January 2010 Ethanol Producer Magazine by BBI International

INSIDE: BIOFUELS TRAINING GAINS POPULARITY JANUARY 2010

2010 US Ethanol Industry Salary Survey Salary, Bonuses, Benefit Programs, Job Satisfaction and More

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ETHANOL PRODUCER MAGAZINE

January 2010

contents

vol. 16 no. 1

features 38 SALARY 2010 US Ethanol Industry Salary Survey EPM presents the results of its recently conducted survey of U.S. ethanol plant personnel. Hundreds of U.S. ethanol plant employees answered questions pertaining to salary, as well as benefits packages, bonuses and other employment specifics. –By Erin Voegele 42 EMPLOYMENT Workers Available, Ethanol Producers Wanted Ethanol industry advocates often tout job creation as benefit of ethanol production. While these are envisioned as new jobs, ethanol could also play a significant role in replenishing jobs lost in other industries. Bastrop, La., serves as an example of a community eager to recruit ethanol as a way to fill the employment void left by a recently closed pulp mill. –By Kris Bevill 46 EDUCATION Ethanol Education: A Window to Employment An increasing number of community colleges have begun to offer biofuelsspecific training programs to fill the need for skilled workers who possess knowledge of ethanol-specific process technologies and plant operations. –By Erin Voegele

50 SUBSIDIES Rewarding Greener Biofuels A long-time sustainable agriculture advocate proposes a producer tax credit tied to environmental performance as a way to encourage improved production practices. –By Susanne Retka Schill

50 Corrections for our 2009 Fall U.S. and Canada Fuel Ethanol Plant Map: The EPM Fall 2009 Fuel Ethanol Plant Map incorrectly listed Green Plains Renewable Energy Inc. as the fifth largest North American ethanol producer. GPRE has an annual nameplate production capacity of 445 MMgy and is the fourth largest producer of ethanol in North America.

ETHANOL PRODUCER MAGAZINE

January 2010

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contents departments 8 Advertiser Index 10 The Way I See It And the Survey Says ... By Mike Bryan 14 Business & People 18 Commodities 20 View From the Hill 2010 Ins and Outs By Bob Dinneen 21 RFA Update 22 BIObytes 24 Industry News 30 Drive What Green Jobs Waiver Means for US By Tom Buis 32 Taking Stalk Efforts to Increase Sorghum Awareness Underway By Bill Greving 34 Legal Perspective Carbon Opportunities for Ethanol Plants By Jesse McCurry 56 Events Calendar 57 Marketplace

54 contributions 54 INNOVATION Distillers Dried Grains Yields High-Fiber, High-Protein Flour A South Dakota State University graduate student is developing food-grade flour derived from distillers dried grains that could be used to provide a low-cost source of nutrition in developing countries. â&#x20AC;&#x201C;By Padmanaban Krishnan and Dana Hess

ETHANOL PRODUCER MAGAZINE

January 2010

Ethanol Producer Magazine: (USPS No. 023-974) January 2010, Vol. 16, Issue 1. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/ Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

AdIndex

48 2010 International

29 FCStone, LLC

BIOMASS Conference & Expo 3 Fermentis 37 2010 International Fuel Ethanol Workshop & Expo 35 2010 National Ethanol Conference 45 Agra Industries Inc. 31 Biomass Magazine 27 Brown, Winick, Graves, Gross, Baskerville & Schoenebaum, P.L.C. 2 Burns & McDonnell 26 Check-All Valve Mfg. Co. 52 CPM Roskamp Champion

11 Genencor速 - A Danisco Division 60 Growth Energy 4 ICM Inc. 12 & 13 Inbicon 49 Indeck Power Equipment Co. 40 Kennedy and Coe, LLC. 41 Nalco Co. 44 Natwick Associates Appraisal Services 6 Novozymes

53 EISENMANN Corp

33 Pioneer Hi-Bred International Inc.

36 ethanol-jobs.com

55 Vogelbusch USA Inc.

28 Fagen Inc.

ETHANOL PRODUCER MAGAZINE

January 2010

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EDITORIAL

PUBLISHING & SALES

Kris Bevill Editor kbevill@bbiinternational.com

Joe Bryan CEO jbryan@bbiinternational.com

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Mike Bryan Chairman mbryan@bbiinternational.com

e-mail to kbevill@bbiinternational.com. Letters should include the writerâ&#x20AC;&#x2122;s full name, address and telephone number, and may be edited for purposes of clarity and space.

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ART

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ETHANOL PRODUCER MAGAZINE

January 2010

The Way I See It

And the Survey Says … This issue of EPM contains the most recent industry job survey data. The participation in this survey by ethanol producers and employees from around the country was excellent, giving us the ability to report with a high degree of accuracy on the employment statistics of the domestic ethanol industry. Estimates are that the direct and indirect jobs created by the U.S. ethanol industry are nearly 500,000. These are domestic jobs, jobs in rural America, jobs that allow people to buy homes, boats, cars, to save for retirement, to educate their children and to improve their standard of living. The revenue generated by these jobs creates tremendous economic stimulus to Wall Street and Main Street. The economic impact of the ethanol industry is in the billions of dollars. This is clearly not an industry that can be brushed off as insignificant. The importance of the domestic ethanol industry to the vibrancy of the U.S. economy, especially the rural economy, cannot be overstated. Recently, there have been numerous issues raised about the domestic ethanol industry. I’ll simply state that the larger the ethanol industry gets, the greater its economic impact, the more jobs it creates and the greater impact it has on the oil industry, the louder and more in-

tense and outlandish the protests will become. I invite you to read the data contained in this issue. Job satisfaction is high, longevity is second to none and nearly all of the employees in the industry have full health insurance coverage and outstanding ancillary benefit packages. These are good, high-paying jobs that help make living in a rural community worthwhile and affordable. At a time when unemployment in the United States is in double digits, when people are losing their homes and the government is spending billions of dollars in bail-out money, the ethanol industry continues to contribute to our economic well-being. And the industry is still growing. The ethanol industry has earned its rightful place in America’s domestic energy pool. That’s the way I see it.

Mike Bryan Chairman mbryan@bbiinternational.com

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creates a dramatic boost in the efficiency of both plants. The Danish modern design also houses the new Inbicon Biomass Technology Campus. It’s home to R&D as well as our client and partner center. Here we’ll foster worldwide collaboration with scientists, owners, financiers, and construction executives on everything from quality control to revenue enhancement to staff training. Join us in the knowledge exchange that keeps us continuously improving our process. By spring, we’ll have the plant in full operation, continuing to optimize it. So if you didn’t come for the opening, come for the open house we’ll arrange just for you. Call Thomas Corle at 01.717.626.0557 or e-mail info@inbicon.com.

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Business&People Ethanol Industry Briefs

Independent biofuels supply chain management firm Aska Energy, has launched a rail optimization clearinghouse geared toward the ethanol industry. Ethanol producers can participate in “swaps” facilitated by the company as a way to reduce shipping costs and turn-around times. According to company president Dan Gordon, swap participants save up to 10 percent of their original freight costs. Gordon said optimization swaps are standard operating procedure in the petroleum industry, but not yet commonly used in the ethanol industry.

Jonathan Silver has been named executive director of the U.S. DOE’s loan program office and will oversee the loan guarantee program and the advanced technology vehicles manufacturing loan program as well as manage the all of the department’s alternative energy investments. Prior to his appointment to the DOE, Silver was a venture capitalist and managing general partner of Core Capital Partners, an early-stage investor in alternative energy, advanced manufacturing, telecommunications and software. He also previously served as a policy advisor to the Secretaries of Commerce, Interior and Treasury in the 1990s and was a member of the team that negotiated the first clean car agreement with the nation’s auto manufacturers. 14

Vancouver, British Columbia-based cellulosic ethanol developer Syntec Biofuel Inc. has retained Investor Awareness Inc. as its investor relations firm. The Chicago-based firm specializes in accelerating growth in the value of small to mid-size companies and will be responsible for creating outreach programs to increase Syntec’s visibility in the investment community and spread awareness about its recent developments. According to the company, Syntec has developed a thermochemical process to gasify various feedstocks and produce ethanol as well as biomethanol, propanol and butanol.

Salco Products Inc., a supplier and manufacturer of products for the freight transportation industries, has received testing results of its improved chevron-style manway tank car nozzle gasket. The gasket, which was developed to enhance sealing on tank cars with hinged manways, was found to have greater overall compression and greater sealing uniformity between the chevrons and around the nozzle compared to a flat gasket. The company said the gasket’s design helps eliminate non-accident releases at the manway and also allows for better compliance with

non-uniform cover and nozzle forces that arise from the bolting pattern.

Green Plains Renewable Energy Inc. has appointed Michelle Mapes as executive vice president - general counsel and corporate secretary. She will be responsible for all legal and regulatory affairs for the company and will report directly to Todd Mapes Becker, GPRE’s president and CEO. Prior to joining GPRE in September as its general counsel, Mapes was a partner at Husch Blackwell Sanders LLP, where she focused her practice in renewable energy. In addition, Wayne Hoovestol has resigned from his position as chief strategy officer of the company, but will retain his seat as chairman of the board. “I feel fortunate to have helped the company get to this point and I leave knowing the company is in good hands,” he said.

CHS Inc., has appointed Josh Blaisdell as vice president of its new corporate compliance department. Blaisdell joined CHS in 1990 and has Blaisdell

served as the company’s tax director since 1995. In his new role with CHS, he will lead the company’s overall domestic and international compliance and audit programs, and will be responsible for corporate compliance and results, including government rules and regulations and development of company policies and procedures. Blaisdell will also be in charge of the implementation and maintenance of compliance programs, policies and procedures. He will report to David Kastelic, senior vice president of the legal and compliance department.

Well-known corn grower and ethanol industry member Gary Pestorious has joined the board of directors of Growth Energy. His is replacing Darrin Ihnen, who left the board to assume the role of president of the National Corn Growers Association. Pestorious is a charter member of the Minnesota Corn Growers Association and has served as chairman of Poet Biorefining - Glenville in Albert Lea, Minn., for 10 years. He also serves on the boards of Poet Biorefining - Hanlontown in Iowa and Poet Biorefining - Lake Crystal in Minnesota and is chair of the SoyMor Biodiesel LLC plant in Minnesota.

ETHANOL PRODUCER MAGAZINE • January 2010

Sponsored by

ethanol production plants. The next step for the companies will be to build a mobile feedstock testing unit that is expected to be operational by early 2010.

pany to develop and distribute new technologies for ethanol production, automation and hydroponics.

California-based industrial biocatalyst developer Codexis Inc. has named Robert Lawson as senior vice president and chief financial officer. In his new position, Lawson will be responsible for the company’s financial, accounting and information technology operations. Prior to joining Codexis, Lawson was employed by Intuit, where he held a series of senior financial management positions, most recently serving as vice president of the finance-consumer group.

INEOS Bio has selected KBR Inc. to serve as its engineering contractor to develop the front-end engineering and design for its first advanced bioenergy plant. INEOS Bio’s technology focuses on converting low-cost carbon materials, including waste, into ethanol and renewable energy. According to INEOS Bio, work on the bioenergy facility’s commercial design began during the second half of 2008. Front-end engineering and design work is scheduled to be complete in early 2010, with commercial production expected to commence in 2011.

GreenHouse, distributor of the E-Fuel MicroFueler, has partnered with Allard Research and Development, a company that designs and builds custom ethanol production systems. GreenHouse now holds the exclusive license to distribute Allard’s technologies and provide ethanol production services to soft drink companies and government agencies. According to GreenHouse, the partnership will allow the com-

Tenaska Biofuels LLC and Tri-State Financial LLC have entered into a two-year tolling agreement that will allow ethanol production to resume at Tri-State’s Rosholt, S.D.-based North Country Ethanol plant. The 26 MMgy facility originally began operations in 2005. In October 2008 the facility was idled as the original ownership entered bankruptcy proceedings.

