INSIDE: U.S. WOOD PRODUCTS MEETING EUROPEAN DEMAND BIOMASS MAGAZINE
June 2010
Biomass Conference Review International Biomass Conference & Expo draws 1,700 to Minneapolis
JUNE 2010 www.BiomassMagazine.com
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27th ANNUAL
June 27 - 30, 2011
Indianapolis, Indiana USA www.fuelethanolworkshop.com
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INSIDE
JUNE 2010
VOLUME 4
ISSUE 06
FEATURES ..................... 38 EVENT Biomass Bonanza The International Biomass Conference & Expo drew 1,700 attendees and nearly 300 exhibitors to the Minneapolis Convention Center May 4-6. The consensus was that biomass is an important component of American’s energy and environmental security. By Anna Austin and Lisa Gibson
48 HEAT The Heat is On In Finland, where 86 percent of the land area is covered by forests, using woody biomass for residential and industrial heat is a no-brainer. The country’s district heating and combined-heat-and-power systems could be models for others to follow. By Lisa Gibson
54 MARKET Bridging the Global Supply/Demand Gap U.S. wood chip, pellet and briquette plants are gearing up to ship their products to the European Union due to strong demand, better incentives and a limited supply of raw wood. By Lisa Gibson
60 BUSINESS Unearthing Green Scams Scam artists typically strike industries that are hot, which makes biomass a natural target. There are ways, however, for investors to spot scams and make smart decisions. By Anna Austin
BUSINESS | PAGE 60
DEPARTMENTS ..................... 06 Editor’s Note Biomass Conference Creates Excitement By Rona Johnson
07 Advertiser Index 08 Industry Events 09 BPA Update Avoiding the Food Versus Fuel Trap By Bob Cleaves
11 EERC Update State-of-the-Art Programs and Infrastructure to Quench the Thirst for Fuels of the Future By Chris Zygarlicke
CONTRIBUTIONS ..................... 64 FEEDSTOCK Align Biomass Strategy to Fit Your Business—Not the Other Way Around There is no doubt the biomass industry is in growth mode, but that doesn’t mean it’s a good fit for every business. Companies that are considering biomass use should make sure their biomass strategies don't interfere with their operational needs. By Kirk Martin
68 PELLETS Wood Pellets: An Expanding Market Opportunity The European Union is looking to the Southern U.S. to fill what is shaping up to be an insatiable demand for wood pellets, but pellet makers have some issues to solve if they want to become reliable suppliers. By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
76 EMISSIONS Air Emissions Control for the Biomass Industry Like traditional energy sources, renewable or alternative energy sources must adhere to stringent air emissions controls. A variety of emissions reduction equipment is available to meet the necessary government requirements. By Rodney L. Pennington
13 BTEC Update Heating the Northeast with Renewable Biomass: A Vision for 2025 By Kyle Gibeault
15 Legal Perspectives Managing Construction Schedule Risk By John Eustermann
16 Business Briefs 18 Biobytes 20 Industry News 80 Marketplace
6 |2010 BIOMASS MAGAZINE 5
editor’s
NOTE Biomass Conference Creates Excitement
T
he International Biomass Conference & Expo that was held May 4-6 in Minneapolis couldn’t have been held at a better time, as millions of gallons of oil were uncontrollably gushing from the Gulf of Mexico seabed. Although tragic, it also emphasizes the nation’s need for clean, reliable energy sources such as biomass. This is no time to be smug, however, as strong opposition to biomass power projects is cropping up across the country. As Bob Cleaves, president and CEO of the Biomass Power Association, said May 5 during a general session panel at the conference: “The carbon benefits of biomass are under siege.” Cleaves urged the other organizations that filled out the panel including the Biomass Thermal Energy Council, Algal Biomass Organization, National Biodiesel Board, Advanced Biofuels Association and the Renewable Fuels Association, to work together to make sure that lawmakers understand the carbon neutrality of woody biomass. The group agreed that it’s in everyone’s best interest to tout the importance of renewable energy to America’s national energy security and the environment. Michael McAdams, president of the Advanced Biofuels Association, also mentioned how crucial it is to reach out to environmentalists on a more consistent basis. It’s critical for the industry to be especially diligent when it comes to emissions. In this issue of Biomass Magazine, we’ve included a contribution called “Air Emissions Control for the Biomass Industry” (see page 76) that details several air emission control systems. To read more about the conference see “Biomass Bonanza” on page 38. This month’s magazine also includes a feature about the burgeoning demand for wood pellets, chips and briquettes in Europe and how U.S. and Canadian companies are shipping their products overseas. One European company is building a wood pellet plant in the U.S. and intends to ship those pellets back to its biomass power plant in Europe (see “Supply and Market: Bridging the Global Gap” on page 54). The demand in Europe is driven mainly by the European Union’s goal of generating 20 percent of its energy consumption from renewables by 2020. This issue also includes an interesting feature on district heating and how Finland is producing about 20 percent of its total energy consumption from wood. Dominik Röser, research scientist with the Finnish Forest Research Institute, describes the country’s model and cautions that although it has worked well for communities in Finland, every community needs to adapt its business models to local conditions. The final feature, and probably the most important, is about the potential for scams to surface in growing industries (see “Unearthing Green Scams” on page 60). The feature discusses the two most common scams and the red flags that people need to be aware of as they look to invest in biomass-based businesses.
