2016 Ethanol Producer Magazine

INSIDE: YEAR-END REFLECTIONS ON STATE OF THE INDUSTRY DECEMBER 2016

GOOD

CHEMISTRY Ethanol Producers, Suppliers Collaborate for Safe, Effective Solutions

Page 28

Canada Poised for Carbon Reduction Era

Page 34

Nanoscale Innovations for Advanced Biofuels

Page 38

www.ethanolproducer.com

DON’T REPLACE YOUR RTO, REVITALIZE IT!

Does your facility have aging VOC abatement equipment needing upgrades, maintenance or repairs?

With Dürr’s more than 40 years of retrofit and repair experience, we can restore full functionality while improving energy efficiency. Dürr has the ability to repair, rebuild and modify all types, models, and designs of RTOs and RCOs.

www.durr-cleantechnology.com

CONTENTS

DECEMBER 2016 VOLUME 22

DEPARTMENTS 6

AD INDEX

7

EDITOR'S NOTE

8

VIEW FROM THE HILL

9

EVENTS CALENDAR

10

DRIVE

12

Good Chemistry

Ethanol plants, chemical companies develop relationships that benefit the industry.

By Ann Bailey

Elegant Solutions

By Tom Bryan The 12 Days of Biofuels

By Bob Dinneen

28

Our Work to Engage Consumers Expands

By Emily Skor

GRASSROOTS VOICE What’s in a Name?

By Ron Lamberty

CANADA

Ethanol in Canada 5%

Provincial Mandate

Biofuels Play Central Role in Brazil’s Climate Goals

By Leticia Phillips

CLEARING THE AIR

5%

LCFS Goal

Transport Fuels to Lower Carbon Intensity by 10% from 2010 to 2020

British Columbia

GLOBAL SCENE

Alberta

5%

Provincial Mandate Requires qualifying renewables reduce GHG by 25%

Carbon Levy on

34

Nonbiofuels

Jan 2017 - $20 per ton Jan 2018 - $30 per ton

Provincial Mandate (Inspirational)

7.5%

Provincial Mandate

New RFS underconsideration as part of climate change action plan, Goal of 5% GHG reduction in gasoline by 2020, likely to include lower carbon intensity requirements

Ontario

BUSINESS BRIEFS

20

COMMODITIES

22

DISTILLED

48

BUSINESS MATTERS

Game Plan for Capital Project Financing Discussions with Lenders

By Jason Johnson

MARKETPLACE

5%

Provinc

ial Man

date Participa nt Climate in Western cap-an Initiative’s reduct d-trade GH G ion from 199 target of 20% 0 levels by 2020

The country's climate-change plan bodes well for the industry.

By Susanne Retka Schill

Quebec

8.5%

Provincial Mandate

2016: Looking Back on a Busy Year

By David VanderGriend

18

50

CHEMICALS

Saskatchewan

16

FEATURES

Manitoba

14

ISSUE 12

TECHNOLOGY

Nanoscale Blendinig

Blendstock cuts diesel emissions.

By Debbie Sniderman

38 CONTRIBUTION

44 ANTIMICROBIALS

Options Expand for Effective Bacterial Control in Ethanol Production ON THE COVER

Cleanliness is No.1, then multiple options are available for infection control.

By Scott Lewis

Tharaldson Ethanol PHOTO: JOHN BROSE

4 | Ethanol Producer Magazine | DECEMBER 2016

Ethanol Producer Magazine: (USPS No. 023-974) December 2016, Vol. 22, Issue 12. 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.

6QIGVJGT

:H &DQ 1PG UK\G FQGU PQV CNYC[U HKV CNN Ä [QWT EJCNNGPIGU CTG WPKSWG CPF VJG UQNWVKQP UJQWNF DG VQQ 7 5 9CVGT YQTMU CU C OGODGT QH [QWT VGCO VQ WPFGTUVCPF [QWT WPKSWG QRGTCVKPI EJCNNGPIGU CPF F[PCOKEU $[ EQODKPKPI QWT KPVGITCVGF QHHGTKPIU CPF KPFWUVT[ GZRGTKGPEG YG CTG CDNG VQ GPIKPGGT C HWNN[ KPVGITCVGF RGTUQPCNK\GF UQNWVKQP HQT [QWT OQUV EJCNNGPIKPI YCVGT RTQEGUU CPF GPGTI[ PGGFU 6QIGVJGT YG ECP CEJKGXG [QWT HCEKNKV[ U IQCNU

ǁǁǁ͘ƵƐǁĂƚĞƌƐĞƌǀŝĐĞƐ͘ĐŽŵ ΛƵƐǁĂƚĞƌƐĞƌǀŝĐĞƐ h͘^͘ tĂƚĞƌ

VOLUME 22 ISSUE 12

ADVERTISER INDEX

EDITORIAL President & Editor in Chief Tom Bryan tbryan@bbiinternational.com Vice President of Content & Executive Editor Tim Portz tportz@bbiinternational.com Managing Editor Susanne Retka Schill sretkaschill@bbiinternational.com Associate Editor Ann Bailey abailey@bbiinternational.com News Editor Erin Voegele evoegele@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com

ART

2017 International Fuel Ethanol Workshop

52

2017 National Ethanol Conference

49

BetaTec Hop Products

24

Buckman

46

D3MAX LLC

26-27

Direct Automation

47

Durr Systems, Inc.

Art Director Jaci Satterlund jsatterlund@bbiinternational.com Graphic Designer Raquel Boushee rboushee@bbiinternational.com

PUBLISHING Chairman Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com

3

EISENMANN Corporation

30

Ethanol Producer Magazine

17

Fagen Inc.

15

Fluid Quip Process Technologies, LLC GEA Group

31

9

Growth Energy

2

Hydro-Klean LLC

SALES Vice President of Operations Matthew Spoor mspoor@bbiinternational.com Sales & Marketing Director John Nelson jnelson@bbiinternational.com Business Development Director Howard Brockhouse hbrockhouse@bbiinternational.com Senior Account Manager/Bioenergy Team Leader Chip Shereck cshereck@bbiinternational.com Account Manager Jeff Hogan jhogan@bbiinternational.com Circulation Manager Jessica Tiller jtiller@bbiinternational.com Marketing & Advertising Manager Marla DeFoe mdefoe@bbiinternational.com

25

ICM, Inc.

37

Iowa Renewable Fuel Association

18

Louis Dreyfus Company

32

Nalco Water

40

Phibro Ethanol Perfomance Group POET LLC

RMPG, Inc.

Ringneck Energy Walter Wendland Little Sioux Corn Processors Steve Roe Commonwealth Agri-Energy Mick Henderson Pinal Energy Keith Kor Aemetis Advanced Fuels Eric McAfee Poet Scott Teigen Western Plains Energy Derek Paine

51

J.C. Ramsdell Enviro Services, Inc.

Premium Plant Services, Inc.

EDITORIAL BOARD

Southeastern Illinois College Thermal Refractory U.S. Water Services Victory Energy Operations, LLC.

11 13 42

41 43 19 5 22-23

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for anyone outside the United States. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to sretkaschill@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Please recycle this magazine and remove inserts or samples before recycling

COPYRIGHT Š 2016 by BBI International TM

6 | Ethanol Producer Magazine | DECEMBER 2016

EDITOR'S NOTE

Elegant Solutions It’s no surprise that the careful use of process chemicals has evolved on plane with other advancements in ethanol production over the past two decades. Our industry’s continuous quest for improvement has made smart chemical Tom Bryan

President & Editor in Chief tbryan@bbiinternational.com

utilization a useful and necessary tool for yield optimization, product quality, consistency and more. However, we learn in this month’s cover story “Good Chemistry,” on page 28, that it’s not only the effectiveness and versatility of process chemicals that have improved, but the way in which chemicals are purchased, stored and dispensed. As EPM Associate Editor Ann Bailey reports, the industry’s drive to be better, leaner, safer and more effi cient has resulted in chemicals being purchased in bulk, for example, and dispensed through sophisticated automation. Plus, rather than bemoaning change, producers tend to leverage regulatory compliance solutions to drive innovation into their plant chemistries.

At press time, the U.S. presidential election had not yet occurred. However, by the time you read this column in print, one of the most polarizing elections in modern history will be behind us—I hope. With so much focus on emails, temperament, salacious accusations and name calling before, during and after the presidential debates, climate change and carbon reduction strategies were given little attention. Perhaps that’s because the candidates’ views on climate change differed so vividly; perhaps the subject simply didn’t need parsing. In Canada, on the other hand, there is less political and public discord over climate change, and ethanol plants there are now jockeying for a seat at the low-carbon energy table. As EPM Managing Editor Susanne Retka Schill reports in “Canadian Producers Poised for Carbon Reduction Era,” on page 34, some of Canada’s top ethanol producers are now expanding and upgrading their plants in anticipation of greater demand brought on by Prime Minister Justin Trudeau’s recent dictum on carbon reduction.

Our coverage of ethanol’s carbon-cutting attributes carries into our anchor feature, “Nanoscale Blending,” on page 38. In this story, we introduce Sylvatex, a California company that has discovered a way to combine ethanol and corn-oil-based free fatty acids, suspended in nanoparticles, to produce an oxygenated blendstock for gasoline, diesel fuel, biodiesel or other mid-distillates. The current idea is to blend it with diesel at 10 percent, but much higher blends are possible. Ethanol producers should like the idea. After all, our industry manufactures the product’s two key ingredients.

FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US:

TWITTER.COM/ETHANOLMAGAZINE DECEMBER 2016 | Ethanol Producer Magazine | 7

VIEW FROM THE HILL

The 12 Days of Biofuels

By Bob Dinneen

As the holidays approach, it’s the time of year we take stock, mentally rewinding the past 12 months and years past. Have you been naughty or nice? Did you meet your New Year’s goals? I decided to reminisce about 2016 to the tune of “The Twelve Days of Christmas,” however, sticking to the repetitive chorus is completely optional.

On the eighth day of Christmas From the USDA: Eight years with Vilsack.

On the ninth day of Christmas Led by the EPA: Nine robust RFS years.

On the first day of Christmas

By Congress decree: A strong RFS for the country .

On the tenth day of Christmas The RFA sponsored: Bikers with E10.

On the second day of Christmas From both of our parties: Support for biofuels.

On the eleventh day of Christmas Thanks to the RFS Eleven years of consumer savings.

On the third day of Christmas Per an RFA study: Proof of boat safety.

On the fourth day of Christmas The RFA did lead: Webinars on octane.

On the fifth day of Christmas Thanks to a company: Terminals that offer E15.

On the sixth day of Christmas To Crappy Masters Glee: Six E10 boats racing.

On the twelfth day of Christmas, Thanks to the industry: New Technology Eleven years of consumer savings Bikers with E10 Nine robust RFS years Eight years with Vilsack E85prices.com Six E10 boats racing Terminals that offer E15 Webinars on octane Proof of boat safety Support for biofuels And a strong RFS for our country.

On the seventh day of Christmas Managed by the RFA: E85prices.com.

8 | Ethanol Producer Magazine | DECEMBER 2016

Author: Bob Dinneen President and CEO, (Assisted by the musical stylings of Maureen Dinneen) Renewable Fuels Association 202-289-3835

EVENTS CALENDAR

2017 National Ethanol Conference February 20-22, 2017 San Diego, California The 2017 National Ethanol Conference: Building Partnerships, Growing Markets provides attendees with an exclusive opportunity to engage key decision makers and industry executives while networking and learning about the latest technologies and government policies.

202-315-2466 | www.nationalethanolconference.com

2017 International Biomass Conference & Expo April 10-12, 2017 Minneapolis Convention Center Minneapolis, Minnesota

2017 International Fuel Ethanol Workshop & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota From its inception, the mission of the event has remained constant: The FEW delivers timely presentations with a strong focus on commercial-scale ethanol production— from quality control and yield maximization to regulatory compliance and fiscal management. The FEW is also the ethanol industry’s premier forum for unveiling new technologies and research findings. The program extensively covers cellulosic ethanol while remaining committed to optimizing existing grain ethanol operations.

866-746-8385 | www.fuelethanolworkshop.com

2017 National Advanced Biofuels Conference & Expo June 19-21, 2017 Minneapolis Convention Center Minneapolis, Minnesota With a vertically integrated program and audience, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, including cellulosic ethanol, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleum-derived products.

866-746-8385 | www.advancedbiofuelsconference.com

Corn Oil Recovery Yields Profits for Producers Adding a GEA RSE 220 separator to your plant can provide a new revenue stream by recovering valuable corn oil. Efficient and economical, the separator pays for itself within a year of installation. Besides the income generated by the corn oil, the process reducess energy consumption during drying for further savings. VOC emissions aree also decreased.

• Easy retrofit at the back-end of the plant • Fast ROI • Energy savings • Reduced VOC emissions for plant safety.

To learn how you can use the most sought after ter corn oil separator to increase profitability and improve plant efficiency, email sales.unitedstates@gea.com, call 800-722-6622, or visit us online.

2219T

Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries.

