August Ethanol Producer Magazine by BBI International

INSIDE: INOVATION IN CELLULOSIC COPRODUCTS AUGUST 2012

The Quest to Turn Cellulosic Integration Investments Into

Profit

Platforms Page 32

ALSO

Researchers Tackle Questions About Antibiotics, DDGS

Page 38

Producers Have Choices in Fight Against Bacteria Page 44

www.ethanolproducer.com

For illustration purposes only. Actual prize may vary.

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contents

AUGUST issue 2012 VOL. 18 ISSUE 8

features

DEPARTMENTS

Editor’s Note

Be Not the First, Nor the Last By TOM BRYAN

Ad Index

10 The Way I See It

32 INTEGRATION

How Cellulosic is Rising from Corn

Companies reach toward integrated production or co-location of next-generation ethanol By KRIS BEVILL

38 ANTIBIOTICS

Testing for Traces

Studies examine antibiotics in DDGS, whether it contributes to antibiotic resistance in animals By Holly Jessen

44 ANTIMICROBIALS Bacterial Battle

Antibiotics aren’t the only player in the game By HOLLY JESSEN

The Problem of Too Much Success By MIKE BRYAN

11 Events Calendar

Upcoming Conferences & Trade Shows

12 View From the Hill There They Go Again:

Attacking the Renewable Fuels Standard By bob dinneen

14 Drive

Bringing E15 to the

Consumer By TOM BUIS

16 Grassroots Voice

Innovation Drives Success

By BRIAN JENNINGS

18 Europe Calling

Supply, Demand Still

Going Up By Rob Vierhout

20 Business Matters Who’s on First? Lien

Priority in a Volatile World By Adam Hertzke

22 Business Briefs

CONTRIBUTIONS 48 DISTILLERS GRAINS

Growing Supply of Low-fat DDGS Impacts Market Dynamics

New specifications become norm, customers assess quality By John Harangody

52 COPRODUCTS

24 Commodities Report 26 Distilled 58 Marketplace INSIDE: INOVATION IN CELLULOSIC COPRODUCTS

Multiple Coproducts Needed to Establish Cellulosic Industry Researchers evaluate feed yeast, green coal as new products By Arthur Kollaras, Paul Koutouridis, Mary Biddy and James D. McMillan

AUGUST 2012

The Quest to Turn Cellulosic Integration Investments Into

Profit

Platforms Page 32

ALSO

Researchers Tackle Questions About Antibiotics, DDGS

Page 38

Producers Have Choices in Fight Against Bacteria Page 44

www.ethanolproducer.com

Ethanol Producer Magazine: (USPS No. 023-974) August 2012, Vol. 18, 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.

4 | Ethanol Producer Magazine | august 2012

ON THE COVER

Edeniq Inc. President and CEO Brian Thome stands in the middle of this company’s pilot-scale corn to cellulosic migration plant in Visalia, Calif. PHOTO: PHOTO: KIM WESCOTT PHOTOGRAPHY FOR EDENIQ INC.

editor’s note

“Be not the first by whom the new are tried nor yet the last to lay the old aside.”

Be Not the First, Nor the Last Tom Bryan, PRESIDENT & EDITOR IN CHIEF tbryan@bbiinternational.com

Big River Resources CEO Ray Defenbaugh shared that old adage with me just before this year’s International Fuel Ethanol Workshop & Expo. Three weeks later, Defenbaugh’s company announced that it had joined Butamax Advanced Biofuels’s Early Adopters Group to investigate the possibility of converting its facilities to isobutanol. No, Defenbaugh didn’t ignore his own advice. The board members of Big River aren’t committed to isobutanol. They’re exploring it. And they aren’t the first to give it a look. Butamax, a subsidiary of DuPont, now has 11 U.S. ethanol plants representing nearly 900 MMgy signed on to vet isobutanol. In addition to the multiple facilities signed on with marketplace competitor, Gevo, U.S. ethanol plants actively converting, planning to convert, or considering converting to isobutanol represent well over 1 billion gallons of production capacity. Isobutanol is this industry’s undisputed story of the year. It’s a story that has largely overshadowed efforts to integrate and co-locate cellulosic ethanol production at existing corn ethanol plants. That is both ironic and predictable. Ironic because cellulosic ethanol is being overshadowed at a time when it’s finally in reach. Predictable because producers remain skeptical about the cost and risk of being “the first by whom the new are tried.” As EPM’s Kris Bevill explains in her page 32 feature, “How Cellulosic Is Rising From Corn,” purveyors of integrated cellulosic platforms like Edeniq understand producer hesitance. Bevill conveys that most producers “want to be the fourth or fifth plant to add cellulosic technology to their process stream, after someone else has taken the leap to be the first to try it.” So how do you get facility No. 1 on board with a major retrofit or cellulosic integration? You do it by courting producers and building critical mass with programs like Butamax’s Early Adopters Group. You do it with sheer brand strength (i.e., DuPont). You do it with strategic EPC partners (i.e., Fagen), and you do it by signing on big name producers (i.e., Big River Resources) and joint development partners like Flint Hills Resources, the ethanol plant owner and Koch Industries subsidiary that is backing—and adopting—Edeniq’s technology. Stand-alone cellulosic ethanol plants are coming. Most of the action on the ground, however, indicates that retrofits, co-location plays, and incremental integrations are defining the next big stage of the ethanol industry’s evolution. While the world waits for the fuels of tomorrow, advanced biofuels production is being staged at existing corn ethanol plant sites today, right before our eyes.

CORRECTION In the “Dropping Water Use” feature article in the July issue the global average water footprint of corn ethanol was incorrectly stated. The Water Footprint Network number is 2,854 liters of water per liter of ethanol produced, a number that includes rainfall.

For industry news: www.ethanolproducer.com or Follow Us: 6 | Ethanol Producer Magazine | august 2012

twitter.com/EthanolMagazine

AdIndex

EDITORIAL PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com

Vice President of Content & EXECUTIVE EDITOR Tim Portz tportz@bbiinternational.com

2012 Algae Biomass Summit

2012 National Advanced Biofuels Conference & Expo

Growth Energy

Himark bioGas

CONTRIBUTIONS EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com

FEATURES EDITOR Holly Jessen hjessen@bbiinternational.com

NEWS EDITOR Kris Bevill kbevill@bbiinternational.com

COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR

2013 International Biomass Conference & Expo

8-9

Inbicon

2013 International Fuel Ethanol Workshop & Expo

Indeck Power Equipment Co.

BBI Consulting Services

INTL FCStone Inc.

BetaTec Hop Products

Kennedy and Coe, LLC

BrownWinick Law Firm

Lallemand Ethanol Technology

Buckman

Nalco

Cellencor Inc.

Pioneer Hi-Bred International

Cereal Process Technologies

POET-DSM Advanced Biofuels

CPM Roskamp Champion

Renewable Fuels Association

Crown Iron Works Company

Sukup Manufacturing Co.

DuPont FermaSure

Jaci Satterlund jsatterlund@bbiinternational.com

GRAPHIC DESIGNER Lindsey Noble lnoble@bbiinternational.com

PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com

CEO Joe Bryan jbryan@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 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

ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

Senior Marketing Manager John Nelson jnelson@bbiinternational.com

EDITORIAL BOARD Mike Jerke, Chippewa Valley Ethanol Co. LLLP Jeremy Wilhelm, Cilion Inc. Mick Henderson, Commonwealth Agri-Energy LLC Keith Kor, Pinal Energy LLC Walter Wendland, Golden Grain Energy LLC Neal Jakel Illinois River Energy LLC Bert Farrish Lifeline Foods LLC Eric Mosebey Lincolnland Agri-Energy LLC Steve Roe Little Sioux Corn Processors LP

43, 64

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 (866) 746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at (866) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to 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

Syngenta: Enogen

DuPont Industrial Biosciences

Vecoplan LLC

Ethanol Producer Magazine

Verenium

Fagen Inc.

Victory Energy Operations, LLC.

Flottweg Separation Technology

Vogelbusch USA, Inc.

Freez-it-Cleen

Wabash Power Equip. Co.

august 2012 | Ethanol Producer Magazine | 7

Power P ow your old There’s more to ethanol plant etha The New Ethanol with with New Ethanol than ethanol. production. prod

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the way i see it

The Problem of Too Much Success By Mike Bryan

The energy market in the U.S. is changing for the better, but it could spell trouble for ethanol. Here are some statistics that may be of interest: • U.S. energy consumption will only increase at a rate of 0.3 percent per year between now and 2035 • Gasoline consumption will fall by 0.6 percent per year between now and 2035 • The adoption of new fuel efficiency standards would require cars to average 54.5 miles per gallon by 2025 • As a result of new oil finds, crude oil production in the U.S. is expected to increase by a million barrels per day by 2020 • Crude oil imports are projected to fall by 2 million barrels per day in the next decade Using these projections, the competition from the oil industry to garner a larger share of a shrinking market will likely put more pressure on their lobbyists to redouble efforts to minimize ethanol use—more challenges to 15 percent blending, downward pressure on oil prices to squeeze the ethanol industry against high corn prices, and certainly, there will be strengthened efforts to eliminate the renewable fuels standard (RFS).

10 | Ethanol Producer Magazine | august 2012

The ethanol industry, despite decades of push-back, has continued to grow and replace greater and greater amounts of imported oil and gasoline. It has saved America billions of dollars on imports and saved the consumer untold amounts at the pump. To say this industry has been a success would be a significant understatement. Now, however, we may be faced with the problems that come with too much success. When you have replaced 10 percent of the gasoline sold in America and look to expand that to 15 percent and greater, that raises the ire of the oil industry. And as we all know, when pushed, they can be formidable adversaries. So, what I’m saying is that we should not expect things to become easier, or for future successes to go unchallenged. In fact, I would suggest that the sledding is likely to get a whole lot tougher in the years ahead. But, having spent nearly 30 years in this industry, I know we are up to the challenge. That’s the way I see it.

Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com

EVENTS CALENDAR

Algae Biomass Summit September 24-27, 2012 Sheraton Denver Downtown Hotel Denver, Colorado Advancing Technologies and Markets Derived from Algae Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. Early bird registration rates expire August 13. (866)746-8385 | www.algaebiomasssummit.org

National Advanced Biofuels Conference & Expo November 27-29, 2012 Hilton Americas - Houston Houston, Texas

The 6th Annual Algae Biomass Summit Denver, Colorado - September 24-27, 2012

The world’s largest algal biomass conference will focus on commercial viability, production, evolving technologies, project finance and more. Today the world is facing unprecedented challenges in energy, food, economics, and climate—all of which can be addressed through a natural solution—algae. At a scale and importance like no other event in the industry, this year’s Algae Biomass Summit will be held in Denver on Sept. 24-27 and is expected to draw more than 900 attendees from around the world. Interest in sponsorships, exhibits, and abstract proposals have already exceeded expectations, setting the stage for the industry’s premier forum. Producers of algae products and fuels, researchers, financiers and policymakers will again gather at the Summit to discuss the latest industry trends, technology developments, and to make new connections in the rapidly growing algae business. Leaders and attendees will discuss issues of critical importance to the industry, including the commercial viability of algae production, current government and private funding initiatives, evolving technologies, processing concepts, life-cycle analysis and project finance. The conference exhibit hall—expected to sell out again this year—will feature representatives from across the algae industry’s value chain, from equipment, manufacturers and suppliers, universities, state and federal agencies, to entrepreneurs and established fuel and chemical companies. Algae have the power to simultaneously put fuels in our vehicles, recycle CO2, provide nutrition for animals and people and create jobs. These solutions and more will be discovered, discussed and decided in September in Denver. More information about registration, sponsorships and exhibit opportunities is available at the Algae Biomass Summit webpage: www.algaebiomasssummit.org

Next Generation Fuels and Chemicals Produced by BBI International, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleumderived products. (866)746-8385 | www.advancedbiofuelsconference.com

International Biomass Conference & Expo April 8-10, 2013 Minneapolis Convention Center Minneapolis, Minnesota Building on Innovation Organized by BBI International and produced by Biomass Magazine, the International Biomass Conference & Expo program will include 30-plus panels and more than 100 speakers, including 90 technical presentations on topics ranging from anaerobic digestion and gasification to pyrolysis and combined heat and power. This dynamic event unites industry professionals from all sectors of the world’s interconnected biomass utilization industries—biobased power, thermal energy, fuels and chemicals. (866)746-8385 | www.biomassconference.com

