2021 January Ethanol Producer Magazine

JANUARY 2021

IMPRESSIVE

EXPRESSION A Package to Replace Exogenous GA PAGE 16

ALSO

Furthering Fiber Conversion PAGE 22

45Q Simplified PAGE 28

www.ethanolproducer.com

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Contents

16

NOVOZYMES

JANUARY 2021 VOLUME 27

LALLEMAND BIOFUELS & DISTILLED SPIRITS

FEATURES 16 YIELD MAXIMIZATION

EDITOR'S NOTE Grit and Growth

‘Fiber Is the New Starch’

AD INDEX

5

EVENTS CALENDAR

6

GRASSROOTS VOICE Accelerating Demand

10

22

INNOVATION

The Next Step

GLOBAL SCENE Transatlantic Tradeoffs

By Emmanuel Desplechin

By Lisa Gibson

DRIVE Building Back Better with Biofuels

34

MARKETPLACE

SPOTLIGHT 27 DUPONT

When 'Best-of-Both' Traits Shine

New yeasts are high yield and robust

By Tom Bryan

32

By Emily Skor

BUSINESS BRIEFS

A detailed look at requirements and simplifications

By Alex Tiller

A platform with impressive enzyme expression hits the market

12

45Q: The Drive to Qualify

By Lisa Gibson

By Brian Jennings

8

STOCK

CONTRIBUTION 28 CARBON CAPTURE

Novozymes launches tailored corn fiber conversion tools

By Lisa Gibson

5

28

ISSUE 1

DEPARTMENTS 4

22

CTE GLOBAL INC.

Rich Data, Real Relationships

Enzyme developer raises bar on service, analysis

By Tom Bryan

ON THE COVER

Lallemand Biofuels & Distilled Spirits' Convergence platform doubles the amount of yeast-expressed glucoamylase.

Ethanol Producer Magazine: (USPS No. 023-974) January 2021, Vol. 27, Issue 1. 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.

PHOTO: STOCK PHOTO

ETHANOLPRODUCER.COM | 3

Editor's Note

Grit and Growth Like the rest of the world, ethanol producers battled a tough 2020, with a global pandemic and drastically reduced fuel demand. But, unlike much of the rest of the world, they had a tough 2019, too, with low margins and oversupply caused by U.S. EPA’s careless small refinery waivers.

Producers headed into 2020 with hopes for a better year, but their struggle was instead prolonged.

Here we are again, at the start of a fresh, new year and one for the record books behind us.

Ethanol producers adapted to the environment surrounding them, and while that did include

Lisa Gibson EDITOR lgibson@bbiinternational.com

shuttered plants and slowed production, it also included diversification, investment in new pathways and exploration of new markets.

Those serving the ethanol industry with products and services stepped it up, too, seeing the need to evolve with changing strategies. Novozymes, for example, has tailored an enzyme/ yeast package to suit both separate and in-situ fiber-to-ethanol conversion. Starting on page 16, we examine the Fiberex platform, which Novozymes says maximizes yield even for plants that aren’t investing in bolt-on fiber conversion processes. Ace Ethanol, in fact, recently switched to a Fiberex product for its D3MAX plant. Novozymes’ scientists are eager to continue rolling out new iterations of the platform.

Yeast and enzyme innovation is a theme throughout this issue, as we also explore an offering that expresses previously unseen amounts of glucoamylase, with a helpful boost to trehalase.

Lallemand Biofuels & Distilled Spirits has released its Convergence platform, a marriage of the company’s yield enhancement and enzyme expression talents. Other yeast developers also are looking at enzyme expression, as well as glycerol reduction and robustness. Turn to page 22 to see where yeast innovation is headed.

In two challenging years, ethanol producers have shown their adaptability. They’ve excelled in the new markets they’re entering, while expanding opportunities to continue improving yield.

Ethanol Producer Magazine stands ready to step into 2021, with continued coverage of that grit and growth. This year, we hope the industry gets to focus more on the latter.

Stay safe and be well.

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

4 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

TWITTER.COM/ETHANOLMAGAZINE

Upcoming Events ADVERTISER INDEX EDITORIAL Editor Lisa Gibson | lgibson@bbiinternational.com

DESIGN Vice President of Production & Design Jaci Satterlund | jsatterlund@bbiinternational.com Graphic Designer Raquel Boushee | rboushee@bbiinternational.com

PUBLISHING & SALES CEO Joe Bryan | jbryan@bbiinternational.com President Tom Bryan | tbryan@bbiinternational.com Vice President of Operations/Marketing & Sales John Nelson | jnelson@bbiinternational.com Business Development Director Howard Brockhouse | hbrockhouse@bbiinternational.com Senior Account Manager/Bioenergy Team Leader Chip Shereck | cshereck@bbiinternational.com Jr. Account Manager Josh Bergrud | jbergrud@bbiinternational.com Circulation Manager Jessica Tiller | jtiller@bbiinternational.com

2021 Int'l Biomass Conference & Expo

13

2021 Int'l Fuel Ethanol Workshop & Expo

31

CTE Global, Inc.

33

D3MAX LLC

14-15

DuPont Nurition & Biosciences

17, 19, 21

EPM's Ethanol Plant Map

12

Fagen Inc.

26

Fluid Quip Mechanical

20

Fluid Quip Technologies, LLC

9

Growth Energy

18

ICM, Inc.

11

Lallemand Biofuels & Distilled Spirits

7

Phibro Ethanol Performance Group

36

POET LLC

2

RPMG, Inc.

24

WINBCO

25

VIRTUAL EVENT

The 26th annual National Ethanol Conference (NEC) will feature a fully digital, interactive format for the first time ever due to the COVID-19 pandemic. NEC will continue to serve as the largest and most visionary ethanol policy and marketing event for industry leaders and stakeholders.

This is a critical time for our nation’s ethanol industry, which faces a changing political landscape, regulatory challenges, and uncertainty in the marketplace. But it is also a time of incredible opportunity for low-carbon renewable fuels, and NEC will explore the strategies and approaches that will facilitate continued success for our essential industry in the future. The digital format will enable broad participation, provide attendees the flexibility to view content live in real-time or on-demand, and offer unique networking and business development opportunities. www.nationalethanolconference.com

Int'l Biomass Conference & Expo March 15-17, 2021 VIRTUAL EVENT

Entering its 14th year, the International Biomass Conference & Expo is expected to bring together more than 900 attendees, 125 exhibitors and 100 speakers from more than 40 countries. It is the largest gathering of biomass professionals and academics in the world. The conference provides relevant content and unparalleled networking opportunities in a dynamic business-tobusiness environment. In addition to abundant networking opportunities, the largest biomass conference in the world is renowned for its outstanding programming—powered

by Biomass Magazine—that maintains a strong focus on commercial-scale biomass production, new technology, and near-term research and development. Join us at the International Biomass Conference & Expo as we enter this new and exciting era in biomass energy.