866-746-8385 | www.biomassconference.com

DECEMBER 2016 | Ethanol Producer Magazine | 9

DRIVE

Our Work to Engage Consumers Expands

By Emily Skor

Year-end is a natural time for reflection, particularly as Growth Energy’s new CEO, who joined only seven short months ago. As I consider where

we’ve been and where we’re going, I’m energized by our industry’s willingness to reach outside the comfort zone for the betterment of all. One of our industry’s great strengths is the support we’ve built within the Corn Belt and the Capital Beltway (what Washingtonians affectionately refer to as the policy community in Washington, D.C.).

Our base is tremendous, propelling us from a start-up industry with fledgling support to being established with a defined and growing marketplace. We will continue to engage and rally our base and that will never change.

Growing our industry and selling considerably more ethanol gallons requires broadening our base of support, however. It requires connecting with consumers across the country, in all states and districts and localities, with urbanites, millennials, moms and grandmothers. Our industry isn’t just good for farming communities, it’s good for every community, they just may not know it yet. I can assure you, however, they soon will.

Ethanol, typically E10, is in nearly 97 percent of our fuel, and higher blends are becoming increasingly prevalent. Access to higher blends is good for Americans’ pocketbooks, their engines and the air we all breathe. Since I became CEO in May, Growth Energy has started new conversations on why American ethanol is such a benefit to all Americans and why options at the pump matter.

Growth Energy traveled to the Southern Women’s Show in Charlotte, North Carolina, to talk with women about ethanol. Women and mothers are interested to know that ethanol displaces harmful chemicals in gasoline known to cause cancer, asthma, groundwater contamination and smog. We met with over a dozen influential female bloggers and marketers to begin a dialogue, and we brought along The Bachelor star Chris Soules and fourth-generation auto mechanic Audra Fordin, the first female head of her family-owned auto repair shop, to help us tell the story in attendee meetings and radio interviews.

In October, we worked with some of our great retail partners in the “Pink Out” campaign. Sheetz, Minnoco, Protec and Murphy USA turning fuel nozzles and pump toppers around the country pink to alert consumers that what they put in their tank matters. We raised awareness for breast cancer, and our retailer partners donated 2 cents of every gallon of E15 sold to fight breast cancer. Choosing E15 isn’t just a fuel choice, it is a health and lifestyle choice. Filling up with E15 during Breast Cancer Awareness Month meant consumers were actively contributing to an amazing cause. But beyond that, choosing E15 on any given day is also an active contribution to keeping our environment cleaner and each other healthier.

In further efforts to reach consumers, we launched a new website: GetEthanol.com that connects drivers with their closest E15 and E85 stations. It also provides easily digestible content on the home page and affiliated Facebook, Twitter, Instagram and Pinterest pages that educate and energize followers about the benefits of E15 without overwhelming unfamiliar consumers. The content is meant to be accessible to anyone, especially young people who may not be familiar with biofuels.

Looking back on these initiatives, I am excited at what the next year holds. Our work to engage consumers will continue to expand and supplement our efforts on Capitol Hill to maintain a strong renewable fuel standard, support renewable volume obligations set at the Congressionally intended levels and secure a Reid vapor pressure waiver for E15, so it can be sold year-round in all 50 states. The synergy of continued legislative strength and a growing focus on reintroducing the public to ethanol all point to the same goal: Expand the availability of higher ethanol blends so that Americans are free to choose a fuel that promotes cleaner air, keeps their engines running smoothly and saves their hard-earned money at the pump. The ethanol industry has been one of the great American success stories, and I look forward to working on behalf of our members and with all of our partners to ensure the next chapter builds on that success.

10 | Ethanol Producer Magazine | DECEMBER 2016

Author: Emily Skor CEO, Growth Energy 202-545-4000 eskor@growthenergy.org

GRASSROOTS VOICE

What’s in a Name?

By Ron Lamberty

You’ve seen the commercials. ExxonMobil introduced it with a huge summer Olympic ad buy, and it’s been all over the place since. A guy

pumps gas and reads a sign saying ExxonMobil gas has seven ingredients for better mileage, and wonders aloud what they are.

Suddenly, seven scientisty-looking people appear, offering vague (but technical sounding) answers to his question. I remember “detergent additive number one” and “detergent additive number two,” and a guy in an egg-shaped hovercraft (with jets facing the wrong direction) talking about “marker molecules,” I think. Not sure how any of those help mileage, but you’ve seen the ad, right?

So, what’s the brand being introduced?

If you can’t remember the ExxonMobil brand, how about one that’s been around longer? Can you name Shell’s premium brand?

No? How about the branded additive Chevron introduced 20 years ago? You know that one, don’t you?

Of course you don’t, unless you’re a fuel nerd of some sort, and maybe not even then. After all, you’re reading this column in a magazine for people in the ethanol industry. You ARE a fuel nerd of some sort. If you don’t know those brand names, who does?

Hardly anyone. And even those who do, don’t seem to do much with the information. Two-thirds of consumers say price is the most important factor when they buy gas, and 25 percent buy based on location or ease of getting in and out of the retailer’s parking lot.

About 8 percent of drivers say brand is the most important thing to them. And by brand, they mean the brand name on the big sign in front of the station, not the name of the fuel or an additive.

So, you won’t be surprised to know, I cringe a little when I hear ethanol people talking about the need for an ethanol “brand name.”

It would be great if a logo or catchy name drew more people to higher ethanol blends, but nothing I’ve seen gives me confi dence

12 | Ethanol Producer Magazine | DECEMBER 2016

that would happen. I’m not sure it matters what WE call our fuel.

At the same time, as higher ethanol blends are introduced into more markets, retailers experience varying degrees of success, especially with E15. We should take note of successful E15 marketers. It does matter what they call our fuel.

At this summer’s American Coalition for Ethanol conference, Mike Lorenz of Sheetz said “Customers don’t know what E15 is, because they don’t know what E10 is.” I thought he was describing a regional issue, particular to North Carolina, until I helped out with grand re-openings of c-stores in Iowa, South Dakota and Nebraska, where E15 was being introduced to customers. After talking with drivers and station employees, it became clear E10 and E15 are our terms, not theirs. Stations sell regular or unleaded, not E10.

Customers don’t know they can use E15, because they don’t use E10. They use regular or unleaded. The only fuel drivers are familiar with that starts with an “E” is E85, so most assume E15 is a fl ex fuel.

To date, most retailers reporting success selling E15, offer it as “Unleaded15” or “Unleaded Plus.” They make information on new blends available, but “unleaded” and a lower price seem to be all most drivers need to know. Ironically, the way to sell more ethanol as E15 seems to be reminding motorists less about ethanol and more about the gas they’ve always used.

That’s disappointing, but remember, after spending hundreds of millions promoting brands like Synergy, V-Power, and Techron, pumps at major branded locations still say “unleaded” and “regular,” too.

Author: Ron Lamberty Senior Vice President American Coalition for Ethanol 605-334-3381 rlamberty@ethanol.org

IMAGINATION YIELDS

INNOVATION +

([ 76,; ^L J\S[P]H[L ZVS\[PVUZ 6\Y ZWPYP[ VM PUUV]H[PVU THKL \Z H NSVIHS SLHKLY PU L[OHUVS WYVK\J[PVU HUK UV^ ^L»YL WYVK\JPUN L]LU TVYL LMMPJPLU[ IPVM\LSZ MVVKZ MLLKZ HUK UH[\YHS HS[LYUH[P]LZ [V WL[YVJOLTPJHSZ

6WWVY[\UP[` PZ L]LY`^OLYL PM `V\ RUV^ ^OLYL [V SVVR WVL[ JVT

GLOBAL SCENE

Biofuels Play Central Role in Brazil’s Climate Goals

By Leticia Phillips

The Paris Agreement on Climate Change entered into force in September, starting a coordinated effort by the world’s governments to reduce carbon dioxide emissions and limit climate change impacts. It’s far from the

end, though. Entering into force starts the hard work—meeting each nation’s decarbonization targets. Every country’s intended nationally determined contributions (INDCs) will reduce emissions and expand economic opportunities for clean energy. More than any other nation, Brazil’s INDC relies on biofuels to meet these goals.

Brazil’s INDC targets 37 percent lower emissions by 2025 compared to 2005, with further reductions by 2030. This assumes biofuels supply approximately 18 percent of the country’s energy mix by 2030 through greater sugarcane ethanol production, expanded second-generation biofuels and additional biodiesel for transportation.

Biofuels can meet this challenge. Ethanol and bioenergy produced from sugarcane already constitute 15.7 percent of Brazil’s energy mix, replacing more than 40 percent of gasoline and avoiding 600 million tons of carbon dioxide emissions since the beginning of the ethanol program in the 1970s. Just this past harvest, Brazil produced 7 billion gallons of advanced ethanol and 15 million megawatt-hours of bioelectricity from cogeneration.

While Brazil’s INDC and its related biofuel goals are ambitious, experience shows they are also realistic. Ultimate success relies on three fundamental pillars: predictable policy, sustainable production and technological innovation.

First, government policy must be clear and stable. Well-established rules of the road fostered Brazil biofuels with the first wave of ethanol’s growth government driven from the mid-1970s to the 1980s. The second wave of growth, starting in 2003, resulted from the introduction of flex-fuel vehicles. In the past few years, however, regulatory uncertainty has reduced investments and inhibited technological development. The lack of predictable policy has its cost and instead of having 10 to 30 new mills built per year, we see mills shutting their doors.

Brazil should maintain a regulatory framework, incorporating the positive externalities of renewable fuel into prices via consumption mandates or tax differentials favoring biofuel over gasoline.

Second, we must ensure sugarcane production continues to expand sustainably. Brazil’s Agro-Ecological Zoning policy prevents sugarcane expansion in the most sensitive biomes and in native vegetation, while authorizing expansion into 64.7 million hectares of suitable land. That’s about 7.5 percent of Brazil’s territory, compared to the one percent of land currently used for sugarcane production. Sustainability extends to paying sugarcane growers fair prices for their product. Brazil’s current approach is very effective, with the Council of Sugarcane Industry and Growers creating clear rules for cane prices and minimizing potential conflicts.

While there’s no sustainability silver bullet, Brazil’s current policies are a good start and must be maintained. In addition, we should consider innovative models like self-regulatory commitments and thirdparty certifications.

Third, we must enhance research and development to unlock nextgeneration biofuels and increase ethanol’s competitiveness. Secondgeneration ethanol is a reality in Brazil. Raizen is producing ethanol from cane bagasse in Sao Paulo and Granbio is producing ethanol from bagasse and straw in Alagoas. The Center for Sugarcane Technology has demonstrated we can quadruple ethanol’s productivity through innovation in the near future. Optimizing production, advancing genetic enhancements and expanding agronomy to increase feedstocks, on top of industrial re-engineering of our first-generation production to second-generation ethanol, can raise production from 1,850 gallons per hectare to 6,500 gallons per hectare.

From the beginning of Brazil’s ethanol program, technological innovations multiplied ethanol production by 20-fold, doubled cane yields and cut prices in half. We believe current innovations will create similar results in the next few decades, if research and development continue on track.

Reducing power sector emissions is an important start to slowing climate change, but to truly decarbonize, we must tackle transportation emissions. Earlier this year, U.S. transportation emissions passed power sector emissions for the first time since 1979 as new clean energy came online, and this trend will likely play out elsewhere as countries decarbonize. Biofuels are a proven solution to replace fossil-based transportation fuel. Together, America and Brazil have built a global biofuels market, showing how stable policy can create economic growth and environmental benefits.

Author: Leticia Phillips North American Representative Brazilian Sugarcane Industry Association, UNICA 202-506-5299

14 | Ethanol Producer Magazine | DECEMBER 2016

CLEARING THE AIR

2016: Looking Back on a Busy Year

By Dave VanderGriend

It is hard to believe we are approaching the end of the year. And what a busy year it has been. At the Urban Air

Initiative, we have been relentless in our efforts to open the market for higher ethanol blends. The road to that market runs a little north of us, right through the U.S. EPA fuels office based in Michigan. We have mailed our Christmas wish list, but we generally get a lump of coal!

We have written extensively in this column that the EPA has the authority—and the obligation—to break down regulatory barriers holding ethanol back. At UAI we have identified those barriers and offered solutions. But being heard has not been easy. During 2016, we have worked hard to understand where EPA has gotten it wrong. We have challenged the agency to open its eyes to the best available science that shows ethanol to be significantly better than EPA’s models and ingrained beliefs would indicate.

One of the less glamorous things we do is to comment on EPA rules and actions. Our comments on the renewable fuel standard focused on the health benefits and CO2 reductions from ethanol. We also invoked the Information Quality Act which requires the EPA use the most accurate, up-to-date science and information, submitting an outstanding compilation of the most contemporary information available on ethanol's positive impact on the environment.

We continued to target EPA emissions modeling that is based on a flawed study conducted with the petroleum industry. Through emails UAI obtained under the Freedom of Information Act, we see how the petroleum industry has influenced virtually every major ruling impacting ethanol. Based on these internal EPA documents, we submitted a Request for Correction on the study, while preparing to challenge EPA in court over the use of its modeling.