International Fuel Ethanol Workshop & Expo June 10-13, 2013 America’s Center St. Louis, Missouri

Now in its 29th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine. (866)746-8385 | www.fuelethanolworkshop.com

august 2012 | Ethanol Producer Magazine | 11

view from the hill

There They Go Again: Attacking the

Renewable Fuels Standard By Bob Dinneen

Calling themselves “The Biofuels Investment and RFS Market Congressional Study Group,” staff members for at least eight U.S. Senators are conducting “a seed-to-wheels examination” of the renewable fuels standard (RFS), setting the stage for legislation in the next session of Congress. Observers are saying a coalition of odd bedfellows—food groups, environmentalists and the oil industry—are teaming up against the ethanol industry for what is expected to be a multiyear campaign to weaken or repeal the RFS, starting with the 113th Congress which ends January 2015. To paraphrase Ronald Reagan, “There they go again!” Back in 2008, with the Grocery Manufacturers Association leading the way, a similar cast of characters conducted a campaign to scrap the RFS. They even persuaded Gov. Rick Perry of Texas—the nation’s leading oil-producing state—to request a waiver from the RFS. They failed then, and they’ll fail again, but not before they confuse the conversation about energy policy with an oil slick of myths, misstatements and misleading analyses. While the ethanol critics, together with some well-intentioned Senators and staffers, are focusing on incentives for American biofuels, it’s time to take a look at the big picture. The fact is: American ethanol willingly gave up its major tax incentive—the

12 | Ethanol Producer Magazine | august 2012

blenders tax credit—at the end of last year. We believe that incentives should help emerging industries to develop and grow, not enjoy eternal subsidies by the nation’s taxpayers. But that lesson has been lost on Big Oil, which has benefited from federal subsidies for the past century. Instead of exclusively examining renewable fuels, the Senate staffers should also scrutinize the $3.6 billion to $4.5 billion each year in federal tax breaks and other advantages for the oil industry. Yes, federal incentives have helped the U.S. renewable fuels industry to stand on its own two feet. When the Senate staffers take a look at American biofuels, they should like what they see. With nearly 14 billion gallons of production, ethanol now provides 10 percent of America’s motor-fuel supply. Last year alone, American ethanol eliminated the need for 485 million barrels of imported oil, more than all the oil we import from Saudi Arabia. Moreover, in the midst of a lagging economy, American ethanol supports more than 400,000 jobs, pays more than $8 billion in taxes to the federal, state and local governments, and has lowered the price of gasoline by an average of more than 25 cents per gallon over the past decade. Even without a seed-to-wheels examination, the Senate staffers should be proud that the renewable fuels standard, which was enacted by both houses of Congress in 2007, has made this progress possible. Without spending a penny of the taxpayers’ money, the RFS has promoted the growth of the American biofuels industry by providing assurance to investors, farmers and the fuel market that renewable fuels

will be part of the mix of motor fuels in this country. Five years after the RFS became national policy, the standard is doing what incentives should do: encouraging innovations such as the development of new technologies that will turn waste products— garbage, woodchips, agricultural residue, corn stover and more—into clean-burning, American-made renewable fuels. That’s the good news about the RFS. What about the attacks upon American biofuels on environmental and food issues? On the environmental front, according to the U.S. EPA and a study by the University of Nebraska, ethanol reduces greenhouse emissions by up to 50 percent, compared to gasoline. As for the idea that ethanol production increases food prices—a claim that the Grocery Manufacturers Association keeps making—I’m tempted to quote Ronald Reagan again: “Facts are stubborn things.” After all, the fact is that farm products such as corn account for only 11.6 cents out of every dollar that Americans spend on food. Even with other farm products, corn prices historically have had little impact upon prices for livestock, poultry, eggs and milk. In fact, food prices track less closely with ethanol production than with energy costs, especially oil prices. Maybe the Senate staffers, and the same coalition that bashed biofuels four years ago, should be examining Big Oil, not renewable fuels. But, more likely than not, here they go again. Author: Bob Dinneen President and CEO, Renewable Fuels Association (202) 289-3835

Don’t be a prisoner to your pH.

Don’t let enzymes determine your plant operating conditions. Let your plant operating conditions determine your enzymes.

Verenium’s Fuelzyme® alpha-amylase works to your conditions so you can break free from the restraints in your process and improve operating margins. Fuelzyme® ɲ-amylase is a highly evolved, high-performance enzyme that is effective at an extraordinary temperature and pH range for starch liquefaction in the production of fuel ethanol. It is the most forgiving enzyme accommodating process variations. This means less time spent worrying about how your enzymes adapt to your operating conditions. Fuel ethanol plants that use Fuelzyme® ɲ-amylase can increase throughput and substantially reduce enzyme dosing while eliminating pH adjustments. Consider also the reduction in chemical usage that can be expected, all while increasing ethanol yields. Can you really afford not to try it? Use enzymes that excel in your process — use Fuelzyme® ɲ-amylase.

Verenium Corporation | 3550 John Hopkins Ct., San Diego, CA 92121 Phone: 1.800.523.2990 or 858.431.8500 | Fax: 858.431.7273 verenium.com | enzymes@verenium.com U.S. Patent No. 7273740, US Pat. 7666633, US Pat. 7659102 and other patents pending. © 2012 Verenium Corporation. Fuelzyme, Verenium, the Verenium logo, and The Energy of Nature are trademarks of Verenium Corporation.

DRIVE

Bringing E15 to the Consumer By Tom Buis

Growth Energy remains at the forefront as a leader in protecting and advancing the industry with its continued efforts to bring E15 into the marketplace. In 2009, Growth Energy filed the initial waiver to approve E15 for the general marketplace. We knew if consumers were given a choice at the pump, they would choose the fuel that is the most cost competitive and reliable. E15 is that fuel. For more than three years, Growth Energy has fought the legal and regulatory battles to finally break through the E10 blendwall to make meaningful strides to protect and improve our nation’s energy security and prosperity. Since the initial filing, there have been a number of challenges and at each and every step Growth Energy has led the industry, working diligently to overcome them. In mid-June, the U.S. EPA gave the final approvals that make the commercial use and sale of E15 possible for vehicles 2001 and newer. This is a remarkable achievement for our industry. There is still a tremendous amount of work that needs to be accomplished, however, before you will routinely see E15 at your local gas station. Growth Energy is leading the efforts in market development, working directly with retailers so they can sell E15. This process is difficult and complex. In anticipation of the next steps, Growth Energy

14 | Ethanol Producer Magazine | august 2012

launched a website just for retailers, www. EthanolRetailer.com, to provide a one-stop resource center. By adding E15 to their fuel sales, retailers will have the opportunity to offer a fuel that has increased octane and is less expensive than other low-blend or pure gasoline choices. Plus, as we like to remind folks, with E15, consumers can put a little more America in their tank. One of the most important elements to introducing E15 into the marketplace is educating consumers and creating the market demand for the fuel. Again, Growth Energy took the lead, utilizing our NASCAR sponsorship platform. In partnership with American Ethanol, we launched a multimillion dollar national ad campaign in June, which includes a sweepstakes giving away three Chevrolet Silverado trucks as well as other exciting prizes. Whether you follow NASCAR, or are a casual fan, you have likely seen our commercial several times this summer. Reaching more than 5 million viewers a weekend, our E15 campaign has been a tremendous success. While entertaining and funny, the message of the commercial is clear—E15 is the fuel for your car. One comical spot features American Ethanol NASCAR driver Austin Dillon and guest star Kevin Harvick. The commercial shows Dillon being passed on the track by the “Ferguson” family in a beige minivan running on E15. The narrator explains that NASCAR is powered by E15 and that your car can use it too, but reminds viewers not to let it go to their head!

By announcing the sweepstakes in the commercial, it was extremely successful in driving people to American Ethanol’s Facebook page, reaching well beyond NASCAR fans and thus increasing our efforts to educate more consumers of the benefits of American Ethanol and E15. As August draws to a close, the sweepstakes will end, but Growth Energy’s work will not. We will continue educating consumers about the benefits of E15. Additionally, our team will continue to work with retailers on how to get E15 in their pumps, highlighting the proven economic advantages other retailers have experienced when increased ethanol blends are offered for sale. Growth Energy’s core mission is to continue to promote the use of ethanol, as a way to reduce harmful emissions and spur economic growth in America, creating jobs and opportunities, while simultaneously reducing our addiction to foreign oil. E15 will not come to the market without a fight. Entrenched interests in foreign oil and the petroleum industry will continue to distort the truth in their misinformation campaigns. We must persist, define and win over the public’s perception. We are on the side of American exceptionalism, investing in America and providing reliable, renewable fuel for American energy security and creating American jobs. Growth Energy will continue to build the market demand for E15 and work directly with retailers to help bring it to a station near you. Author: Tom Buis CEO, Growth Energy (202)545-4000 tbuis@growthenergy.org

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GRASSROOTS vOICE

Innovation Drives Success By Brian Jennings

In 1862, Congress sent the Homestead Act to President Lincoln for his signature, enabling U.S. citizens to settle on about 270 million acres of land. As a result, pioneers were given the ability to unleash their entrepreneurial spirit to succeed, or fail, by unlocking the rich resources in America’s breadbasket. Whether individual pioneers did well or fell short hinged on a number of factors, but in the totality of the 150 years since this historic legislation was enacted, it is clear the U.S. scored an unprecedented victory. Today America’s farmers and ranchers are by far the best and most efficient producers on the planet of sustainable, affordable and nutritious crops that become food. One of many ingredients that led to this achievement was innovation. Government policy can help individuals and businesses innovate, improve and succeed. One such policy is the renewable fuel standard (RFS). While history will judge how the RFS compares to things like homesteading, it is safe to say the RFS is the most important policy enacted by the U.S. to reduce our dependence on foreign oil. Reliance on oil imports peaked around 62 percent in 2005. The original RFS, first championed by the American Coalition for

16 | Ethanol Producer Magazine | august 2012

Ethanol, was enacted that same year. Today, U.S. oil imports stand at just 45 percent. The RFS also spurs innovation by rewarding fuels that reduce greenhouse gases. Innovation really does define how the ethanol industry has grown from less than 1 billion gallons of comparatively inefficient production 25 years ago to more than 200 biorefineries in 29 states today, sustainably producing around 14 billion gallons of fuel and nearly 40 million metric tons of feed. We mark ACE’s 25th anniversary this year, and if you attend our conference in Omaha you will take part in discussions about how ethanol producers are thinking and acting in resourceful ways to succeed well into the future. Steve McNinch, CEO of ACE-member Western Plains Energy, will discuss how his plant is taking advantage of their proximity to cattle feedlots and grain sorghum supplies to produce advanced biofuel for the RFS. Steve will be joined by ICM to discuss progress in cellulosic ethanol and benefits of co-locating cellulose and grain-based ethanol. Other producers will join us to discuss opportunities with biobutanol and other products. Because ethanol is innovating, it is here to stay. In the context of our nation’s current fascination with hydraulic fracking in North Dakota’s Bakken Shale formation and the Keystone XL pipeline, it’s important to remember that ethanol is advancing while oil is regressing. While fracking and the Bakken are making a difference, the ultimate price we pay outweighs the short-term benefits.

