDSU researchers to quantify the benefits. At a January meeting in Madison, South Dakota, farmers in the counties surrounding Dakota Ethanol expressed interest in enrolling over 65,000 acres in the research program, although Jennings adds SDSU researchers believe they

need only 10,000 to 20,000 acres to generate the statistically significant data required to validate soil carbon models. He expects USDA approval of the farmer payments to be finalized this summer in time for farmers to sign contracts and begin practices such as cover crops this fall and plan for practices in next year’s crops. “The project is precisely designed to help show that farmers and farm practices are part of the solution to reducing ethanol’s carbon footprint,” Jennings says. “In a meaningful clean fuel marketplace that can generate significant economic benefit. We can use that information to talk to farmers and others in rural America that are skeptical.” As Minnesota’s experience has demonstrated, ag sector support for a clean fuels policy isn’t automatic. There are many skeptics among commodity groups on whether clean fuel policies would be a net economic benefit or cost, Jennings says. Many also

mistakenly assume California’s high gasoline prices are a result of its Low Carbon Fuel Standard. On top of that, current high fuel prices add to concerns about policies that may boost fuel cost. This summer, Jennings says, ACE will be sharing an analysis with commodity organizations and others on how clean fuels policy can result in economic benefits for farmers and others.

Multiple State Efforts

While Minnesota was the first, it isn’t the only Midwestern state to consider a clean fuels policy. Nebraska is furthest along in considering how such a policy might look. Dawn Caldwell, executive director of Renewable Fuels Nebraska, is coordinating the effort begun a year ago. The Great Plains Institute facilitated discussions among a coalition that included biofuel proponents, environmentalists, fuel retailers, Farm Bureau and representation from Nebraska Community Energy Alliance/Electric Transportation Partners, alongside state agency representatives and other stakeholders. The shape of Nebraska’s proposal and how closely it follows the Minnesota Future Fuels Act example is yet to be determined, Caldwell says. The group stepped back from an initial attempt to draft a bill, with

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the realization more discussion is needed. “Whatever we do,” she says, “there are a few agreements in the room. One, is we are not California and whatever we come up with will not be like what California has done. And we will put farmers first. How do we monetize carbon credits appropriately through the entire value chain to make this work for the farmer, the ethanol plant, the fuel retailer and the consumer? We want every segment of this to win.” Ohio is another state in a pretty early stage of considering a clean fuels policy, Jordan says. “Were doing some modeling looking at what the economic impacts would be for the state.” The governors in Michigan and Illinois have included clean fuels standards as part of their recommendations for their transportation sectors, he adds, although neither state has seen a stakeholder coalition emerge as yet. Focusing on clean fuel standards becomes a natural coalition builder, says Neil Koehler. Having retired from Californiaheadquartered Pacific Ethanol and a past chairman of the Renewable Fuels Association, Koehler is now a policy advisor representing RFA in clean fuel standard developments across the nation. “It takes time to get all the interest groups aligned, but ultimately that is the hallmark of the performance market mechanisms,” he says. “The broad coalition that supports clean fuels standards makes it a very strong policy. There were multiple legal attacks in California and I really believe the LCFS would not have succeeded if it had not been the strong coalition that stayed engaged and supportive.” Besides the Midwestern states, Koehler points out that New Mexico came very close to passing legislation this past year and efforts in New York show promise, while the idea is percolating in other northeastern states. He believes the state efforts will be critical underpinnings for a national clean fuels standard sometime in the future. “The future is bright, but we have to keep a focus on making sure the policies stay appropriately balanced and market based,” he says. “Don’t be afraid of an approach that is truly market based

with full life-cycle accounting. Yes, there will be some electrification as part of that, but biofuels and farmers perform exceptionally well.” Jennings says Midwest coalition members need to remind themselves of the ultimate goal, which is to reduce greenhouse gases and create economic development by increasing the use of low-carbon fuels. “That doesn’t mean electricity only; it doesn’t mean ethanol only,” Jennings says. “I think we’re going through some growing pains,” he continues. “There was a lot of enthusiasm early on, back in 2018 when ACE and Great Plains Institute began holding the stakeholder meetings and we formed the Midwest Clean Fuels Initiative. Groups and individuals seemed willing to look at the bigger picture and cast aside some of the individual hopes and dreams. We were able to develop that white paper and provide a blueprint for various states. “Now that actual legislation has been drafted and introduced and it’s going through committee hearings, it seems like all of us have a bit forgotten about checking our idea of perfection at the door in search of making progress. We’re all trying to perfect this legislation to accommodate our own needs and wants. It’s going to take all of us working together. I’d like to see more focus on progress as opposed to what individual groups view as perfection. I’m hoping we get back to that. Because I think we’ve lost sight of that a bit.” Caldwell’s experience in Nebraska points to the promise of coalition building: “When you put a mix of [stakeholders from] Nature Conservancy, Farm Bureau, Renewable Fuels Nebraska and a fuel retailer in the same room—and especially just a small group—you get some pretty forthright discussion,” she says. “I have not seen protectionism, I have seen problem solving. Everybody wants everybody to be successful, but it’s going to take a while to get it right.” Author: Sue Retka Schill Contact: editor@bbiinternational.com

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ON THE CURVE: With more than 14 million registered vehicles in California, the Golden State has vastly more cars and trucks on its roads than any other state. It also has the strictest fuel standards. Pictured here, a rare reprieve from traffic on scenic Highway 1 near the Big Sur coastline. PHOTO: STOCK

Eleven years ago, California led the way with the implementation of its Low Carbon Fuel Standard, which continues to be a guiding force for clean fuel policy on the West Coast and beyond.