Similarly, through another FOIA request, we found that an EPA researcher skewed the results of a study with the Harvard School of Public Health by downplaying the significant health risks from gasoline aromatics.

We submitted comments on the Technical Assessment Report that is the key to the midterm evaluation of federal fuel economy and carbon reduction requirements. We provided substantial, documented information that calls on EPA to look beyond vehicle technology and recognize that fuels—notably clean-burning ethanol—can be a valuable

16 | Ethanol Producer Magazine | DECEMBER 2016

tool. We are pleased to be offering technical assistance to former Sen. Tom Daschle's High Octane Low Carbon Alliance on this particular issue.

UAI also is sharing technical and educational information with the E30 Challenge in Watertown, South Dakota, as participants demonstrate that simply splash-blending ethanol with E10 can provide a clean, high-octane premium fuel that is compatible with today's vehicles and reduces a range of pollutants.

We also are communicating the benefits of higher ethanol blends to the public, the medical community, academia and the media. We launched two websites this year, fixourfuel.com and fuelingthetruth. com. We continue to support the Clean Fuels Omaha campaign that has resulted in the first major metropolitan area recommending higher blends to combat ozone. We produced white papers, fact sheets and technical assessments on a range of critical issues. We are actively involved with the American Society of Testing and Materials, the Society of Automotive Engineers and the Coordinating Research Council. We presented about aromatics in Mexico City and to others at international workshops sponsored by the USDA and U.S. Grains Council to educate about and advocate for higher ethanol blending.

We sponsored conferences such as the outstanding panel of auto and health experts at the International Fuel Ethanol Workshop. We’ve helped bring panel discussions to Congress in Washington and placed articles and thought pieces with media across the country.

UAI staff is working with ethanol producers nationwide and coordinating with industry and commodity groups to share our findings.

We will be supporting a Health Effects Institute event later this month and have more outreach efforts planned for 2017. Like I said, we have been busy.

We appreciate the support for Urban Air from so many organizations. I wish everyone a blessed Thanksgiving and Merry Christmas and let’s continue to work together to tell the real story of ethanol and the benefits it provides.

Author: David VanderGriend President, Urban Air Initiative, CEO, ICM Inc. DaveV@icminc.com 316-796-0900

)ROORZ 8V

WE

ARE

ETHANOL

! !$ $ &" "" For 21 years

ล ! $ ล $ ล ) !" ล ( $" ล " ล ! $ !+

|_-moัฒ uo7ย 1;uv ล m7ย v|uย uov !;ัฒย om |_-moัฒ uo7ย 1;u -]-ย bm; ou; |_-m mย |_;u ;ย v "oย u1;

(WKDQRO3URGXFHU FRP

&RQWDFW XV VHUYLFH#EELLQWHUQDWLRQDO FRP

BUSINESS BRIEFS People, Partnerships & Deals

Dinneen Henderson

Koehler

Seurer

The Renewable Fuels Association has announced the election of officers for the board of directors. Mick Henderson, general manager at Commonwealth AgriEnergy LLC, was elected as chairman of the board of directors. Neil Koehler of Pacific Ethanol will serve as vice chairman, while Jim Seurer of Glacial Lakes Energy LLC will serve as treasurer. Bob Dinneen will continue as president of the RFA. The Iowa Renewable Fuels Association recently recognized Absolute Energy, a 125 MMgy ethanol production facility in St. Ansgar, Iowa, for producing its 1 billionth gallon of ethanol. The facility began operations in 2008.

Green Biologics Inc. recently announced the branding and product development strategy for its high-purity biobased n-butanol and acetone, as well as associated downstream products. The company aims to market all 100 percent biobased chemicals under the brand BioPure, a descriptive

brand name that encapsulates both the purity and sustainability of its biobased chemistry.

Green Biologics has also registered the trademark GreenInside for cobranding opportunities with its collaboration partners, who will use the mark on a wide range of consumer and industrial products making sustainability claims based on Green Biologics’ technology. In addition, Green Biologics recently announced a distribution agreement with Caldic B.V., a global distributor headquartered in Rotterdam, the Netherlands. Caldic will distribute Green Biologics’ biobased, high-purity chemicals, including n-butanol, acetone and other associated product to customers in Europe, Africa and the Middle East for a variety of key markets, including CASE (coatings, adhesives, sealants and elastomers), HI&I (household, industrial & institutional cleaners), PCI (personal care intermediates), food ingredients and energy chemicals.

noco, Sheetz, Kum & Go, Thorntons, Cenex, Protec and Murphy USA are among the members of the Prime the Pump coalition.

RaceTrac announced it has expanded E15 sales to four locations in Florida. The company also recently joined a list of major retailers as part of the Prime the Pump initiative, which works in collaboration with Growth Energy to expand consumer choice for higher blends of ethanol, like E15, to Americans across the nation. Min-

Gevo Inc. recently announced that it has completed production of more than 1,000 gallons of cellulosic renewable jet fuel that is specified for commercial flights.

The company adapted its patented technologies to convert cellulosic sugars derived from wood waste into renewable isobutanol, which was then further converted into

The Renewable Fuels Association has announced Director of Regulatory Affairs Kelly Davis has been reappointed to the U.S. Department of Commerce’s Renewable Energy Davis and Energy Efficiency Advisory Committee, which advises the agency on U.S. renewable energy and energy efficiency products and services. Davis was one of 34 members appointed in October. REEEAC members advise the Commerce Secretary regarding the development and administration of programs and policies to expand the competitiveness of U.S. exports of renewable energy and energy efficiency goods and services.

7$1. )$50 /,1(5 ,167$//$7,21 (;3$16,21 5(3$,5

18 | Ethanol Producer Magazine | DECEMBER 2016

-&5$06'(// &20

BUSINESS BRIEFS¦

Gevo’s alcohol-to-jet fuel (ATJ) fuel. This cleaning products across the food, beverage, ATJ meets the ASTM D7566 specifica- agricultural, industrial and wholesale markets. tion, allowing it to be used for commercial flights. Alaska Airlines is expected to fly the first commercial flight using this cellulosic jet fuel within the next few months.

The E85prices.com website, managed by the Renewable Fuels Association, now includes E15 in its services. The website is a crowdsourced service and now allows consumers to toggle between E15 and E85, locating information and reporting prices on either fuel blend. The improvements also allow consumers to review E15 prices reported by others, price spreads for each state, historical statistics and more, giving them access to the lowest-price gasoline available.

The website also maintains a database of blender pump locations and an online forum.

Grassley

Buis

Growth Energy recently presented Sen. Chuck Grassley, R-Iowa, with its 2016 Fueling Growth award, which the group called its “highest honor given to congressional leaders who advocate for renewable fuels like ethanol and consumer choice at the pump.” In addition, former Growth Energy CEO and current co-chairman of the Growth Energy board of directors, Tom Buis, was presented with the America’s Fuel award. The award is the highest honor given by Growth Energy, Green Plains Inc. has acquired Fleis- and is presented to an individual who has chmann’s Vinegar Co. for $250 million. The made significant contributions to the growth company is the largest manufacturer and and well-being of the ethanol industry. marketer of food-grade industrial vinegar.

Headquartered in Cerritos, California, FleisThe Renewable Fuels Association has chmann's Vinegar is an all-natural ingredi- announced the addition of Siouxland Ethaents company serving markets and end-use nol to its membership. Siouxland Ethanol is applications, including food and beverage in- a locally owned company near Jackson, Negredients, antimicrobials, bioherbicides and braska, that began production in May 2007.

The ethanol plant currently processes 24 million bushels of corn per year into 70 million gallons of ethanol, 2,000 tons of corn oil and 175,000 tons of distillers dried grains with solubles (DDGS) used by local cattle feeders. Siouxland Ethanol is also moving ahead with a planned expansion to boost production capacity by 15 percent, which is expected to be completed by the end of this year.

Eastern Instruments has introduced the CentriFlow BWS, an economical and accurate gravimetric in-line mass flow meter that serves as an alternative to impact flow meters and belt scales for the dynamic measurement of solids while in process. The BWS can be used to measure granular solids such as grains, pellets, beans, wood chips, pet food and freeflowing granular powders, such as sand.

The U.S. Department of Energy’s Bioenergy Technologies Office has established the Agile BioFoundry, a new consortium of nine DOE national laboratories working to standardize and streamline the entire biomanufacturing pipeline by uniting computer-assisted biological pathway design, process integration, process scale-up, and machine learning. The consortium is led by Lawrence Berkeley National Laboratory.

Thermal Refractory Solutions & Maintenance Give the Thermal team a call today!

612-751-2010 www.thermalrefractory.com We are your Ethanol Refractory Experts! We know your energy center and can provide superior results on your RTO, TO, Boiler, or Dryer. We have installers based from 3 different locations to provide a fast & cost effective solution for your plant. We understand the importance of your operation and will provide the results you need to be running smooth.

DECEMBER 2016 | Ethanol Producer Magazine | 19

COMMODITIES

Prices & Market Analyses

Natural Gas Report

Natural gas price drivers continue to play out as winter approaches Oct. 25—The drivers behind the 2016 natural gas price recovery are still very much in play as the market transitions into winter. Higher exports and power generation load combined with falling domestic production will continue to impact prices as winter heating demand begins to ramp up. A strong withdrawal season is likely in all but the warmest of winter scenarios, which would theoretically set the stage for a higher price environment to emerge in 2017. However, the behavior of the production and power generation sectors will be of chief importance in determining the 2017 market story.

On the production side, 2016 was marked by historically low drilling that resulted in falling output for the first time in the Shale Era. Most expect production growth to resume in 2017, but forecasting the timing and magnitude of that turnaround is very difficult. Drilling began to show signs of life early in the first quarter, with the gas-directed rig count rising to a nine-month high of 108 as of Oct. 21. Activity remains far behind year-ago levels and even further behind the five-year average,

by Andy Huenefeld

so further recovery is likely necessary to kick-start meaningful growth.

Signs of strong production early in 2017 could go a long way in keeping a lid on the market, but further declines would be bullish for pricing.

The power generation landscape in the U.S. has shifted away from coal toward natural gas over the past 10 years. Every year sees more coal units permanently retired and replaced with new gas-fired capacity. The sector consumed natural gas at a record pace in 2016 due to low gas prices and hot summer weather. Natural gas is expected to exceed coal’s share of the power generation mix this year for the first time. In a higher price environment next year, it will be interesting to see how demand from this sector responds. A portion of the load is “price sensitive,” meaning that the economics of delivered coal vs. delivered natural gas have some impact on usage. Demand from power generators will likely need to be lower in 2017 to keep the market in balance; if the industry is slow to scale back consumption, it could raise the ceiling on prices.

Corn Report

Managed money boosts corn market in October, despite big crop Oct. 24—The corn crop is still big but the managed money gave the market a boost in October. The USDA lowered yield to 173.4 bushels per acre in the October report, down from 174.4 in September and 175.1 in the August report. However, planted and harvested acreage increased by 400,000 and 200,000 acres, respectively, so overall production is still just over 15.0 billion bushels. Demand was static in the October report except in the export category, which observed an increase of 50 million bushels from previous expectations of 2.175 billion bushels.

Corn for ethanol is still expected to consume 5.275 billion bushels, up from 5.206 billion last year.

Global corn ending stocks declined from 219.46 mmt to 216.81 mmt. Brazil corn production was estimated to be 1.0 mmt higher at 83.5 mmt while Argentina production was unchanged at 36.5 mmt.

With U.S. production at a comfortable level, the market will soon shift its focus toward demand and South American production. The production issues in Brazil have created a major shortage that won’t be alleviated by its full season crop. Argentina plantings are expected to be strong as the soybean export tax will not be decreased this year as initially expected. Outside influences will continue to impact markets, with the Comments in this column are market commentary and are not to be construed as market advice.

20 | Ethanol Producer Magazine | DECEMBER 2016

by Jason Sagebiel

value of the U.S. dollar influencing global demand. Recent highs in the dollar have limited upside during our recent minor price recovery. The accompanying chart shows the correction in corn, which derived from short covering by the managed money during October.

Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $1.606

DDGS Report

Spot

Rack

West Coast

1.800

1.750

Midwest

1.655

1.728

East Coast

1.695

1.768 SOURCE: DTN

Export challenges weigh on DDGS market Oct. 25—As November approaches, the market is being infl uenced as much by governmental actions as it is about supply and demand. Since last month, China did come out with its countervailing duty to pair with the antidumping tariff previously announced, which now totals just over 44 percent of the CNF (delivered) price in China.