Marketing & Advertising Manager Marla DeFoe | mdefoe@bbiinternational.com Marketing & Social Media Coordinator Dayna Bastian | dbastian@bbiinternational.com

EDITORIAL BOARD Ringneck Energy Walter Wendland Little Sioux Corn Processors Steve Roe Commonwealth Agri-Energy Mick Henderson Aemetis Advanced Fuels Eric McAfee Western Plains Energy Derek Peine Front Range Energy Dan Sanders Jr.

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge 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 866-7468385 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 lgibson@bbiinternational. com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

National Ethanol Conference February 16-18, 2021

TM

Please recycle this magazine and remove inserts or samples before recycling COPYRIGHT © 2020 by BBI International

Please check our website for upcoming webinars www.ethanolproducer.com/ pages/webinar

(866) 746-8385 | BiomassConference.com

Int'l Fuel Ethanol Workshop & Expo June 14-16, 2021

Minneapolis Convention Center Minneapolis, MN From its inception, the mission of this 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. FEW is the ethanol industry’s premier forum for unveiling new technologies and research findings. The program is primarily focused on optimizing grain ethanol operations while also covering cellulosic and advanced ethanol technologies.

866-746-8385 | FuelEthanolWorkshop.com ETHANOLPRODUCER.COM | 5

Grassroots Voice

Accelerating Demand

Brian Jennings

Executive Vice President, American Coalition for Ethanol 605.334.3381

bjennings@ethanol.org

As we turn the page on a year none of us will ever forget, even though most of us would like to, there is promising news on the COVID-19 vaccine front and a former vice president, Joe Biden, will soon be inaugurated the 46th president of the United States. The 2020 election revealed how bitterly divided America remains, meaning President Biden will be operating with a U.S. Senate narrowly controlled by Republicans and a House of Representatives narrowly controlled by Democrats.

Most Americans say they prefer divided government. Indeed, a split Congress is a good thing for the ethanol industry because our opponents will have an impossibly hard time trying to repeal or reduce the RFS, and, extreme measures like the Green New Deal or a ban on internal combustion engines are highly unlikely to become law. Nevertheless, we should expect a Biden administration and many in Congress to aggressively pursue new policy ideas to reduce greenhouse gas (GHG) emissions.

As this climate change discussion picks up, rural America has an important decision to make. Are we going to engage or stand on the sidelines? In anticipation of this very moment, ACE has been doing spade work the last several years to get in the game and position increasing the use of corn ethanol as part of the climate solution.

So now, instead of being caught flat-footed, we will begin executing on a strategic plan we call Accelerate—ACE’s roadmap for sparking new demand for ethanol. Accelerate is built upon three pillars.

1. Increasing demand and value for ethanol through new clean-fuel policies.

2. Protecting and supporting existing policy-driven markets.

3. Developing domestic and international markets.

For the past two years, ACE has been partnering with the Great Plains Institute on clean-fuel policy ideas for Midwestern states. One year ago, we published a blueprint for how Midwestern states could design clean-fuel policy, and conducted an analysis indicating the quickest and lowest-cost way to meet the goals of a clean-fuel policy in a state like Minnesota or Iowa is through increasing the use of E15, E85 and mid-level blends. That is our primary motivation in the Accelerate plan: Drive higher blends into the market by putting a spotlight on how increasing the use of corn ethanol reduces GHG emissions and revitalizes the economy. Already, several states are seriously considering clean-fuel legislation, and ACE has elevated our engagement on this topic to Congress and the incoming Biden administration.

ACE was the first group to advocate for Congress to enact the RFS, and while it started out as a success, there is no debating the fact that EPA has sabotaged the program on behalf of refiners. We remain confident the RFS can still foster market growth and innovation, and ACE will be riding herd on the Biden EPA to comply the decision we won in the 10th Circuit Court last year to rein in the use of small refinery waivers and to get the RFS back on track. Our Accelerate plan includes both offensive and defensive approaches to protect the RFS and overcome regulatory barriers to higher ethanol blends.

Policy plays a very important role in helping secure market access for ethanol, but we know it is not the only tool in our toolbox. ACE’s market development program has the experience and expertise to equip the domestic and international supply chain with the information they need to make higher blends available in the retail marketplace. Our Accelerate plan will build upon this past success to further raise the ethanol intelligence quotient of fuel marketers in paving the way for wider availability of higher blends. This work will not be limited to the U.S. ACE was a key partner in fostering international markets, like Mexico. That blueprint for developing relationships with international fuel marketers can, and will, be replicated in other emerging markets.

Let us hope for the prospect of successful vaccines, people eventually getting back on the road, and returning to some semblance of normal in 2021. As the climate discussion picks up in Washington, D.C., and state capitals, ACE looks forward to working with you to accelerate demand for ethanol.

6 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

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Global Scene

Transatlantic Trade-Offs

Emmanuel Desplechin Secretary General ePURE, the European Renewable Ethanol Association

desplechin@epure.co

The recent U.S. presidential election has spurred a lot of talk about what the new administration will mean for the transatlantic trade relationship after four years of on again, off again tariff wars.

Hopes are high that the European Union and the U.S. will reaffirm their commitment to doing business with each other in the spirit of free and fair trade. Often overlooked in these discussions is the ethanol sector, which has had a rather bumpy transatlantic history, regardless of who has been in the White House.

Now, the COVID-19 pandemic has created a situation in which the stakes are even higher for the EU. Europe faces a potential flood of imports from countries that have amassed stocks of ethanol during the first wave of the pandemic, posing an existential threat to the EU industry.

Among its many other impacts, the pandemic has upended the renewable ethanol industry around the globe.

The drop in petrol demand due to lockdowns has constricted the fuel ethanol market. While many producers have shifted some output to ethanol for hand sanitizers, even during COVID-19 this represents only a fraction of the overall ethanol market.

Recognizing the importance of the EU ethanol industry, the European Commission took action in early November. Responding to a request from France supported by its fellow EU Member State governments, the commission decided to introduce surveillance measures on imports of renewable ethanol for fuel from outside the EU. This will allow a close monitoring of the volume of fuel ethanol imports into the EU, which will facilitate a prompt and effective reaction in case the threat related to increased imports materializes. The decision represents an important step toward preventing a surge in imports from causing further injury to the EU renewable ethanol industry.

EU renewable ethanol producers sounded the alarm in the context of a trade situation that has gone from worrying to worse due to the COVID-19 market disturbances. Even before the pandemic radically altered global fuel and commodities markets, imports of renewable ethanol for fuel into the EU had sharply increased since 2017, from 87,600 metric tons to 536,200 metric tons in 2019, an increase of 512%.

Fuel ethanol imports have rapidly gained a significant EU market share during the past three years, from 2% in 2017 to 14% in the first quarter of 2020. The rapid surge of imports has already started to have a negative impact on the European renewable ethanol industry, as measured by several indicators, therefore causing an imminent threat of serious injury to the European renewable ethanol industry.

In the first months of COVID-19 market disturbances, foreign fuel ethanol producers accumulated significant stocks they were eager to sell. For example, U.S. stocks in March-May 2020 reached more than 3.2 million metric tons, a figure that corresponds to three-quarters of total EU demand in 2019. Brazil’s spare capacity had reached almost 2.4 million metric tons on May 1, 2020, a figure corresponding to more than half the total EU demand in 2019.