ETHANOL PRODUCER MAGAZINE • January 2010

Under the tolling agreement, Tenaska Biofuels will purchase corn and natural gas, which Tri-State will use to produce ethanol and distillers grains. Tenaska Biofuels will own all materials processed at the facility and will market the plant’s ethanol and distillers grains products. The facility was scheduled to resume operations in mid-November.

by Gary Smith, who retired after 29 years with the company. Conrad has been employed by The Andersons since 1984, most recently serving as the assistant treasurer. The Andersons also recently named John T. Stout Jr. to the company’s board of directors. Stout currently serves as the CEO of Plaza Belmont Management Group LLC and has served on the economic advisory council of the District Ten Federal Reserve Bank for the past six years.

Michiel van Lookeren Campagne has been named president of Syngenta Biotechnology Inc. In his new position, van Lookeren Campagne will lead the company’s global biotechnology research and development efforts at both of the company’s biotech facilities—Syngenta Biotechnology, the company’ s North American biotechnology headquarters in South Carolina-based Research Triangle Park, and Beijing-based Syngenta Biotechnology China Co. Ltd.

Cambridge, Mass-based Verenium Corp. has entered into an agreement with Value Prior to Pulping to evaluate the effectiveness of its C5 cellulosic ethanol production technology on hemicellulose feedstock generated by the pulp and paper process. VVP is an organization that was created by the Agenda 2020 Technology Alliance, which is a special project of the American Forest and Paper Association and CleanTech Partners Inc. EP

Nicholas C. Conrad has accepted the position of vice president of finance and treasurer at The Andersons Inc. The position was recently vacated Conrad

SHARE YOUR INDUSTRY BRIEFS To be included in Business & People, send information (including photos and logos if available) to: Industry Briefs, Ethanol Producer Magazine, 4650 38th Ave. S. Suite 160, Fargo, ND 58104. You may also fax information to (701) 373-0638, or e-mail it to kbevill@bbiinternational.com. Please include your name and telephone number in all correspondence. 17

COMMODITIES REPORT

Natural Gas Report By Brad Smith, U.S. Energy Services Inc.

Current oversupply won’t last Nov. 17—Natural gas prices collapsed along with the economy in 2008-‘09. While industrial demand decline is typically the most cyclical factor, the collapse also impacted the residential and commercial sectors. Power generation, which has been the main source of growth for natural gas demand in the past decade, also suffered a decline in 2009. However, gas demand for power still grew in 2009 because many power generators have been able to displace coal with gas on a regional basis. Coal displacement and exchange traded funds’ (ETFs) buying have been the main sources of price support in the second half of 2009. However, as prices have rebounded from September lows, coal displacement demand is in significant decline. Heading into winter, the amount of gas in storage is at all-time records and creating system pressures and congestion on the pipes. With the price decline, producers have cut the rig count by 54 percent from Sept. 2008 highs. Sustained economic growth in early 2010 will be hampered by an end to the inventory restocking cycle, unemployment and con-

sumer spending. On the supply side, with the year-over-year drop in rig counts, the market is forecasting conventional supply loss that may exceed the gains in unconventional drilling. Based on inconsistent, weather adjusted weekly storage injections, overall supply levels appeared to decrease in October and November. The market is divided on whether this tightening supply trend will result in an undersupply in mid- to late-2010, requiring higher prices to incentivize increased conventional drilling. Increased shale accessibility and producers who are unwilling to curtail production voluntarily have led to a sticky supply situation. The increasing rig count, higher productivity provided by unconventional drilling, temporary shut-in production returning, yet to be tiedin wells, high storage levels and a reversal of coal-to-gas displacement will all work to limit upside to current 2010 prices. Key factors to watch will be economic recovery and production data. EP Brad Smith, price risk manager, can be contacted at bsmith@ usenergyservices.com.

Corn Report By Jason Sagebiel, FCStone

Delayed harvest keeps people guessing Nov. 23—This season, the corn market experienced the slowest harvest season of the past 25 years. Wet conditions kept farmers out of the fields, thus delaying corn harvest. By comparison, one of the most recent slow corn harvests was in 1992. That year, only 59 percent of the corn was harvested by the second week of November. This year, only 54 percent had been harvested by that time. One thing to note is that, despite 1992 being one of the slowest harvests on record, it was also a new record yield harvest. In 2009, a slow harvest also resulted in a new record yield. Wet weather has led to some concerns about corn quality and the effects that will have in the demand pipeline, especially for ethanol. The USDA left corn demand for ethanol and feed unchanged in its November report. The export estimate was reduced by 50 million bushels despite a weakening U.S. dollar. World corn carryout this year is projected to decrease from the previous estimate by 3.84 million metric tons to 132.41 million metric tons. One year ago, the USDA estimated world carry-out at 145.95 and 129.72 in the ‘07/’08 marketing year. The accompanying graph illustrates the new record yield (as of Nov. 23). Prices into the spring will be met with great appreciation 18

from the speculative/inflation community. Being long on a commodity of any sort continues to spark interest, thus making fundamental trading even more difficult. Managing the entire margin will be crucial for ethanol profitability going forward. EP ETHANOL PRODUCER MAGAZINE • January 2010

COMMODITIES REPORT

DDGS Report

($/gallon as of Nov. 23)

RACK

REGION

SPOT

West Coast

2.258

2.22

Midwest

2.19

2.25

East Coast

2.29

2.44

By Sean Broderick, CHS Inc.

Toxin concerns replace shipping issues Nov. 24—The DDGS market has recently experienced a round of good news/bad news scenarios. The good news is it appears the DDGS/ hazardous materials shipping situation has been partially resolved. Although the International Maritime Organization classification of DDGS as a hazardous material remains, shippers and insurers have found ways to address this issue, which should open up opportunities in the Gulf of Mexico as winter progresses. It would have been nice to if this had been resolved before the impending closure of the northern Mississippi, but it is still welcome news. The bad news is the discovery of mycotoxins in corn. Although early reports were blown way out of proportion, elevated levels of vomitoxin have been found in DDGS. Howev-

Regional Ethanol Prices

er, most plants were testing inbound corn and were in front of the situation. Hopefully none of the elevated levels found their way into the export market because toxin levels are already at the top of every importer’s list of concerns. Domestically, demand has been very steady. Still a lot of hand-tomouth buying, but the optimism of ethanol plants and livestock producers has led to increased forward trading, even if it is just for the first quarter of 2010. There is still strong demand in the container market, mostly from China. Going ahead, supplies of distillers grains will increase as plants operate at maximum capacity. Exports will need to keep pace, but concerns of available containers after December shipments will keep exporters on edge. EP

SOURCE: DTN

Regional Gasoline Prices ($/gallon as of Nov. 23)

REGION

SPOT

RACK

West Coast

1.9906

2.0725

Midwest

1.9092

2.0590

East Coast

1.9814

2.0603 SOURCE: DTN

DDGS Prices ($/ton) LOCATION

NOV. 2009

OCT. 2009

NOV. 2008

Minnesota

110

125

California*

170

165

Chicago

136

130

105

Buffalo, N.Y.

145

150

120

Central Florida

153

155

145

*Central Valley

SOURCE: CHS Inc.

Corn Futures Prices DATE

(Dec. corn, $/bushel)

HIGH

LOW

Nov. 20, 2009

3.99

3.90 1/4

3.91

Oct. 20, 2009

3.89 1/2

3.79 1/4

3.84 1/2

Nov. 20, 2008

3.69 3/4

3.61

3.63 3/4 SOURCE: FCStone

Ethanol Report By Rick Kment, DTN Biofuels Analyst

Strong ethanol demand continues Nov. 23—Overall commodity prices have experienced market volatility, before rebounding in mid-November after new investment funds entered the market. The U.S. dollar continued to struggle as concerns of stable interest rates, along with strength in overseas markets, kept investors away from financial investments. At the same time, the Dow Jones posted a 13-month high in the third week of November, and the support in the stock market drove gold to an all-time new high. All this points to additional investments stepping into the energy and gasoline markets at a time when traditionally the market is moving significantly lower. Moving into December, crude oil was hovering near the $80 per

barrel level, although it was unable to break that barrier. Downstream, gasoline in the futures market was stuck around the $2 per gallon level. The end of the year could be very interesting in the energy markets, as most of this movement will be more associated with the investment value of commodities moving into 2010. Ethanol demand continues to increase with the surge in overall usage and a renewed uptick in corn prices. In late November, the fundamentals of the grain market had not changed from previous months and overall harvest pressure remained. Strong investments in commodities have helped to elevate ethanol markets above $2 per gallon. EP

ETHANOL PRODUCER MAGAZINE • January 2010

Cash Sorghum Prices ($/bushel) NOV. 19, 2009 OCT. 22, 2009 NOV. 14, 2008 Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

3.44 3.38 3.17 3.47 3.50 3.93

3.49 3.44 3.24 3.56 3.46 4.36

2.95 2.80 2.97 3.10 2.97 3.88 SOURCE: Sorghum Synergies

Natural Gas Prices

($/MMBtu)

NOV. 2009

OCT. 2009

NOV. 2008

NYMEX

4.289

3.73

6.469

N. Ventura

4.81

3.85

6.08

Calif. Border

4.62

3.80

3.91

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol Production Output August 2009

727,000

July 2009

728,000

August 2008

647,000

(barrels/day)

SOURCE: U.S. Energy Information Administration

VIEW FROM THE HILL

2010 Ins and Outs The start of each New Year provides an opportunity to look back at the year that was and speculate on the year that will be. The past few years, I have used this column as an opportunity to take a well-meaning, tongue-in-cheek look at the industry. I have tried to analyze the trends going on in the industry and also provide what I hope is a little bit of entertainment. So, if you will indulge and read this with the spirit in which it was intended, I proudly present the 2010 In and Out List: OUT Food versus fuel Stimulus package Black liquor loophole Net energy balance E85 stand-alone pumps NEVC Blended fuels Corn stalks Chairman John Dingell Secretary Bodman DOE loan guarantees Methane digesters Al Gore’s “Our Choice” 10.5-billion-gallon ethanol mandate Renewable fuel standard waivers Liquidation Airshed modeling UNICA Ethanol imports $8 per bushel corn Ethanol use mandates Social sciences EthanolRFA@aol.com EPIC Indy 500 RFA Daily Clips

IN 162.9 bushels of corn per acre Jobs bill VEETC extension International indirect land use change Blender pumps RFA market development team Drop-in fuels Algae Chairman Henry Waxman Secretary Chu USDA loan guarantees Gasifiers Consumer choice 12-billion-gallon ethanol mandate Cellulose credits Consolidation Life-cycle analysis Global Renewable Fuels Alliance Ethanol exports $4 per bushel corn Low carbon fuel standards Social media @EthanolBob BYOEthanol NASCAR RFA Smartbrief

Bob Dinneen President and CEO Renewable Fuels Association 20

ETHANOL PRODUCER MAGAZINE • January 2010

RFA UPDATE

w w w. e t h a n o l R FA . o r g

RFA launches GPS application for E85 locations The Renewable Fuels Association launched a new GPS application for Garmin users that maps out the location of E85 stations all across the country. Using the Garmin navigation system, flex-fuel vehicle (FFV) owners can download station locations and program their device to guide them to upcoming E85 stations. To download this Garmin application, visit www.chooseethanol.com for stepby-step instructions. There, consumers can download individual state data, a combination of states, or national data directly to their computer and then to their Garmin devices. Directions for installing this point of interest data are now available.