Rona Johnson Editor rjohnson@bbiinternational.com
6 BIOMASS MAGAZINE 6|2010
advertiser INDEX
EDITORIAL EDITOR Rona Johnson rjohnson@bbiinternational.com ASSOCIATE EDITORS Anna Austin aaustin@bbiinternational.com Lisa Gibson lgibson@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com 10th Pellets Industry Forum
73
Envergent Technologies
ART
2010 Advanced Biofuels Workshop
37
Ethanol Producer Magazine
82
ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com
2010 Northeast BIOMASS Conference & Expo 36
Everlasting Valve Company
63
2010 Southeast BIOMASS Conference & Expo 83
GreCon, Inc.
25
GRAPHIC DESIGNERS Elizabeth Burslie bburslie@bbiinternational.com Sam Melquist smelquist@bbiinternational.com
2011 International BIOMASS Conference & Expo
Hoffmann, Inc.
52
Hurst Boiler & Welding Co.
66
PUBLISHING & SALES CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Gary Shields gshields@bbiinternational.com
84
2011 International Fuel Ethanol Workshop & Expo
3
43
ADI Systems Inc.
28
IBED 2010
69
Advanced Trailer Industries
34
Indeck Power Equipment Co.
24
Agra Industries
42
Intersystems
71
ASI Industrial
56
Jeffrey Rader Corporation
32
Bandit Industries, Inc.
51
Keith Manufacturing Company
33
BIBB Engineers Architects & Constructors
12
Larox
72
BRUKS Rockwood
2
Morbark, Inc.
67 78
Buhler Aeroglide
75
Northeast Iowa RC&D, Inc.
Buhler Inc.
59
Peterson
Burns & McDonnell
70
Precision Machine & Mfg. Inc.
Central Boiler
58
R.C. Costello & Assoc. Inc.
79
Christianson & Associates, PLLP
22
Schutte-Buffalo Hammer Mill
10
Church & Dwight Co, Inc.
62
Syntec Biofuel Inc.
26
29
The Parton Group, Inc.
74
The Teaford Co. Inc.
30
Continental Biomass Industries CPM Roskamp Champion
23 & 35
4 57
CW Mill Equipment Co., Inc.
31
Verdant Environmental Services
45
Detroit Stoker Company
50
West Salem Machinery
27
Energy & Environmental Research Center
14
Wolf Material Handling Systems
53
Encore Business Solutions
47
CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com
Subscriptions Subscriptions to Biomass Magazine are $24.95 per year in the U.S; $39.95 in Canada and Mexico; and $49.95 outside North America. Subscriptions can be completed online at www.BiomassMagazine. com or subscribe over the phone at (701) 746-8385.
Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com.
Advertising Biomass Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biomass Magazine advertising opportunities, please contact us at (701) 746-8385 or service@ bbiinternational.com.
Letters to the Editor We welcome letters to the editor. Send to Biomass Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rjohnson@ bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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6 |2010 BIOMASS MAGAZINE 7
industry events 2010 International Fuel Ethanol Workshop & Expo
June 14-17, 2010
Biomass ’10: Renewable Power, Fuels, and Chemicals Workshop
America’s Center St. Louis, Missouri The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. It is the largest, longest-running ethanol conference in the world. The event delivers timely presentations with a strong focus on commercial-scale ethanol production, new technology, and near-term research and development. (701) 746-8385 www.fuelethanolworkshop.com
July 20-21, 2010
The 2nd International Conference on Oil Palm Biomass
Northeast Biomass Conference & Expo
August 2-3, 2010
Westin Copley Place Boston, Massachusetts With an exclusive focus on biomass utilization in the Northeast U.S., this Biomass Magazine event will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. (701) 746-8385 www.biomassconference.com/northeast
Matrade Exhibition and Conference Center Kuala Lumpur, Malaysia Oil palm biomass has emerged as a viable asset for the palm oil industry. Research and development have made it possible to convert oil palm biomass into economic products including medium-density fibreboard, timber board, fertilizer and paper, and new technologies have been developed to generate biofuel and electricity from oil palm biomass. +60 3 7804 3423 www.icopb.com
Alerus Center Grand Forks, North Dakota In its eighth year, this workshop offers a cutting-edge two-day technical program and exhibit with national experts who focus on biomass production and biomass conversion to power, transportation fuels and chemicals. The workshop will be geared toward industry, research entities, government, community and economic development corporations, financial institutions and landowners. Topics will include trends and opportunities in utilizing biomass, renewable policies and incentives, renewable fuels, financing biomass-related projects, biorefinery chemicals and products, biomass for heat and electricity, biomass feedstocks, and algae. (701) 777-5000 www.undeerc.org/biomass10
August 4-6, 2010
2010 Farm to Fuel Summit
Gasification Technologies 2010 Conference
August 11-13, 2010
October 31-November 3, 2010
Rosen Shingle Creek Orlando, Florida This fifth annual summit will be an opportunity for industry leaders and stakeholders to learn, network and strategize to advance the development of renewable energy in Florida. Florida’s Farm to Fuel Initiative was developed to promote the production and distribution of renewable energy from Florida-grown crops, agricultural wastes and other biomass. More than 500 attendees from academia, industry and government participated in last year’s summit. (850) 488-0646 www.floridafarmtofuel.com/summit_2010.htm
Marriott Wardman Park Hotel Washington, D.C. The GTC is the largest gasification event in the world, attracting speakers and participants from the Americas, Europe, China and India. The GTC provides a single venue for participants to learn what is new in the gasification industry and why it is important. Speakers will address all aspects of the industry, from cutting-edge improvements in technology, through projects in development worldwide to updates on operations of plants based on coal, petroleum residues, biomass and secondary materials. (703) 276-0110 www.gasification.org
Southeast Biomass Conference & Expo
International Biomass Conference & Expo
November 2-4, 2010
May 2-5, 2011
Hyatt Regency Atlanta Atlanta, Georgia This Biomass Magazine event is exclusively focused on biomass utilization in the Southeast—from the Virginias to the Gulf Coast. The program will include more than 60 speakers, including technical presentations on topics ranging from anaerobic digestion and gasification to combined heat and power and large-scale biomass combustion within the structured framework of general session panels and four customized tracks featuring electricity generation, industrial process heat and power, biorefining, and biomass project development and finance. (701) 746-8385 www.biomassconference.com/southeast
America’s Center St. Louis, Missouri This Biomass Magazine conference will unite current and future producers of biomass-derived power, fuels and chemicals with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policymakers. Future and existing biofuels and biomass power producers will be able to network with waste generators and other industry suppliers and technology providers as well as utility executives, researchers, policymakers, investors, project developers and farmers. (701) 746-8385 www.biomassconference.com
8 BIOMASS MAGAZINE 6|2010
B PA
UPDATE