This has decreased trade to China dramatically in the past month, although there are still small parcels being traded. At its height this year, the U.S. exported around 360,000 metric tons in both June and July, so dropping the monthly totals to a much lower amount is going to affect values back here in the U.S. At the same time, U.S. exporters have been addressing challenges with Vietnamese shipments, which for some time now have required fumigation, in an effort to address a Trogoderma beetle issue. Oct. 17, the Viet-

Region

by Sean Broderick

namese agriculture minister signed an order that as of Dec. 1, exporters must fumigate with methyl bromide that, with only a few exceptions, is not used in the U.S. due to safety and its ozone depleting qualities. More problematic, the minister’s order says after Dec. 17, the import of DDGS will be temporarily suspended. The U.S. industry is working with APHIS to address the concerns of the Vietnamese and to fi nd a solution. Shippers are doing what they can to ship early, which has tightened up the November market.

In the meantime, harvest is wrapping up with huge basis variances between the Eastern and Western Corn Belts, which is manifesting itself in the price of distillers grains as well. DDGS does not usually fall below the price of corn for very long, and that looks to be the case for November and December as well.

Regional Gasoline Prices ($/gallon)

Front Month Futures Price (RBOB) $1.532 Region

Spot

Rack

West Coast

1.572

2.060

Midwest

1.447

1.471

East Coast

1.562

1.490 SOURCE: DTN

DDGS Prices ($/ton) Dec 2016

LOCATION

Nov 2016

Dec 2015

Minnesota

95

110

110

Chicago

125

135

138

Buffalo, N.Y.

120

140

130

Central Calif.

164

175

170

Central Fla.

155

151

145 SOURCE: CHS INC.

Corn Futures Prices (Dec Futures) Date

close, bu.

close, ton

Oct 21, 2016

3.525

125.893

Sept 21, 2016

3.400

121.429

Oct 21, 2015

3.808

135.982 SOURCE: FCSTONE

Cash Sorghum ($/bushel)

Ethanol Report

by Rick Kment

Ethanol futures pulled higher on tighter oil supplies Oct. 24—Ethanol and gasoline markets continued to make signifi cant counter-seasonal surges through October. A strong drawdown in crude oil supplies in the last few weeks of October drew support and was the driver of the rallies.

Gasoline supplies eroded lower through much of October, putting the focus not as much on current demand, but on the need to gain access to product through the upcoming holiday season and well into 2017. Spot month RBOB gasoline contracts were trading at the highest level

since August 2015, with prices at $1.53 per gallon after moving 20 cents per gallon in the last month. The support seen in RBOB gasoline markets combined with demand-driven buying interest in the corn market helped to push ethanol futures to $1.60 per gallon, just 3 cents under summer highs set in June 2016. Seasonal pressure was expected to develop in ethanol and RBOB gasoline markets, although markets were expected to remain bullish given expected strong, long-term demand and slipping supplies.

Location

Oct 21, 2016

Sept 26, 2016

Oct 22, 2015

Superior, Neb.

2.68

2.39

3.38

Beatrice, Neb.

2.68

2.44

3.28

Sublette, Kan.

2.55

2.38

3.39

Salina, Kan.

2.65

2.49

3.33

Triangle, Texas

2.90

2.66

3.33

Gulf, Texas

3.85

3.61

4.53

SOURCE: SORGHUM SYNERGIES

Natural Gas Prices ($/MMBtu) Oct 24, 2016

Sept 24, 2016

Oct 24, 2015

NYMEX

2.831

3.057

2.062

NNG Ventura

2.810

3.015

2.265

Calif. Citygate

2.875

3.090

2.350

LOCATION

SOURCE: U.S. ENERGY SERVICES INC.

U.S. Ethanol Production (1,000 barrels) Per Day

Month

End Stocks

Aug 2016

1,022

31,669

21,042

Jul 2016

1,008

31,251

21,167

960

29,762

19,390

Aug 2015

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

DECEMBER 2016 | Ethanol Producer Magazine | 21

DISTILLED Ethanol News & Trends

EPA proposes rule updating RFS program On Oct. 3, the U.S. EPA released its proposed Renewable Enhancement and Growth Support rule, which aims to enhance the renewable fuel standard (RFS) program and related fuel regulations.

The proposal includes an updated regulatory structure to allow biofuels producers to partially process feedstock at one facility and convert the resulting material into fuels at another using existing pathways. It also updates fuel regulations to allow expanded availability of high-ethanol fuel blends for use in flex fuel vehicles (FFVs) and includes new feedstock approvals for cellulosic biofuels produced from short-rotation poplar and willow, cellulosic diesel produced from compressing of cellulosic feedstocks and petroleum, and renewable diesel and biodiesel produced from non-cellulosic portions of separated food waste.

In addition, the EPA said it is seeking comments on a variety of other issues related to proposed RFS regulation updates.

Blend wall for RFS RVOs Obligated fuel volume (billions) Gasoline % of obligated fuel Estimated obligated gasoline volume (billions) Estimated blend wall (billions)

2010

2011

2012

2013

153.19

169.4

166.59

172.98

0.71

0.69

0.70

0.70

108.17

117.71

116.51

121.55

10.82

11.77

11.65

12.15

SOURCE: BIOTECHNOLOGY INNOVATION ORGANIZATION

BIO finds no link in blend wall, RIN price spike The Biotechnology Innovation Organization recently released a white paper that analyzes U.S. EPA data and challenges the widely accepted assumption that the blend wall caused the 2013 spike in renewable identification number (RIN) prices.

“The success of the renewable fuel standard has become distorted by the myth that U.S. refiners have encountered an unbreakable blend wall,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section.

“Data recently made available by EPA demonstrates that obligated oil refiners and importers were able to meet RFS requirements through 2013—even building excess RINs—despite having reached the blend wall as early as 2010 and definitely surpassing it by 2012,” Erickson continued. “EPA’s delays in issuing 2014 and 2015 rules—which were in response to the assumed arrival of the blend wall—obscured this data until now.”

DISTILLED

Pacific Ethanol adds solar PV system to Madera plant Pacific Ethanol Inc. has announced it is installing a 5 MW photovoltaic (PV) power system designed and built by Borrego Solar Systems at its Madera, California, ethanol plant. The company financed $10 million of the expected $11 million investment through the CleanFund SolarPACE program.

The solar PV system is expected to reduce Pacific Ethanol’s operating costs and improve its carbon score by displacing more than 30 percent of the grid electricity currently used. Pacific Ethanol estimates the system will reduce the annual utility costs at the Madera facility by more than $1 million and drive premium pricing on ethanol produced at the plant due to improvements in its carbon-intensity core. The company also noted the system qualifies for the Energy Investment Tax Credit.

The new solar facility is expected to be located adjacent to the ethanol plant, situated on 137 acres in Madera County, California.

European fuel ethanol production (billion liters) 2013

2014

2015

4.03

4.77

4.54

SOURCE: EPURE

ePURE report analyzes 2015 ethanol data ePURE, the European renewable ethanol association, recently released its annual statistics report for 2016, finding direct GHG savings associated with European ethanol increased 8.5 percent last year, when compared to 2014. ePURE said European ethanol now achieves a 64 percent direct greenhouse gas (GHG) reduction when compared to fossil fuels, up from 59 percent in 2014.

Total ethanol production capacity of ePURE members increased from 6.8 bil-

lion liters (1.8 billion gallons) in 2014 to 6.9 billion liters in 2015. Total ethanol production capacity in the EU, including ePURE members and non-ePURE members, was estimated to be 8 billion liters in 2014, increasing to 8.1 billion liters last year.

Fuel ethanol production by ePURE members fell slightly last year, from 4.77 billion liters in 2014 to 4.54 billion liters in 2015.

DISTILLED NREL: Gas becomes stale before water uptake becomes a concern A recent study conducted by the U.S. Department of Energy’s National Renewable Energy Laboratory and commissioned by the Renewable Fuels Association has determined that the petroleum components of ethanolblended gasoline become degraded and unfit for use in an engine long before the ethanol portion takes up enough water to cause phase separation in the fuel tank.

As part of the study, NREL scientists stored gasoline-ethanol blends ranging from E0 (0 percent ethanol) to E85 (83 percent ethanol) in actual lawn mower fuel tanks over several months in a climate-controlled chamber meant to replicate hot, humid environments like Houston and Orlando. The samples were tested at regular intervals for evidence of gasoline weathering and water uptake.

In every case, the hydrocarbon components of the fuel became unfit for use in an engine before water uptake became a concern.

North Manchester, Il Portland, Il

Alexandrea, Il

Fostoria, OH Leipsic, OH Marion, OH

Poet installs CHP systems at 6 ethanol plants Poet has announced six of its biorefineries in Ohio and Indiana are installing new combined-heat-and-power (CHP) systems to reduce reliance on the electrical grid and recover waste energy for additional use at each plant. The systems will also reduce greenhouse gas emissions.

The CHP system will use steam in a turbine to generate electricity to run the plant and recover waste energy from the turbine to

meet additional energy demands. Ohio plants installing the CHP systems include Poet Biorefining – Fostoria, Poet Biorefining – Marion and Poet Biorefining – Leipsic. CHP systems are also being installed at the Indiana-based facilities of Poet Biorefining – Alexandria, Poet Biorefining – North Manchester and Poet Biorefining – Portland. The upgrades are expected to be complete next year.

0XOWLSO\ \RXU SURGXFWLYLW\

QDWXUDOO\

)L[H;LJŽ UH[\YHS OVW L_[YHJ[Z HYL [OL WLYMLJ[ MVYT\SH MVY OLHS[O` L[OHUVS WYVÄ [Z ;OL` ^VYR PU `V\Y MLYTLU[H[PVU Z`Z[LT [V YLWSHJL JOLTPJHS HU[PIPV[PJZ HUK LUOHUJL `LHZ[ WYVWHNH[PVU

,VR6WDEė PZ [OL UH[\YHS ^H` [V Lќ LJ[P]LS` JVU[YVS NYHT WVZP[P]L IHJ[LYPH ^OPSL LSPTPUH[PUN HU[PIPV[PJZ HUK OHYZO JOLTPJHSZ (UK `V\Y ++.Z ^PSS IL HU[PIPV[PJ MYLL

9LWD+RSė 6LOYHU `LHZ[ U\[YPLU[ LUOHUJLZ `LHZ[ WLYMVYTHUJL HUK ]P[HSP[` PUK\JPUN MHZ[LY MLYTLU[H[PVUZ HUK SHYNLY `PLSKZ 0[ HSS HKKZ \W [V OLHS[OPLY WYVÄ [Z 3L[ \Z KLTVUZ[YH[L OV^ )L[H;LJ»Z MLYTLU[H[PVU L_WLY[PZL HUK UH[\YHSS` KLYP]LK [LJOUVSVNPLZ JHU TH_PTPaL `V\Y WYVK\J[P]P[`řQDWXUDOO\

7R OHDUQ PRUH YLVLW ZZZ EWKS LQIR IROORZ XV RQ

4HJ(Y[O\Y )S]K :\P[L ;! -! >HZOPUN[VU +* ^^^ I[OW PUMV

24 | Ethanol Producer Magazine | DECEMBER 2016

DISTILLED

Platte Valley Distillers manufactures distillers grains pellets, cubes Nebraska-based Platte Valley Distillers is using a patented process to produce distillers grains cubes and pellets without the use of binders or additives. Rather, the corn oil in the distillers grain helps seal the products.

Tom Kruml, one of Platte Valley Distillers’ owners, said the process increases the density of distillers grains by 2.3 to 2.5 times, making the product easier to transport domestically and overseas when compared to bulk distillers grains.

Platte Valley Distillers primarily buys feedstock from Nebraska ethanol plants, and has the capacity to produce 30,000 to 35,000 tons of product annually. The cubes and pellets have a shelf life of up to three years and are marketed through Furst McNess.

Biobased products industry impacts in 2014 Direct

Spillover

Total

Employment (millions of jobs)

1.53

2.7

4.22

Value added (billions)

$127

$266

$393

SOURCE: USDA

Biobased products benefit the economy The USDA released a report in October showing that the biobased-products industry contributed $393 billion and 4.2 million jobs to America’s economy in 2014.

From 2013 to 2014, the sector created new 220,000 jobs and grew by $24 billion. The analysis was commissioned by the BioPreferred Program and is the second Economic Impact Analysis of the U.S. Biobased Products Industry released by the USDA. The seven major sectors featured in the report include agriculture and forestry, biorefining, biobased chemicals, enzymes, bioplastic bottles and packaging, forest

products, and textiles. The energy, livestock, food, feed, and pharmaceutical industries are not included in the USDA’s definition of biobased products and are not included in the report.

In addition to an industry overview, the report features case studies of NatureWorks, BASF, Eastman Chemical Co., DuPont, The Coca-Cola Co., Poet, Verdezyne, and Green Biologics. The report also features an overview of state policies, incentives, and statistics, along with a discussion of environmental benefits and a list of recommendations.