Since it took effect, the structure and scale of the Golden State’s LCFS has shown that state-level market mechanisms for low-carbon transportation fuel are not only feasible, but powerfully effective. Oregon created its own clean fuel standard in 2016 and, according to Graham Noyes, founder and executive director of the Low Carbon Fuels Coalition, is competitive with California’s LCFS credit value. And starting next year, Washington state’s own low carbon fuel standard will kick in—bordering up to both Oregon and British Columbia’s existing low carbon fuels program, creating a contiguous 3,000-mile LCFS zone along the coast. “The vision of a Pacific Coast collaborative, developing climate change policy together, creating a steady coastline of clean fuel standards from Southern California to the northernmost tip of British Columbia, is happen38 | ETHANOL PRODUCER MAGAZINE | AUGUST 2022

ing,” Noyes says. “These designs are gaining a lot of interest in other states, and also internationally with Canada expanding its programs (see news on page 12), Brazil having it’s renewable fuels program Noyes and many other countries looking at [how they’re structured].” The California Air Resources Board, which administers the state’s LCFS, continues to adjust the program for new opportunities to make faster headway toward the state’s carbon reduction targets. Currently, the most efficient grain ethanol receives a modest LCFS bump in California. Carbon capture and sequestration (CCS)—which 50-plus Midwest ethanol plants are currently planning to do—could cut LCFS carbon intensity (CI) scores in half. Beyond that, more double-digit reductions will be tough to find without credit for low-carbon farming practices. California’s LCFS currently gauges each biofuel pathway on the merits of its process technology, energy inputs and generalized feedstock category. Corn is corn, regardless of how it is cultivated.

But even without credit for low-carbon farming practices, California is a favorable market for corn ethanol sales from plants qualified to do it. Ethanol sold into the state has an average CI rating of just over 58, compared to gasoline’s 90-100 CI rating and average corn ethanol hovering around 70. CI ratings are based on grams of CO2 emitted per megajoule of fuel; each credit unit, usually priced between $100 and $200, equal 1 ton of CO2 reduction. The gallons-to-tons conversion is complicated, but the resultant incentive, and the current price of gas in California, makes conventional ethanol attractive, particularly higher blends. In fact, sales of E85 are booming in California, even while the number of flex-fuel vehicles (FFVs) on the road are diminishing due to phased-out manufacturing. Noyes says E85 use in California grew in volume by 50 percent between 2020 to 2021. This increase in demand is due, in part, to greater availability of E85 at the pump, but also the significant difference in price per gallon between E85 and traditional gasoline, sometimes reaching a spread of $2 or more. “We will continue to see growth there and we’re looking for opportunities to get more

l a t s a o CEFFECT

Comparable to California’s Low Carbon Fuel Standard, pro-biofuel policies in Oregon, Washington and British Columbia offer a vast region of opportunity for reduced-CI ethanol on the Pacific Coast. Inland states may follow suit, bringing farmers to the table. By Melissa Anderson

FFVs into California, and more FFV retrofits done,” Noyes says. Scott Coye-Huhn, program manager for low-carbon fuels at SCS Global Services, says the clean fuel markets in Oregon and Washington are sometimes viewed as secondary to California’s program, but are also highly attractive destinations for LCFS-qualifying fuels. The three contiguous low-carbon markets (plus British Columbia’s program, which was created in 2008 and implemented in 2013), create a massive, geographically connected market for renewable fuel with multiple outlets and shipping synergies. “The incentive is still to sell into California, but you may have reasons to sell in Oregon or Washington,” says Coye-Huhn. “To me, it’s about having a bigger market and more opportunities to sell ethanol.” The bottom line, Coye-Huhn says, is that the West Coast’s collective push to meet transportation-related carbon reduction targets is creating a massive low-CI technology and investment pull that is rippling through the biofuel sector, evident in the rise of renewable diesel and ethanol’s move into CCS. “The incredible amount of biofuel gallons and

projects announced in the past year, in my opinion, is evidence that the market likes low-carbon fuel programs, and the investments and jobs are following,” he says. One policy mechaCoye-Huhn nism expected to have a real impact on the market is the Q45 tax credit, which provides a federal tax credit to power plants and industrial facilities (like biorefineries) that capture and store CO2 that would otherwise be emitted into the atmosphere. The program appears to be moving the needle on CCS investment, layering an extra monetary incentive on top of the enhanced value of biofuel produced at facilities engaged in CCS. While the ethanol industry may experience modest growth in the next three to five years, very little new greenfield construction is expected. Instead, existing producers are doing all they can to become as efficient as possible while, through CCS—and possibly agricultural carbon accounting—cutting their CI scores in half.