Avoiding the Food-Versus-Fuel Trap Several years back, ethanol was introduced as the fuel of the future for American cars. The U.S. seemingly had an endless supply of renewable corn and as gasoline prices spiked, the political will to stop relying on foreign oil was at an all-time high. It is now patriotic to drive a car powered by American corn. So what happened? Why is ethanol now forced to justify its very existence? Much of the reason is linked to the perception, however untrue, that government intervention through ethanol fuel subsidies caused corn prices to skyrocket, resulting in increases in the cost of basic foods. Never mind that the price of corn was part of a larger commodity bubble; foes of ethanol immediately claimed that a well-intentioned government policy to promote renewable energy lead to disastrous results. The Washington Post reported that the higher cost of corn sent Mexico into “the grip of the worst tortilla crisis in its modern history.” The food-versus-fuel debate, as it was termed, serves as an important illustration of how federal subsidies can be attacked on the basis of “unguided” government policy. Today, biomass power sits at a similar crossroads. The potential for Congressional support of biomass power is stoking some fears that the market for woody waste material could skyrocket, resulting in higher, unsustainable prices for competing forest industries. Learning from ethanol’s mistakes, the Biomass Power Association is actively working with Congress and the USDA to ensure that biomass power does not result in the same debate. First, all government subsidies are not evil market distorters that are destined to cause chaos in competing markets. Many incentives are necessary in order to jump-start the investment needed to develop an industry, build the infrastructure to grow and create thou-
sands of jobs in the process. The key is to work with Congress and other industries to make sure government support is measured and targeted. Without production tax credits, for example, the biomass power industry could potentially be cut in half. This would have a devastating impact on small, rural communities that de- Bob Cleaves pend on these facilities for jobs and president and electricity. In many cases, these tax CEO, BPA credits are literally the lifeline to the biomass power industry. The BPA intends to work across industries to ensure that these essential programs remain intact. Biomass power can avoid the debate about “unintended consequences” by working with partners in the paper industry, composite wood industry, forest owners, and other major groups concerned about the consequences of renewable energy incentives. The lessons learned from the food-versus-fuel debate during the ethanol boom should not be a roadblock to future programs that incentivize clean energy, but rather a road map to the best legislative path forward—with the least impact on other industries. The BPA is looking forward to partnering with Congress and all of the stakeholders, such as the paper and composite wood industries, to set responsible and measured energy policies that will ensure America maintains a strong energy—and economic—future. BIO Bob Cleaves is president and CEO of the Biomass Power Association. To learn more about biomass power, please visit www.USABiomass.org.
6|2010 BIOMASS MAGAZINE 9
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Wood is a terrible thing to waste. Since 1928, Schutte-Buffalo Hammermill has been pulverizing the competition. We have produced more fine grinding hammer mills than any other manufacturer of size reduction equipment in the world. Designed specifically for the wood waste market, our mills reduce your wood chips, shavings, bark or hogged scrap to the exact finished particle size required for boiler fuel, pelletizing, briquetting and more. We offer a wide variety of configurations and the expertise to fit the right mill to your application, while making the environment greener. Let us put our experience to work for you. 1.800.447.4634
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EERC
UPDATE State-of-the-Art Programs and Infrastructure to Quench the Thirst for Fuels of the Future The world’s thirst for fuel is driving an increasing need for renewable fuels and a greatly reduced carbon footprint. The Energy & Environmental Research Center entered the competition more than two decades ago to convert biomass to renewable energy and fuels. Ten years ago, Sen. Byron Dorgan, D-N.D., instituted the Center for Biomass Utilization at the EERC, which evolved to become a worldclass research program inventing, demonstrating, and commercializing new technologies for converting biomass to alcohols, distillate fuels, chemicals, heat and electricity—with the ultimate goal of reducing U.S. dependency on foreign imports, while stimulating the domestic economy. To satisfy the world’s hunger for renewable fuels, the EERC is pursuing several new programs and infrastructure that will foster the development of a variety of new biomass research projects. The EERC will break ground on a Fuels of the Future facility this year that will allow the EERC to transfer fundamental research from the laboratory into commercialization. The 7,500-square-foot facility will be added onto the current National Center for Hydrogen Technology facility. When the NCHT was dedicated in 2008, it was already full of a variety of technologies and test systems for the production and utilization of hydrogen. Ongoing research, as well as a variety of new fundamental and applied research and development projects, are waiting in the wings for the Fuels of the Future facility. Structurally, the new building will include a traditional laboratory area with ventilating hoods and bench-top work areas, a high-bay area with multiple levels, a control room, and a biomass preparation and handling area to accommodate a wide range of biomass types and processing systems. This preparation area is critical since biomass can range from low-density straw or grasses to higher-density wood chips. In some test scenarios, biomass must be downsized, dried, pelletized or treated before it is fired in reactors. The
new facilities will accommodate all of these functions. Actual systems and test equipment that will fill the building are the result of existing and new contracts with commercial and government partners. Some of the projects of note this year Chris Zygarlicke will include: associate Construction and test- deputy director for ing of new novel technologies research, EERC for the production of renewable liquid fuels, inkling renewable jet fuel, green diesel and other renewable byproducts. A system design for the subscale pilot facility has already been completed. The system will be designed to convert nonfood-grade biomass oils derived from crambe or camelina into a liquid distillate fuel. Development of an ASTM International standardized method for characterization of biomass for use as fuels and feedstocks, expediting biomass acceptance. Some of the first biomass types included in this study will be corn stover, livestock waste, beet pulp, wood residues and switchgrass. Utilization of nonfood-based waste biomass for conversion to liquid fuels or heat and power generation in small-scale biomass gasification systems. Strategic studies of paradigm-shifting technologies as well as educational outreach activities. As long as America needs to get places, fuels will be required. The EERC is using its worldclass facilities and expertise to advance a variety of fuel technologies with its private-sector partners. These fuels may be available to fill your tank sooner than you think. BIO Chris Zygarlicke is deputy associate director for research at the EERC. Reach him at czygarlicke@ undeerc.org or (701) 777-5123.