And that’s not even the only threat on the horizon. If adopted, the pending agreement with the Mercosur bloc in Latin America would radically alter the transatlantic ethanol trade balance. This deal, approved by negotiators in 2019 after 20 years of talks, would open EU markets to a flood of Brazilian ethanol. But it might never actually be ratified in its current form, as several EU Member States have signaled their opposition to the deal on the grounds of environmental concerns.

Why is action needed at the European level to address these looming threats? Because the EU renewable ethanol industry is a strategic sector for the European Union. It contributes directly and indirectly to the employment of at least 50,000 people. It plays a significant role in tackling climate change and decarbonizing the transport sector, which are among the top priorities of the EU. Renewable ethanol production is an important source of income for Europe’s farmers, and it boosts rural economies.

The EU renewable ethanol industry has played a vital role in the current health crisis and provided significant efforts to contain the COVID-19 pandemic. In this situation, the preservation of a solid renewable ethanol industry is key to ensure a sufficient supply of hand sanitizers and other disinfectants throughout the EU. The European Commission’s decisive action in launching surveillance is a positive sign that it is willing to stand up for a vital and strategic domestic industry. The coming months could determine whether more action is required.

8 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

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Drive

Building Back Better with Biofuels

Emily Skor

CEO, Growth Energy 202.545.4000

eskor@growthenergy.org

In 2020, the biofuels industry met and overcame some of the toughest obstacles in our history.

From a worldwide pandemic to disastrous windstorms to hostile regulators, we remained agile and resilient, seizing every opportunity to drive demand and propel the industry forward. Thanks to these efforts, no other industry is in the same position to revitalize rural America in the wake of COVID-19 or rebuild America’s agricultural supply chains. We also worked tirelessly to ensure that all candidates in the election understood ethanol’s critical role in decarbonizing the transportation sector and revitalizing rural America.

And we’re glad we did, because President-elect Joe Biden was among the 13 democratic presidential candidates who toured Growth Energy member plants during the campaign cycle. Throughout the campaign, we heard repeated vows to support our industry on the Renewable Fuel Standard, small refinery exemptions (SREs), and renewable volume obligations, as well recognition for the role of biofuels in the rural economy.

“From day one, President Biden will use every tool at his disposal, including the federal fleet and the federal government’s purchasing power, to promote and advance renewable energy, ethanol and other biofuels,” declared the Biden-Harris campaign.

As we all know, campaign promises are no guarantee of future behavior, but Growth Energy can and will hold our elected leaders accountable on their commitments. That’s because biofuels can play a critical role in the president-elect’s Building Back Better agenda. They remain the most affordable and effective solution available now, and we can harness those environmental and economic benefits by strengthening the RFS, accelerating innovations in climate-friendly farming, and promoting low-carbon transportation strategies at home and abroad.

In the near-term, Growth Energy will be pushing the Biden Administration to focus on some of our industry’s top priorities. That includes restoring the integrity of the RFS, rejecting outstanding SREs, and setting strong biofuel targets for next year and beyond. The administration also must eliminate barriers to higher blends—that includes clarifying rules for the use of E15 in existing E10 infrastructure, and importantly, removing the outdated E15 label at the pump.

More broadly, we expect new attention on climate change, where biofuels must play a key role as part of any serious plan to decarbonize transportation—at home and abroad. Thankfully, we have proven champions who will be by our side this year to make the case. Bipartisan leaders, from Rep. Cheri Bustos, D-Ill., to Sen. Joni Ernst, R-Iowa, ran and won on their record of supporting biofuels.

Alongside these and other champions, we will continue to break down trade barriers to low-carbon ethanol in markets like Brazil, Mexico and China. We will promote innovation in biotechnology and sustainable agricultural tools. And we will make higher biofuel blends central to investments in clean energy infrastructure.

So, on behalf of America’s biofuel industry, Growth Energy extends its congratulations to President-elect Joe Biden, Vice President-elect Harris, and all our champions who were re-elected, as well as new members in Congress, whom we look forward to advising as they get up to speed. The challenges ahead are great, but we look forward to working with America’s elected leaders to unleash ethanol as the engine of the rural economy and the foundation of rapid climate progress.

10 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

ETHANOLPRODUCER.COM | 11

BUSINESS BRIEFS PEOPLE, PARTNERSHIPS & PROJECTS

Element shifts focus to high-protein animal feed Element LLC in Colwich, Kansas, has been refocused to produce ANDVantage 50Y, a yeast-enriched 50% protein animal feed. The process utilizes three proprietary technologies from ICM: patented Selective Milling Technology, patented Fiber Separation Technology Next Gen and patentpending Thin Stillage Solids Separation System.

Element, a joint venture between ICM Inc. and The Andersons Inc., became fully operational in 2019 and oriented its pro-

duction to ANDVtantage 50Y after an operational pause in 2020. The feed, which will be marketed by The Andersons, has both higher protein and lower fiber than traditional ethanol coproducts.

“In addition to producing a high-quality combination of corn and yeast proteins, these processes deliver higher efficiencies and operational cost savings throughout the production process,” said ICM President Chris Mitchell.

FHR producing NexPro coproduct at second plant Flint Hills Resources is now producing and delivering its trademarked NexPro protein ingredient from its Shell Rock, Iowa, ethanol plant. The company installed Maximized Stillage Co-Products technology at the 125 MMgy plant earlier this year, making it the second FHR plant to install MSC under license from Fluid Quip Technologies.

NexPro protein ingredient will be used in a variety of animal feed rations globally.

The product is made by extracting protein from an ethanol plant’s whole stillage. The process yields not only a 50% high-protein feed ingredient with premium market value, but also residual distillers grains and enhanced levels of distillers corn oil. NexPro will be sold locally, nationally, and internationally, competing against corn gluten meal, soy, corn protein concentrates and fishmeal.

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12 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

Construction on cellulosic ethanol plant in Romania continues Clariant is progressing on schedule with the construction of a cellulosic ethanol plant in southwestern Romania, according to the company. Despite the challenges of the COVID-19 pandemic, Clariant’s team has been able to ensure that the facility’s construction has carried on. To do so, the company has had to fully comply with all of Romania’s precautionary safety regulations.

The plant is being constructed on a 10-hectare plot of land in the town of Po-

dari, where it has access to a secure regional supply of feedstock and the region’s existing logistic and industrial infrastructure.

Once operational, the facility will produce 50,000 metric tons of cellulosic ethanol annually from approximately 250,000 metric tons of straw. The plant’s construction is expected to be complete by the end of 2021.

Pacific Ethanol sells Idaho grain handling facilities Pacific Ethanol Inc. has closed on a $10 million deal with Liberty Basin LLC to sell 134 acres of land including a rail loop and grain handling assets at its Magic Valley ethanol plant in Burley, Idaho. Pacific Ethanol will retain the ethanol plant and terminal on the remaining 25 acres and has entered into agreements with the buyer for grain delivery.