EPA encouraged to approve E12 as interim ethanol blend In anticipation of a delayed E15 rule from the U.S. EPA, the Renewable Fuels Association issued a pathway to E12, illustrating how the EPA can authorize the use of E12 under existing regulations. Based on authority provided under the Clean Air Act and on previous fuel approvals, the EPA could deem E12 to be “substantially similar” to E10 and other fuels already approved for use. The issue centers on the oxygen content of the fuel and variances currently recognized by the EPA. Starting with the “gasohol” waiver in 1978 and building upon regulations through the years, the EPA has already allowed for fuels with oxygen contents equivalent to E12 blends. A complete and detailed outline of the evidence supporting this pathway can found in the RFA’s comments to EPA on the E15 waiver request, available on the RFA’s website at: http://renewablefuelsassociation.cmail1.com/T/ ViewEmail/y/01431982E94079C2.

ETHANOL PRODUCER MAGAZINE • January 2010

Dinneen addresses World Ethanol members RFA president and CEO Bob Dinneen spoke at the World Ethanol 2009 conference in Paris on Nov. 2 and addressed the need for ethanol on a global level. “We need to find new ways to work together, to grow this industry, to develop new technologies, to make and market new products, to answer the attacks upon us and to push for public policies that recognize the worldwide need for cleanburning biofuels that can power our planet towards a more sustainable energy future,” he said. “Let’s face it: renewable fuels have only taken hold in countries such as the U.S. and Brazil that have created and sustained programs to encourage their production. As we continue to grow this industry, it is important that countries be allowed to create their own programs and develop their own biofuels industries, using whatever indigenous raw materials are available to them, without having to subsidize the biofuels production of others.”

BIObytes Ethanol News Briefs

Alfa Laval to supply Vietnam plants

The U.S. DOE is expected to release a roadmap to algal biofuels technology by January which will provide an assessment of current algae technology and determine how to commercialize the algae-to-biofuel process.

Alfa Laval recently announced it has received a second SEK 100 million ($15 million) order from the PetroVietnam Group for equipment and engineering solutions that will be installed in an ethanol plant. The second order will support the development of a cassava-based ethanol facility in northern Vietnam. The first order, which was announced in mid-October, will support the development of a similar facility in central Vietnam. Both orders are scheduled to be delivered in 2010. Heat exchang-

ers supplied by Alfa Laval will be used in the plants’ starch-based fermentation, distillation and dehydration processes. The PetroVietnam ethanol facilities are part of Vietnam’s biofuel development program, which was ratified by the nation’s government in 2008. The program aims to partially replace traditional fuels with renewable energy sources, and includes a goal to produce 86 million gallons of renewable fuel, including ethanol, by 2015.

DOE places emphasis on algae development The U.S. DOE is developing a National Algal Biofuels Technology Roadmap to assess the current state of algae technology and determine how to commercialize algae-to-biofuel processes. The agency intends to focus on developing advanced drop-in biofuels, such as those that are being developed from algae, in a more accelerated fashion than cellulosic ethanol. According to Valerie Reed of the DOE’s Office of Energy Effeciency and Renewable

Energy, the DOE is seeking to develop algae-to-biofuels pilotscale demonstration facilities within 10 years. The agency has already dedicated $50 million toward this development and hopes to learn from some of the mistakes made in developing cellulosic ethanol. “Cellulosic ethanol was done in a piecemeal fashion, and this consortia concept is meant to bring together all the experts necessary, with some key targets in mind,” she said.

Equipment manufacturers showcase cob harvesters Poet LLC hosted a field at its 25 MMgy pilot-scale plant in Scotland, S.D. in November to showcase equipment that can be used to harvest cellulosic feedstocks such as corn cobs. Agco Corp., a manufacturer and distributor of agriculture equipment, including biomass bailers, was one of the companies to display equipment. “Biomass is 22

a major area of interest,” said Agco spokesman Reid Hamre. “We were very proud to participate for the first time in Poet’s field day.” Officials from the USDA and U.S. DOE were also on hand to speak with area farmers about the financial assistance available to procure equipment and pay for feedstocks.

The portion of the U.S. EPA’s proposed rule for the RFS2 would require ethanol producers to track and verify the origins of their feedstock, a nearly impossible task, according to members of the ethanol industry.

South Carolina focuses on trees Clemson University Restoration Institute and South Carolina-based ArborGen LLC, a commercial tree producer, have partnered to develop woody biomass as dedicated biofuels feedstock. The partners will identify areas of joint research, including plant genetics and development, field trials, equipment engineering, material handling and woody biomass pretreatment. “This relationship marks a big move for the collaborative into trees as a feedstock,” said Clemson University Re-

search Institute corporate operations director Karl Kelly. “ArborGen is a key industry leader that can develop our existing switchgrass-to-ethanol program into other forms of biomass.” In addition Clemson will bring ArborGen into the Bioenergy Collaborative, which is a public-private partnership developed to investigate commercial ethanol production in South Carolina. Other members of the collaborative include, Fagen Engineering LLC and Dyadic International Inc.

ETHANOL PRODUCER MAGAZINE • January 2010

Study: climate policy will create jobs

PHOTO: AMERICAN LUNG ASSOCIATION OF ILLINOIS

A new national economic impact study performed at the University of California-Berkeley found that passage of a comprehensive national climate policy will create jobs, increase personal income and boost the nation’s gross domestic product, without increasing energy costs to the consumer. The study was an organized collaboration across three universities, said David RolandHolst, lead author of the study and economics professor at UC-Berkeley. To complete the study, researchers created a stateof-the-art forecasting model that

Illinois Gov. Pat Quinn fuels up with E85.

200th E85 location opens in Illinois The Shiloh, Ill.-based Green Mount Motomart became the 200th Illinois fueling station to offer E85 on Oct. 23. As part of the festivities, each flex fuel vehicle (FFV) owner who filled their car with E85 on that day received a $10 coupon to be applied to their fuel purchase. Illinois Gov. Pat Quinn spoke at the event. “It’s vitally important that we continue to bring E85 stations to all parts

of Illinois,” he said. “E85 saves money when you fill up your tank, supports Illinois agriculture and jobs, and keeps our air clean.” The event was sponsored by Motomart, the Mon-Clair County Corn Growers Association, the Illinois Corn Marketing Board, the American Lung Association in Illinois, and the Illinois Renewable Fuels Association.

ETHANOL PRODUCER MAGAZINE • January 2010

provides national- and state-level detail of the economic effects of national climate policy. According to Holst, there are three pillars of national climate policy that must be delivered in unison to order to realize these benefits: reducing carbon emissions, improving energy efficiency and promoting renewable energy alternatives. Holst said Michigan specifically stands to gain from such a policy, as the state could benefit approximately 40,000 additional jobs and increase personal income by $600 to $1,000 per person by 2020.

UN review favors sugarcane over corn The United Nations has released an overview of recent major research reviews of firstgeneration biofuels from experts around the world. The UN report highlights a wide variety of issues related to global biofuels production, including current trends, environmental impacts and the potential impacts of increased demand and land use change. The report stated that net greenhouse gas (GHG) savings resulting from emissions associ-

ated with biofuels production vary depending on feedstock used, conversion technology and methodological assumptions. Sugarcane was found to have the highest GHG savings, ranging from 70 percent to more than 100 percent when compared to emissions from fossil fuels. Comparatively, emissions from corn ethanol were found to have a savings of 60 percent to a 5 percent increase in emissions over fossil fuels.

DOE funds development of feedstock supply system The U.S. Department of Energy recently awarded $21 million in funding to develop supply systems to handle and deliver feedstocks for cellulosic biofuels production. Columbus, Ohio-based FDC Enterprises Inc. was one of five winners to share in the

$21 million grant. FDC Enterprises plans to complete design, fabrication and demonstration of three types of innovative harvest and biomass handling machines, including a singlepass mowing and baling operation, a bale picking truck, and a self-loading trailer.

PHOTO: KEITH WELLER, USDA

Chemist Kevin Hicks checks the color and quality of a corn fiber oil sample.

GreenShift awarded patents, files lawsuit GreenShift Corp. recently announced that the U.S. Patent and Trademark Office has issued two patents to its wholly owned subsidiary, GS CleanTech Corp., for advanced processing methods for corn oil extraction. GreenShift estimates the ethanol industry currently produces more than 20 million barrels of corn oil per year. The oil can be used as a feedstock for biodiesel and renewable diesel, among other applications. The ‘858 patent, Method of Processing Ethanol Byproducts and Related Subsystems, awarded Oct. 14, is for GreenShift’s proprietary approach to the extraction of corn oil. The ‘729 patent, Method of Freeing the Bound Oil Present in Whole Stillage and Thin Stillage, announced Oct. 27, details GreenShift’s process for extracting the corn oil before the grains are dried. David Winsness, GreenShift’s chief technology officer and co-inventor of the company’s extraction technologies, describes the process as unique in the industry. “There are no other technologies that have been

developed for corn ethanol producers that begin to approach even a fraction of these results in the entire history of the ethanol industry,” he said. “The ‘858 patent covers the core of our extraction platform. The ‘729 patent builds off the ‘858 patent to enhance yield and optimize energy utilization.” Ethanol plants capturing corn oil can realize an added benefit from selling the oil. In addition, an efficiency improvement is created by removing the oil, which acts as an insulator during the drying process. GreenShift estimates an ethanol plant’s savings at roughly 13 cents per gallon of ethanol. According to GreenShift, the company’s patented and patent-pending extraction technologies can increase biofuel yields per bushel of corn by 7 percent, while reducing the energy consumption and greenhouse gas intensity of corn ethanol production by an estimated 21 percent and 29 percent, respectively. Immediately after it received the patents, GS CleanTech filed legal action in the

U.S. District Court (Southern District of New York) against GEA Westfalia Separator Inc. and others in the industry for infringing on GreenShift’s U.S. patent covering corn oil extraction technology. “The economic and environmental benefits to the ethanol industry made possible by our portfolio of patented and patent-pending extraction technologies are remarkable,” said Kevin Kreisler, GreenShift’s chairman and CEO. GreenShift contends that seven years after it started offering its corn oil extraction equipment to the ethanol industry and well after its patent applications were published, Westfalia trivialized those innovations as it solicited and influenced customers in the ethanol industry to use Greenshift’s now-patented technology. GreenShift’s team demonstrated the feasibility of its corn oil extraction technology for the first time in 2004, according to the company. —Craig A. Johnson

ETHANOL PRODUCER MAGAZINE • January 2010

PHOTO: AUSTIN D. LYNCH

Leafcutter ants build enormous nests that can house hundreds of thousands of ants. The leaves they collect for food also provide media for the cocktail of enzymes researchers may use for ethanol production.

Leafcutter ants may provide cellulosic solution Finding natural solutions to difficult chemical conundrums is the purpose of the Great Lakes Bioenergy Research Center in Madison, Wis. Researchers there are looking to leafcutter ants for new enzymatic processes that will further efforts to commercialize cellulosic ethanol. The ants, which are found in tropical climates and live in enormous colonies with populations that can number in the millions, have evolved several features over time that make their particular cocktail of enzymes attractive to researchers. Leafcutters are considered a pest for most agricultural operations in Central and South America. “A mature colony can defoliate a tree overnight,” said Garret Suen, a post doctoral research fellow at the GLBRC. “They’re really a major agricultural pest in the tropics. Anyone who farms oranges or papaya loathes leafcutters. If they get into a grove, they can devastate it overnight.” It may seem counter-intuitive to look

to such a destructive pest for an economic benefit to ethanol production, but this tiny nuisance could also provide a big benefit from the enzymes it creates. Converting plant cell walls into simple sugars is a major challenge for scientists and leafcutter ants, which tend massive fungal gardens of their decaying byproducts, may present a worthwhile solution. Researchers at the GLBRC are studying multiple enzymes used by the ants in the fungal gardens to craft the perfect cocktail for ethanol production. “That cocktail is probably a mixture of about six or seven enzymes,” Suen said. “One is definitely a cellulase that does the majority of the breaking of the beta -1,4 glycocitic link between the glucose and cellulose chain. But then there are other things, such as cellulose-binding modules, a protein which binds the cellulose itself, and then allows the cellulase to do its job.” The researchers recently received a U.S. DOE grant to further study this cellulosic possibility, but prior to receiving

ETHANOL PRODUCER MAGAZINE • January 2010

the grant the GLBRC was already studying the unique symbiotic relationship between the ants and their fungal gardens. Over 50 million years, the ants and the fungus have evolved to the degree that if the ants were to die, or are removed from the system, the fungus dies as well, and vice versa. “The fungus-growing ant system is obligate, and one of the most complex symbioses that’s described in nature,” Suen said. Research at the GLBRC is providing a new look at some very old progress made in the ants’ natural communities. With the leafcutter ants, the mixture of enzymes works in balance, but that nuanced formula would be nearly impossible to synthesize in a lab. “There is a renaissance, and researchers are going back to natural communities—an area called natural products. These are novel compounds in that no one has ever seen them before,” Suen said. —Craig A. Johnson

PHOTO: BP PLC

BP implements global biofuels strategy

A road tanker refuels at the BP plc renewables demonstrator site in Hornchurch Connect, Essex, United Kingdom.