6|2010 BIOMASS MAGAZINE 11
SERVICES: Detailed Design • EPC • CM • Studies • Owner & Bank Engineering CLIENTELE: Utilities • IPPs • Industry • Universities • OEMs • Banks/Investors PROJECTS: Biomass • Solar (Thermal & PV) • Wind • Simple & Combined Cycle • Fluidized Bed/PC/Stoker Boilers Biofuels • Landfill Gas • MSW • Gasification • Pyrolysis • Plant Improvements • Air Pollution Control Engine-Generators • CHP/Cogeneration • Energy Savings • Facilities/Buildings & Systems
3131 Broadway
Kansas City, Missouri 64111
President: Lou Gonzales
816.285.5500
www.bibb-eac.com
Business Development: Jason Moe, Tony Jaime, Kevin Bibb
BTEC
UPDATE A few highlights of what fulfilling the vision would accomplish includes: Reinvesting $4.5 billion per year in the Northeast economy Creating 140,200 permanent jobs Converting 1.38 million households to biomass heating Kyle Gibeault Reducing consumption of heat- deputy director, BTEC ing oil by 1.14 billion gallons annually If there is to be an American Revolution in how we produce thermal energy, it is appropriate that it should begin in the Northeastern U.S. The vision represents an effort by a group of five organizations to catalyze debate, creative thinking and entrepreneurial initiative around the challenge of reducing America’s reliance on fossil fuels for heating. We do not presume to know all the solutions, and in fact, this vision will probably prompt more questions than it provides answers. But if the U.S. is serious about achieving a cleaner, more sustainable energy future, it must focus serious attention on thermal energy. In presenting this vision, we aim to jump-start the dialogue on how to transform an important sector of our energy economy in line with consensus national and global goals to shift to renewable, sustainable sources of energy. This transformation will create tremendous growth and profit opportunity for whole new industries. We offer this vision only to challenge the status quo and engage the people of the Northeast in a process of change that will be more sustainable and beneficial to the region in the long run. BIO Kyle Gibeault is deputy director of the Biomass Thermal Energy Council. Reach him at Kyle.Gibeault@biomassthermal.
BTEC
The Northeastern U.S. region is heavily dependent on fossil fuels to provide thermal energy for space heating, hot water and industrial process heat. In 2007, the Northeastern U.S. (defined as the six New England states and New York) consumed 2.09 quadrillion Btu of thermal energy. This amount, 96 percent of which is generated from nonrenewable sources, represents more than one-third of the region’s total energy consumption. The Northeastern states use 86 percent of the nation’s entire consumption of home heating oil, nearly all of which is produced outside the region and a significant percentage of which is exported from foreign countries. This dependence on fossil energy exposes the region to extreme economic and social vulnerability in the event of price shocks, such as those seen in 2001, 2005 and 2008. Additionally, it exacerbates environmental impacts including the region’s contribution to global climate change, air quality and acid rain. Further, it results in significant wealth in the region being exported to support other economies instead of the region’s own economic vitality. This has to change. On April 28, the Biomass Thermal Energy Council and four other organizations unveiled a vision for changing the thermal energy landscape in the Northeastern U.S. This vision, presented at the Heating the Northeast with Renewable Biomass conference in Manchester, N.H., calls for 25 percent of all thermal energy requirements in the Northeast to be met with renewable energy resources by 2025. Further, this vision calls for three-quarters of the renewable thermal energy to come from sustainably produced biomass from forest and farm resources. Both the full report and a four-page brief can be found on our website at: www.biomassthermal. org/vision.
Biomass Thermal Energy Council
Heating the Northeast with Renewable Biomass: A Vision for 2025
6|2010 BIOMASS MAGAZINE 13
R E G I S T R A T I O N I S N O W www.undeerc.org/Biomass10
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July 20–21, 2010 Alerus Center Grand Forks, North Dakota, USA
It’s All Here
iomass is no longer a long-range option for U.S. energy needs—it is a significant player. It has many near-term uses now, as seen in the alternative fuels and chemicals industry, and holds hope as the largest global sustainable and renewable energy resource. The Biomass ’10 Workshop will deliver an all-inclusive look at the most pressing topics circling around the biomass industry today. Join industry leaders this summer in the heart of biomass country for exceptional networking and educational opportunities! It’s all here!