([SHULHQFH WKH GLIIHUHQFH 2QH FDOO 2QH VHUYLFH SURYLGHU 2QH H[SHULHQFH 6HUYLQJ DOO RI \RXU LQGXVWULDO FOHDQLQJ QHHGV

9LVLW +\GUR .OHDQ FRP

2XU VHUYLFHV LQFOXGH Ă„ 5HPRWH K\GUREODVWLQJ

Ă„ 6LHYH EHDG UHPRYDO VHSDUDWLRQ Ă„ 3RUWDEOH ZDVWH VWRUDJH DQG KDQGOLQJ DQG GLVSRVDO

Ă„ (QWLUH HQHUJ\ FHQWHU GLVWLOODWLRQ FOHDQLQJ Ă„ *UDLQ ELQ VLOR YDFXXP VHUYLFHV Ă„ 6WRUDJH WDQN VHUYLFHV LQWHULRU Ă„ 3URFHVV SLSH FOHDQLQJ DQG H[WHULRU WDQN FOHDQLQJ WDQN UHKDELOLWDWLRQ LQVXODWLRQ DQG Ă RDWLQJ URRI Ă„ 'U\ LFH EODVWLQJ OHJ SLQQLQJ

WR YLHZ RXU SURMHFW OLEUDU\ DQG OHDUQ PRUH DERXW WKH YDOXDEOH VHUYLFHV ZH KDYH WR RIIHU

Ă„ :DVWH GLVSRVDO VHUYLFHV Ă„ (3$ 26+$ DQG '27 FRPSOLDQW

_ 'HV 0RLQHV _ 0DQNDWR _ 5RJHUV _ 6LRX[ )DOOV _ :DWHUWRZQ DECEMBER 2016 | Ethanol Producer Magazine | 25

%5($.7+528*+ 7(&+12/2*< ' 0$; '(/,9(56

_+,*+(5 <,(/'6 _' 5,1V _*5($7(5 352),7 2YHUDOO (WKDQRO 3ODQW 3URGXFWLRQ &DQ ,QFUHDVH %\

,QFUHDVH *ULQG %\ +LJKHU <LHOGV )URP &RUQ )LEHU $W /RZHU &RVWV

',67,//(56 0$; ' 0 $ ; / / & F R P

$W HWKDQRO SODQWV DFURVV WKH FRXQWU\ WKHUH·V DQ HYROXWLRQ JRLQJ RQ 3URGXFHUV DUH GHPDQGLQJ PRUH WKDQ MXVW VWDQGDUG HWKDQRO SURGXFWLRQ IURP WKHLU IDFLOLWLHV 7KH\·UH GHPDQGLQJ ´EROW RQµ WHFKQRORJLHV WKDW DUH HDVLO\ DGGHG DQG VXLWDEOH IRU WKHLU SODQW ' 0$; GHOLYHUV WKDW FXWWLQJ HGJH WHFKQRORJ\ E\ FRQYHUWLQJ FRUQ ILEHU DQG UHVLGXDO VWDUFK LQ GLVWLOOHUV JUDLQV WR FHOOXORVLF HWKDQRO 7KLV LV D ELOOLRQ JDOORQ SHU \HDU PDUNHW DQG ZLWK ' 0$; HWKDQRO SURGXFHUV FDQ PD[LPL]H WKHLU \LHOG DQG SURILWV

/ ( $ 5 1 0 2 5 ( $ 7 ' 0 $ ; / / & F R P &217$&7 86 $7 RU P\DQFH\#G PD[OOF FRP

5HSRUW ([DFW &HOOXORVLF 2XWSXW WR 0D[LPL]H 5,16

CLOSE AT HAND: Chemicals at Tharaldson Ethanol are stored near the areas in which they will be used.

PHOTO: JOHN BROSE

28 | Ethanol Producer Magazine | DECEMBER 2016

CHEMICALS

GOOD

Chemistry Ethanol plants, chemical companies work together to improve profits and enhance industry.

By Ann Bailey

As the ethanol industry has evolved and grown, so, too, has the response of the chemical companies that provide the plants with the products they need to process the biofuel and coproducts.

“The ethanol industry is fairly young and still maturing, so they’re continuously learning new ways to make themselves more efficient and trying new ways to do things. There are a lot of opportunities in the ethanol industry,” says Todd Emslander, vice president of U.S. Water’s ethanol process technologies team.

“The continuous search for improvement is motivated by industry drivers such as regulatory compliance, risk mitigation, asset integrity, brand assurance, increased efficiency and profitability. Every plant wants to reduce variability in processing, so plants are interested when new products or services allow them to run more smoothly. Many of the chemicals used in these plants

DECEMBER 2016 | Ethanol Producer Magazine | 29

CHEMICALS

today help protect the equipment in place, allow the facilities to maintain their product quality and consistency for their customers,â&#x20AC;? Emslander says.

Changing to Meet Demand

One of the steps chemical companies that supply products to the ethanol industry have taken to accommodate their plant customers is to offer certain commonly used chemicals, such as sulfuric acid and enzyme amylase in bulk. Bulk handling is becoming increasingly available to the ethanol industry as it matures, says Paul Shepperd, Solenis biorefining applications project manager. â&#x20AC;&#x153;I view the evolution of the industry in the (United) States, particularly, is the steel was put on the ground, you learned how to use it to make ethanol, and, beyond that, you were looking for ways to take costs out and make your operation more efficient, and I think thatâ&#x20AC;&#x2122;s really an indication of the maturity of the industry at this point.

â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve seen this happen in the pulp and paper area, in the textile area, and many other industries, as you learn and understand what youâ&#x20AC;&#x2122;re going to be using in the longterm, folks look at the bulk purchase as a way to take costs out in terms of the tote bins,â&#x20AC;? Shepperd says. â&#x20AC;&#x153;You eliminate that cost.â&#x20AC;? Bulk handling can also aid the controls and tracking of chemicals that potentially become part of the feed coproduct. â&#x20AC;&#x153;Generally, it gives the plant a good handle on whatâ&#x20AC;&#x2122;s going on.â&#x20AC;? Another important reason that plant managers purchase chemicals in bulk is that storing the products in, and distributing them from, tanks reduces safety risks, Shepperd adds. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve got a lot of bulk tanks,â&#x20AC;? says Ryan Carter, general manager of Tharaldson Ethanol in Casselton, North Dakota While some products, such as dry urea, are not available in bulk, other ones, such as sulfamic acid, are. â&#x20AC;&#x153;If you can get it in bulk, you typically get a better price on that

Carter

â&#x20AC;&#x2DC;When thereâ&#x20AC;&#x2122;s a new chemical weâ&#x20AC;&#x2122;re working with, itâ&#x20AC;&#x2122;s part of my policy that the vender of that chemical comes in and supplies some training and all the data sheets that go with that chemical, so we understand what weâ&#x20AC;&#x2122;re dealing with.â&#x20AC;&#x2122; â&#x20AC;&#x201C;Ryan Carter, Tharaldson Ethanol

chemical, so we put bulk systems in our plant. Keeps it cleaner, keeps it more organized. Keeps it safer. Weâ&#x20AC;&#x2122;re trying to get operators from having to handle totes of chemicals as much as possible.â&#x20AC;?

Another improvement in process chemical handling is the use of better and more sophisticated automation and feed

an Option V and HAP Control VOC >>100 RTOâ&#x20AC;&#x2DC;s in the Ethanol Industry 1100% Reliability S Service & Support

For more details, call the Eisenmann Environmental Team at 815-477-5335 . www.eisenmann.us.com DGYHUWB B [ B =ROOB572BSULQW LQGG

30 | Ethanol Producer Magazine | DECEMBER 2016

BULK PRACTICE: Handling as much as possible in bulk is the goal at Tharaldson Ethanol, the U.S.'s sixth largest ethanol plant located west of Casselton, N.D. PHOTO: JOHN BROSE

control, says Andrew Ledlie, Solenis biorefining marketing manager. It used to be fairly common for pumps to be controlled manually or with a timer, he says, but now there is more use of data, the plant distributed control system (DCS) and in-line sensors to help improve and optimize the dos-

age of different chemicals. â&#x20AC;&#x153;This is an area where we have invested heavily in, to add value as a chemical technology provider.â&#x20AC;?

Chemical Innovations

When it comes to the chemicals that are used in ethanol plants, the most recent

innovations are those used in corn oil extraction, Carter says. â&#x20AC;&#x153;I would say that has been a big game changer in corn oil products for efficiencies out of the plant.â&#x20AC;? â&#x20AC;&#x153;The value for the corn oil itself is higher per pound than our DDGS, than the animal feed,â&#x20AC;? Shepperd says. Value

3URFHVV 7HFKQRORJLHV

6*7

6HOHFWLYH *ULQG 7HFKQRORJ\Â&#x152; ,QFUHDVH (WKDQRO DQG 2LO <LHOG Â&#x2021; (WKDQRO <LHOG ,QFUHDVH Â&#x2021; 2LO <LHOG ,QFUHDVH Â&#x2021; 'HSOR\HG DW ! 00*< RI 3URGXFWLRQ Â&#x2021; ´ ´ ´ 0LOO 2SWLRQV Â&#x2021; 7XUQ .H\ ,QVWDOODWLRQ $YDLODEOH

´ )4 *ULQG 0LOO

ZZZ )437HFK FRP 86 3DWHQW

HANDLING SYSTEMS: At Tharaldson, urea comes in bags, while other chemicals supplied in totes are fed through piping. Tharaldson Ethanol buys chemicals in bulk when possible because it is a safer and more cost-effective PHOTO: JOHN BROSE

www.ldcom.com 32 | Ethanol Producer Magazine | DECEMBER 2016

YOUR

TRUSTED PARTNER

SINCE

1851

GETTING THE RIGHT PRODUCT TO THE RIGHT LOCATION, AT THE RIGHT TIME

propositions like that drive innovation, particularly among equipment suppliers, to develop technologies for separating individual streams which then have the potential to be higher value. Ultimately, the value of coproducts will be determined by the market for them, Shepperd notes. If there is a viable market, “then the question becomes can you put the equipment in place and do you do need a chemistry to help make the equipment work?”

Rules and Regs

Another driver of innovations in the chemistries that ethanol plants use is regulations. For example, the Food and Drug Administration’s Food Safety and Modernization Act has required that ethanol plants change some of their testing and cleaning methods, Emslander says. New FDA rules suggest that sulfamic acid, which traditionally has been used as a clean-in-place chemical for equipment may not be acceptable for use in animal feed, so ethanol plants are looking at other chemicals they can use to replace it, he notes.

Producers like Tharaldsons are taking a close look at the new products.

“We’re in the process of running trials with approved chemicals to take over sulfamic acid,” Carter says. “We are working with some different companies right now.” Becoming FSMA compliant requires some work, but he believes it is well worth it. “There are some hoops we have to jump through,” he says. “But, I think in the long run, it will help us with a positive spin on what we do in the industry and what we do in the livestock feed market. We can say we’ve gone through all of these steps. This is clean. This is good. This is what FDA wants us to do.” Tharaldson plant em-

CHEMICALS

ployees are now undergoing training, Carter says, “to make sure that we’re certified to do in-house checks and balances and make sure we’re compliant with that.”

Chemical companies assist ethanol plants in complying with FSMA by offering alternative products, Emslander says.

For example, sulfuric acid, which is used in cleaning and adjusting pH in some ethanol plants, can be replaced with other chemicals. A U.S. Water product called pHyOUT, for example, mitigates some of the deposits that plants typically required sulfuric acid to treat, Emslander notes.

Safety Training

Training employees in the safe handling of chemicals is an integral part of the operation of Tharaldson Ethanol, Carter says. “These guys do multiple safety training every single month, so we’re always upto-date. When there’s a new chemical we’re working with, it’s part of my policy that the vender of that chemical comes in and supplies some training and all the data sheets that go with that chemical, so we understand what we’re dealing with. [Employees have] to understand the product before we allow them to work with it. The operations de-

partment works with the chemicals at first, but there are times when, obviously, the maintenance department has to go out and repair something. They’ve got to be familiar with the chemicals because when they are breaking into a flange or a pump, they’ve got to understand the hazards that could be there potentially.” The maintenance crew meets with the operations manager or shift lead, reviews pertinent information and suits up with safety gear, if needed.

On-site Assistance

Working with plant managers and employees to teach them how to properly use chemicals and other inputs is something all providers put high on the priority list. Solenis, for example, has an in-the-field workforce available for its plant customers, Ledlie says. One of the challenges some plant managers face is what he calls the “knowledge gap” or finding employees who are experienced and knowledgeable about handling chemicals. “We’re seeing more customers who want to partner, especially if they do have that knowledge gap.”

Emslander sees it as a win-win situation for chemical companies to work together with the plants they serve to improve the in-

dustry as a whole. “From what I have been seeing, the industry is trying to get better.

There are a lot of vendors just like us trying to help the industry improve,” he says. “In turn, we’re getting a lot of support from the industry as we learn and work together to continue to help the industry grow, become more efficient, and have a greater impact on the overall market” Emslander says. Right now, he adds, “Regulatory compliance is a key driver of innovations in the chemistries used by ethanol plants.”