“The sale of real estate and grain handling assets at our Magic Valley facility marks further progress in our strategic realignment around higher, more stable margins in specialty alcohols and essential ingredients,” said Pacific Ethanol’s CEO Mike Kandris, adding that the company will restart the facility after it is repositioned to produce higher-value products.

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Yield Maximization

FIBER IN HAND: Novozymes has released a new platform of products to complement and enhance both in-situ and separate corn fiber conversion. The company's scientists are eager to continue releasing new, improved iterations.

PHOTO: NOVOZYMES

16 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

'FIBER Is the New Starch'

Novozymes has released a platform to help convert more fiber to ethanol, and looks ahead to higher conversion in future iterations.

Introducing the SYNERXIA® Gem Collection The next advancement in high-performance yeasts to make your plant shine. www.xcelis.com

By Lisa Gibson

It’s the rallying call at Novozymes: “Fiber is the new starch.”

“It’s to work so hard that we don’t talk about fiber anymore— we don’t have to,” says Kalpesh Parekh, senior manager in business development for Novozymes. “It becomes so easy and so normal that it’s not special anymore. But to get to that point, it’s a lot of hard work.”

Novozymes has released its Fiberex platform, for in-situ and separate corn fiber processing: Fiberex F1 and Fiberex R1. The Fiberex platform reimagines ethanol, Parekh says. “This goes back to our customers’ needs. They’re looking to diversify their business and make it more sustainable.

“Fiberex is not a product, it’s a platform,” Parekh says. “And the idea is to consistently launch breakthrough solutions for new products, be it enzymes, be it organisms like yeast, or process pieces to work together to then convert fiber into ethanol.”

More than a decade of biomass conversion expertise has lent

DuPont™, the DuPont Oval Logo, and all trademarks and service marks denoted with TM, SM or ® are owned by affiliates of DuPont de Nemours, Inc.

ETHANOLPRODUCER.COM | 17

Yield Maximization

FIBER FLEXIBILITY: Fiberex enables drop-in and bolt-on fiber applications, diversifying into lowcarbon and high-value coproduct markets.

SOURCE: NOVOZYMES

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Novozymes research and development firepower to leverage. “We have learned a lot and now we are investing more in fiber-focused solutions to make tailormade products for fiber conversions.”

Brian Brazeau, Novozymes’ vice president for bioenergy, adds, “I would really characterize it as Novozymes even helping to lead the market. We have a long history of looking at complex substrates, biomass, how do we break that down and create value? How do we take our biological tools, apply them to this biological raw material and allow our customers to create value from that?”

The pandemic in 2020 followed 2019’s negative producer margins, and the ethanol industry has struggled, Brazeau says. “It’s really about us understanding that our customers have been hurting, have been looking at additional ways to create value. We do know how to develop microbes that break down complex materials like fiber, and help our customers create value from them.”

The Platform

Fiberex R1 is an enzyme for separate conversion. Because the product focuses specifically on conversion of pretreated fiber into ethanol, and uses the appropriate high dose of enzyme, the fiber conver-

18 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

'Fiberex is not a product, it’s a platform, and the idea is to consistently launch breakthrough solutions for new products, be it enzymes, be it organisms like yeast, or process pieces to work together to then convert fiber into ethanol.'

Kalpesh Parekh, Novozymes

sion is near 6%. “It’s a cocktail of enzymes that works really well with pretreated corn fiber,” Parekh says.

Fiberex F1, for in-situ processing, reaches more than 2% fiber conversion.

Both iterations allow producers to do more with less, Parekh emphasizes. “The same kernel of corn—create more ethanol, create more corn oil, reduce energy consumption and create maybe a little bit more sustainable future for us.”

The holistic approach Novozymes takes is crucial for optimal performance.

“The yeast can’t work and do its job optimally if it’s developed and designed

XCELIS® Yeasts

SYNERXIA SAPPHIRE

®

CENTRIFUGE STATS: Ace Ethanol in Stanley, Wisconsin, has switched to Novozymes’ Fiberex R1 in its bolt-on D3MAX process. Here, an Ace employee checks the system.

PHOTO: D3MAX LLC

independently of the enzyme systems,” Brazeau says. “We’ve carried that thinking over.

“To create an optimal fermentation process to make ethanol, we need to link all these systems together. We’ve been a leader in thinking about how we do that and Fiberex is a good example of that.”

Ace Ethanol in Stanley, Wisconsin, recently switched to Fiberex R1 for its separate corn fiber conversion process, D3MAX. “They’re pretty happy about it.”

Parekh says.

“The Novozymes enzyme will work better in our equipment,” says Mark Yancey, chief technology officer for D3MAX. “We expect better performance and are waiting on the data to confirm that.”

Brazeau says, “Our biology might marry well with a hardware or a processing technology to create value, and the advantage from our point of view, at least, is here is the additional value that an ethanol producer can create, which doesn’t require them to invest in any additional capital.”

D3MAX at Ace Ethanol started up in January 2020 and, through early December, had been online 310 out of 320 days.

“Overall, the plant continues to perform very well,” Yancey says. “The online time is at 97 to 98%, so since Jan. 9 (2020), the first day of startup, we’ve only had a hand-

ful of days when the D3MAX plant was down. So, we’re extremely happy with that.

It’s proven so far to be very reliable, which of course is a big plus for any kind of cellulosic process.”

Since startup, Ace has made modifications to the plant to correct some issues, including the optimized R1 for fiber conversion, Yancey says. Overall, the design and construction have worked well, he adds.

Since June, the D3MAX plant has made steady improvements to the amount of cellulosic ethanol produced. “Every month the amount of ethanol produced has gone up,” Yancey says. “The plant is now running at nearly 95% of design yield.”

The goal is 9,000 to 9,500 gallons per day, or a D3 lift of 6.5% or more. “We’re getting there.”

The most powerful combination of yield, robustness and enzyme expression in a yeast. www.xcelis.com

In-Situ R&D

Fiberex F1 is in use at a few plants, but Parekh is eager to continue releasing new iterations.

“We have heavily invested and continue to invest in in-situ fiber conversion because we realize that not everybody is able to invest in the capex,” he says. “So insitu fiber conversion is a big piece of what we do here.”

DuPont™, the DuPont Oval Logo, and all trademarks and service marks denoted with TM, SM or ® are owned by affiliates of DuPont de Nemours, Inc.

ETHANOLPRODUCER.COM | 19

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Novozymes is working to include hemicellulases with its traditional cellulase products to open up the fiber matrix even more, boosting fiber conversion another 1.5%, Parekh says. The process also bumps corn oil production by up to 20%, he says. “That’s an immediate revenue gain for customers.”

Going forward, new iterations of the Fiberex platform are expected to cross 3.5% cellulosic ethanol. Parekh expects the next iteration to be released in 2021, with another in 2022. “We’ll soon become the new norm in terms of solutions for fiber conversion.

“The idea behind the platform is consistently launch new solutions that keep moving the ball forward in converting the most amount of fiber into ethanol. So Fiberex F1 is just a very small rung of the ladder and we’re quickly going to jump

into the novel combinations of cellulases and hemicellulases, which would be the next Fiberex iteration.”