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LEGAL
perspectives
Managing Construction Schedule Risk John Eustermann partner, Stoel Rives LLP
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oday’s push to bring biomass energy projects on line and the seemingly never-ending death grip on project financing dollars has resulted in greater risk aversion by all contractual participants. Regardless of the feedstock being used and whether the project involves a stoker boiler, pelletization or torrefaction, completion and performance risk, among others are perceived to exist. As such, when the markets loosen up and opportunities surface, negotiating and allocating risk among transaction participants will require substantial consideration. Considering that the biomass project developer is the party paying for the construction, expecting the project to be completed on time within a stipulated budget and according to the quality and performance levels specified seems reasonable. In light of unforeseen issues related to technology, site and location, multiple cost components and the layers of skill deployment to which a project is exposed, however, the engineering, procurement and construction (EPC) contractor understandably will adjust the bid price. At the end of the day, the parties understand that allocating and managing risk directly impacts the productivity, performance, quality and financial modeling of a biomass project. Thus, to ensure project success, each party should analyze what risks are likely to arise and the consequences of such risks, what can be done to avoid the occurrence of such risks, what party can prevent or control such risk, and finally, can the parties insure against such risk. The goal is to have the party with the most control (avoidance or mitigation), as much as may be negotiable, contracted to assume such risk.
The following briefly presents a couple of issues in EPC contracts that, among others, tend to be focal points when discussing/negotiating project completion of schedule risk. In addition to the time value of money and reaching the commercial operation date to generate revenues as quickly as possible, a lot of pressure around construction timing has resulted from certain grants and incentives in the stimulus package. Understandably, the developer and construction contractor seek certainty as to a project’s construction schedule and contract completion. Owners want completion as per an agreed schedule to avoid additional costs and the contractor does not want to be held accountable for delays caused by the owner or other contractors. In light of the fact that biomass projects involve layers of skilled workers performing distinct activities that require specific sequencing, avoiding any domino effect delays benefits everyone. Implementing completion milestones throughout the project, in addition to reasonable liquidated damages, presents a couple of opportunities, if negotiated reasonably, that the parties can use to manage a project schedule and some of the associated risk. By agreeing to completion milestones throughout the construction, the developer can ensure that the project remains on track. Generally, such milestones are tied to certain installment payments due the contractor or adjustments to the EPC contracts retainage percentages. Thus, if the contractor fails to hit a milestone, the developer may hold back such payments or portions thereof until the contract is completed. To the extent the contractor
finishes the project on time by “catching up,” then those monies withheld may be tendered to the contractor as part of the final payment. In the event the contractor fails to finish the project as per the agreed upon schedule, the developer may seek to apply the payments that were held back to any applicable liquidated damages negotiated in the EPC. Liquidated damages refers to the money, as agreed upon by the parties, that represents the dollar amount of damages caused by a contract default as to timely completion. Such damages are triggered by an inexcusable delay that extends contract completion beyond the completion date and are generally expressed in terms of a fixed dollar amount for every day that the contract extends beyond the completion date. It has been established that to be enforceable, liquidated damage provisions amounts must: roughly approximate the damages likely to be incurred by the party seeking relief in the event of failure; and be sufficiently difficult to calculate at the time the contract is executed that both parties recognize the significant benefit of being spared any future difficulty of estimating those damages. Finally, in light of the multiple layers of third parties involved in large-scale projects, equitable schedule adjustments should be negotiated to accommodate for delays not caused by the EPC contractor. Again, the above discussion addresses only a couple of the risk allocation tools that are worthy of note. BIO John Eustermann is a partner at Stoel Rives LLP. Reach him at jmeustermann@ stoel.com or (208) 387-4218. 6|2010 BIOMASS MAGAZINE 15
business
BRIEFS PowerStock appoints Pettit to development role PowerStock, a provider of biomass feedstock solutions for renewable energy generation and advanced biofuels development, announced it has appointed Harrison Pettit, an ethanol industry veteran, to the position of vice president of business development. Prior to joining PowerStock, Pettit was director of business development for Pacific Ethanol Inc., where for four years he was instrumental in the development of the company’s 220 MMgy of ethanol production and was the lead developer for its 60 MMgy plant in Burley, Idaho, completed in May 2008. Pettit also led Pacific Ethanol’s advanced biofuels efforts, overseeing its 2.7 MMgy cellulosic ethanol commercial demonstration project, which was selected in 2008 by the U.S. DOE for a $24.3 million financial assistance grant. BIO
John Deere launches 900K-series feller bunchers The John Deere 900 K-series tracked feller bunchers pack plenty of power. The largest, the 953K and the 959K, come with an industry-first 330-horsepower (hp) engine standard, while the smaller 903K and 909K have dual power options at 300 hp and 330 hp, respectively. The 900s feature a larger displacement Tier 3 PowerTech Plus 9.0L engine that delivers the power, with the lowest daily fuel cost in the industry and a 295-gallon fuel tank. Designed with a quick-recovery saw that never slows down, the 900K-series features a best-in-class felling head accumulation that picks up more trees at once and high-tractive effort-to-weight ratio with low-ground pressure for smooth operation. BIO
Ze-gen named top 50 Greentech Startup Ze-gen Inc. announced that Greentech Media has chosen it as one of the top 50 venture capital-funded Cleantech Startups. The list includes companies from every sector of the cleantech industry, including green building, solar, wind, geothermal, smart grid, energy storage, next-generation vehicles and gasification. Ze-gen was chosen from among 500 venture capital funded firms. Inclusion in the Greentech Media’s Top 50 Greentech Startups signals leadership amongst cleantech peers and Ze-gen’s potential to severely disrupt the market. Ze-gen offers an economically viable and environmentally superior alternative to traditional landfills and incineration processes through its advanced gasification technology that creates renewable fuel from waste to produce clean energy. BIO 16 BIOMASS MAGAZINE 6|2010