Author: Ann Bailey Associate Editor, Ethanol Producer Magazine abailey@bbiinternational.com 701-738-4976

DECEMBER 2016 | Ethanol Producer Magazine | 33

CANADA

5% Provincial Mandate

5%

LCFS Goal

Transport Fuels to Lower Carbon Intensity by 10% from 2010 to 2020

Requires qualifying renewables reduce GHG by 25%

Carbon Levy on

Nonbiofuels

Jan 2017 - $20 per ton Jan 2018 - $30 per ton

7.5%

Manitoba

5%

Provincial Mandate

(Inspirational)

Provincial Mandate

Saskatchewan

Alberta

British Columbia

Provincial Mandate New RFS under consideration as part of climate change action plan, Goal of 5% GHG reduction in gasoline by 2020, likely to include lower carbon intensity requirements

Ontario 8.5% Provincial Mandate

SOURCE: CANADA BIOFUELS ANNUAL 2016, USDA FAS GAIN REPORT ILLUSTRATION: BBI INTERNATIONAL

CANADIAN PRODUCERS

Poised for Carbon Reduction Era

By Susanne Retka Schill

Optimism is growing among Canadian biofuel producers as the federal government is embracing carbon reduction strategies in its climate change action plan. “It’s a pretty exciting

time for us now,” says Jim Grey, board chair of Renewable Industries Canada (RICanada, formerly the Canadian Renewable Fuels Association). “I think it’s going to bode very well for our industry.”

In early October, Canadian Prime Minister Justin Trudeau announced all provinces will have to choose between implementing a carbon tax or a cap-and-trade system to address climate change.

The action plan includes targeted greenhouse gas (GHG) reductions throughout all emitting sectors,

Ethanol in Canada Federal Mandate Provin

5%

cial M

andat Partici e pant in Weste Climat rn e cap-an Initiative’s reduct d-trade GH G io from 1 n target of 20% 990 le vels by 2020

Quebec

Renewable Content 5% in gasoline 2% in diesel Needed to fill federal mandate: 2.3 billion liters Ethanol production capacity: 1.775 billion liters Estimated 2016 imports: 1 billion liters

Ethanol Production 2015-1.725 billion liters 2015-1.75 billion liters (up 1.5%)

Feedstocks 77% corn 23% wheat

including transportation, Grey says. “Obviously, they’re promoting the use of electric vehicles and public transportation, but clearly they understand that blending more ethanol or biodiesel into the fuel pool will have an immediate positive impact on the greenhouse gas reduction targets.” Grey, who is CEO of Ontario ethanol producer IGPC Ethanol Inc., reports that his province will be blending up to 4 percent biodiesel in 2017 and the industry is asking for the ethanol mandate to be raised from 5 to 10 percent, coupled with a GHG reduction component, such as a low carbon fuel standard.

It’s not that there aren’t biofuel critics in Canada, but Grey reports they are definitely not as loud as those in the U.S. Early in Octo-

ber, RICanada criticized a report from the Ecofiscal Commission that called for a rethinking of Canadian biofuels policies. In its response, RICanada described the commission’s report as skewed and flawed, pointing out Canada’s 26 biofuels production facilities (about half ethanol producers) are great supporters and users of emerging low-carbon technology. “If anything, now is the time to double-down on the success of renewable fuels mandates, not abandon the single largest guaranteed source of emissions reductions from our transportation sector.”

Some of the arguments echo those heard south of the 49th parallel. RICanada criticized Ecofiscal’s finding that the economic costs of the renewable fuel mandates exceed benefits

by pointing out the commission used only one report from 2010. “Farm income has actually tripled since biofuels became a significant part of the Candian economy,” RICanada said.

Ecofiscal recommended moving away from subsidies, but RICanada pointed out federal support for most biofuels ended in March 2015. Furthermore, Ecofiscal claimed the effect of biofuels on improving air pollution is negligible when in Ontario, the province’s ethanol growth fund reported a reduction in annual smog days from 15 to 20 per year to two or three.

IGPC

Grey’s company, for one, is getting ready for higher mandates. In October, the board DECEMBER 2016 | Ethanol Producer Magazine | 35

Canadian Ethanol by the Numbers 2010

2011

2012

2013

2014

2015

1,445

1,700

1,695

1,730

1,730

11

450

803

1,079

1,436

2,151

2,495

15

15

1,429

2016

2017

(estimate)

(forecast)

1,725

1,750

1,750

1,143

1,094

1,000

1,000

2,808

2,873

2,819

2,750

2,750

14

15

15

15

14

14

1,818

1,815

1,760

1,800

1,800

1,775

1,774

101

94

93

98

96

96

99

99

DDGS

980

1,220

1,075

1,100

1,100

1,100

1,100

1,100

WDG

575

550

635

650

650

650

650

650

2

2

3

6

6

6

6

6

2,800

3,201

3,285

3,200

3,250

3,375

3,250

3,250

770

970

850

1,000

1,000

1,000

950

1,000

(million liters) Production Fuel Imports Fuel Consumption No. plants Nameplate capacity Capacity Use (%)

Coproducts (1,000 metric ton)

Corn Oil

Feedstock Use (1,000 metric ton) Corn Wheat

SOURCE: CANADA BIOFUELS ANNUAL 2016, USDA FAS GAIN REPORT

of IGPC Ethanol Inc. approved the doubling of the Aylmer, Ontario, plant’s capacity from 200 MMly to 400. “If all goes well, we should put shovels in the ground in April and start up in October 2018,” Grey says. The expansion will be highly integrated into the existing plant, he adds, which makes it a more complex engineering project than just building a second plant alongside the existing one. Engineering and permitting activities have begun, and additional capital is being raised.

The expansion plans come on the heels of two major upgrades. IGPC has installed ICM’s FST technology, which removes the fiber at the front to increase throughput, potentially becoming the feedstock for cellulosic ethanol production. In that upgrade, IGPC boosted its capacity from 170 MMly to 200 MMly. It also installed generating capacity, adding a steam turbine generator to produce roughly 1 MW electric power from existing excess steam energy, along with adding a natural gas fired internal combustion generator to produce 3 MW power. “Ontario has very expensive electricity,” Grey says. Becoming selfsufficient in electric power has brought the plant’s power costs in line with U.S. Midwest producers. The planned expansion will include expanded generating capacity as well.

GreenField

IGPC isn’t the only producer making big investments. Canada’s largest ethanol producer, GreenField Specialty Alcohols, has several innovative projects unfolding at its four facilities. The company is among Canada’s oldest 36 | Ethanol Producer Magazine | DECEMBER 2016

producers, starting out with a single plant in Tiverton, Ontario, in operation since 1989.

In 1998, it opened its first large-scale plant in Chatham, Ontario, and a third plant in Varennes, Quebec, in 2007. Its largest plant, a 254 MMly corn ethanol plant in Johnstown, Ontario, came online, in 2008, along the St. Lawrence Seaway.

While GreenField’s ethanol production is still primarily for fuel, its 2013 name change to GreenField Specialty Alcohols signaled a shift in the business model for the company.

Today, 175 MMly of its total 675 MMly capacity is industrial ethanol. Not only is a big part of its ethanol production distilled to industrial specifications, the company has developed its own packaging and distribution network for its commercial alcohol that is used in more than 4,500 consumer and industrial products. In Canada, the company operates packaging facilities for commercial alcohols at Boucherville, Quebec, and Brampton, Ontario. In the U.S., GreenField’s Pharmco-AAPER division owns and operates facilities in Shelbyville, Kentucky, and Brookfield, Connecticut, manufacturing and packaging a wide range of pure and denatured ethanol products. Pharmco-AAAPER also has two warehouses in California, along with warehouses in North Carolina, Texas and Washington.

With a solid distribution network and expanding export sales beyond North America, GreenField boosted its industrial ethanol capacity with a recently completed expansion of its industrial-grade distillation capacity in Chatham, increasing the fuel-industrial split from

50-50 to 25-75, for an industrial capacity of 42 MMly. Along with the industrial-grade expansion, GreenField also invested in a second cogen unit at the plant to begin generating all of the plant’s electric demand, feeding the surplus into the grid.

Chatham’s carbon-reduction strategy goes far beyond cogeneration and even the capturing and purification of carbon dioxide

by Praxair. In the past year, the ethanol plant has begun sending its surplus carbon dioxide from fermentation to greenhouses next door.

GreenFields’s vice president of business development Barry Wortzman reports work is nearly completed on the system that will deliver the ethanol plant’s waste heat off the stack to help heat the Truly Green Farms greenhouses.

The company has other innovative projects in development. GreenField and Enerkem announced a joint venture to build a 10 MMly cellulosic plant at Varennes, which will use municipal solid waste as the feedstock for Enerkem’s thermochemical conversion process. GreenField also is working on other integrated second-generation technologies, Wortzman adds, that the company expects to roll out in the new year.

Other Producers

GreenField is the largest, but not the only Canadian ethanol company with unique business models. In Lanigan, Saskatchewan, Pound-Maker Agventures was established in 1970 by 50 area farmers looking for alternative markets for their grain, who built a 2,500-head feedlot. A 1991 expansion to 10,000 head in-

CANADA

cluded a 10 MMly ethanol plant. Today, the company feeds out 26,000 head of cattle and produces 14 MMly of ethanol.

Permolex International Ltd. at Red Deer, Alberta, found a different mix to prosper from, since its ethanol plant was completed in 1998. It integrates three traditionally independent manufacturing processes—flour milling, gluten extraction and ethanol production—that allows the byproducts of one process to be utilized as feedstock for the next, using about 110,000 tons of wheat a year.

The oil industry’s share of ethanol capacity is slightly higher in Canada than in the U.S. with Husky Energy and Suncor’s combined capacities representing 19 percent of the country’s total while Valero, Flint Hills and Sunoco’s combined capacities are 14 percent of the U.S. total ethanol capacity.

Both large integrated oil companies, Suncor operates the country’s largest ethanol plant, the 400 MMly St. Clair Ethanol facility in Mooretown, Ontario. Albertaheadquartered Husky Energy operates two, 130 MMly ethanol plants in western Canada at Lloydminster, Saskatchewan, and Minnedosa, Manitoba. The Manitoba plant primarily uses corn along with some wheat, while the Saskatchewan plant primarily uses wheat. At Lloydminster, the ethanol plant is integrated with Husky’s heavy oil upgrader and an on-site cogeneration power facility to increase energy efficiency and reduce emission. In 2012, Husky began capturing carbon dioxide at Lloydminster to reduce emissions and aid in enhanced oil recovery.

Other active ethanol producers include Kawartha Ethanol Inc. operating an 80 MMly corn ethanol plant in Havelock, Ontario. Two Saskatchewan producers use wheat: North West Bio-Energy Ltd., a 25 MMly plant in Unity and Terra Grain Fuels Inc., a 150 MMly plant in Belle Plaine.

Canada also is represented by second-generation biofuel producers Enerkem, Iogen Corp. and Woodland Biofuels all developing cellulosic technologies.

Author: Susanne Retka Schill Managing Editor, Ethanol Producer Magazine sretkaschill@bbiinternational.com 701-738-4922

icminc.com/epm

NEW BLENDSTOCK: Sylvatex's new diesel fuel blendstock, MicroX, promises to reduce emissions and provide oxygenate benefits.

PHOTO: SYLVATEX

38 | Ethanol Producer Magazine | DECEMBER 2016

TECHNOLOGY

NANOSCALE

Blending A California company develops nanotechnology combining ethanol with corn oil for a new blendstock that reduces diesel emissions.

By Debbie Sniderman

One of the biggest technology upgrades for the ethanol industry in the past decade has been corn oil extraction. If Virginia Klausmeier and the team she leads at Sylvatex

have their way, the next will be upgrading that corn oil, combined with first-generation ethanol, into a new advanced biofuel, applying ethanolâ&#x20AC;&#x2122;s well-known oxygenate benefits to improve emissions in diesel fuels.

The process for creating low-emission diesel fuels is similar to gasoline: Blend oxygenates with diesel fuel to reduce the overall carbon content and emissions of harmful substances released into the air. Klausmeier is CEO of San Francisco-based Sylvatex Inc., a company founded by her father, who developed a process to create an alternative diesel fuel that blends ethanol with free fatty acids (FFAs) to produce a low-emission fuel that not only reduces NOx (nitrogen oxides) and particulate emissions when blended with ultra-low sulfur diesel and B100, but does so without affecting engine performance.

DECEMBER 2016 | Ethanol Producer Magazine | 39

BLENDSTOCK PROCESS ILLUSTRATION: SYLVATEX

Optimize your Evaporator System’s Performance Increase production time with our comprehensive evaporator management solution

More effective cleaning

More robust deposit control

• Shortens cleaning duration • Extends time between cleanings • Reduces / eliminates the need for Hydroblasting

• Tailors chemistry to the type of deposit • Inhibits deposits more effectively • Extends time between cleanings

Call Jeff Prochaska today at 224-828-5326 to find out more.