BP plc’s alternative fuels sector may have expanded this year to include biobutanol, but the company continues to focus on cellulosic ethanol. According to the company, the petroleum giant’s biofuels strategy is three-pronged and includes: advancing a sugarcane-to-ethanol business in Brazil, building a cellulosic biofuel business in the U.S., and developing advanced molecules such as biobutanol. The first step of BP’s plan to build its cellulosic presence in the U.S. is through its joint venture with Verenium Corp. to produce cellulosic ethanol in Florida. The 50-50 partnership, named Vercipia Biofuels, will commercialize technology that is currently being demonstrated at Verenium’s demonstration-scale facility in Jennings, La. Groundbreaking on the 36 MMgy Highlands County facility is set for this year, with commercial production scheduled to commence in 2012. At a recent U.S. House of Representatives subcommittee hearing on second-generation biofuels, BP Biofuels North America LLC President Susan Ellerbusch said the joint venture also has plans to develop a second site in the Gulf Coast and anticipates using energy crops, such as energy cane, as feedstock at all of its facilities. “We believe energy grasses will be an essential part of the future U.S. feedstock mix, given their

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high yield, yield improvement potential and reduced pressure on land resources,” she said. “BP intends to broaden our energy grass feedstock portfolio [and] to continue to scale up the production capacity of future units as we move toward a cost structure that can compete with traditional transport fuel sources.” However, while it continues to tout its investments in cellulosic ethanol, BP officials are quick to point out some of the fuel’s challenges. BP Biofuels CEO Philip New told attendees at an Oct. 1 climate change seminar that the small percentage of ethanol currently allowed for use in U.S. autos and the fuel’s inability to be transported via existing infrastructure have led BP to also develop biobutanol. “Biobutanol gives more miles per gallon than ethanol,” New said. “It can be blended in higher concentrations than ethanol. And it doesn’t mix with water, so we can easily put it into pumps, pipes and refineries. It means that petrol firms will be able to comply with regulations at lower cost.” BP’s biobutanol work is being conducted by Butamax Advanced Biofuels LLC, a joint venture developed in July 2009 between BP and DuPont Biofuels. The company plans to display some of its technology at a demonstration-scale facility in Hull, in the United Kingdom, this year. The first commercial-scale biobutanol facility is expected to begin operating in 2013. Additionally, Vivergo Fuels, a joint venture with DuPont and

British Sugar, is constructing a 110 MMgy wheat-to-ethanol production facility on a BP Chemicals site at Saltend, Hull. The plant is scheduled to be begin ethanol production in 2010, however, BP plans to convert the facility to produce biobutanol once its technology has been proven. Ellerbusch told House members that BP views biobutanol usage as a method to increase the use of biofuels. “BP believes biobutanol will help to accelerate the adoption of biofuels and assist in overcoming the blend wall, so that the U.S. can meet targets for reducing greenhouse gas emissions from transport more quickly,” she said. The third prong of BP’s biofuels strategy is to increase its presence in the Brazilian sugarcane-to-ethanol market. The company holds a 50 percent stake in Tropical BioEnergia SA, which currently operates one sugarcane-to-ethanol facility and plans to expand to several locations. Of all of the alternative fuels BP is exploring, the company has made it clear that it does not view corn ethanol as a viable option. “Of the plethora of potential future technologies—photosynthetic algae, gasified biomass, etc., we believe that the technologies most likely to continue to meet our selection criteria are those that involve the conversion of low-cost, low-carbon sugars,” New said. —Kris Bevill

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PHOTO: UNIVERSITY OF CALIFORNIA, RIVERSIDE

Researchers add cellulosome to yeast

A University of California, Riverside research team led by Wilfred Chen, center, professor of chemical engineering, has constructed a synthetic cellulosome in yeast that has the potential to allow for the simultaneous hydrolysis and fermentation of cellulosic biomass.

Researchers at the University of California, Riverside (UCR) have successfully constructed a synthetic cellulosome in yeast. This development may have important implications for the cellulosic ethanol industry by potentially allowing simultaneous hydrolysis and fermentation of cellulosic material, reducing the cost of production. Cellulosomes are self-assembled structures naturally found on the exterior surfaces of certain bacteria that allow these organisms to efficiently break down cellulosic material. The cellulosomes contain multiple types of cellulases, which are enzymes that break down cellulose, optimally spaced for maximum activity. Essentially, cellulosomes are the structures certain bacteria use to degrade cellulose, said Wilfred Chen, a professor of chemical engineering at UCR who is leading the project. Rather than secreting cellulases such as fungus to, these bacteria actually anchor a whole bunch of different cellulases on their surface. This allows them to very efficiently complete hydrolysis of the cellulose without using a lot of enzymes, Chen continued. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a very clever way to increase the efficiency,â&#x20AC;? he said. While cellulosomes occur naturally on some bacteria, these bacteria are not as ethanol-tolerant as yeast. By adding synthetic cellulo-

somes to yeast, it becomes possible to combine the hydrolysis and fermentation processes of cellulosic ethanol production. The cellulosomes found in nature are much more complex than the ones Chen’s team has produced in the lab, at least to date. “[Those bacteria] typically have 19 to 20 cellulases that display on the surface in organized cellulosome structure,” Chen said. These cellulases complete hydrolysis of cellulose, allowing the bacteria to utilize the resulting sugar as a substrate for growth, he continued. The experimental cellulosome created by Chen and his team contains three different cellulases. The yeast engineered with this cellulosome was able to multiply to high levels with cellulose as the only carbon source. Compared to controls engineered with one or two cellulases, the triple cellulase displaying yeast had higher rates of hydrolysis, demonstrating the benefit of using diverse cellulytic enzymes in a single organism. The use of multiple enzymes in the cellulosome greatly increases the efficiency of hydrolysis because heterogeneous forms of cellulose can be digested. The artificial cellulosome developed by Chen and his team is modular, and can be engineered to display ten or more different cellulases. This composition of cellulases can be tuned to optimize hydrolysis for any feedstock. While it would be possible to tailor yeast for specific feedstocks, Chen said the ideal solution is to create a system that is so intelligent it can adapt to any feedstock employed in the cellulosic ethanol production process. Although the synthetic cellulosome created by the

ETHANOL PRODUCER MAGAZINE • January 2010

team has only three enzymes right now, Chen said future research will seek to create more complex structures. “[This yeast] is the initial proof of concept,” Chen said. “What we want to do is try to build on what we know already and make much more complex structures.” He said the long term goal is to increase the number of cellulases to 10, 15 or more. Ultimately, the yeast cellulosome could enable an efficient onestep consolidated bioprocessing method by maximizing the catalytic efficiency of cellulosic hydrolysis with simultaneous fermentation. A process employing this kind of engineered yeast could potentially make the production of cellulosic ethanol more efficient and economical. While the researchers have not been working with yeast that has been genetically enhanced to optimize ethanol production, Chen said that could be part of his team’s future research. “Certainly we want to combine [the results] with some of the other genetically engineered yeast that have been proven to produce a lot of ethanol in the future,” he said. According to Chen, the research project has been ongoing for about a year and half. In late 2009, the team received a three-year grant from the U.S. DOE that will support additional research on synthetic cellulosomes. The research has also been funded in part through a grant awarded by the National Science Foundation. —Erin Voegele

DRIVE Buis

What Green Jobs Waiver Means for US By Tom Buis

ow important is the Growth Energy Green Jobs Waiver? To the ethanol industry, it represents a move toward market opportunity—establishing as much as 6 billion gallons of new capacity— at a time when our industry has recently seen ethanol plants go idle and capital investment into new technologies, such as cellulosic, dry up. Growth Energy filed the Green Jobs Waiver in March because we believe the science, technology and economics behind the requirements laid out by the Clean Air Act to raise the blend wall from E10 to E15. If the U.S. EPA grants the waiver, as we believe it should, the agency will be acting on proven data: there is more science for E15 than there ever was for E10 when that was set as regulation in the 1970s. If EPA approves the Green Jobs Waiver, it will be doing more than creating new market opportunity for the ethanol industry. The agency will help the domestic ethanol industry meet its greatest potential—to help our country create U.S. jobs, reduce pollution, and strengthen our national security by lessening our dependence on foreign oil. These goals all lie at the heart of why Growth Energy was created. Each of the major achievements seen by Growth Energy since its inception more than one year ago have been good for the ethanol industry and good for rural communities, but they have been just as important for the nation. In the “food versus fuel” debate, Growth Energy formulated the counter-attack to answer the multimillion-dollar propaganda blitz waged on ethanol and corn farmers by Big Food and Big Oil. The Growth Energy website still includes a clock that keeps a running tab of the number of days since Growth Energy first demanded an apology from

the Grocery Manufacturers Association for its misleading attacks. When the California Air Resources Board began its process to regulate ethanol, and included controversial international indirect land use change (ILUC) carbon penalties on biofuels, it was Growth Energy that amassed the body of technical data challenging CARB on the facts. We continue to fight CARB’s poorly conceived regulations. On ILUC, Growth Energy representatives persuaded the House of Representatives to amend its climate change legislation in order to nullify the toxic ILUC provision of the 2007 Energy Act that would penalize ethanol as part of the renewable fuel standard. And ultimately, there was the Growth Energy Green Jobs Waiver. We knew that the best way to increase market demand for ethanol in the United States was to seek a waiver with the EPA to raise the blend; since 1978, the EPA has granted 11 waivers for fuel additives—the first being for E10. The Growth Energy Green Jobs Waiver contains more technical data, third-party testing and independent studies than that of any approved EPA waiver request. The Green Jobs Waiver will ultimately do more than help the ethanol industry. An E15 blend could create 136,000 new jobs in the United States, eliminate the carbon that would have been released from the burning of gasoline, and reduce the amount of oil that is imported into the United States. Even without the science behind the Growth Energy Green Jobs Waiver, who couldn’t support that? Tom Buis is the CEO of Growth Energy. Reach him at TBuis@GrowthEnergy.org or (402) 932-0567.

ETHANOL PRODUCER MAGAZINE • January 2010

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TAKING STALK Greving

Efforts to Increase Sorghum Awareness Underway By Bill Greving he increased role of grain sorghum in the ethanol production process in the U.S. is a promising development for those who have spent a lifetime accepting the uncertainties of the market. But this is not a time to be complacent. I often recall the words of Will Rogers, “Even if you’re on the right track, you’ll get run over if you just sit there.” While the biofuels industry is continually evolving, it is imperative to understand not only the needs of ethanol producers, but their perceptions about sorghum. To that end, the United Sorghum Checkoff Program commissioned a survey by Agri-Energy Solutions Inc. on the use of sorghum in the ethanol industry. Unfortunately, surveys and research are often manipulated by those seeking to enhance their reputation. We viewed this research as a learning tool: how can we better serve our customers? Positive feedback tells us we’re heading in the right direction. Misperceptions tell us there is a need to raise awareness of the benefits of sorghum as a feedstock in the ethanol industry. In 2009, more than one-quarter of total domestic grain sorghum production was used in the U.S. grain-to-ethanol market. The increased utilization of sorghum by ethanol plants in the past two years is a significant step towards the USCP’s strategic goal of increasing sorghum use in the ethanol industry by 50 percent by 2011. Even slight increases in demand could mean half of the Kansas sorghum crop could be used to produce ethanol in 2010. The facts are clear: grain sorghum offers a lower cost alternative to higher priced corn for manufacturing ethanol, with similar output rates of production. But grain sorghum needs to be recognized for benefits other than cost. And as they say, the devil is in the details. In comparison to many other crops, sorghum has very little consumer awareness beyond the friendly confines of sorghum country.