Jonsson named Chemrec CEO Max Jonsson has taken over as CEO of Chemrec AB, following the resignation of Rick LeBlanc. Jonsson’s company, Nykomb, of which he is chairman, is one of the owners of Chemrec. LeBlanc led Chemrec through the past year, during which considerable progress was achieved towards the goal of commercialJonsson izing of Chemrec’s technology for gasification of black liquor and production of motor fuels. Jonsson has a finance background and previously held senior positions in the development, financing and operation of independent power production projects. He founded and led the start-up of the HyHeat energy recovery technology company, whose technology won the Swedish Environmental Innovation of the Year award in 2009. BIO
Boldt to build We Energies cogeneration plant The Boldt Co. will provide all construction services for We Energies’ new 50-megawatt biomass cogeneration plant at the Domtar Corp. paper mill in Rothschild, Wis. The total project cost was pegged at $255 million. We Energies, the Milwaukee-based provider of electricity and natural gas to more than 1 million customers, said the project will create about 400 construction jobs and 150 permanent jobs in central Wisconsin. Construction could begin next spring if the Wisconsin Public Service Commission gives the green light by the end of the year. The facility will use forest residue, clean wood waste and wood shavings to generate electricity and steam to assist Domtar’s papermaking operations and wean the Montreal-based firm off fossil fuels. BIO
ArborGen hires Mann as general manager Australasia operations ArborGen, a tree improvement and production company, announced that Greg Mann has joined the organization as general manager of ArborGen Australasia. Mann will oversee ArborGen New Zealand and Australia operations. He comes to ArborMann Gen with more than 15 years of business and science experience. Most recently he was the commercial general manager at The New Zealand Institute for Plant & Food Research Ltd., a New Zealand science company specializing in elite cultivar development, sustainable production systems and bioprotection, where he led the team responsible for the commercialization of technology and intellectual property. BIO
business
BRIEFS Upfill-Brown joins Terrabon as COO
Buhler Aeroglide acquires drying technology license Buhler Aeroglide announced a license agreement with Ronning Engineering Co. Inc. of Overland Park, Kan. The license agreement includes the utilization of Ronning’s drying technology for specific market segments such as biomass. The license agreement completes Buhler Aeroglide’s portfolio of convection drying technologies. With the addition of Ronning’s specialized rotary drying technology, Buhler Aeroglide is able to provide fully-integrated biomass processing solutions from drying of raw material to grinding, pelleting and final bulk load-out of finished biomass fuel pellets. The acquisition will allow Buhler Aeroglide to provide drying solutions for the largest production rate challenges. BIO
A.W. Jenkinson, Stobart Group set up joint venture A.W. Jenkinson Forest Products, a U.K. supplier of wood chip and bark products, and Stobart Group Ltd., a provider of multimodal transport and logistics in the U.K., have formed a new joint venture, Stobart Biomass Products Ltd. The new company was created to source and distribute supplies of biomass fuel to the emerging U.K. renewable energy market, allowing A.W. Jenkinson to concentrate on its traditional customer base. The biomass fuel sources will include low-grade virgin wood, arboricultural arisings, low-grade wood chips woody green waste, recycled timber and refuse-derived fuels. BIO
Irish joins Anderson Partners as media director Anderson Partners announced today that Cort Irish has joined the firm as media director. Irish will manage Anderson Partners’ media planning and buying services, including both traditional and online media. He will also have a role in the firm’s client development efforts. Before joining Anderson Partners, Irish was media director for Bozell in Omaha and has also worked for several national agencies, including Publicis/MediaVest and Starcom in New York and Chicago. Prior to that he worked with advertisers such as Denny’s restaurants, Kraft, Green Giant and Allstate, before returning to Omaha, his hometown. BIO SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Industry Briefs, Biomass Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail information to rjohnson@ bbiinternational.com. Please include your name and telephone number in all correspondence.
Terrabon Inc., a waste-to-fuel conversion technology company, announced that Simon Upfill-Brown has joined the company as chief operating officer. Upfill-Brown has more than 25 years of experience in executive leadership roles and a proven track record in the development of early-stage technology Upfill-Brown companies. He will oversee the company’s operating teams and will play an integral part in driving development of Terrabon’s innovative technologies. Prior to joining Terrabon, he served as CEO of GreenFuel Technologies Corp. in Cambridge, Mass., a venture spun out of the Massachusetts Institute of Technology that recycled flue gas CO2 into valuable ingredients for feed, food, fuel and chemical markets. BIO
NDARE elects officers Patrice Lahlum, West Fargo, N.D., is the new chair of the North Dakota Alliance for Renewable Energy. Lahlum, a consultant to the Great Plains Institute on biomass programs, was elected at NDARE’s annual meeting. Other officers include Kim Christianson, Great Plains Energy Corridor, vice chair, and Lahlum Jocie Iszler, communications consultant, secretary-treasurer. Other members include Al Christianson, Great River Energy; Mindi Grieve, Environmental Law & Policy Center; Terry Goerger, farmer; and Mike Williams, Greenfields Energy. Kim Christianson was elected to his first three-year term and Iszler was re-elected to a three-year term on the board. NDARE promotes the development and use of renewable energy, including biofuels, biomass and wind energy, as well as the widespread adoption of smart energy efficiency and conservation practices. BIO
Capstone Turbine’s Crouse elected chairman of WADE Capstone Turbine Corp., a clean technology manufacturer of microturbine energy systems, announced that Capstone Executive Vice President Jim Crouse was elected chairman of the board of directors for the World Alliance for Decentralized Energy. In the influential role as WADE’s chairman, Crouse will help the organization set its agenda, expand its global presence and broaden efforts to accelerate worldwide development of cogeneration, onsite power and decentralized renewable energy systems. WADE’s membership includes more than 200 corporate leaders in the decentralized-energy industry, national cogeneration and decentralized energy associations, and a number of public and private institutions. BIO 6|2010 BIOMASS MAGAZINE 17
BIObytes Biomass News Briefs
Honeywell brings biomass to NH schools Honeywell will install wood-fueled energy systems at two New Hampshire school districts, heating two buildings in each district and saving them a combined $3.7 million over the next 15 years. The company will also perform several needed upgrades in both districts. The Pembroke and Winnisquam school districts will finance the improvements and
use the energy and operational savings the upgrades produce to pay for the work, according to Honeywell, which guarantees savings through a 15-year performance contract. Both districts will also receive funding through the American Recovery and Reinvestment Act for the projects, resulting in no required up-front capital or additional money from the districts’ budgets.