Navigating Certification

A vital piece of fiber solutions is proving cellulosic conversion to regulatory agencies like CARB. Parekh says Novozymes helps producers navigate that process, as well. “We know that the biology is only a piece of the puzzle. So we work really hard and seamlessly with engineering companies … and bring everybody at the table for the customer to make sure the process is as seamless as possible in moving forward with CARB. “That’s another key part of the platform is our commitment to not only bring the best solutions out there, but to make business easier for our customers.”

Novozymes works closely with

XCELIS® Yeasts

SYNERXIA RUBY

®

The new standard in high yield yeast driving plants to the peak of performance. www.xcelis.com

BOLT-ON BOOST: D3MAX is running at nearly 95% of design yield at Ace Ethanol. Novozymes’ new Fiberex R1 will help the plant achieve a D3 lift of 6.5%.

PHOTO: D3MAX LLC

CARB, the U.S. EPA and others to make sure certifications and validations go smoothly. “We make sure there’s clarity and customers can do it easily,” Parekh says.

“Customers come to us and say, ‘this is a great solution but how do we make it work with CARB?’ So we coach them in that process as well.

“It’s really great when years of R&D and the right partnership approach with our customers works in favor of them and helps them diversify more and be more sustainable in terms of business.”

Parekh emphasizes the sustainability of fiber conversions. “One of the things I’m grateful for is the work of CARB, who have provided a great environment for fiber-based ethanol driving diversification in business and for our planet’s sustainability.

“We’re really thankful for California

and Oregon’s carbon programs. Going forward hopefully it’ll happen in Washington, New York, Minnesota and other places as well. We’re thankful to these states and these regulatory bodies for creating an environment where we can create these new solutions and innovations.”

Ethanol producers are pioneers in sustainability and biotechnology, Brazeau says.

“The ethanol industry is an example of what biotechnology and agriculture can create. And we think about that very holistically—what are new biological tools that we can bring out to our ethanol-producing customers to help them continue to be pioneers in this space?”

Author: Lisa Gibson Editor, Ethanol Producer Magazine 701.738.4920 lgibson@bbiinternational.com DuPont™, the DuPont Oval Logo, and all trademarks and service marks denoted with TM, SM or ® are owned by affiliates of DuPont de Nemours, Inc.

ETHANOLPRODUCER.COM | 21

Innovation

The

NEXT STEP

Lallemand Biofuels & Distilled Spirits’ new Convergence platform merges its expertise in yield enhancement and enzyme expression. Other innovators have similar goals.

By Lisa Gibson

Lallemand Biofuels & Distilled Complementary Combination Convergence is a combination of an exterSpirits has released what company nal enzyme package, Alcolase 146, that complePresident Angus Ballard says is an enormous “step change” in the ments the TransFerm CV5 yeast, with its yieldethanol production process, on par enhancing features and enzyme expression, says Richards, director of application technolwith the emergence of genetically Matt ogy for LBDS. It’s the first time LBDS has been modified yeast. able to demonstrate such a significant level of LBDS’ Convergence platform marries its work in yield-enhancing yeast with glucoamylase production to provide optimal performance.

TransFerm CV5 and Alcolase 146 work together to greatly reduce exogenous GA requirements, as well as enhance yield.

To date, yeast innovation has moved forward with “a little more yield, a little more robustness, a little more GA expression,” Ballard says. “Until now.”

“We have a technology now that the yeast can express levels of GA that literally were thought impossible. It’s literally a step change in the amount of exogenous GA required. Instead of needing truckloads of GA, it’s a small amount, it’s a tote of 1,000 liters that will last several weeks.

“That’s the exciting change.”

22 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

yeast-produced enzyme in the ethanol production process, he adds.

“We’ve seen roughly 70% to complete displacement of the added enzyme in fermentation being provided by the yeast in the process,” Richards says.

“The exciting part is the displacement of the GA,” he adds. “The yeast produces both the GA and trehalase, so when coupled with Alcolase 146, we get the best performance. But in some cases, we have demonstrated complete replacement of a GA package with the yeast-made enzymes.”

Before Convergence, conventional dry yeasts from LBDS with a complete exogenous enzyme package were able to replace 25% to 45% of enzyme needs. “This is obviously a significant increase to that,” Richards says.

CLOSEUP: LBDS’s TransFerm CV5 doubles the enzyme expression of previous TransFerm products.

PHOTO: LALLEMAND BIOFUELS & DISTILLED SPIRITS

Trehalase Train

BRINGING FERMENTATION FORWARD: Lallemand Biofuels & Distilled Spirits recently released Convergence, a combination of an enzyme-producing yeast and enzyme cocktail to improve yield and reduce the amount of exogenous enzyme needed in fermentation.

PHOTO: STOCK PHOTO

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GA works to break down the solubilized “There is this very small segment of the longer chain soluble starches, dextrins, into glu- industry that is less interested in yield, but is cose for the yeast to ferment directly. “GA is very interested in output, very interested in really what needs to work to make sugars avail- fast kinetics and very interested in robustness able to yeast for fermentation,” Richards says. because of their particular circumstance.” For Trehalase splits the trehalose made by those customers, Bio-Ferm EGA, coupled the yeast in fermentation. Without splitting, with Alcolase 146, still provides extraordinary trehalose tends to build up and recycle in fer- levels of GA expression. mentation.

“We encourage customers to increase “Yeast can displace more of the overall profitability with CV5, but some are intercocktail by expressing more of the trehalase ested in Bio-Ferm EGA,” Ballard says. “We and glucoamylase, the two most important have a couple plants running product and it’s enzymes for the yeast to perform,” Richards proving to be very interesting as well.” says.

The Convergence platdƌĞŚĂůŽƐĞ Ăƚ ƌŽƉ form includes another yeast that 6285&( &$5*,// hasn’t gotten much attention, as it’s not the primary offering, Ballard says. Bio-Ferm EGA is extremely robust, but is not a yieldenhancing strain. “It’s a very fast strain,” he says. “It’s a strain with very high kinetics.

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Cargill also is focusing on trehalase expression, with its biocatalyst, an advanced Saccharomyces cerevisiae, according to Greg Poynter, principal biotechnologist for Cargill. The combination of its three main traits—glycerol reduction, GA and trehalase expression—allows producers to reduce enzyme costs while increasing yield through the reduction of byproducts, Poynter says.

“The third trait, a secreted trehalase enzyme, is what I feel differentiates our strain from the competitors,” Poynter says. “Through an extensive screening process, we identified several viable trehalase enzyme candidates and then engineered them into the yeast.”

The trehalase hydrolyzes trehalose, he explains. “Our solution results in a significant reduction in the overall DP2 sugars at the end of fermentation and a corresponding increase in ethanol titers.

“Cargill’s yeast would bring another competitive offering into the market with the added benefit of a secreted trehalase enzyme. The trehalase offers the same performance as commercial enzyme cocktails containing the trehalase, but with the advantage of having the yeast supplying the enzyme.”