Declining sorghum acres and production have led to decreased private investment in sorghum. These declines brought about not only a “technology gap” between sorghum and other crops such as corn and cotton, but a potential “perception gap.” The Agri-Energy survey provides the information that will enable USCP to close that gap. Some of the concerns raised by ethanol producers provide an avenue to speak to those within the sorghum industry about the opportunities as well as the perceived weaknesses for sorghum. The survey found that some respondents are concerned that there is not a consistent supply of sorghum, or that grain sorghum production in the U.S. does not meet with its demand potential. This underscores the need for a comprehensive education program for grain sorghum producers who sell to ethanol markets and for ethanol marketers who purchase grain sorghum. We’re working to illuminate the value of using grain sorghum in the ethanol production process. Grain-based ethanol plants in areas where grain sorghum can be grown will benefit because of its price differential and availability. Ethanol conversion kits created by the USCP are being distributed to plants across the U.S. These interactive kits provide a detailed look at the costs and technical aspects of using grain sorghum in the ethanol production process. This is the first time in the industry that a “calculator” has been created to provide bottom line numbers for sorghum and ethanol. In the new year, we are looking to not only expand upon opportunities within the biofuels arena, but also develop greater consumer awareness of sorghum. Bill Greving is chairman of the United Sorghum Checkoff Program. Reach him at wand@ruraltel.net.

ETHANOL PRODUCER MAGAZINE • January 2010

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LEGAL PERSPECTIVE McCurry

Carbon Opportunities for Ethanol Plants By Jesse McCurry espite the backlog of front-burner issues facing President Barack Obama and Congress, many analysts believe carbon legislation is a matter not of “if” but “when.” “Certainly the health, appropriations and energy bills—and just the sheer lack of time—make it a cloudy proposition though,” said Sara Hessenflow Harper, a partner with Washington-area environmental consulting group The Clark Group LLC. According to Hessenflow Harper, a real breakthrough occurred when many members of the agriculture industry came to the table to engage. This was an important step because, as Hessenflow Harper says, “If you are not at the table, you are on the menu.” Many major farm groups eventually came to oppose carbon legislation outright, but their willingness to participate at least found some offset provisions for agriculture. “The ethanol industry needs to help shape whatever comes out of a climate bill,” Hessenflow Harper said. “There are plenty of folks who want to attribute the destruction of the rain forest to ethanol and claim that it is even more carbon intensive than gasoline. A new market is going to be created nonetheless, and whether ethanol is treated fairly in that system is critical. The industry needs to not only oppose ‘bad stuff,’ but also come up with better alternatives.” Kennedy and Coe LLC partners to help plants comply with increased regulations—and identify some new revenue opportunities in the process. “Between renewable identification numbers, tax filings, the U.S. EPA and now carbon credits, it is our obligation to help position plants to mitigate risk and perhaps find added rev-

enue opportunity,” said Donna Funk, member in charge of the firm’s biofuels practice. “We’ll bring in additional resources as necessary that we trust.” Currently there are no federal compliance rules or methodology regarding carbon. Garth Boyd, senior vice president for agricultural services at Camco, a private international climate change and sustainable development company, offers ethanol plants a number of services related to carbon. “Today the market is voluntary,” he said. “Companies interested in corporate sustainability are buying carbon credits to either decrease or offset their carbon footprint. They find that it is good for their green image or for shareholder approval.” Camco offers an alternative to the Chicago Climate Exchange. “We are not a trade platform or a registry,” Boyd said. “We create and sell carbon and provide general consulting to help companies understand what risk they have in a mandated carbon environment. We also invest in projects that have potential to create carbon credits.” Boyd said Camco’s international experience and understanding of rigorous international protocols such as the Kyoto Protocol will put his company ahead of the curve once similar mandates come to the United States. “Big companies all around the world (many of which are big polluters) need to synch up with those that have credits to offer,” he said. Jesse McCurry works in business development for Kennedy and Coe LLC, a leading accounting and consulting firm focused on renewable energy. Reach him at jmccurry@kcoe.com or (316) 691-3758.

ETHANOL PRODUCER MAGAZINE • January 2010

Climate of Opportunity February 15–17, 2010 Gaylord Palms Resort & Convention Center Orlando, Florida

Why Should You Attend? “It’s the one industry event each year that brings all my customers together in one place. It’s great for business, and I wouldn’t miss it.” —Randy Hahn, CEO, RPMG, LLC

“In these tough times, face-to-face meetings are more important than ever. At the NEC, I have an opportunity to spend quality time with dozens of customers in one location.” “The material presented at the NEC is timely, providing me with the information I need to make sound business decisions throughout the year.” —Mike Jerke, General Manager, CVEC

—Robert Zmudka, Vice President & Executive Director Strategic Sales, GATX Corp.

SAVE THE DATE June 14 -17

2010

St. Louis,

Missouri, USA

www.fuelethanolworkshop.com

SALARY

2010

US Ethanol Industry Salary Survey Back by popular demand, EPM presents the results of its recently conducted salary survey of U.S. ethanol plant personnel. By Erin Voegele

ETHANOL PRODUCER MAGAZINE

January 2010

SALARY

t’s been a few years, but EPM has once again conducted a salary survey of ethanol plant personnel in the U.S. To complete the survey, EPM editorial staff formulated a series of 26 questions designed to gather basic demographic data about the employee, as well as information related to the facility where the respondent is employed. The survey was conducted exclusively online during the last two weeks of October and was distributed to more than 1,200 potential respondents. Nearly onequarter of those who received an invitation participated in the survey. Respondents self-reported the data and, because EPM did not gather the data using random sampling techniques, results may not be representative of the ethanol industry as a whole. Rather, this salary survey was conducted to provide an interesting snapshot of the respondents’ employment specifics at a single point in time.

Job Satisfaction Factors Not Somewhat Neutral Important important Unimportant Challenging Work

18%

53%

27%

Positive Atmosphere/ Morale

36%

60%

Competitive Salary

10%

42%

47%

Benefits Package

47%

42%

Job Security

36%

55%

Oppprtunity for Advancement

29%

40%

22%

Recognition by Employers/Peers

10%

27%

37%

23%

Working for the Reneawble Fuels Industry

14%

31%

33%

16%

A positive atmosphere, job security and competitive salary top the list of factors most important to job satisfaction. However, working in the renewable fuels industry is not a major factor in the survey participants' job satisfaction.

Reported Bonuses By Job Title

ETHANOL PRODUCER MAGAZINE

Amount of Bonus

Received a No Bonus Bonus in the in the Past Past 12 12 Months Months

Basic Demographic Data Almost half (47 percent) of survey respondents reported being employed by ethanol facilities with annual production capacities of 40 MMgy to 59 MMgy, while 28 percent were employed by facilities that produce more than 100 MMgy. Nearly half of respondents (49 percent) have earned a four-year college degree, with an additional 23 percent reporting that they graduated from a two-year technical college.. This is fairly consistent with EPM’s 2006 Salary Survey, in which 72 percent of respondents claimed to be college graduates. The majority of survey respondents (76 percent) were men. However, the number of women working in the ethanol industry appears to have increased dramatically over the past three years. In 2006, only 15 percent of EPM’s survey respondents were women. This year, 24 percent of the participants were female. Approximately 60 percent of survey

Extremely Important

General Manager/CEO/ Corporate Management Controller/CFC Plant/Operations Manager Plant Engineer Commodities Manager Maintenance Manager EH&S Manager Lab Manager Lab Technician Lead Operator/Operator Administrative Other - Managerment Other - Non-Management

45% 25% 38% 67% 33% 36% 33% 44% 50% 48% 74% 50% 40%

55% 75% 62% 33% 67% 64% 67% 56% 50% 52% 26% 50% 60%

Less than $10,000

25% 67% 65% 100% 75% 100% 100% 100% 100% 100% 100% 80% 89%

$10,000-$24,000

17% 22% 24% 0% 25% 0% 0% 0% 0% 0% 0% 20% 11%

$25,000$49,000

$50,000 or More

33% 11% 9% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

25% 0% 3% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

The majority of bonuses awarded to survey respondents during the past 12 months were received by those . The upper management positions. One quarter of those identified as general managers, CEOs or corporate management reported receiving bonuses of $50,000 or more.

respondents reported that they held some sort of management position within their current company, and only 2 percent reported they currently work part-time.

January 2010

Work Experience The majority of survey participants told EPM they are relatively new employees at their current company, with 74 percent stating they have been with their cur-

SALARY

rent employer for only one to five years. Only 8 percent of respondents reported being employed by their current company for more than 10 years. Only two respondents (less than 1 percent) reported having been laid off from their current position during the past 12 months. These figures may not be representative of the ethanol industry as whole, however, because survey invitations were primarily sent to work email addresses, rather than home addresses. Therefore, it is unlikely that workers who were laid off at the time of the survey participated. This is also true of those who may have lost their job due to a bankruptcy. Given the current state of the economy, it may be surprising that only 5 percent of respondents indicated they had been forced to take a pay cut during the past 12 months. When responding to a question on work history, participants reported prior employment in a wide range of industries. The three most common answers were agricultural, industrial manufacturing and food and beverage industries. However, 79 percent of respondents claim to have gained the majority of their employment experience in the ethanol industry. This is a substantial increase over EPM’s 2006 Salary Survey results, in which only 35 percent of respondents indicated they

Gross Annual Salary by Education Level Achieved Less than $40,000- $50,000- $60,000- $75,000- $100,000- More than $40,000 $49,999 $59,999 $74,999 $99,999 $149,999 $150,000 Graduate of 4-year University

34%

32%

50%

46%

41%

69%

91%

Graduate of Technical College

29%

35%

24%

17%

16%

17%

Some College or Training

20%

21%

15%

19%

35%

11%

High School Graduate

12%

17%

Results of EPM's 2010 Salary Survey show that employees with more extensive educational backgrounds earn higher salaries.

had obtained the majority of their work experience in the ethanol industry.

Salary, Benefits and Bonuses Reported salaries ranged from less than $40,000 per year to more than $150,000 per year, with only 4 percent reporting an annual salary of more than $150,000 and 17 percent indicating that they earn less than $40,000 per year. The most often reported salary level was in the $60,000 to $75,000 per year range, which represented 22 percent of respondents. Other salary categories—$40,000 to $49,000; $50,000 to $59,000; $75,000 to $99,000 and $100,000 to $149,000 per year—were nearly evenly split, with 14 percent to 15 percent of respondents reporting each.