SG Biofuels partners with Brookhaven National Laboratory Brookhaven National Laboratory, Brookhaven, N.Y., will research Jatropha curcas as a sustainable, low-cost feedstock and chose California-based SG Biofuels as its source for seed and oil to test combustion properties. SG Biofuels has the largest library of jatropha material in the world and operates plantations in Latin America.
During the tests, jatropha will be blended with residual oil combusted in a commercial boiler that has been used to test other biofuel blends over the past few years. Measurements of gases and particulates in the stack will be taken to evaluate the differences blending makes. Physical and chemical properties will also be evaluated.
Cereplast offers algae plastics As part of a plan to develop a new family of algae-based resins, Cereplast Inc. expects to offer the first grade of Cereplast Algae Plastics for commercial use by the end of the year, according to the company. Cereplast is currently using renewable material such as starches from corn, tapioca, wheat and potatoes to produce biobased resins.
Cereplast is in contact with several companies that plan to use algae to minimize emissions from smokestacks. The company is also in discussions with chemical conversion companies that potentially could convert the algae biomass into viable monomers for further conversion into potential biopolymers.
18 BIOMASS MAGAZINE 6|2010
Carbonomics joins OriginOil’s first working group Carbonomics, an emissions trading company, will help develop a new carbon “asset class” in an industry working group to develop jet fuel from algae using waste streams. The working group is led by OriginOil Inc., a Los Angeles-based company working to transform algae into a true competitor for petroleum. Through modeling, OriginOil has concluded that carbon credits are a key contributor to cost-effective algae production.
Initially, Carbonomics will determine if the activity complies with the Voluntary Carbon Standard, the American Carbon Registry and possibly the Kyoto Protocol’s Clean Development Mechanism. Once a protocol has been established and validated, the working group will register projects, perform annual audits and identify opportunities for credit sales.
NRG will cofire in NY By the end of 2011, New Jersey-based NRG Energy will be generating up to 15 megawatts (MW) from cofiring clean woody biomass at its Dunkirk Generating Station in western New York. The company received a 10year contract from the New York State Energy Research and Development Authority for the power
and plans to locally source forest and wood processing residue, according to the company. NRG is also planning to use biomass as the primary fuel at its Montville Generating Station in Uncasville, Conn., after repowering one of the facilityâ&#x20AC;&#x2122;s existing units to produce up to 40 MW.
Mass. Legislature says no to initiative The Massachusetts Joint Committee on Telecommunications, Utilities and Energy has decided not to act on a citizen petition that would limit clean energy development in the state. The measure is too broad and would cut off essential incentives for renewable energy, the committee said. The initiative calls for a mandate that would exclude fa-
cilities producing more than 250 pounds of carbon dioxide per megawatt hour from qualifying for the state renewable portfolio standard. That would also eliminate them from qualifying for tax credits crucial for affordable operation. Initiative proponents can still push for inclusion on the November ballot, but they need 11,000 signatures to do it.
Wheelabrator buys Portsmouth RDF plant Wheelabrator Technologies Inc., a subsidiary of Waste Management, purchased the Southeastern Public Service Authorityâ&#x20AC;&#x2122;s refuse-derived fuel (RDF) plant in Portsmouth, Va., and adjacent waste-to-energy facility for $150 million. Wheelabrator officially assumed management of the operation, dubbed Wheelabrator Portsmouth, on April 29. The purchase concludes a two-year process aimed at
selling the two plants in order to reduce debt and operating costs and draw on the expertise of a private vendor, according to Wheelabrator. SPSA chose Wheelabrator in November from a pool of four companies. A total of 164 SPSA employees at the facilities will become Wheelabrator employees. Wheelabrator also plans to invest more than $20 million in capital improvements.
PetroAlgae signs MOU to launch technology in Chile Algal technology developer PetroAlgae Inc. reported the signing of a memorandum of understanding (MOU) with Asesorias e Inversines Quilicura, a major shareholder of Subus Chila S.A., and expects the MOU to enable the development of a micro-crop technology system for the large-scale production of green gasoline, diesel and jet fuel in Chile. By managing light exposure the technology is able to dramatically increase growth
and productivity of indigenous organisms in open-pond bioreactors. The resulting microcrops absorb approximately twice their weight in CO2 and are harvested every few hours to produce a high-quality protein and carbohydrate-rich biomass, according to PetroAlgae. Last year, the company was the recipient of the Sustainable Biofuels Technology Award in the technology supplier category at the World Biofuels Markets.
6|2010 BIOMASS MAGAZINE 19
industry
PHOTO: NAVY VISUAL NEWS
NEWS
The U.S. Navy is testing a 50/50 camelina biofuel blend in its unmodified Green Hornet.