Meanwhile, ethanol producers are continually taking advantage of the product and process technical advancements that have been developed to debottleneck, reduce energy and water use, or create new products and coproducts. We’ve got to be innovative on the policy front as well, doing the smart diplomacy necessary to reconstruct a winning coalition of allies to help us defend the RFS and win future policy battles. That’s why ACE is working with automakers on flex-fuel vehicles, fuel standards and the better use of ethanol’s octane in the engines of tomorrow. That’s also why ACE has been meeting with scientists, environmental groups and advanced biofuel stakeholders about how we can more constructively work together on common policy goals. One result of these discussions was a group letter to Congress making it clear that the RFS should remain intact. The positive headlines about how environmental groups and ACE came together in support of the RFS grabbed the attention of members of Congress because we were able to unite with forces that had been fighting against ethanol in the recent past. Innovation defines how ethanol producers operate and how ACE pursues our member-driven mission to make U.S. ethanol the consumer fuel of choice. Author: Brian Jennings Executive Vice President, American Coalition for Ethanol (605) 334-3381 bjennings@ethanol.org

Europe Calling

Supply, Demand Still Going Up By Robert Vierhout

In July, we get a clearer view in the European Union of the previous year’s production and consumption. Obtaining data is always a cumbersome, time-consuming operation. Once the data is there, the challenge is to explain the differences and eventually come up with the most accurate numbers. Every year when I try to pull together the supply and demand data on ethanol, I am reminded of what former U.K. Prime Minister Winston Churchill supposedly thought of statistics: “I only believe the statistics I make myself.” I will not go that far, but a lot of checking and double-checking is needed before a level of accuracy is achieved that is presentable. For ethanol trade numbers, the European statistical office is still the best source. EU member states have the legal obligation to hand over national statistics to the Eurostat office. Getting in the national data is a time-consuming affair. The collection of ethanol supply and demand data is done at two levels. One division in the European Commission needs to present the so-called ethanol balance every year. The analysis of the data obtained from the 27 member-states provides detailed information on feedstock and end-use. Another division produces data on fuel-use only, also based on national reporting. The data never matches

18 | Ethanol Producer Magazine | august 2012

and thus the search starts, comparing different sources to get a full, accurate picture. The preliminary 2011 data now surfacing already allows some interesting initial observations. Total domestic supply in 2011 was about 6.3 billion liters (1.6 billion gallons), 15 percent more than 2010. Total demand was about the same, almost 12 percent over the prior year. That would suggest that the market was in balance last year, with imports not accounted for. If we add the imports, however, there was a substantial oversupply of almost 1.5 billion liters. Getting the import data right is always the biggest challenge. Undenatured or denatured ethanol needs an import license, which makes counting easy. It gets rather difficult as soon as ethanol enters in blended form with gasoline and/ or another chemical product and the EU import statistics are not entirely reliable for those imports. The better way is to count the volumes from exporting countries, assuming that all exports to the EU were indeed consumed there. Last year, close to 1.2 billion liters entered though this not-so-transparent way, of which the U.S. accounted for 85 percent. There were no real shifts in 2011 as far as production and consumption by country is concerned. France is still, by far, the number one ethanol producer in Europe, producing 1.8 billion liters (467 MMgy) followed by Germany at 223 million gallons. Next is the U.K., then Spain and number five is Belgium.

The biggest consumer of ethanol is Germany—good for close to 2 billion liters, of which two thirds goes into fuel. Number two is France with 1.5 billion liters and 70 percent going into fuel. The third biggest consumer of ethanol is the U.K. where 90 percent is used in fuel. In terms of feedstocks, we see an increase of the cereal share in 2011 to the detriment of sugar juice. Almost 70 percent of ethanol production is now cereal based. Even though the statistics I am quoting from don’t tell us what type of cereals, we know from other sources that almost 50 percent is wheat and 35 percent maize. The second most preferred crop is sugar beet, which accounts for almost 23 percent of EU ethanol production. And finally, there is still some lower quality wine used as feedstock. The higher share of wheat can be explained by two factors: first, new production capacity coming online uses either wheat or corn and, second, higher global sugar prices made it more attractive to divert more sugar juice to the production of sugar than ethanol. All in all, it can be concluded that 2011 is continuing the growth trend of previous years, though at a more modest pace than before. The growth pattern should continue this year. The true challenge is to obtain a growth rate in market prices that reflects the growth rate in supply and demand. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org

business matters

Who’s on First? Lien Priority in a Volatile World By Adam Hertzke

Secured financing can sometimes seem simple: Get a security agreement, file a financing statement, make a loan. In the grain industry, even the multiple parties with interests in grain—banks, seed sellers, fertilizer providers, harvesters, and so on—can all get paid when grain prices are high enough to satisfy all of their claims. Unfortunately, this simple view has been challenged as grain prices have fluctuated and input costs continue to rise. Several types of interests may compete for grain proceeds. Most farmers rely on secured credit provided by banks. Lawyers, bankers and many farmers know that the granting and enforcement of such consensual security interests is governed by Article 9 of the Uniform Commercial Code and the process is fairly well understood. Things get more complicated when grain buyers have to deal with statutory liens and the Food Security Act. States have created statutory liens for nearly every person in the grain production value chain, but the liens created by each state are different in scope and enforcement. Statutory lienholders could include seed sellers, fertilizer providers, harvesters, warehousers and carriers, among others. Unfortunately for all parties, statutory liens vary widely. Each state’s law must be consulted to determine permitted liens, how they are perfected (such as by filing a financing statement), and what the priority of those liens will be. The final complication discussed here arises from the rights of grain buyers. 20 | Ethanol Producer Magazine | august 2012

Before 1985, a buyer of grain or other farm products was always subject to security interests created by the seller. To mitigate the risk that grain buyers might have to pay twice, buyers routinely conducted searches against their sellers and cut checks payable to both their sellers and their sellers’ secured creditors. The Federal Food Security Act of 1985 shifted the burden somewhat in favor of buyers. The act provides that buyers of farm products take free-of-security interests created by sellers, unless the holders of those security interests comply with certain requirements. Under the act, states may be certified as “central filing states” or “clear title states” and those without a central filing system are commonly known as “notice states.” Unless a state’s central filing system has been certified by the USDA, the state is a notice state. To date, 19 states have been certified as clear title states for some or all farm products. The list published on the USDA’s website at www. gipsa.usda.gov/Lawsandregs/cleartitle.html reveals, for example, that Minnesota and Nebraska are clear title states, but Iowa and Kansas are not. In clear title states with an approved central filing system, secured parties must file an “effective financing statement” covering their security interest in the state where the grain is produced. Grain buyers must search the central filing before paying for grain. If any secured parties have filed against the grain being purchased, the buyer should obtain a release from the secured parties, or at least cut any checks

payable to both the farmer and the secured parties. The contents of the filing required in clear title states is different from that required under the Uniform Commercial Code, but a secured party must file both to be protected in those states. Matters become particularly difficult when multiple states are involved. Under the Food Security Act, the correct state in which to file is the state where the product is produced. Under the UCC, the correct state in which to file is the state where the debtor—not the product—resides (or was formed, if an entity). In notice states, a buyer of farm products, including grain, in the ordinary course of business takes free-of-security interests created by the seller, unless the secured parties have given the buyer notice of their security interests. For this reason, lenders in notice states often require farm debtors to provide a list of their grain buyers. The ways that statutory liens, the Uniform Commercial Code and the Food Security Act interact to determine priority vary from state to state. Grain buyers would be well-served to fully understand lien priority in the states in which they operate so that they can make payments in a way that minimizes the risk of double payment. Author: Adam Hertzke Faegre Baker Daniels LLP (515) 447-4719 adam.hertzke@FaegreBD.com

business briefs People, Partnerships & Deals

enzymes and CodeXol detergent alcohol. “I envision that Codexis’ CodeEvolver directed evolution technology platform will continue to generate differentiated commercial products in the pharmaceuticals, chemicals and fuels markets,” he said. Biofuels marketer Eco-Energy Inc. has entered into a supply agreement with Propel Fuels to meet the retailer’s E85 demands for the next three years. Propel currently operates a network of self-serve biofuels filling stations and Clean Mobility Centers, which introduce renewable fuels blends alongside conventional fuels, in California and Washington. According to Propel, integrating the producer-to-pump supply chain will reduce the cost of procuring, storing and delivering renewable fuels. “Eco-Energy’s extensive supply and distribution capabilities and access to low-cost feedstocks strengthens our ability to provide great value to our customers,” Propel CEO Matt Horton said. “They are the perfect fit for us as we plan and execute the expansion of our fueling network.” As part of the agreement, Propel and EcoEnergy will collaborate to expand Propel’s renewable fuels retail network substantially. Propel expects to grow its retail network to more than 200 stations over the next five years. Codexis Inc. has appointed John Nicols to serve as president and CEO. Prior to joining Codexis, Nicols was employed for more than 20 years at Albermarle Corp., a specialty chemicals company, where he managed multiple divisions throughout his career and most recently served as senior vice president of strategic development and catalysts. From 2007 to February 2012, he served as Albermarle’s vice president of the catalysts division and was responsible for growing that division’s segment income by $200 million from 2006 to 2011. In his new role at Codexis, Nicols said his first priority will be to complete the development of the company’s trademarked CodeXyme cellulase 22 | Ethanol Producer Magazine | august 2012

Visalia, Calif.-based biomaterials and biofuels company Edeniq Inc. recently promoted Tom Griffin to chief technology officer. Griffin joined the company in 2010 and served previously as Chemical Engineer vice president of techTom Griffin has nology. Griffin’s proexpertise in chemical reaction engineering, motion follows continbiofuels, photovoltaics, ued market growth of coal gasification and advanced hazardous the company’s prodwaste conversion ucts and services to applications. He holds a doctorate in chemical existing ethanol plants engineering from the as well as commercial Massachusetts Institute of Technology. development and scaleup of its cellulosic processes. In his new role, Griffin will lead Edeniq’s technology developments and future growth strategy. “In the short two years Tom has been at Edeniq, he has played a key role in our success,” Brian Thome, president and CEO, said. “His new role as CTO ensures that Edeniq will benefit from his continued leadership and hands-on approach to invention and implementation.” Griffin is a chemical engineer and has spent the past 20 years actively involved in technology development and deployment in the alternative energy and environmental technology sectors. His accomplishments include co-founding Pennsylvania Sustainable Technologies, integrating bioprocess and thermochemical reaction engineering elements toward advanced biofuels process configurations. Lallemand Ethanol Technology and Mascoma Corp. will market the Mascoma Grain Technology yeast product under the

trademarked name TransFerm. The product is a bio-engineered substitute for conventional fermenting yeast and is expected to lower the cost of corn ethanol production by reducing the amount of enzymes currently required for ethanol production. It is the first commercial application of Mascoma’s proprietary consolidated bioprocessing technology platform. Lallemand serves as the manufacturer and distributor of the product. Mascoma and Lallemand will share marketing and sales roles under an exclusive partnership. TransFerm has been used to produce more than 50 million gallons of ethanol by nine corn ethanol producers, according to the companies. The American Coalition for Ethanol will honor Sen. Ben Nelson, D-Neb., with the Merle Anderson Award during the group’s annual ethanol conference Aug. 10 in Omaha, Neb. Nelson was selected to receive the award in recognition of his leadership in supporting the renewable fuels industry while serving as governor and senator of Nebraska. Nelson established the Governors’ Ethanol Coalition in 1991, assisted in creating the first energy title in a Farm Bill, and played a key role in passing the 2005 and 2007 renewable fuels standards. “Senator Nelson has been a great champion on behalf of the ethanol industry,” ACE Executive Director Brian Jennings said. “His work and leadership during his time in office really gave a boost to rural economies in Nebraska as well as across America.” The Merle Anderson Award Ethanol Advocate Sen. Ben Nelson, is named in honor of D-Neb., has been a ACE’s founder and strong supporter of the ethanol industry for first president, Merle more than 20 years Anderson, who serves and will be honored for his leadership as chairman emeritus and contributions to of the group’s board of advancing the industry during the American directors. Coalition for Ethanol conference in August.

BUSINESS BRIEFS Sponsored by

ICM Inc. has been issued a U.S. patent for its Advanced Oil Separation System, which employs both mechanical and chemical separation to increase the volume of nonfood-grade oil recovered from an ethanol plant’s process. Ethanol is used as a solvent to break the emulsion and free oil that would not otherwise be recovered, thus eliminating the need for other additives. Kurt Dieker, director of product development, said the AOS System processes a smaller product stream post-centrifuge, providing a competitive advantage on processing costs. The systems have been installed at nine ethanol plants, with seven more installations scheduled to be complete by the end of the year. Customers who have installed the system so far are experiencing a return on investment rate of six months or less, according to the company.

Pacific Ethanol Inc. announced June 21 that it will install ICM’s AOS system at its 60 MMgy Magic Valley facility in Burley, Idaho. Installation will be complete by the end of the year. The company expects to begin generating revenue from corn oil separation early next year and intends to implement the technology at its three other plants by the end of the first quarter of 2013. The USDA Natural Resources Conservation Service recently awarded a nearly $400,000 grant to a group of university researchers to conduct ongoing research on biofuel crops that could be used as an alternative to corn. The group’s research began last summer and will be funded through the grant for two more years. Joshua Campbell, an assistant biology professor at High Point University in North Carolina co-authored the grant and will be examining pollinating insects and how their populations and diversity are affected by various types of biofuel

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) 746-8385, or email it to kbevill@bbiinternational.com. Please include your name and telephone number in all correspondence.

crops. “Currently the effects of biofuel crops on pollinators and other beneficial insects are largely unknown,” he said. Other researchers in the project are professors at Mississippi State University.