“I don’t think you will see new ethanol plants built because of low-carbon fuel programs, but we will certainly see the facilities remain profitable and competitive because of those programs,” Coye-Huhn says. “What they’re doing with CI scores is amazing. And I can’t think of any other industry in the world that, en masse, is forging together to capture carbon. It’s amazing how they are responding by trying to reduce their carbon scores, and that’s because of these LCFS programs.” The addition of LCFS programs in Oregon and Washington is aligned with, and adding to, the momentum and interest that California has created over the past decadeplus. For years, market experts have speculated that what California does with clean fuels may ultimately be replicated elsewhere, not just in bordering states but nationwide. Indeed, that could soon be the case. Clean fuel legislation has been attempted in other states like Minnesota (see “Moving Stepwise Toward State Clean Fuel Standards” on page 32) and New Mexico, which have both attempted to take up low-carbon fuel standards. “We have been working with stakeholders on active bills in three states—Minnesota, ETHANOLPRODUCER.COM | 39

ETHANOLPRODUCER.COM | 39

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ON THE MOVE: Drivers in Portland (above) have been steadily increasing their use of low-carbon fuels since Oregon's LCFS took effect six years ago. Residents of Seattle (right) will likely see more low-carbon fuels at the pump next year when Washington's own LCFS kicks in. PHOTO: STOCK

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New York and New Mexico. None of them passed,” Noyes says. “In New York and Minnesota, the bills didn’t get past their initial introduction. In New Mexico, however, the bill went to a tie on the House floor, falling one vote short.” To Noyes, seeing an oil and gas state like New Mexico come so close to passing a clean fuels standard—an act that would have required the carbon reduction of its transportation fuels by 20 percent by 2030 and 30 percent by 2040—was a powerful and unexpected near win for biofuels in the Southwest. “We don’t expect to necessarily win bill passage the first time a bill is introduced,” he says. “It takes a lot of work to get legislatures and stakeholders comfortable with the legislation, and to build support and create awareness around the benefits of clean fuel standards. We think we will be back next year in all those states, and other states moving forward.” At the federal level, the idea of a national LCFS has been floated numerous times, sometimes as policy bolstering the nation’s existing Renewable Fuel Standard, and sometimes as a replacement of the RFS. Industry observers believe these national LCFS efforts are an indication of how much state low-carbon policy structures have gained attention and credibility over time. A national LCFS, however, is considered by some to be a potential quagmire for corn ethanol, and the U.S. biofuel industry more broadly supports the development of state and regional clean fuel standards that complement the current RFS. Coye-Huhn says regardless of the approach, “the whole ethanol community needs to get behind these LCF programs”—not only on the West Coast but in the Midwest—especially now, as consumer sentiment about biofuels is positive amid record-high gas and diesel prices. “This will create more opportunity and more revenue for farmers, and it will also create green policies that focus more on ethanol,” he says. “Big picture—broad support for policy expansion across the Midwest is needed.” A potential flywheel in the development of a Midwest clean fuels standard is carbon capture. Ethanol plant CCS, experts say, could lower each participating biorefinery’s ethanol CI by 20 to 30 points, creating instant new value for grain ethanol shipped into LCFS markets.

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“If we can capture carbon, liquify it, put it in pipelines and put it underground, scores go from 60 to 40 [or lower],” Coye-Huhn says. “That’s a huge value.” On the agricultural side, there’s still a significant avenue of growth available to bring down carbon scores. Coye-Huhn says allowing growers to play a meaningful role in state and regional LCFS programs starts with the monetization of proven low-carbon farming practices. He says the agricultural economy is a massive opportunity to reduce carbon emissions, which includes the reduction of inputs and a focus on preserving soil carbon. Current low-carbon fuel regulations in the U.S. do not enable this type of incentive because quantifying soil carbon sequestration is challenging and still new. But “the technology and will” to make it happen exists, Coye-Huhn says. “The American farmer is

creative, resilient and adaptive. They are the original environmentalists and have always cared about the health of their fields and ecosystem,” he says. “We need to include them in this effort to unleash their creativity and potential.” Grower practices appear to hold the answer to future CI reductions beyond CCS and increased plant efficiency, but Noyes says many looming questions remain. “To what degree are we going to get these programs into Midwestern states,” he asks. “Can we build these programs to benefit precision ag and regenerative ag, both of which keep more carbon in the soil? And, overall, what will benefit farmers the most?” Author: Melissa Anderson Contact: editor@bbiinternational.com

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