Cargill’s yeast has demonstrated between 2% to 4% yield

dƌĞŚĂůĂƐĞ ŶĂďůĞĚ zĞĂƐƚ ETHANOLPRODUCER.COM | 23

Innovation

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increase, depending on the mash and fermentation conditions. Cargill has been using its yeast developed in-house at its North American ethanol plants but is exploring options to release the technology to the broader ethanol industry, Poynter says.

Glycerol Goals

24 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

Mickel Jansen, senior scientist in fermentation for DSM Advanced Yeast & Enzymes, says ethanol producers will always want yield enhancement and robustness of yeast. Looking forward, he says new strains will continue to innovate in those areas, but it’s crucial to pay attention to what the altered yeast do to the process.

“Biology has quite some astonishing powers and possibilities for opportunities,” he says. “That’s what we are exploring here, to the benefit of the customer, of course.”

The first wave of advanced yeast was related to glycerol reduction, the second was related to GA, and last was robustness, he says.

Ballard says, looking back, those iterations seem almost rudimentary, considering how far development has come.

“Glycerol is still being produced and, for me, that’s kind of the ultimate (opportunity),” Jansen says. “It’s not zero. Can we get there?”

Glycerol is needed in the process for robustness, he says, but there’s more potential in getting more sugars for yeast to be converted.

“I can see already some trends there. I expect that would happen more. I would not be surprised if it goes in that direction more.”

Cargill is on top of it. “Glycerol and trehalose represent the major byproducts in an ethanol fermentation, so those were the top targets for the strain development program,” Poynter says.

6285&( /$//(0$1' %,2)8(/6 ',67,//(' 63,5,76

But, Jansen points out that, in an anaerobic environment, like fermentation, both yeast biomass and electrons are being produced.

“The yeast can only compensate if it also makes glycerol,” he explains. “In that sense, it’s kind of a yield loss. The ones that offer a lower glycerol technology do have a certain metabolic pathway introducing the yeast that can partly circumvent that. … Making less glycerol makes higher yields.”

Poynter addresses that. “One of the challenges with glycerol reduction is that many of the solutions, while effective in reducing glycerol, negatively impact ethanol productivity.

The modifications we have made to our strain brings the best of both worlds, reduction in glycerol without impacting productivity.”

Jansen adds that process control is crucial in partnership with an optimal yeast. “You cannot fully control your fermentation temp in the process. If you really want to squeeze out the best potential of every yeast, then also the best process control is needed.”

Process control and yeast control go hand-in-hand, he says. “You really have to also think about process control, not only what the yeast can control.”

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Compelling Economics

Despite the tough couple of years producers have had, the timing is good for a new product, Ballard assures.

“In this case, the economics are so compelling it’s helped in our favor. And it’s a product that works very well without a lot of onsite tweaks.”

Richards agrees. “The robustness has really decreased the support requirement from the technical support service managers and the team has also really adapted to provide remote

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Innovation “While we want to communicate on-site, the remote support has been pretty effective in helping these trials succeed,” Richards says. “It’s been good timing as far as the intro to the industry.”

One doesn’t find out the extent to which business can be done virtually, until forced to do it, Ballard says.

‘Exciting World’ 6285&( /$//(0$1' %,2)8(/6 ',67,//(' 63,5,76

support, and on-site support where customers allow it.

“But with improved robustness and overall strong performance of this strain coupled with our existing knowledge in rolling out products, it’s been pretty smooth,” Richards says.

“What we’ve all learned during this pandemic is what can be done without being on-site, without being face to face,” Ballard says. “We’ve pivoted to ensure our team is able to provide the high level of technical support that is valued in the industry, but, very often, that has to be done virtually.”

26 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

LBDS has plenty of plans for future iterations of its platforms, continuing to enhance yield and improve robustness.

“We’ll continue to work on different types of enzyme activity to help producers, in terms of some of their other goals with coproducts,” Richards says.

“The next step is to continue to enhance yield where we can and overall improve fermentation rate and fermentation robustness.”

Ballard says, “I think it’s an exciting world, when you look into the future— what we can do with GM yeast. There

are other enzymes we can express, and we still believe we can get more yield out of the process. So we have plenty of options to work on.”

Poynter says biotechnology has expanded by leaps and bounds over the past decade. “By leveraging these everexpanding capabilities, the yeast providers can significantly improve the process economics for ethanol producers by reducing costs and improving profit margins.”

Ballard always expresses appreciation for competition, helping to motivate innovation. “Competition has certainly been very active and there’s a lot of good products out there,” he says. “We’re very happy we’re currently winning the yield race. But the only way we’ll stay ahead is by continuing to innovate, so we’re continuing to do just that.”

Author: Lisa Gibson Ethanol Producer Magazine 701.738.4920 lgibson@bbiinternational.com

Spotlight: DuPont Nutrition & Biosciences

BY Tom Bryan

When ‘Best-of-Both’ Traits Shine The new glucoamylase-expressing yeasts within DuPont’s SYNERXIA® Gemstone Collection are both high yielding and fundamentally robust.

Both nature and physics rarely allow two desired but incompatible outcomes to occur in unison—like chasing optimal efficiency with maximum output—and, because of it, ethanol production is full of difficult tradeoffs. “Best-of-both” scenarios are infrequent in biological processes; when one goal is met, another is often partially forfeited.

Until recently, high-yield, gluLee Robinson Application Scientist coamylase (GA)-expressing yeasts DuPont were subject to precisely that type PHOTO: DUPONT of limitation. Producers in search of the highest yielding yeasts had to sacrifice some degree of robustness. Those seeking the pinnacle of robustness had to give up some degree of yield.

Now, scientists are producing those dual traits, jointly, with more success. DuPont Nutrition & Biosciences, building on years of success with its high-yield, GA-expressing yeasts, is making the previously divergent characteristics of high yield and superior robustness—packaged together—a reality.

“What we’ve seen in this industry is that you’re either going after yield or robustness,” says Lee Robinson, an application scientist at DuPont’s Applied Innovation Center in Cedar Rapids, Iowa.

“There wasn’t much of a middle ground. The line between yield and robustness had to be walked with known consequences: engineering yeasts for yield came at the expense of robustness, and vice versa. But our newest line of yeasts from the XCELIS® platform, the SYNERXIA® Gemstone Collection, is changing that by creating a best-in-class combination of both yield and robustness.”

Robinson says DuPont began its latest journey to develop new yeasts with “good base genetics” that allowed its scientists to drive more robustness into the SYNERXIA® Gemstone Collection. “That’s where we really pushed hard,” he says. “We leveraged a set of very diverse genetic yeast backgrounds, and by mating our current high-yield yeast with an exceptionally robust yeast, we produced hybrid yeast strains with incredible genetic diversity.”

The resultant yeasts were then screened for performance under various stress conditions such as temperature and organic acid tolerance—“the type of stresses they would see at an ethanol plant,” Robinson says. “And after applying that stress and seeing what resulted, we were able to pick two winners.”