Universal Components Wayne’s new fuel dispenser is designed to address the all users’ needs, including a variety of ethanol blends.

Wayne, GE Energy’s fuel dispenser and technology company, has launched a new line of fuel dispensers that will serve as the global platform on which all future Wayne dispenser models will be based. The Wayne Helix fuel dispenser line represents an insideand-out redesign, incorporating high-quality materials and advanced fuel-dispensing technology which will accommodate gasoline/ ethanol blends and higher-ethanol content fuels, according to Russ Haecker, Helix product manager. “For dispensing ethanol grades higher than E15 per UL [Underwriters Laboratories] requirements, the Helix fuel dispenser is equipped with coated meters and stainless steel tubing, the same as our current dispenser product offerings,” he said. “In addition, the Helix dispenser will be able to provide variable blending of both ethanol

and gasoline, outputting up to five blended fuel products.” Ethanol blending configurations for the dispensers will be available early next year. Gevo Inc. has signed a collaborative agreement with Malaysia’s East Coast Economic Region Development Council, Malaysian Biotechnology Corp., and Malaysian state government officials to develop a cellulosic biomass isobutanol facility in the State of Terengganu. Gevo has been conducting development work in Malaysia for the past year to develop strategic partnerships along the supply chain and is in the final stages of evaluating additional partners to complete that value chain. “The technology for sustainable cellulosic feedstock is expected to be commercially viable this year, so now is the appropriate time to begin our cellulosic platform,” said Chris Ryan, Gevo president and chief operating officer. “We’re excited to follow the demand, especially since Southeast Asia is one of the fastest growing chemical markets, and Malaysia provides an excellent growth opportunity for Gevo.” Beta Renewables, a joint venture between Italy’s Gruppo Mossi & Ghisolfi and TPG, received the Innovation Award for its Proesa technology during the 2012 ACHEMA conference held June 18-22 in Frankfurt, Germany. More than 100 companies applied for awards in 10 categories at the chemical engineering, environmental protection and biotechnology industries conference. Winners were selected based on innovation, usability, quality, efficiency and economy. Beta Renewables’ Proesa technology converts a variety of inedible feedstocks into fermentable sugars which can be used to produce biofuels and chemicals. The technology will be used at Beta Renewables’ commercialscale cellulosic ethanol plant in Crescentino, Italy, which is scheduled to begin production by the end of this year. The technology will also be installed at facilities to be constructed by GraalBio in Brazil. august 2012 | Ethanol Producer Magazine | 23

commodities Natural Gas Report

Natural gas prices strengthen relative to crude June 25—Crude oil prices continue to drop to unanticipated levels, below $80 per barrel for the first time since October. As crude dropped by 25 percent over the past two months, natural gas increased by 37 percent. The accompanying chart shows April crude oil trading at 50 times the natural gas price per million Btu—the highest since natural gas started trading in 1991. It now rests at roughly 30, a drop of 40 percent. Over the past three and a half years, natural gas prices and crude oil prices have moved somewhat independently. Relative pricing activity over the past two months is further verification that differing market forces are driving crude and gas. Crude oil prices dropped precipitously as inventories increased and concern built over economic slowdown in China and Europe. On the other hand, natural gas prices firmed

as production levels dropped in response to slowing activity in dry gas formations. In addition, natural gas prices incent electric utilities and industrial customers to switch from coal to natural gas. Strong demand and possible reduced supply resulted in several weeks of lower-thanexpected and lower-thanaverage natural gas storage injections. Fewer concerns about running out of storage capacity later this summer is allowing natural gas prices to float up. This may be shortlived or, we may have bottomed out. We expect crude oil and natural gas prices to remain somewhat independent of each other for the foreseeable future. It is

By Casey Whelan

important to analyze supply/demand fundamentals and market risks for each commodity separately as risk management plans are developed and implemented.

Corn Report

Weather markets dominate new crop June 25—A slowing world economy, and in particular a slowing China economy, led to June markets sliding on concerns about longterm demand. Initially funds trimmed their long positions in corn, then ethanol plants began slowing or idling, weakening the market, spreads and basis. June failed to bring precipitation to areas of Illinois, Indiana and Ohio as well as areas of the Delta, deteriorating crop ratings, while well-above-normal temperatures added stress. USDA used 166 bushels per acre in the June supply/demand report, but the trade is now considering sub-160, and even 155, yield prospects. The accompanying chart uses the June USDA planted/harvested acres and demand scenario, illustrating what reduced yields do to carry-out while leaving the other variables constant. More above-normal temps across the Midwest with already deficit soil moisture will 24 | Ethanol Producer Magazine | august 2012

BY JASON SAGEBIEL

erode yield potential further. June 25 crop ratings were 56 percent good-to-excellent nationally, down from 63 percent the previous week. The last time the crop rating was rated this low was in 1988. The market will now have to determine what a carry-out could end up being for new crop and what demand sectors will be sacrificed— exports, ethanol, livestock feed or other industrial uses. At this time the focus is on weather, weather, weather as the macroeffects of the world economy sit on the back burner.

New crop corn is getting ample opportunity to test contract highs on production concerns.

report

Regional Ethanol Prices Front Month Futures (AC) $2.070 REGION

SPOT

RACK

West Coast

$2.165

$2.560

Midwest

$2.045

$2.400

East Coast

$2.105

$2.495 SOURCE: DTN

Regional Gasoline Prices

DDGS Report

DDGS exports steady, domestic feed margins poor BY SEAN BRODERICK June 25—Corn is expensive and has been difficult for ethanol plants to find, and pay for, leading to a focus on margin preservation. We ended June with many plants running at reduced rates and/or extending maintenance shutdowns. Most had the majority of their June production sold, and about half of what they were going to make in July, with little, if any, sold for August. With the slowdowns, the contracts they thought would comprise half of production, now extend through all of the July tonnage made, leaving less leeway for spot sales. Container exports have been steady. Business got done early, and recent trading has more to do with logistics and execution than demand. The announcement

that the Chinese dropped the dumping case against U.S. DDGS shocked no one, and much had been traded in advance. Bulk markets are very slow, as DDGS is more expensive than U.S. corn in the Gulf, and the corn in the Gulf is more expensive than most other world origins. Domestically, buying is still hand-tomouth. Feeding margins are poor, with no incentive to buy ahead. Those who think there are corn areas “burning up” are being met with those who think we are “one good rain away.” The change in production, and corresponding supply, will be an issue. Demand from plants buying in their previously sold tonnage will keep prices firm, relative to corn.

Front Month Futures Price (RBOB) $2.570 REGION

SPOT

RACK

West Coast

$3.289

$2.774

Midwest

$3.112

$2.839

East Coast

$3.069

$2.704 SOURCE: DTN

DDGS Prices ($/ton) Aug 2012

JuL 2012

Minnesota

location

218

215

Aug 2011 175

Chicago

239

226

202

Buffalo, N.Y.

230

215

Central Calif.

275

238

Central Fla.

240

239 SOURCE: CHS Inc.

Corn Futures Prices Date

(Sept. Futures, $/bushel)

High

Low

June 26, 2012

6.20

5.92 3/4

6.19 1/2

May 24, 2012

5.28 1/2

5.18 1/2

5.26 1/2

June 24, 2011

6.82 1/4

6.52 1/4

6.57 SOURCE: FCStone

Cash Sorghum Prices ($/bushel) LOCATION

Ethanol Report

Energy markets turn bearish midsummer BY RICK KMENT June 25—Typically, gasoline demand peaks through vacation season due to increased driving patterns. The summer of 2012, however, is taking on the ho-hum attitude seen earlier this year. Gasoline demand has struggled these past six months to keep up last year’s average as well as the five-year average. The higher prices earlier in the year limited driving. Although prices for gasoline have fallen significantly in the past two months, a lag remains in overall demand that is not expected to erode before year end. This created pressure in all energy markets, including RBOB gasoline and crude oil, while inventory levels continue to either remain strong or build, and overall demand remains well behind the usual pace.

Ethanol inventories also remain strong. Although production levels have fallen off through mid-June, the lack of strong gasoline demand has hindered the ability to clear the large stockpile of ethanol carried from the beginning of the year. Total ethanol stocks as of the middle of June were nearly 9 percent higher than levels a year ago, which could lead to additional price pressure. While ethanol pricing has been marginally based off higher production costs due to elevated corn prices, ethanol plants still face poor processing margins. Without the expectation that demand levels for either gasoline or ethanol will improve significantly through the summer, it appears that ethanol prices may not see much relief.

Jun 22, 2012

May 22, 2012

Jul 1, 2011

Superior, Neb.

5.40

5.46

5.64

Beatrice, Neb.

5.56

5.58

5.50

Sublette, Kan.

5.73

5.68

5.41

Salina, Kan.

5.61

5.59

Triangle, Texas

5.93

5.92

5.89

Gulf, Texas

5.62

6.47

6.22

SOURCE: Sorghum Synergies

Natural Gas Prices

($/MMBtu)

LOCATION

Jun 22, 2012

Jun 1, 2012

juL 1, 2011

NYMEX

2.62

2.43

4.36

NNG Ventura

2.44

2.29

4.26

CA Citygate

2.81

2.75

4.40

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production

(1,000 barrels)

Per day

Month

End stocks

Apr. 2012

879

26,368

22,370

Mar. 2012

894

27,706

22,952

Apr. 2011

886

25,591

20,807

SOURCE: U.S. Energy Information Administration

august 2012 | Ethanol Producer Magazine | 25

distilled

Ethanol News & Trends

Report: Renewable energy use on the rise

E15 cleared for sale

The 2012 renwable energy report by the United Nationâ&#x20AC;&#x2122;s interagency energy group found that renewable energy consumption and investment grew in 2010, despite a global recession. In the U.S., renewable energy consumption grew by 5.6 percent in 2010 compared to the previous year, up to about 11 percent. Global renewable energy consumption reached 16 percent in 2010. Total global investment in renewable energy broke a record in 2010, reaching $211 billion, up 32 percent from the $160 billion invested in 2009. All renewable energy sectors are taken into account in the U.N.â&#x20AC;&#x2122;s report, including liquid transportation fuels, power generation and heating and cooling. Biofuels employed more people worldwide in 2010 than any other renewable energy sector, according to the report, employing more than 1.5 million people. Brazil employed nearly half of the global total of biofuels workers, however, accounting for an estimated 730,000 workers employed in sugarcane and ethanol production.

Three years after initially approving the use of E15 for 2001 and newer cars, the U.S. EPA issued its final nod for E15 on June 15 by clearing the first misfueling mitigation plans (MMPs) for individual companies. The approval marks an important step toward expanding the domestic ethanol blend wall, but ethanol advocates said the agencyâ&#x20AC;&#x2122;s decision is also a victory for American consumers. Earlier this year, it was believed that retailers could begin selling E15 for 2001 and newer vehicles sometime in May, but the roll-out was delayed due to the EPAâ&#x20AC;&#x2122;s concern that residual E15 left in the hose of a single hose pump, such as a blender pump, could cause consumers purchasing E10 to receive fuel containing more than 10 percent ethanol. The concern was alleviated through the addition of an addendum to address that concern in the Renewable Fuels Associationâ&#x20AC;&#x2122;s E15 Retailer Handbook, according to the EPA.

U.S.

Brazil

China

Canada

All Other

2010 Global Ethanol Production (In Billion Gallons) U.S. Brazil EU China Canada All Other TOTAL

12.9 7.4 1.2 0.6 0.4 0.3 22.7

SOURCE: REN21

Scaling back costs. How a U.S. ethanol plant cut acid usage and evaporator cleaning frequency by switching to BulabÂŽ 8301 scale control from Buckman. The challenge. A Midwestern ethanol plant relied heavily on sulfuric acid to lower pH. Unfortunately, acid availability was tight, driving costs up significantly.

The solution. Buckman applied FDA-allowed BulabÂŽ 8301 just ahead of the first evaporator resulting in outstanding scale control and process pH control.