Given the financial hardships experienced by the ethanol industry recently, it was surprising that slightly more than half of the respondents reported receiving a monetary bonus during the past 12 months. Of the 55 percent of respondents who claimed they had received a bonus, 78 percent reported bonuses of less than $10,000. However, 3 percent reported receiving a bonus of more than $50,000. By comparison, EPM’s 2006 Salary Survey showed that 63 percent of respondents claimed to receive a bonus in the prior year, with an average bonus of $17,300. Of the 51 percent of respondents who received a raise in the past 12 months, only 18 percent reported that the

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January 2010

SALARY

Salary by Job Title Less than $40,000

0% 0% 0% 0% 0% 0% 8% 11% 80% 24% 68% 6% 53%

$40,000$49,999

$50,000$59,999

0% 0% 0% 0% 0% 0% 23% 22% 20% 52% 21% 22% 0%

0% 0% 4% 33% 17% 7% 31% 50% 0% 21% 5% 11% 20%

$60,000$74,999

10% 25% 30% 22% 42% 57% 31% 17% 0% 3% 5% 28% 27%

$75,000$99,999

0% 25% 40% 22% 17% 29% 8% 0% 0% 0% 0% 22% 0%

$100,000$149,999

48% 50% 21% 22% 25% 7% 0% 0% 0% 0% 0% 11% 0%

More than $150,000

38% 0% 6% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

Management-level positions at ethanol facilities earn more than double the salaries of non-management positions, according to EPM survey respondents.

raise was given due to a promotion and/ or change in responsibility. Approximately 63 percent of those who received raises reported an income increase of less than 5 percent. Just under one-quarter (24 percent) of respondents said they are very satisfied with their total compensation package, and only 5 percent of respondents claimed to be very unsatisfied with their current compensation packages. When comparing their salaries in the

ETHANOL PRODUCER MAGAZINE

ethanol industry to what they believe others in the industrial sector earn, only 11 percent of EPM’s salary respondents said they believe they are compensated better than average. Nearly half (47 percent) reported comparable salary levels. This is fairly consistent with EPM’s 2006 Salary Survey, in which 59 percent of respondents said they felt they were compensated “about right” for what they do. When asked about opportunities for

January 2010

advancement within their current facility, only 22 percent reported that these opportunities existed. This fell to 19 percent when asked if opportunities for advancement were found outside their current facility, but within their current company. Although the past 12 months have proven to be a difficult time for the ethanol industry, results of EPM’s Salary Survey seem to reveal some positive indications. Nearly three-fourths of those surveyed reported annual salaries of more than $50,000, which indicates that ethanol plants provide their local communities with well- paying jobs. In addition, ethanol companies seem to be ahead of the curve when it comes to providing employee benefits. Although the U.S. Bureau of Labor Statistics shows that only 71 percent of private industry workers had access to employer-provided health insurance in 2008, 99 percent of EPM’s survey respondents indicated that they receive health insurance benefits. EP Erin Voegele is an Ethanol Producer Magazine associate editor. Reach her at evoegele@bbiinternational.com or (701) 373-8040.

EMPLOYMENT

Workers Available, Ethanol Producers Wanted

Representatives of the ethanol industry often list an increase of domestic jobs as one of the many reasons why ethanol production would benefit the United States. While these jobs are often thought to be new jobs, ethanol could also play a significant role in replenishing jobs that have been lost in other industries. By Kris Bevill

Bastrop, La., population 12,988, is home for a large number of skilled laborers who recently became unemployed due to the closure of the townâ&#x20AC;&#x2122;s International Paper pulp mill. The community is actively recruiting renewable fuels as a replacement industry. PHOTO: MOREHOUSE ECONOMIC DEVELOPMENT CORP.

ETHANOL PRODUCER MAGAZINE

January 2010

EMPLOYMENT

orehouse Parish and the city of Bastrop, La., suffered a devastating economic loss in November 2008 when International Paper announced it would permanently close the pulp mill it had operated there for more than 80 years. The company’s decision was not a surprise to the community. It’s been no secret that the paper industry has been lagging in recent years and a weak market and oversupply of product proved to be too much to keep the plant profitable. But for the 12,988 people who live in Bastrop, and particularly the 550 skilled laborers who were employed at the facility, lost jobs meant that commuting or moving out of the area was almost certainly their ultimate fate. Parish leaders, determined to keep a mass exodus to other communities from happening, teamed with state officials to launch economic recovery efforts. It wasn’t long before it became apparent that biofuels could be their solution. “It was a huge blow to the city to lose the plant,” says Kelsey Short, director of agriculture, food and forestry for Lousiana’s economic development agency. “It was probably one of our biggest economic development blows, particularly because it happened in a small community. The irony about Bastrop was that IP indicated that it was really a very productive, hard-working workforce. It was just that the plant had not been kept up because of a lack of reinvestment capital.” As the state economic development office representative, Short set out to meet with Morehouse Economic Devel-

ETHANOL PRODUCER MAGAZINE

January 2010

opment Corp. members to work on finding a replacement for the IP facility. The first item on the state’s do-to list was to provide funds to hire recovery planning experts. Mandeville, La.-based Taimerica Management Co. was chosen for the job and was tasked with identifying target replacement industries for the area. Short said it was obvious early on that bioenergy was a good fit to replace the hole that had been made locally by the shutdown of the paper mill. “If you look around the country, there have been other instances where paper mills have been redeveloped into some type of bioenergy assets,” he says.

Workforce Availability One of the major reasons for this easy transition from the paper industry to the biofuels industry is workforce adaptability. Taimerica reported in its recovery strategy for Bastrop that the pulp and paper industry has an unusually large concentration of blue-collar skilled trades, including industrial maintenance mechanics, stationary engineers and electricians. These skill sets fit closely with those in the metal fabrication, food processing and chemical processing industries— which includes ethanol and biodiesel production. Kay King, president and CEO of the MEDC, says most of the skilled workers who held jobs at the IP mill are still in the area. “We know that the more time goes by [since the mill’s closing], some of the workforce will begin to filter out of the area,” she says. “So, we’d like to capture another company into the area before we

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The recently closed International Paper mill in Bastrop, La., boasts close proximity to major rail lines as well as multiple feedstocks and water supplies.

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lose that workforce.” According to King, approximately 30 percent of the former IP workers are commuting to jobs at other paper mills in the area. Short says Taimerica identified the parish’s workforce as being “sticky”— meaning that residents are unwilling to relocate and will often commute or take lower-paying jobs in order to stay in the community. Short says this situation is typical in Louisiana. However, in order for residents to obtain even low-paying jobs, there must be jobs to apply for. This has been a problem in Morehouse Parish. Unemployment rates in the parish reached 16 percent in September, the highest King has seen in the five years since she joined the economic development team. Bastrop Mayor Betty Olive says while unemployment has been rather high in recent months, the community is resilient. “Our unemployment rate has been up compared to last year, but the government has been supportive of our recovery plan and that’s what we’re focused on,” she says.

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PHOTO: MOREHOUSE ECONOMIC DEVELOPMENT CORP.

EMPLOYMENT

A qualified, available workforce is essential for any industry considering a new location, but perhaps equally important

for ethanol producers is the availability of nearby feedstocks. Short says the area surrounding Bastrop is ripe with options for both corn and cellulosic producers. According to Short, Bastrop is situated on the edge of the grain producing area in northeastern Louisiana. In recent years many farmers in the area have shifted their acreage away from cotton and into corn. More than 600,000 acres of feedgrains were harvested in that area in 2008. In addition to corn, woody biomass is also abundant. Areas to the west, north and south of Bastrop comprise what is known as a “wood basket” and offer a multitude of cellulosic feedstock, as illustrated by IP’s annual use of 1.5 million tons of locally obtained pulp wood at its Bastrop facility. “So, while there’s not yet a commercial cellulosic ethanol operation, that area could be an ideal location for something like that,” Short says. Bastrop, and specifically the mill property, also has access to other vital components necessary for ethanol production. The mill has direct rail access to two major rail lines and has two on-site power turbines capable of producing approximately 40 megawatts of energy. The community can handle 1 million gallons

ETHANOL PRODUCER MAGAZINE

January 2010

EMPLOYMENT

per day of waste water and is located on the edge of the Mississippi River floodplain, which benefits local agricultural practices.

Drawbacks While biofuels is near the top of Bastrop’s list for an ideal replacement industry, the mill is still owned by IP and it will decide what company can purchase the site. This could pose a potential roadblock for producers who want to utilize woody biomass, because IP still operates mills in the area. According to King, “It’s going to have to be a company that IP feels is not going to compete with them, and the competition goes a little deeper than just producing paper. The competition is going to be about the wood basket.” Financing is always an issue for ethanol producers and so far, that doesn’t appear to be any different for potential buyers of the Bastrop location. Short says there have already been some ethanol producers, as well as wood-to-electricity companies, to review the site, but they have all expressed concern about acquiring financing. To that end, the state and the local community are willing to do whatever is necessary to facilitate an economically feasible project. Louisiana has not developed a funding program specifically for biofuels, but Short says there are other incentive packages geared toward manufacturers that ethanol facilities would qualify for, including a 10-year property tax exemption, a payroll rebate and discretionary funds for infrastructure upgrades. “[If] there’s a need for a road or a bridge or natural gas line or something like that, we can come to bear,” he says. “We’re very anxious to put industry and commerce back into the Bastrop community, so we probably would be fairly aggressive with any kind of discretionary incentives for companies looking to invest in the area.” The state has placed a

ETHANOL PRODUCER MAGAZINE

high priority on filling the vacant mill because of its economic impact on the local community. Olive says the community at large would be supportive of an industry such as ethanol, but importance will be placed on it being environmentally friendly and its ability to provide long-term stability to the community. According to King, the residents of Bastrop would be “very tolerant” to a biofuel project, because they are accustomed to having a paper mill operate in their community and are also located close to a large power plant and chemical facility. “I think we’re a little more open to some things that other people might not be open to,” she says. Ideally, King would like 550 jobs to return to the community, but realistically, “I think the community would be happy even if we could get a couple of hundred jobs back right now.” The fact that Bastrop was home to such a large, single employer for so long makes finding a replacement difficult, according to King, and the community is willing to adapt. “It’s hard for other businesses to come in and compete with a large paper mill,” she says. “As [the paper] industry began to decline, we lost that emerging growth industry characteristic and became [part of] a mature and declining industry. It becomes very difficult to bring new industries into the area. We have been dominated by a very large industry for 80 years and we’d like to diversify into some other companies that might employ 50, 100, 200 employees, because that makes a much stronger economy. We realize that many of the biofuels companies are in the 50 to 100 jobs category, but we’re willing to work very hard for a 50-job company.” EP Kris Bevill is the editor of Ethanol Producer Magazine. Reach her at (701) 3738044 or kbevill@bbiinternational.com.