The selected pair of champion yeasts reside within a “bestof-both-worlds spectrum,” Robinson says, explaining that they are

both high yielding and fundamentally robust. “We made sure we weren’t sacrificing either quality.”

The new yeasts within DuPont’s SYNERXIA® Gemstone Collection—SYNERXIA® RUBY and SYNERXIA® SAPPHIRE— are both available in dry and cream formats. While the two yeasts vary in their makeup and overall attributes, both have enhanced temperature and organic acid tolerance, along with GA-expression that dramatically reduces the need for additional glucoamylase.

When GA-expressing yeast are employed, very little standalone glucoamylase needs to be added to the process during saccharification. In fact, Robinson says, SYNERXIA® RUBY results in a 65% reduction in GA (relative to conventional yeast dosage) and SYNERXIA® SAPPHIRE results in an 80% reduction.

“With SYNERXIA® RUBY, which has DuPont’s patented high-yield, glycerol-reducing PKL pathway, we’ve also applied some additional, targeted genetic modifications that further enhance yield and provide an increase in robustness relative to its predecessor, SYNERXIA® THRIVE GX,” Robinson says. “So, the result is that SYNERXIA® RUBY is our highest-yielding yeast to date from the XCELIS® platform.”

SYNERXIA® SAPPHIRE is intended to fulfill a different but equally important customer need. “Where SYNERXIA® RUBY is for ethanol producers focused on the highest-yielding yeast possible, SYNERXIA® SAPPHIRE is best suited for customers that want significantly more yield than a conventional yeast but also superior robustness,” Robinson explains. “SYNERXIA® SAPPHIRE gives you assurance that you’re going to survive and thrive during the upsets that inevitably occur.”

Unlike SYNERXIA® RUBY, SYNERXIA® SAPPHIRE does not have the patented PKL pathway built into it, but contains many other yield-enhancing modifications. Furthermore, SYNERXIA® SAPPHIRE and SYNERXIA® RUBY do not share the same GA. “The glucoamylase in SYNERXIA® RUBY is similar to its predecessor, but SYNERXIA® SAPPHIRE has a new glucoamylase that has the potential to lower residual starch in fermentation with an enhanced ability to reduce the need for additional GA—and that’s how we get to an 80% reduction.”

Both products have gone through extensive plant trials, despite the unique challenges of doing so during the pandemic. “We have excellent data sets from multiple plants,” Robinson says. “Whenever you trial new yeasts, you’re never quite sure what will emerge, but we saw unique value in each yeast, and enough of a market segment for each product, to bring both of them forward together.”

ETHANOLPRODUCER.COM | 27

Carbon Capture

ROAD TO 45Q: Detailed mandates, including a 2023 construction-start deadline, can sneak up on a carbon capture project and result in disqualification. A thorough understanding of the rules is crucial.

PHOTO: CARBONVERT INC.

45Q: The Drive to Qualify The road to qualifying for the 45Q tax credit can be confusing, with strict limitations on project phases and what constitutes start of construction. But, navigated properly, the credit is a promising opportunity.

By Alex Tiller

Carbon capture and storage (CCS) presents a tremendous financial opportunity for many ethanol producers. Through CCS, producers can lower their carbon intensity (CI) score to increase profits through the California Low Carbon Fuel Standard market, with the potential for concurrent earnings from both 45Q tax credit transactions and sales in carbon credit markets.

CCS also provides access to indirect economic benefits, namely the mitigation of enterprise risk from a future carbon tax and the improvement of commercial relationships with ESG sensitive lenders, investors and customers.

While the economic benefits of CCS can be numerous, producers will need to commit significant time and capital to pre-development. Proper due diligence is necessary to navigate the complexities of IRS Section 45Q tax credit rules. 45Q contains a litany of guide-

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).

28 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

lines, timelines and limitations that require expertise and adherence to prevent inadvertent project disqualification.

Among the intricacies of 45Q is the determination of what qualifies as the start of construction. Despite its apparent simplicity, the start of construction is a complex milestone that serves as the primary pacing item for all other pre-development activities.

In addition to a start timeline, certain mandates must be met to consider construction officially started.

It’s also essential to understand that there are many other guidelines, both written and unwritten, drawn from previous tax credit programs and guidance. Tax credit program complexity can become a barrier to entry for inexperienced emitters. Retaining specialized legal counsel with experience in closing tax credit investment transactions, also known as tax equity investments, is an efficient way to obtain this support. Additionally, as 45Q guidance develops over the coming months, ethanol producers will be forced to make critical decisions and investments, or risk missing out altogether.

Construction Clock

To qualify for the program, facility construction must begin by Dec. 31, 2023. Legislation proposed in December would extend the date for projects to begin construction to claim the 45Q tax credit for carbon dioxide sequestration by 10 years. It would also provide a direct pay elective for the full value of the tax credit.

With the current 2023 construction start date in mind, many steps need to fall into place before construction can begin.

Preliminary technical phase: The first phase includes, but is not limited to, acquiring internal funding and contracting with third-party providers, as well as conducting

As 45Q guidance develops over the coming months, ethanol producers will be forced to make critical decisions and investments, or risk missing out altogether. feasibility studies, geologic characterization, and FEED studies for geologic storage. In addition, plan on conducting FEED studies for carbon capture, securing land and subsurface rights with owners, initiating LCFS and carbon registry documentation, construction permitting, and U.S. EPA permitting.

Project finance: About $30 million to $50 million will need to be secured, and the lender will seek certainty that an experienced tax equity investor stands ready to monetize all the tax credits generated from the new facility. Since 45Q is a relatively new incentive, the tax equity investor market is still evolving and is relatively unknown, which makes the financial modeling required to make a go/nogo decision for a project even more difficult.

Once these phases have been completed, a project will need to meet strict start-ofconstruction criteria.

Qualifying for Construction Start

There are two ways to establish that a project has begun construction before Dec. 31, 2023. The first is by incurring at least 5% of the project’s total cost and making continuous efforts to advance toward completion of the project thereafter. It’s a seemingly straightforward approach to meeting the start of construction deadline, but it comes with important caveats: • The total costs need to be calculated based on the project’s depreciable basis, including any tax credit structuring related ba-

sis step-up. Since there’s a chance the project cost overruns the budget, it is prudent to target about 7% as a rule of thumb.

• The payment approach is only available when using the cash method for accounting, as opposed to the commonly used accrual method.

• When purchasing components and equipment to meet the 5% threshold, delivery can be at the project site, the manufacturer’s factory or in transit, but steps should be taken to make it clear that the buyer has truly taken possession of the property.

• If the project developer cannot establish that the 5% test is met based on its own costs, the rules permit it to look through the contractor’s costs if there is a binding written contract in place.

Another way to mark the start of construction is by performing what the IRS calls “physical work of a significant nature.” This test focuses on the nature of the work performed as opposed to the cost or amount. It requires a continuous program of construction, but potentially leaves the door open for an unfavorable IRS judgment that construction was not truly underway, as “significant” is not clearly defined. Key points to consider include: • A carbon dioxide emitter does not have to do the work itself if the work is performed under a binding written contract that is entered into before the work starts.