The savings. s 3AVED ON PLANT SULFURIC ACID USAGE RESULTING IN NET SAVINGS OF TO YEAR s 4EN #)0 S PER YEAR WERE ELIMINATED SAVING LABOR DOWNTIME AND CHEMICAL COSTS FOR ACID WASH s (YDROBLASTING FREQUENCY AND TIME WAS REDUCED s /VERALL HEAT TRANSFER PERFORMANCE HAS BEEN IMPROVED WHICH PROVIDES ADDITIONAL mEXIBILITY TO optimize water balance and backset usage. s ! REDUCTION IN $$' SULFUR CONTENT WAS OBSERVED

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distilled

Miscanthus, switchgrass win BCAP support

BCAP

The USDA awarded $4 million through the Biomass Crop Assistance Program in June to establish 4,000 acres of miscanthus and switchgrass in North Carolina for use at a cellulosic ethanol facility. less than Chemtex, the global engineering and technology division of Gruppo Energy million Mossi & Ghisolfi, is project sponsor crop Initial million and will use energy crops grown in project budget Actual 11 counties for its planned cellulosic areas funding ethanol plant in Sampson County, allowed N.C.. The proposed 20 MMgy plant, dubbed Project Alpha, will be owned in Crescentino, Italy. That facility is expected and operated by Beta Renewables, to be operational by the end of this year. The a joint venture between Chemtex and TPG North Carolina project could be complete by Capital. The plant will utilize Beta Renewables’ 2014, pending approval for a U.S. DOE loan feedstock-flexible Proesa pre-treatment techguarantee, according to Dennis Leong, execunology, which has been under development tive vice president of marketing and business for several years and will be used at the comdevelopment at Chemtex. pany’s first commercial-scale facility, located

$432

$100

Cargill adds wheatto-ethanol in Netherlands Cargill recently completed an overhaul to its former corn and wheat processing plant in Bergen op Zoom, Netherlands, converting the facility to a wheat wet mill and adding ethanol production capabilities. The ethanol facility can process 600,000 metric tons (20 million bushels) of wheat annually and produce up to 100 MMgy of ethanol. Because ethanol is one of multiple starch-based products produced at the mill, the environmental impacts of wheat production do not have to be factored into its carbon footprint and Cargill is able to receive double credits toward the country’s renewable energy targets. In a statement, Alain Dufait, general manager of Cargill starches and sweeteners, said the plant is an example of innovation and entrepreneurship. “[It is] an example of how we are constantly trying to optimize our activities, and actively contribute to the biobased economy,” he said.

distilled

Oil files RFS lawsuits Initial RFS volumes vs. EPA’s revised volumes 500

400

Million Gallons

The American Fuel and Petrochemical Manufacturers and the Western States Petroleum Association filed a lawsuit with the District of Columbia Circuit Court on June 11, challenging the U.S. EPA’s 2011 cellulosic biofuel mandate as part of the renewable fuel standard (RFS). The groups’ claim that the mandate’s required volume of 6.6 million gallons is unfair given the lack of actual cellulosic biofuel gallons produced to date. They had previously filed a waiver request with the EPA, asking it to reconsider the mandate, but the agency officially denied that request in May, prompting the groups to file the lawsuit and accuse the EPA of waging war against the fossil fuel industry. Earlier this year, the American Petroleum Institute filed a lawsuit against the EPA challenging its 2012 cellulosic biofuel mandate. It is unclear whether the cases will be combined.

Codexis, Shell collaboration continues

300

200

100

2010 2011 2012 Actual EPA mandate Initial mandate

Refiners groups claim the EPA is unfairly optimistic in its cellulosic biofuel volume mandates, but the agency says it has addressed lack of production by drastically reducing required cellulosic volumes each year that the mandate has been in place. SOURCE: U.S. EPA

The research agreement between Shell, Iogen Energy Corp. and Codexis Inc. to explore biomass-to-cellulosic ethanol conversion was terminated on June 30, following a larger drawback by Shell earlier this year, which included major layoffs at Iogen and the cancellation of a planned cellulosic ethanol facility in Manitoba. A separate research agreement between Shell and Codexis will continue through October as scheduled, however, said Wes Bolsen, vice president and chief marketing officer for Codexis. As part of that agreement, Shell will provide funding for 116 employees to further Codexis’ cellulosic enzyme research. Codexis is also involved in first-generation sugarcane ethanol enzyme research in Brazil with Raizen Energia S.A. Raizen is a joint venture between Shell and Cosan S.A. Industria e Comercio. It is also Codexis’ largest shareholder.

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distilled

Energy crop technology development firm Agrivida Inc. is conducting the first year of USDA-permitted field trials to test corn that has been engineered to include enzymes in the stalk. Fewer than 100 acres of the modified corn were planted at sites in Indiana and Iowa this spring, but acreage will be expanded over the next few years, said Jeremy Johnson, co-founder and vice president of Agrivida. The corn was modified using Agrivida’s trademarked INzyme technology, which allows implanted enzymes to remain dormant throughout the corn’s growth cycle, activated only when subjected to heat at the processing facility after harvest. By including enzymes in the stalk, Agrivida expects to reduce the cost of sugar production down to about 10 cents per pound. The engineered corn could be available commercially in four to five years, Johnson said.

China withdraws DDGS anti-dumping petition The anti-dumping investigation of U.S. distillers dried grains with solubles (DDGS) exports to China has been dropped, following the withdrawal of a petition filed more than a year ago by three Chinese ethanol producers. The withdrawal effectively terminated any pending case against U.S. DDGS exports, leaving U.S. producers free to continue selling their product for use in China’s growing market. “From a legal perspective, we’re essentially in the position we were in before the anti-dumping investigation was filed in the first place,” said Mark McConnell, a partner with Hogan Lovells U.S. LLP, who served as attorney for the U.S. Grains Council and the ethanol industry during the investigation. China was the top export destination for U.S. DDGS in 2010, but the threat of high import tariffs led to a decline in exports after the anti-dumping investigation was announced. Tariffs were never imposed, however, and export numbers for 2012 are on track to surpass the 2010 total, according to the USGC.

U.S. Distillers Grains Exports to China

? 2.5

2.0 Million Metric Tons

INzyme technology produces enzymecontaining stover

1.5

1.0

0.5

0.0

2010

2011

2012

With the threat of high import tariffs eliminated, exports of U.S. distillers grains to China this year could set a new record. SOURCE: US GRAINS COUNCIL

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INTEGRATION

Pilot Proof Edeniq Inc.â&#x20AC;&#x2122;s 2 ton-per-day pilot plant in Visalia, Calif., began producing cellulosic ethanol earlier this year. The facility will serve to perfect Edeniqâ&#x20AC;&#x2122;s Corn-to-Cellulose Migration strategy. PHOTO: EDENIQ INC.

32 | Ethanol Producer Magazine | august 2012

How Cellulosic INTEGRATION

Corn

is Rising from

Investing in cellulosic production could improve profit margins at corn ethanol plants By KRIS BEVILL

The once futuristic vision of integrating traditional and second-generation ethanol facilities appears more attainable as various companies emerge with technology improvements that will allow corn ethanol producers to add cellulosic ethanol streams without taking on insurmountable piles of debt. Edeniq Inc. was one of the first companies to promote the concept of integrated production. The Visalia, Calif.-based company has been developing technology for that purpose since its inception seven years ago. “That was the purpose of Edeniq—how do you take a process for cellulosic and convert it in a lowest-cost manner and integrate with a corn ethanol plant?” says Brian Thome, Edeniq president and CEO. With help from a $25 million U.S. DOE cost-sharing program, Edeniq has constructed a pilot-scale Cornto-Cellulose Migration plant in Visalia in order to further perfect the concept. Completion of the plant was celebrated with an official ribbon cutting at the plant to celebrate its completion on June 26, but the facility actually began producing cellulosic ethanol at the end of March. “We like to talk about what we have done rather than what we believe we’ll be able to do in the future,” Thome says. That philosophy could serve Edeniq well as it approaches skeptical corn ethanol producers to discuss migrating toward cellulosic production. According to Thome, many ethanol producers are quite interested in adding cellulosic to their revenues, but they are cautious about adding risk to a $200 million cornethanol plant. “They’re looking for proven technologies,” Thome says. “There are a lot of companies coming into this industry that have not been involved previously that make a lot of promises. As our industry has found out over previous years, those promises don’t always hold water.”

Looking for Leapers

Thome’s company has spoken to many plant leaders who say they want to be the august 2012 | Ethanol Producer Magazine | 33

INTEGRATION

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34 | Ethanol Producer Magazine | august 2012

fourth or fifth plant to add cellulosic technology to their process stream, after someone else has taken the leap to be the first to try it. That’s one reason Edeniq recently formed a joint development agreement with Flint Hills Resources Renewables LLC. The Koch Industries subsidiary operates four corn-ethanol plants in Iowa, representing approximately 425 MMgy of production capacity, and has agreed to work with Edeniq to scale up its cellulosic technology. Flint Hills became an Edeniq investor in May, stating at the time that the investment was part of its strategy to enhance a competitive edge over fellow producers. This could come to fruition quickly, as the first of Edeniq’s three-step migration plan is put into place at one of Flint Hills’ plants. The Cellunator, Edeniq’s particle miller, is used to produce uniformly sized pieces of biomass for conversion to sugars. According to Edeniq, adding the Cellunator to a corn-ethanol plant can increase the facility’s income by $3 million to $6 million annually. Flint Hills also plans to install Edeniq’s corn-oil-extraction technology in at least three of its plants, further boosting their profitability through corn-oil recovery. The ultimate goal will be to test Edeniq’s Pathway enzyme platform, which is designed to allow facilities to produce cellulosic ethanol from corn fiber in the plants’ existing distillers grains. The Pathway enzymes, which will be used in conjunction with reduced amounts of commercially available enzymes, are expected to be ready for use by year’s end. The overall migration process is meant to be gradual, according to Thome, but the technologies allow plants to experience profit improvements along the way. “Our belief is that these plants have the opportunity to incrementally improve their revenues through the addition of technologies such as the Cellunator,” he says. Thome says Edeniq is certain that corn ethanol producers will be the key to introducing cellulosic ethanol to the market by way of adding cellulosic streams to their existing facilities. “We believe firmly, as do a number of other companies, that we need to utilize the assets that are in the ground and the billions of dollars that have been deployed in our industry, as well as the expertise and operations and knowledge base of the corn ethanol industry,

to add cellulosic to existing ethanol plants,” he says. There are challenges, of course, such as feedstock logistics and the formation of inhibitors in the cellulosic process, but Thome says Edeniq is addressing those issues and he believes they can be overcome. “We know, based on everything we’ve done, that you can integrate a portion of cellulosic materials, whether it’s sugar or otherwise, directly into the process and make some changes to fermentation [and] the effluent byproduct usage that are extremely beneficial to the plants and help them increase revenue and drive margins, which they need right now,” he says.

Cutting Costs and Validating

Canada’s largest ethanol producer, GreenField Ethanol Inc., has been developing cellulosic ethanol process technology for half a decade with an eye toward eventually integrating the technology into its four existing corn-ethanol plants. About a year ago, those involved with the technology development project thought they had achieved their goal. The process worked but the problem was it cost too much. “We ended up with an estimated cap ex [capital expenditure] at commercial scale for just the pretreatment package that we knew was not going to work,” says Barry Wortzman, vice president of business development. “Our process was fine and the equipment was executing the process, but the cost to do it was making it noncommercial, so we had to figure out a way to make it less expensive.” After another year or so of additional development, the company now believes it has solved this problem by developing its own process equipment—a highly modified twin screw extruder that will be used at two places in the biomass pretreatment cycle. Replacing five or six pieces of equipment that would otherwise be required to do the job lowers the capital costs significantly, he says. The modified extruder is first used at the very beginning of pretreatment. After the feedstock is chopped and sized, it is fed into the extruder, where it is detoxified in preparation for fermentation. At this stage, Wortzman says the extruder replaces two or three other pieces of equipment, and does so without lessening the efficiency of the process. In fact, he believes the extruder is more efficient.