January 2010

EDUCATION

Ethanol Education:

A Window to Employment Like most businesses, ethanol companies employ a variety of white-collar professionals. However, ethanol plants also need skilled workers who possess knowledge of ethanol-specific process technologies and plant operations. To fill this niche, an increasing number of community colleges have begun to offer biofuels-specific training programs. By Erin Voegele

ETHANOL PRODUCER MAGAZINE

January 2010

EDUCATION

primary goal of most community colleges is to provide students with a discrete set of skills that can be used to secure employment. “As a two-year college, we obviously are not a research institute; we are not trying to develop new processes or research cellulosic ethanol production,” says Duane Carrow, director of renewable energy programs at Minnesota West Community & Technical College. “What we focus on is the application of research, and we can adapt very quickly.” Minnesota West began to offer an ethanol-specific training program in 2000. According to Carrow, the program began as an initiative of the Minnesota Coalition for Ethanol. The coalition approached the college and expressed a need for employees who had the proper skills sets for work in an ethanol plant. “To the best of my knowledge, it was the first program in the nation to focus on ethanol production,” Carrow says. “To develop this program, we worked very closely with industry to identify the skill sets that they needed for good employees [and] in particular, production employees. That is what we focus on— training operators.” The biofuels technology program at Minnesota West in Granite Falls, Minn., focuses exclusively on ethanol and biodiesel production processes, with emphasis biology, chemistry and process control. This includes training related to the mechanical fundamentals of operating plant equipment, as well as operating mechanical equipment in a distributed control system. Minnesota West recently installed an ethanol plant simulator which allows students to essentially run a virtual ethanol plant from the classroom. As part of the simulation program, Carrow says the instructor is able to introduce process disturbances into plant operations, allowing students to practice plant operations without endangering personnel or dam-

ETHANOL PRODUCER MAGAZINE

January 2010

aging equipment. “The simulator seems to be a very effective capstone course for students who have learned all about the ethanol process,” he says. In addition to training students, Minnesota West is using the simulator to assist ethanol plants in cross-training and to expand the skill sets of their current employees. Beginning in 2009, Minnesota West also began offering an Energy Technical Specialist program. Although the program offers students a broader range of skills that can be transferred to a wide variety of energy industries, it includes some training specific to biofuels production. The program is also being offered at eight other community colleges within the Minnesota State Colleges and Universities system. In North Dakota, Bismarck State College has offered a Process Plant Technology program since the early 1980s, which has been expanded in recent years to provide biofuels-specific training. “We took our process program and tweaked it, added to it and modified it to include curriculum that focuses on ethanol and biofuels,” says Dan Schmidt, a program manager at BSC’s National Energy Center for Excellence. “The curriculum is designed to expose students to the equipment, the process flows and systems, safety issues and operator duties that an energy-level operator would be responsible for when they get hired at a plant.” In addition to its two-year associatelevel program, BSC began offering a four-year bachelor’s degree program in energy management in 2008. According to Schmidt, the bachelors program is an opportunity for graduates from a twoyear technical program to expand their skills in order to qualify for a promotion into a management or supervisor role at their company. Because it is aimed at prospective students already in the workforce, the bachelor’s degree program is offered exclusively online. Lake Area Technical Institute in

South Dakota offers two programs that prepare students for employment in the ethanol industry. While neither program focuses solely on biofuels production, each program includes biofuels-specific coursework. According to Roger Solum, department head and instructor for LATI’s Energy Operations program, LATI added biofuels training to its course offering after recognizing that local ethanol plants were in need of properly trained employees. “We’re here basically because the industry asked us to be here,” he says. Northeast Community College in Nebraska recently began to offer a biofuels program as well. In 2007, the college implemented a Renewable Fuels Technology program. “The degree covers pretty much all of the ethanol fundamentals that new prospective hires would need at a typical dry mill ethanol plant,” says program instructor Randall Sigle. This includes basics such as math and biology, as well as safety requirements, piping and instrumentation, diagrams, reading blueprints and ethanol process fundamentals. The program also employs a computer simulation model that mirrors the operation of an ethanol plant, allowing students to gain more hands-on experience in plant operations. According to Sigle, NECC’s Renewable Fuels Technology program was funded with a $2 million grant from the U.S. Department of Labor. In addition to offering courses for credit on campus, the college offers continuing education to ethanol plant employees through onsite training seminars. Last summer, approximately 500 plant employees participated in the seminars. Although many programs focus on large-scale industrial plant operations, some biofuels training programs are geared toward smaller-scale production. At Central Carolina Community College in North Carolina, the Alternative Energy Technology program, launched in 2008, specializes in training on small-

EDUCATION

Student Enrollment and Placement Enrollment patterns in ethanol training programs seem to mirror the state of the industry. “The challenges in ethanol education pretty much follow the challenges, or peaks and valleys that are subject to the industry,” Sigle says. “In 2007, it was very easy to recruit students because new plants were being built. By 2008, it became a little bit more difficult to recruit students. The ethanol industry has followed a wave-like fluctuation, and it has affected the ethanol training program the same way.” Carrow agrees that enrollment seems to ebb and flow with the state of the industry, but also notes that he has seen increased interest from nontraditional students who have been displaced by the re-

PHOTO: NORTHEAST COMMUNITY COLLEGE

scale on-farm production. The program also currently places more focus on biodiesel production because no commercial-scale ethanol plants current exist within the state. Similarly, the Energy Technology program at Miles Community College in Montana places a greater emphasis on agricultural issues than many Midwestern programs. “We are in a really rural farming-type community,” says Kristin Buck, MCC’s science technology instructor. “So, we have a little more agricultural involvement than some of the other schools that focus more on process control.” MCC’s program was also funded through a government grant, and is currently in its first year. Although the program includes curriculum related to both ethanol and biodiesel production, Buck says the program currently focuses more on biodiesel, only because no commercial-scale ethanol plants are located near the college. The inaugural graduating class of Norfolk, Neb.-based Northeast Community College's renewable fuels technology program, shown here, entered into the industry in 2009. Despite the volatile state of the industry at the time, every graduate who sought a job in the ethanol industry found one, according to program instructor Randall Sigle.

cession. This includes current ethanol plant employees who want to upgrade their skills as well as displaced workers who are looking to change career paths. According to Schmidt, BSC has seen a 30 percent increase in enrollment in its program since 2007. “We have experienced a lot of growth in all of our programs over the past couple of years,” he says, adding that much of the growth has been via online enrollment.

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ETHANOL PRODUCER MAGAZINE

January 2010

EDUCATION

Solum says the programs offered by LATI are filled and that each class primarily consists of traditional students. “We have a handful of nontraditional students as well that may have been displaced in some other market with the slowdown in employment in manufacturing.” Although a number of biofuels programs are relatively new and have yet to graduate a significant number of students, programs that have graduated students report placement rates of more than 90 percent. In general, all graduates who have sought employment at an ethanol plant have been able to find work.

Evolving for Cellulosic Advisory boards play a large role in shaping the curriculum at community colleges. These boards are made up of local industry representatives that work with faculty members to ensure that students receive the most up-to-date training possible. As the ethanol industry moves to second- and third-generation production technologies, these boards are expected to be an integral force driving innovation in the programs. Sigle says community colleges such as NECC excel at keeping up with current industry trends, and says advisory boards play a large role in helping to guide areas of study. “We get feedback from the industry on what their needs are, what the newest opportunities are, and what the new promising technologies will be,” he says. “We put a great deal of effort into trying to stay well-informed about new technologies and new opportunities—where the industry is headed as well as the challenges within the industry.”

“Part of our job is to identify the new technology needs and then modify our curriculum to meet new technology, because our students need to be prepared for new concepts all the time,” Solum says. “We have a very fluid curriculum that we are allowed to massage and mold as the industry requires us to.” According to Sigle, alterations have continually been made to NECC’s biofuels program as technology changes. He says this is not only true of big changes, such as the move to cellulosic, but also smaller technology changes, such as the deployment of fractionation technologies. “Sometimes it’s not just about large separations in technology… sometimes it’s about optimizing and tweaking an existing process and adding value to what plants are currently doing.” “It’s important that we continue to recruit and train people for the ethanol industry,” Sigle says. “My personal belief is that the ethanol industry will continue to grow and be a dynamic industry.” “Even though there might be a lot of negative publicity about ethanol, most of the facilities are now running again,” Carrow says. “Obviously those facilities need employees. Those jobs are still there and the industry needs people. There might not be new facilities being constructed right now, but hopefully we will see another surge in facility construction as cellulosic ethanol becomes more viable.” EP Erin Voegele is an Ethanol Producer Magazine associate editor. Reach her at evoegele@bbiinternational.com or (701) 373-8040.

SUBSIDIES

A long-time sustainable agriculture advocate proposes a producer tax credit tied to performance. By Susanne Retka Schill

ETHANOL PRODUCER MAGAZINE

January 2010

SUBSIDIES

oni Kemp has a vision for rewarding better biofuels that won recognition in the Farm Foundation’s “30-Year Challenge: Agriculture’s Strategic Role in Feeding and Fueling a Growing World.” The long-established think tank for agricultural policy sought papers proposing new policy strategies. Kemp won the recognition in the climate change category for her well-developed proposal for a Greener Biofuels Tax Credit to replace existing blender tax credits by shifting the subsidies towards performance-based tax credits to biofuel producers who are improving their environmental and greenhouse gas footprints. Kemp knows the impact ethanol has had on farm communities. She lives in rural southeastern Minnesota a few miles away from a farmer-owned corn ethanol plant. Permeable ground formations in the area make water aquifers susceptible to leached contaminants, which has motivated her

ETHANOL PRODUCER MAGAZINE

to work on water quality policy. For more specific soils, climate and crops, calculating than 20 years Kemp has worked with the an environmental performance score for a Sustainable Ag Coalition, a policy-oriented specific farm, incorporating soil and water union of environmental groups and groups quality measurements. Kemp says the evaluadvocating sustainable agriculture and rural ation tool could possibly be used as is, or be streamlined to apply to biofuels development, among which are feedstocks. She points out the the Minnesota Project and the Center for Rural Affairs. The curCSP program is well accepted, rent USDA Conservation Stewreceiving three times the number of applications in the last ardship Program carries the finsign-up period than the program gerprints of the coalition, which could accept. has steadily worked to improve In the Greener Biofuels environmental and conservation provisions in the Farm Bill. Tax Credit proposal, assuming Loni Kemp the total tax credit were $1 per The CSP also provides an policy analyst, gallon, up to 50 cents of it would important tool for Kemp’s pro- Kemp Consulting be allocated to biofuel feedstocks posal. “We now have a measurebased on their environmental ment tool that provides a really good model on how you score performance. The other half of the outcomes of conservation practices,” the tax credit would be based on GHG reshe explains. Developed for the 2008 Con- duction performance and tied to the strucservation Stewardship Program, the Soil ture created by the U.S. EPA to implement and Water Evaluation Tool is based on site- the renewable fuel standard (RFS). “What

January 2010

SUBSIDIES

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I love about this idea is it would serve as a foundation for incremental change,” Kemp says. “Farmers could improve their performance and be rewarded for it; ethanol plants could improve their scores. It’s a policy that encourages everyone to improve their practices—and not a hammer. And, we’re not picking winners.” Current biofuels subsidies reward corn ethanol and soy biodiesel for their societal benefits, including national energy security, jobs and rural economic development, improved air quality and superior life-cycle greenhouse gas (GHG) performance compared to gasoline. “Yet actual delivery of those benefits has been vigorously debated,” Kemp wrote in her proposal. “What is missing from current tax policy is a requirement for actual performance in delivering expected environment and climate benefits.” The Greener Biofuels Tax Credit proposal says it would: Be technology neutral and apply to all biomass-based fuels and all feedstocks Be performance based, rewarding better environmental performance with higher tax credit payments Protect the environment by rewarding lifecycle carbon emission reductions beyond those required by the RFS Be streamlined, using workable reporting systems for farmers, biofuel refiners and the Internal Revenue Service Be budget neutral, using savings from phasing out current production tax credits to fund the new, greener biofuels tax credit. Kemp suggests the tax credit be applied to biofuels according to their energy content, with 76,000 Btu—the energy content of one gallon of ethanol—serving as the base. Existing corn ethanol and soy biodiesel producers would be eligible as long as they employ advanced processes, such as using renewable energy and using feedstocks from farmers who are building soil quality and minimizing polluted runoff. Next generation biofuels could earn even more if they vastly reduce GHG emissions and rely on perennial feedstocks that require little land disturbance or fertilization.

One of the biggest hurdles, Kemp admits, will be to convince people that such a system wouldn’t be a bureaucratic nightmare of paperwork. “We’re going to have to show people that the logistics of this aren’t going to be a big headache,” she says. “There is a simple performance tool, third-party verification that takes less than a half hour to complete, and the score would be attached to renewable identification numbers (RINs). All the IRS will need is to get the score for the RINs.” The half of the tax credit based on carbon performance would be paid in direct proportion to reductions in GHG emissions, based on the EPA’s calculations of lifecycle GHG emissions in the RFS. The refinery’s choice of feedstocks, technology and management of direct emissions would determine its life-cycle emissions. A zero-carbon biofuel (a 100 percent reduction compared to fossil fuel) would be eligible for the full carbon tax credit of 50 cents per gallon. The half of the greener tax credit rewarding refineries that buy more sustainable feedstocks would potentially reward the farmers growing the biofuel crops. “It is critical that the industry not be motivated solely by the lowest price feedstocks, forcing growers to cut corners and ignore conservation opportunities,” the proposal says. “A performance-based tax policy would telegraph incentives to minimize tillage, fertilizer and pesticide use, erosion and runoff.” Kemp envisions a system where farmers sit down with Natural Resource Conservation Service personnel once a year to calculate their performance scores. The biofuel producer would then collect the certificates of scores accompanying feedstock deliveries, and compute an average. She suggests there be a minimum environmental stewardship threshold, disallowing such practices as land conversion of intact ecosystems such as forests, wetlands and prairies. One of her recommendations that will no doubt be controversial is that feedstocks produced using irrigation should not qualify. Other eligibility requirements she recommends

800-232-8444 | WATERLOO, IOWA WWW.CPM.NET/PARTS2 52

ETHANOL PRODUCER MAGAZINE

January 2010

SUBSIDIES

deal with crop residue being removed at sustainable levels and farms meeting USDA Conservation Compliance requirements.