• If properly designed and implemented, project developers can take credit for the characterization work that is performed adjacent to construction.

• Physical work may not be deemed significant if it includes the manufacturing of components that are either in existing inventory or normally held in a vendor’s inventory.

• Consistent with previous renewable energy tax credit guidance, the IRS has indi-

ETHANOLPRODUCER.COM | 29

Carbon Capture

CONSTRUCTION CLOCK: To qualify for the 45Q tax credit, producers must start construction by Dec. 31, 2023.

PHOTO: CARBONVERT INC.

cated that certain preliminary activities do not count (such as exploration, research, etc.), even if their cost is properly included in the basis of the property.

Before beginning the construction process, it is crucial to consult with professional and legal resources to determine which strategy best suits the project.

Simplifying A Project

Determining whether a plant is a viable candidate for CCS through feasibility studies could cost millions. That alone could be a barrier to entry for many producers. One viable option is using third-party experts to conduct all the upfront assessments while minimizing cash and cost outlay at the same time.

Given recent economic setbacks from the COVID-19 pandemic and questions surrounding the future of ethanol production, creditworthiness for host emitters poses a challenge for project execution. Project lenders are going to need production covenants to mitigate the risk of project fallout. Considering the shutdown of some ethanol plants in 2019, additional expected shutdowns due to COVID-19, and projected declines in U.S. 30 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

motor gasoline demand, the risk aversion of lenders could lead to many unbankable deals for host emitters.

Many ethanol producers donâ&#x20AC;&#x2122;t have the excess cash or team bandwidth for in-house development. The capital-intensive process further hinders the feasibility of undertaking a carbon capture project alone. Fortunately, there are well known commercial approaches to exploiting similar opportunities through third-party project development and finance teams.

For years, the oil and gas, solar and wind industries have partnered with project hosts.

These partnerships have provided stakeholders with the technical and financial expertise needed to successfully stand-up new projects and manage the complexities of the finance and tax credit markets.

In these arrangements, a third-party project developer contracts with a project host for the right to develop a project at their facility in exchange for mutually beneficial financial terms. The project developer provides a dedicated team with a vested interest in the projectâ&#x20AC;&#x2122;s success, allowing the project host to focus on their core business. Plants entering into CCS investments will likely be

required to enter take-or-pay agreements with lenders, which can limit the ability of plants to react dynamically to market conditions. Through diversification of projects and substantial financial expertise, thirdparty developers can limit this risk for plants.

For large ethanol producers, it might still make sense to build in-house competencies in CCS development. For many others, entering into CCS projects alone will be difficult, considering the financial and technical complexities that coincide. Partnering with experts and sharing in the upside of generated benefits could be the best course of action.

CCS allows host emitters to monetize waste emissions while promoting the development of sustainable infrastructure. Lower CI scores, 45Q and additional state or local incentives create enormous market potential for emitters to profit from decarbonization. With proper execution, CCS provides a promising growth opportunity for emitters.

Author: Alex Tiller President, Carbonvert Inc. 303.517.6608 alex@carbonvert.com

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BY Tom Bryan

Rich Data, Real Relationships Enzyme provider CTE Global is raising the bar on service with madeto-order testing and contextual plant data analysis from a single lab.

For Pedro Peña, CTE Global CTE offers more than 20 different enzymes, both stand-alone Inc.’s Lab and R&D director, deliv- and blended products, including half a dozen alpha-amylases tailored ering the right enzymes to an ethanol for liquefaction, a suite of glucoamylase blends for fermentation and producer is a process of discovery saccharification, yeast and numerous specialty enzymes. CTE also that couples plant data analysis with provides food-grade enzymes for producers making alcohols for a genuine effort to understand the sanitizers or other consumer products. Knowing which products are facility, the people who run it, and best suited for each producer, Peña says, comes down to understandtheir goals. ing the plant. “When you fold all the work in—the data, testing in the “It starts with those two things: lab, tech support in the field, understanding the customer’s goals— establishing the data and making the answer is usually pretty evident,” he says. personal connections at the plant,” CTE recently expanded its suite of alpha-amylases to include Pedro Peña, Ph.D. Lab and R&D Director Peña tells Ethanol Producer Magazine. two new products with thermostable characteristics. Peña explains CTE Global Inc. “You have to know your customers that high heat boosts the solubility of starch, along with the viscosityPHOTO: CTE GLOBAL INC. to understand their challenges, and break of liquefaction, giving way to the potential for yield improvehow their plant is running. The data is vital, obviously, but leverag- ment. ing those relationships—knowing exactly what your customers want “That’s what we’re shooting for with these new alphas,” he says. to achieve, and why—is the context that leads to real optimization.” “The industry is moving toward higher and higher starch conversion, CTE’s dedication to customer service is the driving force be- and if you can run your liquefaction at higher temperatures, you’re hind its Data-Driven Strategies platform, aimed solubilizing the starch at significantly higher levat extracting maximum value from the producels than you would at lower temperatures. And 'We’re helping our tion data it harvests for clients through laboanytime you can do that, you are increasing your customers go after opportunity to improve yield.” ratory testing and plant trials. “When we do a trial, whether it’s working with a customer for CTE’s AMYL-XT is a stand-alone enthat undigested the first time or the tenth, we perform an all-out starch, and also corn zyme with high heat tolerance, while the newer analysis of how the plant is running,” Peña says.

AMYL-XTP+, also a thermostable product, infiber, so little or The production data CTE generates for its cludes a beneficial protease. “With XTP+, we customers is analyzed and parsed out in ways nothing is left behind. can break up that protein-lipid complex and It’s about squeezing free up oil, giving your corn oil coproduct yield that are particularly useful to decision makers at the plant. “Most of our clients still use third- out as much value as a boost,” Peña says, explaining that a higherparty labs for testing, and those labs play an imquality nitrogen environment for yeast growth possible.' portant role,” Peña says. “But we’re providing also results. “Happy yeast withstand stresses new value to producers by taking commonly and grow and populate better, so that, too, crerun tests, like starch, and separating the data out in ways that provide ates the potential for better yield.” actionable insight—like defining enzymatically-available starch from Recently, CTE launched a new line of blended specialty enresistant starch, or showing how much nitrogen a producer has from zymes, including cellulases and fungal alpha amylases, trademarked ammonia, urea or amino acids—information that sheds new light on by CTE as Complete™, designed to help ethanol producers finish optimizing their process.” challenging conversions. “We’re helping our customers go after that One of CTE’s key assets is its ability to accommodate this work undigested starch, and also corn fiber, so little or nothing is left within a single lab. “Having our entire customer base, the testing and behind,” Peña says. “It’s about squeezing out as much value as posdata for all the plants we serve, under one roof, where we know the sible. With our Complete™ line of products, producers can now go methods are consistent day to day, month to month, is a huge advan- after that last bit of potential.” tage,” Peña says. “It gives us the ability to see precisely where each of our customers stand, and it also enables benchmarking. Being able to do all this work under one canopy also accelerates new product development.”

32 | ETHANOL PRODUCER MAGAZINE | JANUARY 2021

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