INTEGRATION

Additionally, for feedstocks that require acid treatments, standard equipment would need to be made of expensive, high-grade steel to prevent corrosion. GreenField’s extruder is designed instead with a liner, which again means less capital cost for producers. The second point the extruder is employed is further downstream in preprocessing, where is it used to wash the material and separate the C5 and C6 sugars for processing. The washing is completed under high pressure using heat, which also contributes to the cooking process, providing a head start on the fermentation. Wortzman says up to three pieces of standard equipment were previously required to complete the washing/separation process that is now handled by a single extruder. “By combining all of this into one piece of equipment, as opposed to three, you have increased the cap ex gains significantly,” he says. “That’s why we believe that what we have got is going to be a real contributor for commercial viability.” Wortzman declined to elaborate on the financial investment made by Greenfield to develop this technology, but says the company believes it will be worth the expense. “The name of the game is to increase your ethanol throughput in order to meet the demand,” he says, adding that while corn yields may con-

tinue to increase, the amount of corn that can be used at ethanol facilities will still be limited. Therefore, it is necessary for producers to incorporate technologies into their facilities that will broaden their range of usable feedstocks. In the case of Greenfield’s technology, that will likely include corn stover and cobs, but the equipment has also been tested on a variety of energy crops and other sources of biomass, including poplar trees. Greenfield will validate its process on a continuous scale at its Chatham, Ontario, pilot plant later this year. From there, the company plans to roll out the technology at just one of its plants initially and expects to begin constructing its first bolt-on facility in 2014. The company currently operates three facilities in Ontario—an approximately 50 MMgy facility in Chatham, a 60 MMgy plant in Johnstown and a 7 MMgy facility in Tiverton—as well as a 40 MMgy plant in Varennes, Quebec. It’s not yet known which will serve as the inaugural commercial-scale cellulosic site. If all goes well, the cellulosic technology will likely be bolted on to all of Greenfield’s corn ethanol plants, but that decision is not final. “We walk before we run,” Wortzman says. “We have a plan, but we execute it in an incremental way.” Greenfield also plans to market its technology to other producers.

For genuine fiscal success, go to www.kcoe.com or call 800.303.3241.

august 2012 | Ethanol Producer Magazine | 35

PHOTO: GREENFIELD ETHANOL INC.

INTEGRATION

Validation Center Greenfield Ethanol Inc.’s Center of Excellence in Chatham, Ontario, contains a pilot unit of continuous hydrolysis and fermentation, as well as lab space.

Together but Separate

Other corn ethanol producers and technology developers agree that existing ethanol plants can play a critical role in advancing cellulosic ethanol technology, but they envision co-located, free-standing facilities as the production method of choice. Poet-DSM Advanced Biofuels LLC is expected to be one of the first companies to display this concept. Its 20 MMgy corn cob-to-ethanol facility in Emmetsberg, Iowa, is currently being constructed adjacent to Poet’s 55 MMgy corn ethanol facility and is on pace to be operational in 2013. As the largest ethanol producer in the U.S., Poet has a wealth of corn ethanol production knowledge, and it’s that knowledge base that attracted DSM to the project as it sought a partner to demonstrate its sugar conversion technology. “DSM is the only company that can simultaneously ferment all C5 and C6 sugars in cellulosic biomass,” says Joost Dubois, branding director for bio-based products and services at DSM. “Furthermore, we have a proven track record in scaling up and running industrial biotech and large chemical operations that we will combine

with Poet’s strength in process technology and infrastructure.” Dubois says that DSM wasn’t looking specifically for a co-location project to mark its entry into the U.S. cellulosic ethanol industry, but the strategy does offer clear advantages to the production process. “The Emmetsberg facility has a full infrastructure of [feedstock] suppliers and Poet has invested several years in building up experience in the collection of biomass on-site,” he says. “It is clear that co-location brings multiple advantages from a cost, staffing, biomass and logistics point of view, so the economics are clearly more favorable for a co-located plant than a stand-alone.” Meanwhile, Denmark’s Inbicon has also based its cellulosic ethanol technology strategy on co-locating second-generation facilities with existing ethanol plants. Paul Kamp, director of sales and project development for Inbicon, says corn ethanol producers can reap a multitude of benefits through co-location, including increased profits and reduced energy costs. It’s possible that by utilizing energy produced through the cellulosic plant’s process, a traditional ethanol plant could also lower its carbon intensity to the point of qualifying the traditional fuel as an advanced biofuel, thus increasing demand for that product as obligated parties seek out advanced fuels to meet renewable fuel standard requirements. The build-out has been slow to start, but if the biofuels industry is going to meet the renewable fuel standard’s 36 billion gallon volume requirement in 2022, Kamp believes the industry needs to get back on track and begin rapidly expanding capacity. The corn ethanol industry has done it once before, and Kamp and others believe they can, and must, do it again.

Author: Kris Bevill News Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinternational.com

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ANTIBiOTICS

38 | Ethanol Producer Magazine | august 2012

ANTIBiOTICS

esting for races

Studies examine antibiotics in DDGS, whether it contributes to antibiotic resistance in animals By Holly Jessen

Are the antibiotic residues found in distillers grains biologically active? And, if they are, could antibiotic use in distillers grains production contribute to antibiotic resistance in animals? While the answer may vary depending on the source, one thing researchers agree on is that more study is needed. The University of Minnesota spent one year investigating whether antibiotic residues survive the ethanol production process—concluding that those residues are not biologically active, says Gerald Shurson, a swine nutrition and management professor at the U of M. Shurson is one of six researchers from the Department of Animal Sciences, the U of M Extension Service and the Department of Food Science and Nutrition, who worked on the study. Final data collection wrapped up this spring and the researchers plan to publish the results in the Journal of Animal Science, possibly by the end of the year, he says. Funding came from the Minnesota Corn Research and Promotion Council. Later, at the International Fuel Ethanol Workshop & Expo, held June 4-7 in Minneapolis, the outcome of two additional studies were presented. Kenneth Bischoff, a research microbiologist with the USDA’s Agricultural Research Service (ARS), revealed something different—that the antibiotic virginianmycin did remain biologically active through the ethanol production process. A second research project examined the same distillers grains produced in the first USDA study and determined that feeding cattle distillers grains that contained antibiotic residues had minimal or no influence on antimicrobial susceptibility of fecal bacteria or dissemination of resistance genes. The results of that study

SOURCE: UNIVERISTY OF MINNESOTA

august 2012 | Ethanol Producer Magazine | 39

ANTIBiOTICS

were presented by Tom Edrington, a research animal scientist with the food science research unit of USDA ARS.

In Minnesota

The U of M study follows up on unpublished U.S. Food and Drug Administration studies, which found antibiotic residues do remain in distillers grains through the ethanol production process. Using the same procedures FDA used, the Minnesota researchers

came to the same conclusion. There were tiny amounts of antibiotic residues in the distillers grains, but not enough to exceed what the FDA has set as limits in animal feed. â&#x20AC;&#x153;Relative to approval levels of our FDA, they are minuscule amounts,â&#x20AC;? Shurson says. What they did differently, he explains, is take it a step further to investigate whether distillers grains samples showed any bacterial inhibition when two bacteriaâ&#x20AC;&#x201D;E. coli and listeria monocytogenesâ&#x20AC;&#x201D;were introduced. Sam-

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ples of both wet distillers grains and DDGS were collected and analyzed quarterly for one year. Every sample of distillers grains analyzed contained residues of antibiotics. The concentrations were very low, however, when compared to the FDA-approved feed levels. In addition, out of 159 samples, only one showed inhibition of E. coli bacteria and none with listeria monocytogenes. In searching for biologically active residues, the researchers put distillers grains extracts in bacteria-seeded petri dishes. Because the majority of the extracts didnâ&#x20AC;&#x2122;t show any signs of bacterial inhibition, researchers concluded that the antibiotic residues were not biologically active. Only one distillers grains extract killed the bacteria in the petri dish. That sample resisted the growth of E. coli and contained 0.015 ppm virginiamycin and 0.014 ppm erythromycin. â&#x20AC;&#x153;Even though we find small amounts of antibiotics in these distillers, there isnâ&#x20AC;&#x2122;t any biological activity,â&#x20AC;? Shurson says. Based on the literature from other research studies, the environmental conditions in an ethanol plant inactivate antibiotics in the production process. Penicillin is very sensitive to pH and is inactivated fairly quickly as the pH drops to the 3.5 to 4 range, he says. Virginiamycin, on the other hand, is very heat sensitive, and is destroyed in temperatures above 93 degrees. Distillers grains dryers operate at temperatures from 93 to 232 degrees. Tylosin is inactivated with increased temperature levels and is the most stable at pH 3.5 and 9. Although the inactivation of erythromycin is less well-documented, Shurson said there is likely some inactivation of that antibiotic as well. The most commonly used antibiotic is virginiamycin, the only antibiotic used by the ethanol industry that has a letter of no objection from the FDA. Virginiamycin and penicillin, also used by the industry, are listed as generally recognized as safe (GRAS.) The U of M study identified residues of both virginiamycin and penicillin, as well as erythromycin. The puzzlers were tetracycline and tylosin, particularly the latter. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re not clear at all where this would be coming from,â&#x20AC;? Shurson says. â&#x20AC;&#x153;We know the least about this particular antibiotic.â&#x20AC;? The results of the U of M study is positive news for the ethanol industry, the majority

ANTIBiOTICS

of which still uses antibiotics to control bacterial infection in the production process, Shurson says. “The fate of using these antibiotics in animal production has not yet been decided by FDA, which in my opinion has a much more significant bearing on the issue than the level of antibiotics used in ethanol production,” he said. Not everyone agrees, however. “The use of antibiotics in animal feeds has received increased scrutiny and attention from many groups, and thus, continues to be one of the most controversial issues facing agriculture today,” Shurson says. In May, before U of M researchers had finished compiling the results of the fourth and final survey of distillers grains samples, an 11-page report from the Institute for Agriculture and Trade Policy referenced its preliminary findings. Julia Olmstead, author of “Bugs in the System: How the FDA fails to Regulate Antibiotics in Ethanol Production,” focused in on the one sample of distillers grains that exhibited inhibition of E. coli and called for immediate action. For one thing, Olmstead wants the FDA to ban sales of unapproved antibiotics to the ethanol industry and recommended that the ethanol industry voluntarily stop using antibiotics. The USDA, U.S. DOE and other agencies should provide technical assistance and potential financial support to the industry to help with a quick transition away from antibiotics, she said in the report. As a result, quite a few conflicting articles are floating around the Internet, some referencing the conclusions of the U of M study, some using Olmstead’s report as the only source.

understand what affect the various processes, such as distillation, evaporation and drying have on the antibiotic residue level. The conclusion was that conditions during the ethanol production process were not sufficient to deactivate virginiamycin in distillers grains. In the samples taken from the fermentors that were dosed with only 2 ppm antibiotics, only the dried distillers grains with solubles contained antibacterial (or biological) activity. Presumably, Bischoff said, the activity was below

detection at the other stages. For the fermentors dosed with 20 ppm, however, there was antibacterial activity in all the samples, starting with fermentation and moving through all the stages, including whole stillage, thin stillage, wetcake, syrup and dried distillers grains with soluables. Looking at the data on a dry-weight basis, a steady decrease in antibacterial activity was observed from the beginning to the end of the process. Virginiamycin content also varied in samples taken from the same stage

Complementary Studies

In contrast, the USDA study that concluded there were biologically active antibiotics in distillers grains focused on virginiamycin. In cooperation with the National Corn-toEthanol Research Center, the USDA ran three fermentors: a control with no antibiotics; one with 2 ppm virginiamycin, the recommended dosage for ethanol production, and one fermentor containing 20 ppm virginiamycin. “This is not to suggest that an ethanol plant would use this type of dosage,” Bischoff said during his FEW presentation. Samples were taken during all stages of ethanol production. The goal, he said, was to august 2012 | Ethanol Producer Magazine | 41