Reforming Credits to Save Them While biofuels producers may dismiss her proposal as unnecessary change, Kemp suggests it could be a way to refocus biofuel subsidies, essentially saving them in the face of increasing criticism. All the current biofuel tax credits have sunset clauses, she points out, and will be up for debate in the next couple of years. “There’s a lot of feeling that we don’t need these tax credits because they duplicate the RFS.” While Kemp drafted the winning Farm Foundation policy proposal, she developed the concepts in conversations with Nathanael Greene at the Natural Resources Defense Council and Jeremy Martin with the Union of Concerned Scientists. Martin, who is a senior scientist in the clean vehicles group, provided input on the GHG reduction sections of the EPA’s rule to implement the second stage of the renewable fuel standard using RINs as the instrument to report to the IRS. The details of how it might work will depend upon how EPA incorporates GHG reduction targets in the implementation of RFS2, he says. “Everyone has a sense of what we want from our biofuels program, which is to reduce oil use and reduce GHG emissions,” he adds. “Here’s a proposal to reform tax credits and make them work.” Martin cites a Nathanael U.S. Government AcGreene countability Office rerenewable energy policy director, port released in August Natural Resources that found ethanol tax Defense Council credits are redundant to the RFS. “They don’t increase the volume of ethanol sold and don’t raise the price of corn,” Martin re-

ETHANOL PRODUCER MAGAZINE

ports. “[The ethanol tax credits] cost $4 billion a year and they’re not delivering any extra biofuels and not creating extra GHG benefits.” Martin also points out the cellulosic ethanol tax credit has problems as well, with the paper industry getting tax credits worth millions for black liquor production used to fuel boilers. “No transportation fuel has been created and it’s something they’ve been doing all along, so nothing is new,” he says. Radically reforming the biofuels tax credit will be no small challenge. Greene has presented the concept to small groups of ethanol industry leaders. The response was polite listening, which Greene considers a pretty open response. “They didn't throw me out,” he says with a chuckle. The overall logic of the proposal was grasped quickly, and the questions zeroed in on the details, he says. “Some of the obvious and important questions are: how will it be implemented and what does it mean economically for all the different players? Is there enough money to encourage and pay for the improved technologies at the biorefinery and the improved practices in the field that would be needed to get the higher scores?” Greene adds that he’s hoping someone trusted by the industry will examine the Greener Biofuels Tax Credit’s possible impact. “I’m not convinced the NRDC would be a credible messenger on that sort of economics study,” he adds. In the meantime, NRDC has begun looking for a Congressional sponsor for a bill. The timetable is actually very tight, with ethanol tax credits expiring at the end of 2010. One-year extensions have been done in the past and may occur again, with Congress being pressured to complete legislation on health care reform, banking regulation and climate change policies. EP Susanne Retka Schill is an assistant editor at BBI International. Reach her at sretkaschill@bbiinternational.com or (701) 738-4922.

January 2010

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INNOVATION. BY PADMANABAN KRISHNAN

PHOTO: ERIC LANWEHR

Contribution

Padmanaban Krishnan, Kurt Rosentrater and Sowmya Arra form the team at SDSU studying flour made from distillers dried grains.

Distillers Dried Grain Yields High-Fiber, High-Protein Flour A flour made from distillers dried grains used in the flat bread being baked at the food science lab at South Dakota State University. The flour could be a solution to global hunger.

owmya Arra is known around the lab for her soft-spoken and friendly nature, but the South Dakota State University food science graduate student has big dreams. Arra’s goal is to feed the world through a low-cost yet sustainable means using distillers dried grains (DDGs). While that may seem like a tall order, Arra is well on the way to reaching her goal after winning the graduate research poster competition at the Institute for Food Technologists Conference in Anaheim, Calif. Competing against 50 other graduate students, Arra won

a $1,000 cash award and certificate for her project, “Fortifying Chapathies, an Asian Whole Wheat Unleavened Flat Bread. Using Corn Distillers Dried Grains.” Since the competition in July, Arra’s research has expanded to include naan—oven-baked, leavened flat bread popular in Afghanistan, India and Pakistan and which tastes remarkably like pizza crust. When choosing her thesis project, Arra, who is from India, said she wanted “to make a product that has all the nutrient values.” She found that in foodgrade, DDGs, which contain 40

percent dietary fiber and 36 percent protein. “Due to economics and their culture, many people make their own bread,” Arra explained. “Since they make flat bread, it only makes sense to provide a better flour ingredient, which has higher nutritional qualities.” Developing food products from DDGs has been a challenge I have faced as Arra’s adviser since I came to SDSU in 1989. The food grade DDG is a product I have been working on at SDSU for the past 20 years and I envision limitless possibilities for the flour made from DDGs.

One case where bland is best In order to blend with flour, the DDG flour has to be made aroma neutral, taste neutral and texture neutral. What needs to be created is in essence, a stealth ingredient that blends with the background and allows other ingredients to pick up the slack. This ingredient must also work in harmony with the food system. So far, that food system can handle about 7 percent to 20 percent of the DDG flour in the traditional flour used in bread products. Adding any more of the DDG flour, particularly in yeast-

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).

ETHANOL PRODUCER MAGAZINE

January 2010

leavened products, undermines the dough system. By replacing more then 20 percent of wheat flour with the DDG flour, one risks baking “hockey pucks” or “bricks,” but flat breads are a different story. Mixed in at the right levels, the DDG flour will add significantly to the fiber and protein of tortillas, cookies, noodles and breads.

Next step belongs to industry A variety of entities have invested in the research so far. At one time or another in the process, that funding has come from the U.S. Agricultural Research Service, the SDSU Agricultural Experiment Station, the South Dakota Wheat Commission and the South Dakota Corn Utilization Council. At this point, the team has taken the DDG flour about as far as it can. The entrepreneur is the one who will have to run with it. Finding those entrepreneurs in a down economy may prove to be difficult. One person who’s on the lookout is Kurt Rosen-

trater, a biomass engineer with the Agricultural Research Service, whose mandate from USDA is to add value to DDGs. Rosentrater has worked collaboratively with SDSU for the past five years. Closely associated with the research that resulted in Arra’s master’s thesis, Rosentrater said he has fielded calls from “dozens” of companies that are toying with the idea of pursuing the project. “It’s got to be industry’s investment,” Rosentrater said. “So far, nobody’s been willing to pull the trigger and take that leap.” Capturing what could be an international market will start first with the U.S. Food and Drug Administration. Rosentrater said that the FDA will need to ensure that the corn is food-grade from the kernel to the finished product. For some ethanol plants, that may mean the installation of new equipment.

Time may be right for DDG flour The federal call for a significant increase in renewable fuels by 2022 will also mean an increase

in the production of DDGs. According to Rosentrater, about 80 percent of DDGs is used as feed for beef and dairy animals with the rest going to feed swine and poultry. “We have not hit a point where we’ve saturated that market,” Rosentrater said, though he does note some interesting factors that may influence the market. Rosentrater estimates ethanol plants are currently producing between 25 million metric tons and 30 million metric tons of DDGs and the new fuel standards may increase that output to as much as 40 million metric tons. He said that about 20 percent of U.S. DDGs was exported internationally last year. “That’s up considerably,” Rosentrater said. “There are plenty of opportunities if the ethanol plants are interested.” This work has accomplished much to add value to an underutilized co-product. The research has always intended to get everything out of the corn, including the squeal.

At present, DDGs are sold at 8 to 10 cents per pound, $165 per ton, as livestock feed. Food ingredients are sold at about $2 to $3 per pound. Adding utility in the food industry will enhance DDGs’ economic return to the producer. We have demonstrated scientific, nutritional and technical merit, but we realize that it is the economic drivers that will permit food-grade DDGs to take wing. The world is hungry for novel protein, fiber and functional ingredients if the $21.8 billion nutraceutical ingredients market is any indication. Far from just a “byproduct” of the ethanol-making process, DDG can account for 20 percent to 40 percent of an ethanol plant’s income. Adding value to the dried distillers grain makes business sense while at the same time helping to alleviate world hunger. EP Padmanaban (Padu) Krishnan is a food scientist South Dakota State University. Reach him at padmanaban.krishnan@ sdstate.edu.

VOGELBUSCH The Bioprocess Company

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We Make Biotechnology Work Vogelbusch USA, Inc. • 1810 Snake River Road • Katy, TX 77449 • (713) 461-7374 • office@vbusa.com www.vogelbusch.com ETHANOL PRODUCER MAGAZINE

January 2010

EVENTS CALENDAR

Pacific West BIOMASS Conference & Expo January 11-13, 2010

National Ethanol Conference February 15-17, 2010

Hyatt Regency Sacramento, Calif. Hosted by BBI International, the event will focus exclusively on biomass utilization in California, Oregon, Washington, Idaho and Nevada. Topics of discussion will include biomass-derived electricity, industrial heat and power, and advanced biofuels. (701) 746-8385

Gaylord Palms Resort & Convention Center Orlando, Florida Speakers and sessions will focus on historic opportunities facing the ethanol industry, including climate change, the increase of ethanolâ&#x20AC;&#x2122;s marketshare and technology practices. www.nationalethanolconference.com/

www.pacificwest.biomassconference.com

Jan

Feb

Developing and Commercializing Next Generation Biofuels February 9-11, 2010 Kingsway Hall Hotel London The conference focus will be on utilizing new technologies to deliver increased cost efficiency and greenhouse gas savings of ethanol and other biofuels. Attendees will also examine the prospects for bringing next-generation biofuels to market.

Mar

World Biofuels Markets March 15-17, 2010 Amsterdam, The Netherlands Topics will include algae fuels, energy crops, policy, indirect land use change and biobased products. An introductory course in transport biofuels will also be available. www.worldbiofuelsmarkets.com/index.html

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WE ARE GROWTH ENERGY. YOU ARE, TOO. WE’RE A GROUP OF LEADING ETHANOL COMPANIES DEDICATED TO FUELING AND FEEDING THE WORLD THROUGH ETHANOL AND AGRICULTURE.

Growth Energymeans meansbusiness. business. We taken led the oght against food industry’s “food Growth Energy We’ve a forceful stand the on the food industry’s “foodvs. vs.fuel” fuel”smear smear campaign. are set leading the effort raise the regulatory cap on ethanol. is not easy work. But campaign. And Nowwe we’ve our sights on atobigger goal: raising the regulatory capIt on ethanol. This work together, we can our industry, help our our industry nation become energy independent andour create jobs while won’t be easy. Butgrow together, we can grow to where it needs to be, helping nation become cleaning the environment our children grandchildren. energy independent whilefor creating jobs atand home and a cleaner environment for future generations. Ethanol is clean, clean,green, green,high-tech high-tech and homegrown. spread this word to opinion leaders, policy Ethanol is and homegrown. HelpHelp spread this word to opinion leaders, policy makers makers and Americans fromtocoast coast. Go to GrowthEnergy.org today and see youinvolved. can get and Americans from coast coast.toGo to GrowthEnergy.org today and see how you how can get involved. we can keepgrowing. ethanol growing. Together,Together, we can keep ethanol

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