New evaporator model • Actionable data that helps determine exactly when and what you need to clean

3 Bottom line: Extended run time between cleanings increases profitability

QDOFR HFRODE FRP 1DOFR :DWHU DQG WKH ORJR DUH 7UDGHPDUNV RI (FRODE 86$ ,QF (FRODE 86$ ,QF $OO 5LJKWV 5HVHUYHG

40 | Ethanol Producer Magazine | DECEMBER 2016

Sylvatex’ process takes ethanol and encapsulates it in a nanosized particle that enables suspension in a mid-distillate product. It creates an alternative fuel blend that is Klausmeier not a mainstream renewable diesel nor biodiesel. “Using ethanol as the oxygenate in this alternative fuel blend allows for increased emission reductions. It also allows there to be a secondary use for a product that is available in large supply.

Opening new markets for ethanol producers can increase energy security, use more local resources, and upgrade diesel fuel for the users,” Klausmeier says.

Nanostructure Key

The sizing aspect of this proprietary blending technology is what creates stability in the end product and gives it functionality. Nanoparticles behave as a small system and act as a whole unit with respect to its transport and properties, Klausmeier explains. “Sylvatex is a nanotechnology company. We know how to create nanoparticle applications that are important for industry, and understand how nanotechnology can be used with biomass as key inputs, which is a novel approach compared to other companies.”

The resulting end product, MicroX, is a blendstock that can be considered an additive, a blended fuel or a drop-in fuel that can be blended into gasoline and any diesel fuel, biodiesel or other middle-distillate fuels. “It is not used at 100 percent, but is blended. Successful demonstrations have been completed at 15 to 20 percent and more than 40 percent, but the current focus is to blend at 10 percent for use in diesel engines,” she says. “It also looks like a drop-in because it blends with existing diesel fuels and can go into current diesel engines as well as advanced diesel engines.

Some consider it an additive, but the U.S. EPA reserves that terminology for substances that are blended with small percent-

TECHNOLOGY ages less than 1 percent, so Sylvatex calls it a blended fuel.”

“It’s important to realize that ethanol is not blended directly into diesel fuel, it’s not stable,” she continues. “It’s separated out and encapsulated into a stable nanostructure. These nanoparticles are so small that they remain intact as they go through the fuel system until combustion. They’re not filtered out, and fuel that has these particles behaves the same until they combust.

The nanostructure is an important part to creating a low-carbon fuel overall and lower emissions at the tailpipe.”

As produced, the blendstock is very dense. In order to measure the size, distribution and structure of the nanoparticles created, it has to be diluted in a base solution. The National Institute of Standards and Technology performed an optical analysis of MicroX that was blended into diesel fuel, showing the process produces 10 micron spherical particles. Other techniques that blend macrosized molecules or bubbles into diesel fuels cause problems because the molecules are so large that they are trapped when the fuel passes through fuel filters, which typically screen out particles that are larger than around 500 microns. Macrosized molecules are 100,000 times larger than nanoparticles, which is why nanoparticles have no problems passing through the system.

NANOPARTICLES: The Sylvatex proprietary blending process combines free fatty acids from corn oil with ethanol to produce nanoparticles that have a reverse micelle structure and diameters around 10 microns.

ILLUSTRATION: SYLVATEX

Easy Integration

Producing MicroX blendstock involves a simple process with two key inputs, a blending tool and one output. The ethanol and FFA inputs, both renewable, are combined in the microblend technology utilizing trace amounts of proprietary components that stimulate the reactions.

In the past year, Sylvatex and its partners developed a way to use FFAs from corn oil, which over the past five years has become a commodity coproduct of ethanol production. The eventual goal and advantage of colocation is to obtain both inputs from the ethanol facility. “A 50 million-gallon ethanol facility produces about 3 million gallons of corn oil, which after being hydrolyzed and treated, could be used directly as an FFA input,” Klausmeier DECEMBER 2016 | Ethanol Producer Magazine | 41

TECHNOLOGY

ILLUSTRATION: SYLVATEX

MEET PREPARED

OTHERWISE KNOWN AS THE

8YLTP\T <YHPUPUN +LU[LY Whether it’s a routine or emergency shutdown, you want a team that knows what they’re doing. That’s why we have our own state-of-the-art training center that prepares employees to provide the highest quality cleaning solutions as safely and quickly as possible. When you work with Premium, you work with professionals who are trained to live up to our name.

• • • • • •

Confined Space Rescue Dry Ice Blasting Hydroblasting Hydro Reclamation Industrial Vacuuming Sandblasting

• • • •

Slurry Blasting Sponge Blasting Surface Chemical Cleaning Tube Bundle and Heat Exchanger Cleaning

(888) 5 4 9 1 86 9 . PHOTO: ZACH KOBRINKSY

Hibbing, MN • Dubuque, IA • Tracy, MN

42 | Ethanol Producer Magazine | DECEMBER 2016

says. “By being located on-site, it is possible that both key inputs can come from the ethanol production’s back end.”

Sylvatex has demonstrated the process with ethanol from a wide range of feedstocks and even FFAs that aren’t yet well-optimized for biofuel reactions. To produce the blendstock, low-cost, lowmaintenance, splash-blending equipment mixes the liquid inputs together in a twostep chemical reaction at room temperature in Sylvatex’s proprietary blending module. “Being low cost and having a small footprint are two strong reasons to be located on-site at ethanol production facilities where space is at a premium,” she says. “It also creates a new value pathway for ethanol producers who use ethanol and corn oil and can take advantage of existing delivery logistics.” Blending modules can be added into whatever modular space is desired for producing clean diesel fuel, making it easy to manage, permit, control and scale up.

Not only does the process work with any type of ethanol, it also works with most nonedible corn oils from any extraction processes, both front end or after distillation. Currently, Valicor is supplying the corn oil coproduct for the colocation pilot testing. “We’ve evaluated a number of suppliers with multiple types of extraction systems and found them all to be suitable during small-scale piloting at the Advanced Biofuels Demonstration Facility in Berkeley and through grants from the USDA,” Klausmeier says.

Industry Potential

“Even though the ethanol industry is well-developed, there is an opportunity for first- and second-generation ethanol manufacturers to expand into new markets with an advanced diesel fuel. The diesel fuel base is extremely large, so this could be game-changing for ethanol producers. Like corn oil was in the past, this modular colocation approach is the next step for ethanol producers to create new clean diesel fuel products that can upgrade the industry so it can continue to grow and thrive,” she says.

%LRIXHOV 7UDLQLQJ 2QOLQH

ZZZ VLF HGX HQHUJ\

COLOCATERS: The Sylvatex team and ethanol partners consider good locations for collocating a Sylvatex blending module to mix ethanol and treated corn oil.

PHOTO: SYLVATEX

Klausmeier believes using green nanoparticles for low-carbon diesel fuel will be a $1.8 trillion market that can meet the needs of the petroleum industry, end users and biofeedstock providers and provide many benefits. Ethanol producers creating low-carbon fuels can take advantage of low-carbon credits. End users who use low-emission diesel and marine fuels can extend the lives of their fleets and access emission-controlled areas quicker. Feedstock providers can diversify and enter new growing markets that value carbon. â&#x20AC;&#x153;Our process produces a very low-cost product and is scalable. Ethanol can come from any feedstock, so as ethanol producers evolve over time, they can continuously satisfy the diesel fuel market as they grow,â&#x20AC;? she says.

Sylvatex is working with biomass leaders on the West Coast and commercial ethanol producers to prove technical and commercial feasibility. â&#x20AC;&#x153;We are starting small, getting the process moving and obtaining accreditation before scaling up.

We expect our colocation model will begin to produce fuel on-site in the pilot stage and generate modest revenue at our large ethanol producer partner in early 2018,â&#x20AC;? she says.

With testing labs housed at Lawrence Berkley Laboratories and collaborations

across the U.S., including the USDA, NIST and the National Renewable Energy Laboratory, Sylvatex is developing technical specifications, evaluating fuel properties and validating emissions and other mandated criteria. It has received funding from state and federal sources and grants as well as private angel investors and family funding.

Sylvatex is also working with a number of thought leaders to develop standards and pathways for approval at the state and federal level, and has been successful in California so far, Klausmeier says. It is also performing demonstrations of emissionreducing biofuels on the end-user side, with engineering partners and end-user support in industries such as mining.

Klausmeier welcomes working with ethanol producers who may be interested in colocation. She hopes that combining Sylvatexâ&#x20AC;&#x2122;s new technology with the innovative business structure of working inside existing ethanol producersâ&#x20AC;&#x2122; infrastructures will create low-cost fuels that reduce pollution and have global impact.

Author: Debbie Sniderman CEO, VI Ventures LLC info@vivllc.com

&ROOHJH &UHGLW &RPSHWHQF\ DOLJQHG &RXUVHV &HUWLĂ&#x20AC;FDWHV 2QOLQH

Â&#x2021; %LRIXHOV 7HFKQRORJ\ 6XVWDLQDELOLW\

Â&#x2021; %LRIXHOV )DVW 7UDFN

Â&#x2021; %LRHQHUJ\ 3URGXFWLRQ

$ $ 6 'HJUHH

Â&#x2021; %LRIXHOV 3URGXFWLRQ

6XVWDLQDELOLW\

7KLV ZRUNIRUFH VROXWLRQ ZDV IXQGHG E\ D JUDQW DZDUGHG E\ WKH 8 6 'HSDUWPHQW RI /DERUÂśV (PSOR\PHQW DQG 7UDLQLQJ $GPLQLVWUDWLRQ 7KH VROXWLRQ ZDV FUHDWHG E\ WKH JUDQWHH DQG GRHV QRW QHFHVVDULO\ UHĂ&#x20AC;HFW WKH RIÂż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

DECEMBER 2016 | Ethanol Producer Magazine | 43

OPTIONS EXPAND

FOR EFFECTIVE BACTERIAL CONTROL IN ETHANOL PRODUCTION Cleanliness comes first, but then plants must evaluate multiple approaches to remain free of infections.

By Scott Lewis

Maximizing ethanol production is the top priority for fuel ethanol producers. It is, however, a

process that requires tremendous effort by well-trained, experienced operators who understand both the many variables that affect production and the many new production-enhancing technologies on the market.

Given the importance of maintaining high production levels, the last thing ethanol plant managers want is bacterial

infections compromising their production process and decreasing yields. In a typical corn-to-ethanol, dry-grind process, corn is converted to sugar, which is consumed by the yeast to produce ethanol.

Unfortunately, yeast are not the only hungry organisms looking for a sugar fix.

Any bacteria present will also consume the sugars. Because they typically grow at rates much faster than yeast, a small number of bacteria will quickly multiply and outcom-

pete the yeast for vital nutrients. As a result, there is less sugar to produce alcohol. Additionally, the byproducts secreted by the bacteria, lactic and acetic acids, act as stressors that are harmful to the yeast.

Bacterial problems can have expensive consequences. For example, in a 100 MMgy fuel ethanol plant, a moderate level of bacterial contamination can lead to an annual revenue loss of $4.5 million at current ethanol prices. Excessive bacteria can cost as

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

ANTIMICROBIALS much as $190,000 if a single fermentor is entirely lost.

Unfortunately, fuel ethanol plants were not designed to be sterile environments, thus eliminating bacterial infections is cost prohibitive, if not impossible. Not only are bacteria introduced with the incoming corn, but they also find their way into the fermentors from other sources, such as cooling tower water, which may be added to the cook water. While the raw water might be fine, any time a tank or yeast propagator is filled with water and additives, there is the potential to introduce bacteria. â&#x20AC;&#x192;

First Line of Defense

Good plant hygiene is the first line of defense against bacteria. Plant managers who keep their plants as clean as possible will reduce places for bacteria to hide, thrive, and then be transferred to the production process via surface contacts or simply in airborne dust.

A robust clean-in-place (CIP) program to remove deposits, such as beer stone, or organic fouling, such as scum, which form at the liquid-air interface in tanks, is critical.

Cleaning piping, heat exchangers and tank surfaces to bare metal eliminates places where bacteria persist before rapidly infecting the production process when the next tank is filled. This is very important because the fewer bacteria in the propagator at the start of propagation, the greater the head start for the yeast.

The quality of the water used in the ethanol production process is also very important in controlling bacteria. Reuse of wastewater streams, such as cooling tower blowdown or scrubber water, benefits the environment, including the water table on which the local community depends. However, while reuse of wastewater is the right thing to do from an environmental perspective, it may not be right from a production perspective, because wastewater streams can be a significant source of bacteria. Making the right choice regarding where and how best to reuse water can be difficult given the numerous variables. Technology providers, like Solenis, are an excellent source of information that can help facilitate this decision-making process.

These plant hygiene practices play a critical role in maximizing ethanol yields,

ETHANOL CONCENTRATION AT THE END OF FERMENTATION: Each point represents one fermentation with antibiotics (black circles) or the Solenis fermentation aid program (blue squares).

Solid lines represent the average ethanol and dotted lines represent the upper and lower control limits (average plus or minus two standard deviations).

but may still not be sufficient to control a bacterial infection. As a result, a traditional course of action for ethanol plants looking to maximize yields is a bacterial control strategy based on antibiotics.

Antibiotic-Based Treatments

Many plant managers opt for treatment programs using antibiotics that have a solid track record in reducing both the number of bacteria present in the fermentation process and the bacteriaâ&#x20AC;&#x2122;s ability to grow.