ANTIBiOTICS

What antibiotics are used in ethanol production? • PhibroChem ▫ Lactrol – virginiamycin • Lallemand ▫ Lactoside 247 – penicillin and virginiamycin ▫ Lactoside V – virginiamycin ▫ Allpen Special - penicillin • FermSolutions ▫ Fermguard ▫ Fermguard Sentry – virginiamycin ▫ Fermguard Extreme – erythromycin, penicillin, virginiamycin • North American Bioproducts Corp. ▫ Bactenix V60 – penicillin ▫ Bactenix V300 - erythromycin SOURCE: UNIVERISTY OF MINNESOTA

of the process, but at different times, Bischoff noted. More study is needed on the topic. First, more antibiotics need to be evaluated and there’s a need to increase the sensitivity of analytical method and bioassay, he said. Subsequent studies should look at the effect of varying operating parameters, such as process temperature, to increase the rate of antibiotic deactivation. The results were concerning, Bischoff said. Viewing the data side-by-side with the results of a follow-up investigation, however, illustrates how important it is not to stop with just one study. Taking it to the next step, a second group of researchers fed cattle the distillers grains containing antibacterial residues and examined whether antibiotic residues in distillers grains would have any influence on antimicrobial susceptibility of fecal microflora or the dissemination of resis-

tance genes. In the end, none of the findings were of concern. “Overall, I think it’s good news,” Edrington said during his presentation at FEW, which was on the same panel as Bischoff ’s presentation. In fact, the data showed that antibacterial resistance is already out there as the cattle were already showing antibacterial resistance on day zero of the study. “We can take cattle at any stage in the process and we can find resistance to bacteria,” he said. In some cases, the control group of cattle fed distillers grains produced with no antibiotics actually showed more antibacterial resistance, and antibiotic resistance tended to decrease over time in the animals fed distillers grains containing antibiotic residues. The distillers grains used in the second study were produced at NCERC during experimentation with different levels of antibiotic use for Bischoff ’s research. Cattle were separated into groups that were fed distillers grains produced using no virginiamycin, 2 ppm virginiamycin or 20 ppm virginiamycin. Another control group was fed distillers grains containing 22.5 grams per ton of a virginiamycin drug intended to be mixed into animal feed. The experiment started before the results of the first USDA study were compiled, Edrington clarified, and the researchers wanted to be certain at least one group of cattle was indeed fed virginiamycin. As it turned out, there was antimicrobial activity in the distillers grains produced with the antibiotic virginiamycin but the researchers wanted to make sure so as not to replicate other studies on this topic that used distillers grains that it was unknown if they actually contained antibiotic residues. “You have to be careful with a study,” he said. “Is it really a cause and effect relationship?” Like the other researchers, Edrington also talked about the need for more study. This particular experiment was for 49 days and he’d like to see another study do a feeding trial for the more typical 150-day period. In this case, the study was cut shorter due to labor costs and the fact that the cattle were on concrete and typically get tender feet at about that time. Author: Holly Jessen Features Editor of Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com

42 | Ethanol Producer Magazine | august 2012

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ANTIMICROBIALS

44 | Ethanol Producer Magazine | august 2012

ANTIMICROBIALS

Bacterial

Battle Antibiotics are the most common tool against bacteria, but alternatives exist By Holly Jessen

Bacterial infections are a fact of life in the ethanol production process. The reality is, complete sterilization is simply not practi-

cal, according to Kevin Kauers, senior research scientist for North American Bioproducts Corp. Kauers was one of several people who gave presentations on bacterial control at the 2012 International Fuel Ethanol Workshop & Expo, held June 4-7 in Minneapolis. Because bacteria competes for yeast and sugars, reducing yield, even a small infection can hit the bottom line hard. At $2 per gallon of ethanol, a 50 MMgy plant would lose about $500,000 a year with only a 0.5 percent loss in yield. That goes up to $1 million for a 1 percent loss and $4 million for a four percent loss, illustrating why itâ&#x20AC;&#x2122;s so important that producers remain proactive in fighting contamination, Kauers said. There are three options for ethanol producers looking to control bacterial infections, according to Brian King, lab manager for Ferm Solutions Inc. The first is an application of 0.5 to 2 parts per million (ppm) of conventional antibiotics. Nonantibiotic options include new natural products, hops, chlorine dioxide, hydrogen peroxide, bleach, para-acetic acids and more.

august 2012 | Ethanol Producer Magazine | 45

ANTIMICROBIALS

Levels of Contamination LOW

• Little or no change of HPLC values • Reduced fermentable sugars? • Detectable by increased bacteria populations

MODERATE

HIGH

• Higher total sugars • Slight increase in organic acids • Measurable yield loss

• Significantly higher total sugars • Significant increase in organic acids • Much lower ethanol production

$$$ Profit Loss $$$ SOURCE: NORTH AMERICAN BIOPRODUCTS CORP.

BetaTec Hop Products has seen significant growth in the use of alternatives to antibiotic products in the U.S., said Lloyd Schantz, executive vice president of the company. Out of about 200 ethanol plants in the U.S., more than 60 are using products marketed by BetaTec or its competitors, some in combination with antibiotics and others in place of antibiotics. As the use of antibiotics in the ethanol production process increasingly comes under scrutiny, U.S. FDA regulations may become stricter, prompting even

more growth. However, Schantz predicted future changes will be driven by the customers of distillers grains, who he expects react faster than the regulatory agencies. For example, Poet LLC announced a year ago that it was selling certified antibioticfree distillers grains. The move was significant, considering Poet is the largest dry-grind ethanol producer in the world. The company spent a few years developing and testing a new process that eliminated the need for antibiotics. Although the process has been installed

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46 | Ethanol Producer Magazine | august 2012

at all Poet plants, only customers specifically requesting it will receive certified antibioticfree distillers grains, the company said. DuPont markets its trademarked FermaSure, patent-pending, stabilized chlorine dioxide products, to ethanol plants around the world, according to Eric Sumner, business leader for the company’s FermaSure antimicrobials business. Since it was launched at the 2007 FEW, DuPont’s FermaSure is now used in about 50 U.S. ethanol plants, including Poet’s facilities. “DuPont has certainly seen very strong growth in our FermaSure products sales, and away from antibiotics,” Sumner told EPM. “Most of our customers do not use any antibiotics. Some customers choose to use both FermaSure stabilized chlorine dioxide and antibiotics.” The company believes this is due to the practice of rotation to prevent development of resistant bacteria strains, something that it says is not necessary with DuPont’s FermaSure. Ferm Solutions is looking to nature to develop antimicrobial products for the fuel ethanol industry. The company has, so far, selected 23 natural exudates for commercial application, including one called Naturyl, currently undergoing trials at both batch and continuous ethanol plants, Kauers said. The data shows that, under high bacterial pressure, applications of 2 ppm Naturyl can re-

PHOTO: FERM SOLUTIONS INC.

ANTIMICROBIALS

Bacteria Display Gram positive bacteria, shown in blue here, are the most common source of infection in the ethanol production process. Gram negative bacteria are pictured in pink.

sult in yield increases. The result of one trial showed that using the 100 percent natural product in a bacteria-infected fermentation resulted in 12.893 percent yield, compared to 12.784 percent yield in the control with no bacteria added. The treatment with bacteria, but no Naturyl, yielded only 8.833 percent. “Naturyl appears to be a viable alternative to antibiotics for controlling bacteria in fuel ethanol applications,” he said, adding that the company is now working to gain regulatory approval for use in the fuel ethanol industry. Illustrating that bacterial infections aren’t a corn-ethanol problem alone, Jadyr Oliveira, managing director for Prozen Biosolutions, spoke at FEW about the Brazilian company’s efforts to develop Biozyn, a biobased antimicrobial. The industry has been working on the problem for four or five years because dried yeast, a coproduct of the sugarcane-ethanol production process, is marketed to the animal industry, he said. Moving away from antibiotics is a challenge because those products are extremely efficient and a high sugar load makes sugarcane

Contaminating bacteria are composed of two types based on their cell wall structure

u v

Gram negative (acetobacter, gluconobacter) Gram positive (lactobacillus, pediococcus)

Gram positive bacteria are responsible for most contamination problems, including the production of organic acids SOURCE: NORTH AMERICAN BIOPRODUCTS CORP.

ethanol very susceptible to bacteria, he said. Prozen’s Biozyn works well in sugarcane ethanol production, however, and has also shown excellent results in industrial trials at corn-ethanol plants which, in Brazil, produce high-quality ethanol for the pharmaceutical industry. Author: Holly Jessen Features Editor of Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com

DISTILLERS GRAINS

CONTRIBUTION

Corn Oil Extraction

Grows 2006

Dry mill ethanol plants extract corn oil -------------

2011

90 -------------

2012

105 Projected

PHOTO: University of Minnesota

Growing Supply of Low-fat DDGS Impacts Market Dynamics Specifications shift as market adjusts, many questions arise about specific applications By John Harangody

In 2006, there were four dry mill ethanol plants that extracted corn oil from distillers grain. Today, approximately 90 of 200 corn dry mills have oil extraction capabilities, and that number is expected to rise to 105 by this summer. Low-oil distillers dried grains with solubles (DDGS) is approaching 60 percent of the

market. Initially, corn oil flowed into the animal feed market. Today, most demand comes from biodiesel due to corn oil prices being typically lower than soy. For ethanol producers, the biodiesel market generally returns a higher price than the feed market. There are two basic options for corn oil extraction: in the front-end before fermenta-

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). 48 | Ethanol Producer Magazine | august 2012

tion or as a back-end process where the oil is removed after distillation. The front-end process extracts 50 percent more product and a cleaner corn oil, however, the cost is triple that of the back-end process. Hence, recent investments favor back-end processes. Corn oil extraction equipment is relatively lowcost. Most plants anticipate a payback of less than two years. Depending on the technology employed, extraction rates can vary from approximately 0.5 to 2 pounds of corn oil per bushel of corn.

DISTILLERS GRAINS

The variability of oil content in distillers grains adds an additional level of complexity to an unresolved issue. Jay O’Neil, senior agricultural economist with the International Grains Program at Kansas State University explains that “high-fat DDGS have been part of the feed ration for the past seven to 10 years. Nutritionists have had the opportunity to conduct a number of feed trials and subsequently have developed a good understanding of how adding DDGS to an animal’s diet impacts performance. However, there is only anecdotal information related to how low-fat DDGS in a ration impacts performance. We’re going through a learning curve where nutritionists don’t know for certain and are having to make calculated guesses.” As we enter this new era of distillers grains production, end users of DDGS will have to redefine their buying specifications to fit each species and company needs. Product variability will increase and make ration formulations more challenging. Relative value, defined as a product’s nutrient composition as it compares to another product for conversion of energy in animals, will need to be continually assessed. Previously, the most widely accepted standard protein/fat composition for DDGS was 28/8 for a combined 36 percent. This year, the domestic market has defined this composition as 27 percent protein, 7 percent fat. The combined 34 percent benchmark represents a majority of the DDGS volume today and is likely to rise as more oil is “spinned.” Bart Vance, Atlas physical grains managing director confirms that. “It appears 34 percent will be where the standard will settle for the coming crop year,” he said. “The market can adapt for these variances, but it is imperative that defined specifications be outlined within contracts. Understanding the ‘flavor’ of a particular production of DDG will be critical in determining its value for various livestock sectors. It is highly probable we will see a range evolve as the market changes.” If 34 percent pro/fat becomes the benchmark, it’s widely thought that DDGS’ relative value to corn will drop. That logic may be flawed, particularly when one considers that the market has been saturated in recent years. In hindsight, DDGS may have been a

bargain for many end users, which is one reason there was an initial backlash as specifications dropped and prices for the most part did not. The developing export market, competition for corn and limited flaking capacity may assist in holding DDGS to a higher, although slightly discounted, value relative to corn.

Demand Curve Factors

When defining the demand curve for

FRACTIONATION

•

EXTRACTION

•

low-fat DDGS, geographic location and animal species play a significant role. In 2011, U.S. ethanol producers exported 7.65 million metric tons (mmt) of DDGS, about 23 percent of total production. Of that number, 3.39 mmt went to Asia, or 44 percent of total exports. In economically less-evolved southeast Asia countries, there is limited access to alternative sources of fat and, therefore, a high dependence on high-fat DDGS. A reduced-fat

OIL PROCESSING

•

DEMO FACILITY

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DISTILLERS GRAINS

DDG product may prove to be less desirable. In China, which accounted for 21 percent of total exports, the enormity of their overall feedstock needs may take priority over a desire for high-fat DDGS. In Mexico, the largest importer of DDGS at 1.78 mmt, the market has access to alternative sources of fat, and low-fat DDGS may not be an issue. From a domestic perspective, livestock feeders have numerous alternative sources. The question only remains

as to the fair discount for low-fat DDGS relative to the high-fat product. The second looming issue in defining the demand curve for low-fat DDGS revolves around the species of animal. Although animal nutritionists have yet to conduct conclusive empirical tests to determine the performance impact of low-fat DDGS, they are not without opinion. For example, many nutritionists suspect that, in general, ruminants will handle

a low-fat ration better than nonruminants. In the case of dairy producers, O’Neil says, “They’ll like the new DDGS because they already feed almost too much fat, and a higher protein, lower fat DDGS ration will work well. As for fat cattle, questions exist whether they’ll like the change as much, and for poultry, it is doubtful low-fat DDGS will work well for broilers. On the other hand, layers may find it to their liking.” Unfavorable economic conditions, particularly in the dairy sector, may challenge DDGS inclusion rates, if values trend too high relative to corn and other products. Vance believes that “as low-fat DDG production expands, the dairy industry will be a prime target market. We have seen as wide as $20 per ton, and as narrow as $5 per ton, spread on DDGS within the same market, depending on the type of consuming animal unit. This will elevate the 36 percent pro/fat product to premium status where it once was the standard.” As the world market share of DDGS increases, suppliers of competing products may revisit old customers. Bank lenders’ growing involvement in feed and cash management decisions will challenge nutritionists to evaluate all feed options in their quest for leastcost formulation. As other byproducts need homes, they will target the dairies once again and be formidable competitors. There may also be a mixed reception for low-fat DDGS within the hog industry. The lower fat content may not work well in the diets of growing pigs. Recent research, however, conducted by Purdue University’s Department of Animal Sciences indicates that the abundance of linoleic acid in high-fat DDGS is substantial and a contributor to “soft belly.” As production of low-fat DDGS expands and the feed industry acquires empirical evidence of its performance impact on specific animal species, the economics of production may look distinctly different than today. It will be imperative to find new sources of demand and to confirm attractive nutritional values to insure its long term success. Author: John Harangody, Chief Operating Officer, Atlas Commodity Markets (713) 574-5005 John.Harangody@atlasmarkets.com

50 | Ethanol Producer Magazine | august 2012

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CONTRIBUTION

Feed and Fuel New coproducts are proposed for cellulosic producers: feed yeast and green coal. PHOTOS: Microbiogen

Multiple Coproducts Needed to Establish Cellulosic Ethanol Industry Feed yeast, green coal contribute to bottom line

By Arthur Kollaras, Paul Koutouridis, Mary Biddy and James D. McMillan

The slow progress towards an advanced cellulosic ethanol industry has long been blamed on high costs associated with securing feedstocks and developing effective technologies suitable for large volumes. Technical challenges are compounded by large capital expense and process complexity in comparison to the relatively low value of the fuel produced. History shows that once an industry is established, significant technological improvements quickly evolve. But in the meantime, how does one go cap-inhand to investors when the returns on ethanol are often so meager? Without government assistance or an attractive price on carbon, one

way for biofuels to become a sustainable alternative is through higher-value coproducts. Researchers are now trying to offset the substantial costs of fractionating and hydrolyzing lignocellulosic materials by coproducing complex plastics, polymers and chemicals. The majority of these coproducts, however, are aimed at markets significantly smaller in scale than fuel ethanol. For over a decade, scientists at Australia-based Microbiogen Pty Ltd have used a population genetics approach to selectively breed strains of Saccharomyces cerevisiae able to metabolize lignocellulose-derived compounds into ethanol and yeast biomass. Yeast biomass has long been used as a high-protein nutritional supplement in animal feedsâ&#x20AC;&#x201D;these are the

same yeasts that provide a large component of the digestible protein and other nutrients within dried distillers grains (DDG). Yeast as a supplement to animal feed has traditionally been harvested from starch- or sugar-dependent food manufacturing waste streams. For purpose-grown yeast, substrate accounts for up to 60 percent of production expense, and the cost of the main substrate, molasses, is at historic highs. The ability of Microbiogenâ&#x20AC;&#x2122;s unique, nongenetically engineered yeast strains to utilize the wood sugar xylose along with conventional six-carbon sugars, opens up global markets. It can potentially compete in the established feed-yeast market worth more than $120 million in the U.S. alone, which is a subset of a $16 billion world feed additives market, and also as a partial substitute to soymeal and fishmeal worth more than $80 billion combined annually. Based upon the yeastâ&#x20AC;&#x2122;s demonstrated

COPRODUCTS

Key Techno-economic Inputs for Feed and Fuel Biorefinery Base Case Parameter

Input

Life of facility Required rate of return Federal tax Financing

30 years 10% 35% 40% Equity

Feedstock (corn stover) Online time Enzymes Energy requirements

2,205 dry tons per day 8,410 operating hours per annum Purchased Natural gas purchased for heating requirements

Pretreatment Neutralization of hydrolysate Enzyme loading Enzymatic hydrolysis

Dilute sulphuric acid, continuous Ammonia 20mg crude enzyme protein per gram glucan 72h at pH5.0±0.2 and 50±2oC

Non-GM Ethanolagen Six-carbon sugars to ethanol yield Ethanol titres reached Fermentation residence time Productivity (ethanol)

Saccharomyces cerevisiae MBG3248 0.44g of ethanol per gram of six-carbon sugars 8.6%w/v ( i.e. 10.9%v/v) 18-24h 2.5-3.0g ethanol per liter per hour

Yeast propagation yield Propagator residence time Productivity (yeast biomass) Aeration requirements

0.35g of yeast per gram of total useable carbon* 18-24 hours 1.5-2.0g yeast per liter per hour 12-24g air per gram yeast produced

Products (on a per annum basis) Ethanol (200 proof) Green coal (90%TS, 6%ash, 0.1%sulfur & 18-20MJ per dry kg**) Feed yeast (90%TS & 48-52% crude protein)

131M liters (i.e. 35MM gal or 114,000 tons) 168,000 tons of solid fuel as pellets/briquettes, sold at 9 cents per kilogram 129,000 tons of dried feed yeast product, sold at 70 cents per kilogram

(*) Within a submerged aerobic propagator similar to that in which baker’s yeast is grown, S.cerevisiae MBG3248 converted acetic acid, lactic acid, ethanol, glycerol, residual six carbon sugars and xylose into yeast biomass at an observed yield of 0.35g of yeast per gram of total usable carbon. (**) Equivalent to 7,740 – 8,600 Btu per pound of dry material. In comparison, premium-grade Australian thermal coal at 12,000 Btu per pound, and less than 14% ash & 1% sulfur, sold for 12.4 cents per kilogram in January 2012.

capabilities, Microbiogen’s Feed and Fuel Biorefinery concept was assessed by the U.S. DOE’s National Renewable Energy Laboratory. As part of the assessment, corn stover was sourced and processed by NREL through a one-ton-per-day dilute acid pretreatment system in its Integrated Biorefinery Facility in Golden, Colo. It was then shipped to Microbiogen’s Sydney laboratories for pilotscale trials, where over 200 kilograms (kg) of slurry was neutralized using ammonia and digested using an enzyme cocktail provided by Novozymes Australia Pty Ltd. The six-carbon sugars were fermented into ethanol, and yeast biomass was aerobically produced from the xylose-rich stillage. The residual lignin fraction was dried and assessed as a renewable solid fuel or “green coal.” Experimentally derived yields and productivities were then relayed back to NREL allowing it to build a comprehensive model using engineering software Aspen Plus, and a similar throughput base case as used in the NREL May 2011 Humbird et al design report.

Based upon the technical and economic inputs listed in the table, a stand-alone facility processing 2,200 dry tons of corn stover per day would produce over 35 MMgy of ethanol (131 million liters or 114,000 tons), 129,000 tons of dried feed yeast, along with 168,000 tons of lignin-rich green coal. The installed equipment costs for a facility were estimated at $210 million, which equates to $550 of installed equipment costs per annual dry ton of saleable products per year. The total capital investment was calculated at $394 million, or $1,029 total capital invested per dry ton of saleable products annually. The breakdown of the installed equipment costs are summarized in the pie chart. The major production cost after feedstock, is the cost of enzymes, with 22 million liters required yearly. The next major component is the cost of aeration during propagation. We currently estimate aeration requirements will be similar to baker’s yeast propagation where 24 kg of air is needed for each kilogram of yeast produced. At this rate, the energy re-

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COPRODUCTS

quirement for aeration is equivalent to the cost of purchasing cellulase enzymes. The minimum ethanol selling price (MESP) is the value per gallon at which ethanol from the facility is sold at a 10 percent return on investment, obtained over the 30-year life of the project. This includes all U.S. taxes and excludes subsidies. Based on observed yields and productivities the MESP for the feed and fuel base case is $2.57 per gallon (67 cents per liter). When optimization of yeast yields and the aeration requirements are taken into account, cellulosic ethanol produced via Microbiogen’s process has the potential to be made today for an MESP of between $1.93 and $2.57 per gallon (51 to 67 cents per liter). The MESP for the Microbiogen Feed and Fuel Biorefinery model is reliant on selling the lignin-rich green coal and feed yeast. These coproducts make up 7 and 42 percent of the revenue, respectively, with the remaining income attributed to the sale of the ethanol. Assuming this biorefinery had been in opera-

54 | Ethanol Producer Magazine | august 2012

tion since January 2010, and its ethanol sold at market value, this venture would have been profitable if the feed yeast had been sold at 70 cents to $1.20 per kg. This value sits comfortably between two large, established feed additive markets—soymeal and fishmeal. Given feedstock accounts for a quarter of the operating cost, it is susceptible to price fluctuation. A corn stover cost of $65 per dry metric ton ($58.50 per short ton) was assumed for the base case, including collection, washing, drying and size reduction—processing costs prior to pretreatment. If feedstock costs were to double, due to supply and demand, it would add $1.30 per gallon (34 cents per liter) to the MESP, thus crippling a facility that produces ethanol alone. This is where the ability to sell the feed yeast as a valuable coproduct becomes vital to the overall project economics. Should feedstock cost double, the base case MESP of $2.55 per gallon can be matched by increasing the yeast selling price from 70 cents to $1.25

per kg, which is still competitive with feeds such as fishmeal.

Feed Yeast Demand

Is there sufficient demand for feed yeast? In November 2011, Alltech Inc. announced it had completed the expansion of its Sao Pedro facility in Brazil to 50,000 metric tons per year of spray-dried product, with plans to expand to 100,000—comparable to the yeast production in the Microbiogen model. The main difference being the latter will be producing feed and fuels from lignocellulosic-derived agriculture wastes, and not from food sources such as molasses, sugar or starches. It is important to add, that as a supplement fed to the poultry, swine, cattle, dairy, sheep, goat, aquaculture, equine and petfood industries, yeast biomass currently sells at prices between 80 cents and $3 per dry kilogram, depending on the strain and its intended market. The value of the highly digestible amino acids and nucleotides found within Saccharomyces are critical in the

COPRODUCTS

Installed Equipment Costs $210 million

Pretreatment & Conditioning 19%

Utilities & Storage 7% Distillation & Product Recovery 9%

Yeast Propagation & Drying Plant 16%

Enzymatic Hydrolysis & Fermentation 17%

Combined Heat & Power 15%

Wastewater Treatment Plant 17%

SOURCE: Microbiogen

development of healthy bones and muscles, as well as assisting in the maintenance of the immune system. Along with its elevated bio-

available phosphorus and vitamin B content, it provides a more nutritional feed additive in comparison to DDG or soymeal. In terms of the lignin-rich green coal, a single feed and fuel biorefinery would produce enough solid fuel to displace only 0.05 percent of current Australian coal exports. (Australia is the largest exporter of black coal in the world, accounting for one-third of the worldâ&#x20AC;&#x2122;s exports with sales of $36 billion in 2010.) In order to displace 5 percent, we would need more than 100 feed and fuel biorefineries in operation, which in turn would produce 3.5 billion gallons of ethanol and 13 million tons of feed yeast. For ethanol to compete in the liquid fuel market, it needs to be a low-value commodity produced at large scale. The DDG coproduct is essential to the economics of corn-ethanol production. Similarly, in the case of cellulosic ethanol, coproducts will be essential to the fledgling industryâ&#x20AC;&#x2122;s economic success. These coproducts must be able to breach established

markets and have a higher value than the ethanol itself. Sustainable fuels along with animal feeds are markets that will not reach their limits anytime soon, especially with the United Nations projecting an extra two billion people on the planet within the next 40 years. Authors: Arthur Kollaras Manager, Bioprocess Engineer & Technical BD Microbiogen Pty Ltd, Sydney, Australia +61 2 9418 3036 arthur.kollaras@microbiogen.com Paul Koutouridis Chemical Engineer Microbiogen Pty Ltd, Sydney, Australia Mary Biddy Senior Research Engineer, NREL: National Bioenergy Center mary.biddy@nrel.gov James D. McMillan Principal Engineer and Group Manager, NREL: National Bioenergy Center jim.mcmillan@nrel.gov Reference Humbird et al. Process Design and Economics for Biochemical Conversion of Lignocellulosic Biomass to Ethanol. Report No. NREL/TP-5100-47764. Golden, CO: NREL May 2011.

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