Among the benefits of these programs are that they are easily incorporated into the production process and they effectively arrest bacterial growth, reducing the risk of a costly problem. While there are many positives associated with antibiotic programs, they are not without their drawbacks. Some of these issues have received attention from the media, consumers and corporate America.

The highest-profile concern is over the presence of antibiotics in meats and poultry from animals fed with distillers grains

sourced from fuel ethanol plants where antibiotics are used to control bacteria in fermentation. Whether these antibiotics find their way into the human food chain or can potentially confer antibiotic resistance to strains of bacteria in livestock and poultry is widely debated in scientific circles. Nonetheless, these matters are understandably concerning to consumers, consumer advocates and companies like Subway, McDonaldâ&#x20AC;&#x2122;s and Walmart.

Lastly, managers of some fuel ethanol plants have expressed concerns about potential time-consuming documentation of antibiotics use that will likely be required under increasingly stringent government regulations, such as the Food Safety Modernization Act.

Antibiotic-Free Alternatives

In an effort to address these drawbacks, there are a growing number of antibiotic-free additives for controlling bacterial infections available in the marketplace.

One choice for plant managers is a novel

DECEMBER 2016 | Ethanol Producer Magazine | 45

ANTIMICROBIALS

LACTIC ACID CONCENTRATION AT THE END OF FERMENTATION: Each point represents one fermentation with antibiotics (black circles) or the Solenis fermentation aid program (blue squares). Solid lines represent the average lactic acid concentrations and the dotted line on top represents the upper control limit.

The lower control limits for lactic acid, as well as acetic acid concentrations, were below the detectable limit for all fermentations.

Some chemical companies focus on this

technology from Solenis that uses a patented, synergistic combination of iso-alpha acids derived from hops and organic acids to control bacterial infections. These products, which are marketed as Solenis fermentation aids, have proven to be an economical way to eliminate antibiotics from the ethanol production process and ease the concerns of consumers and other important influencers in the marketplace about antibiotics in the food chain.

Another advantage of this technology over other antibiotic alternatives is that, like antibiotics, it exhibits differential toxicity.

This means that it will negatively impact unwanted organisms, such as Lactobacilli, but will not harm yeast. The fermentation aids are also cost-effective, safe to handle, sustainable, biodegradable, designated as generally regarded as safe (GRAS) and Kosher certified.

An important differentiator for the fermentation aids is that each product is a liquid and can easily be dosed automatically.

As part of its offering, Solenis provides its customers with an automatic feed system

or that

Buckman takes a wider view.

Some chemical companies focus only on process.

Some focus solely on water treatment. Buckman takes a comprehensive approach and looks at the bigger picture — return on investment and environment.

We look at every aspect of your plant’s operation,

© 2014 Buckman Laboratories International, Inc. All rights reserved.

46 | Ethanol Producer Magazine | DECEMBER 2016

tailoring chemistries to boost production and increase profitability — from evaporator efficiency to corn oil recovery to water treatment issues. To find out more or to schedule a system audit, contact your Buckman representative or email ethanol@buckman.com.

.

ANTIMICROBIALS to eliminate manual product dosing and operator error, enable plant operators to achieve more precise control of the chemical feed, help them optimize the results of the program over time, and reduce health and safety risks in the facility.

In-Plant Test Results

The efficacy of Solenis’ fermentation aids has been demonstrated recently in trials conducted at a new customer’s 55 MMgy corn ethanol plant in the U.S. Corn Belt.

The goal of the trials was to confirm for the customer that the antibiotic-free fermentation aid would control bacterial infections and deliver equal or better plant performance at no additional cost.

The first step in the process was a detailed audit of the plant’s ethanol manufacturing process and an evaluation of its historical performance data. Among the things reviewed were details of the plant’s fermentation process, the additives being used, yeast counts and viabilities and concentration profiles of ethanol, sugars, lactic and acetic acid and glycerol. The results of

these assessments indicated that the fermentation aid program would be a good fit for this customer.

The second step was for Solenis field and technical staff to work with the plant personnel to carefully develop a trial plan that would not negatively impact the plant’s production. Elements of the plan included a process for gradually converting from antibiotics to the fermentation aid program and contingency plans if production performance began to slip.

The final step was for the Solenis technical team to be on-site in order to work closely with the plant personnel during the trial to monitor and evaluate the program’s performance. Over the course of the trial, ethanol production was maintained (see graph on page 45) and DP3 and sugar profiles were not negatively impacted. The concentrations of bacterial byproducts, lactic and acetic acids, which are common indicators of bacterial infection, did not increase (see graph on page 46). Glycerol concentration, an indicator of yeast stress, did not increase either. Collectively, these data con-

firmed production levels using the fermentation aids were equal to or slightly better than the plant’s previous performance.

The test protocol called for a six- to eight-week trial but, based on the very positive initial results, the customer chose to fully convert to the Solenis fermentation aid program in just two weeks. It was clear that the program was a viable way to costeffectively eliminate the use of antibiotics in the ethanol production process without impacting productivity, easing marketplace concerns regarding antibiotics in the distillers grains generated at the plant.

Author: Scott Lewis Biorefining R&D Scientist, Solenis 866-337-1533 srlewis@solenis.com Contributing authors: Andrew Ledlie Biorefining Marketing Manager, Solenis; Paul Shepperd, Biorefining Applications Project Manager, Solenis;

DECEMBER 2016 | Ethanol Producer Magazine | 47

BUSINESS MATTERS

Game Plan for Capital Project Financing Discussions with Lenders

By Jason Johnson

As the ethanol industry has matured and paid off significant amounts of debt in the past few years, it is becoming more common for plant managers to consider expansions or upgrades to enhance efficiency. Many consider new technologies for processing

in an expansion where more working capital may be required. Working capital in the 15- to 20-cents-per-gallon range generally is considered healthy. Higher working capital levels, however, can mitigate the additional risk a capital investment project may bring. Expect your lender to have covenants around this financial metric. Striking the right balance among asset investment, a strong working capital position and distributions back to investors is the biggest challenge as new projects alternative, value-added products from corn. Some older plants simply are discussed. need to reinvest in the plant, bringing it up to state-of-the-art.

While the historic and projected financials of the plant are central The lender’s point of view of such projects is not all that different to a lender’s credit decision, equally important is the strength of a from the evaluation by the management team and board of directors. It management team. Strong economic periods can hide management starts with projected return on investment (ROI). What are the costs? deficiencies, but good performance during challenging times highlights What are the potential returns and how might additional gallons affect strong management teams. Not all adverse factors can be controlled, the local corn basis? Unlike the investor, the lender generally only has but strong management positions the facility to better navigate them. downside risk to the stated interest rate on the loan and no upside in the An ethanol plant’s debt level is usually a combination of historic form of greater returns, thus the lender’s tolerance for risk is generally and projected cash flows, working capital and management strength. not as great as equity investors.

The level of debt generally ranges between 50 and 65 cents per gallon, When discussing a capital infrastructure project with a lender, depending on the project. As it relates to expansion, there is always be prepared to discuss the short- and long-term benefits and risks. the discussion on whether the industry needs more gallons. This is Prepare a three- to five-year projection with the key assumptions used no different from many other commodity-based businesses and is a in the analysis. Consider stress testing those assumptions, as the lender function of supply and demand. A business expansion must include definitely will be doing so in its evaluation. Consider the ROI under plans on how to survive an oversupplied market. This correlates with different scenarios and how it makes the plant more competitive in the being an efficient producer with working capital to absorb acceptable long run. losses and a strong management team that can adapt to changes to the The goal of most projects is to drive down costs to be more market. competitive or to capture higher-margin revenue products. Thus, Having a good lender relationship establishes management’s understanding the plant’s performance drivers and how the facility ranks credibility and generally creates a more open dialog as capital projects on the performance curve are important, typically stated as EBITDA are discussed. Lenders do not like surprises, so keep them informed (earnings before income taxes, depreciation and amortization) per and let them know what the business sees as potential risks and why the gallon. History has shown that the most efficient gallons will have less business is comfortable with the risk. Cultivating this relationship on volatility to earnings during down cycles. an ongoing basis will position you for a more productive, honest and When considering a new technology with new market opportunities, beneficial discussion when the time comes for project financing. expect pushback for expenditures with the serial number “001.” While we have seen great successes, such as corn oil extraction, not all projects Author: Jason Johnson experience universal success, nor does one size fit all. For instance, Vice President, Team Leader, AgStar Financial Services there may be geographical differences that impact success. Another 952-997-1278 Jason.Johnson@agstar.com example: Cellulosic production is still an evolving path. Often, it’s better to be patient and ride out the infancy phase of new technology, so initial bugs can be corrected and performance data accumulated.

As with all commodity-related industries, the project’s impact on the business’s working capital will be a key discussion point, especially

48 | Ethanol Producer Magazine | DECEMBER 2016

22nd Annual

BUILDING PARTNERSHIPS, GROWING MARKETS February 20–22 • 2017

WHO ATTENDS

AT RFA’S NEC 2017, YOU’LL ACCESS:

Ethanol producers and marketers Future producers Finance/Banking/Traders Risk Management Gasoline marketers Transportation Industry Policymakers and government Ethanol Industry Suppliers Energy and Environment Officials Agricultural Leaders Academia

Networking Opportunities: Build key industry relationships Business Development: Conduct business with high value Domestic and Global industry customers and clients under one roof Government Policies: Learn the latest information on issues and regulations affecting the industry to be prepared International Buyers Program: Participate in this exclusive program for U.S. companies interested in exporting your product overseas or expanding your sales to new markets

SPONSORS

®

WE BUILD CONFIDENCE

Hilton San Diego Bayfront • San Diego, CA

nationalethanolconference.com

EPM MARKETPLACE

Consulting Industrial Microbiologists And Yeast Technologies

www.xylome.com

Designer & Manufacturer of:

CO2 Recovery and Liquefaction plants Dry Ice manufacturing equipment CO2 Transportation Vehicles Turn Key Installations CO2 Fire Suppression Systems Liquid CO2 Storage Vessels 800-832-4262 www.tomcosystems.com

Contact Jim at jjung@tomcosystems.com

Adhesive compounds withstand: â&#x20AC;¢

Acids â&#x20AC;¢ Bases â&#x20AC;¢ Organic Solvents

main@masterbond.com â&#x2C6;&#x2122; +1.201.343.8983

176#)' 5'48+%'5

805-603-9736 Xylome Corportation 510 Charmany Drive, Labs 61-62, Madison, WI 53719

directory.ethanolproducer.com directory. y ethanolpproducer.co maintenance services| BROWSE CATEGORIES

%106#%6 /1.'ű/#56'4 (14 Ű %LQ &OHDQLQJ 6HUYLFHV Ű &RUQ %LQV Ű ''* 6LORV Ű 6FDOSHU %LQV Ű &RPSOHWH &OHDQRXW DQG &6( 9DFXXP 6HUYLFHV

FIND

BROWSE COMPANIES COMPANIE

line aatt online nd it onlin find fifin

One FREE Listing per Company

ZZZ PROHPDVWHU FRP ELRIXHOV

Live + OnDemand

WEBINAR SERIES

www.EthanolProducer.com/pages/webinar

GAIN MAXIMUM EXPOSURE & CONTACT INFO Sponsor Featured On:

Website All emails Advertisements Webinar page on EthanolProducer.com OnDemand material Attendee Information

50 | Ethanol Producer Magazine | DECEMBER 2016

Contact us today d for f more information service@bbiinternational.com or 866-746-8385.

January 31, 2017

Prairie Meadows Conference Center, Altoona, Iowa

New Era for New Markets Learn what the future holds for biofuels markets at home and abroad from prominent speakers addressing the exciting potential for high-octane, low-carbon fuels; export opportunities; busting biofuels myths; and a post-election forecast for energy and trade policy.

The Summit is FREE to Attend!

Register to attend, explore exhibitor and sponsorship opportunities and learn more about the 2017 Iowa Renewable Fuels Summit, by visiting:

www.IowaRFA.org

/2&. ,1 <285

(;+,%,7 63$&( 63216256+,3

:25/'·6 /$5*(67 (7+$12/ (9(17 UG $118$/

/LPLWHG 1XPEHU RI 6SRQVRUVKLSV $YDLODEOH 'RQ W :DLW %HFRPH D 6SRQVRU 7RGD\ 6XUURXQG <RXUVHOI ZLWK (WKDQRO 'HFLVLRQ 0DNHUV 'RQ·W :DLW *HW <RXU 3UHPLXP %RRWK 1RZ %\ SXUFKDVLQJ D ERRWK \RX DUH VXUURXQGLQJ \RXUVHOI ZLWK LQGXVWU\ SURIHVVLRQDOV ZKR DUH ORRNLQJ IRU VROXWLRQV WR WKHLU FKDOOHQJHV

:KHUH 3URGXFHUV 0HHW _ VHUYLFH#EELLQWHUQDWLRQDO FRP _

#)(: #HWKDQROPDJD]LQH

3URGXFHG %\