Green Hornet flies supersonic on camelina blend In an effort to confirm no difference in performance exists between a 50/50 camelina biofuel blend and standard petroleum-based JP-5, the U.S. Navy will log 23 test flight hours with the biofuel in an unmodified F/A-18 Super Hornet dubbed Green Hornet. The most recent flight was on Earth Day, April 22, when the aircraft broke the sound barrier, travelling at 1.2 Mach, according to Billy Ray Brown, public affairs officer for the Naval Air Warfare Center Aircraft Division. The test program is a significant milestone in the certification and operational use of biofuels by the Navy and Marine Corps. “We’re trying to certify it as a drop-in replacement,” Brown said, adding that all of the feedback thus far indicates the camelina-derived fuel does serve as a drop-in, but tests won’t be complete until the middle of this month. Final approval and certification of the biofuel blend could be six to nine months from the Earth Day flight. The Navy is not growing the flowered plant nor producing the fuel. Instead, the Defense Energy Support Center awarded a $2.7 million contract to Sustainable Oils, a joint venture between Targeted Growth Inc. and Green Earth Fuels LLC, for 40,000 gallons of the biofuel, according to the Navy. During the fuel procurement process, a request for a proposal is submitted to the Defense Energy Support Center, outlining the needs and requirements, Brown explained, adding that the Navy lab requested a nonpetroleum, nonfood source. “[The Defense Energy Support Center] goes out with all the need requirements to do that collective buy,” he said. “[Camelina] fit the bill.” The annual plant has seed pods about the size and shape of a small pea that are about 40 percent oil, compared with soybeans’ 20 percent, 20 BIOMASS MAGAZINE 6|2010
according to Sustainable Oils, which says it has the largest camelina research program in the nation. The company calls the short-seasoned, fast growing crop the “darling” of biodiesel production. Camelina matures earlier than other crops so it’s not dependent on rain later in the summer. It can also be harvested early, allowing the ground to absorb later-season rainfall to enter the next year in a better position, according to Sustainable Oils. The blend went through the Navy’s lab testing programs prior to any test flights. “Before we can use the fuel, we have to make sure we can use the fuel,” Brown said. Test and certification protocols will identify fuel chemistry and physical properties testing; material, component and engine performance testing; operational aircraft testing; and fleet trials, according to the Navy. Critical certification requirements include chemical properties, material compatibility, component and propulsion system performance, and weapon system performance. But testing and certification most likely won’t stop with camelina. “The idea is to certify as many different fuels as possible,” Brown said. The Navy hopes to source at least half of its total energy consumption from alternative sources by 2020. The U.S. Air Force, which is catching on to camelina, as well, flew an A-10 Thunderbolt II jet on a blend of camelina-derived biofuel and standard JP-8 jet fuel at the end of March. The Air Force has a goal to acquire half of its domestic aviation fuel from alternative fuel blends by 2016. —Lisa Gibson
industry
NEWS EPA releases proposed MACT rule changes The U.S. EPA has released a set of proposed changes to the Maximum Achievable Control Technology rule that would reduce mercury emissions from industrial boilers, process heaters and solid waste incinerators by more than 50 percent. The proposal would also considerably slash emissions of other pollutants from those technologies that are thought to cause cancer or other serious health problems, along with climate change, according to the EPA. The proposal, open for a 45-day comment period, includes emissions standards for three source categories: area source industrial, commercial and institutional boilers; major source industrial, commercial and institutional boilers; and commercial and industrial solid waste incinerators. For area source boilers, the EPA recommends a rule with standards to address mercury, particulate matter and carbon monoxide, applicable to technologies based on whether they are coal or biomass-fired and new or existing, according to the proposal. Major source boilers would have a work practice standard instead of emission limits under the proposal and operators would be required to perform annual tune-ups for each unit. The major source standards would include limits for mercury, carbon monoxide, particulate matter, hydrogen chloride and dioxin. Finally, the proposal would limit nine pollutants from commercial and solid waste incinerators: mercury, lead, cadmium, hydrogen chloride, particulate matter, carbon monoxide, dioxin and furans, nitrogen oxides and sulfur oxides. The limits would require reductions at 172 of 176 operating solid waste incinerators, as four already meet the proposed standards, according to the EPA. The agency also proposes a new definition to identify which nonhazardous secondary materials would be considered solid waste and which would be considered fuel. That distinction determines whether a facility burning the material would be considered a boiler or a solid waste incinerator pursuant to the proposed rule. The proposal states that the definition would not include, among other criteria, material that has been determined through a case-by-case petition process to not have been discarded and to be indistinguishable in all relevant aspects from a fuel product. The entire proposal can be found at www.epa.gov/airquality/ combustion. When fully implemented, the proposed rule would yield combined health benefits estimated between $18 billion and $44 billion annually, according to the EPA. That includes preventing between 2,000 and 5,200 premature deaths and about 36,000 asthma attacks per year. The estimated annual cost of installing and operating the pollution control equipment necessary to meet the proposed standards is $3.6 billion. The proposed rule comes after a District of Columbia Circuit Court vacated and remanded the original definition of commercial or industrial solid waste incinerator and the Boiler MACT rule in June of 2007.
Petition for Change The original MACT rule was finalized in 2004 and consists of a floor limit for each pollutant and source category, below which the standard cannot be set; and a technology-based standard, which can be equal to or more stringent than the floor. Before establishment of the MACT rule, emissions standards had been risk based. Some municipalities and environmental groups dissatisfied with the MACT rule petitioned the EPA to reconsider it in 2004, according to Anna Wildeman, a member of the Land and Resource Practice Group for law firm Michael Best & Friedrich LLP. The EPA granted the reconsideration and issued a revised rule in December of 2005. Still not pleased, the groups filed petitions with the D.C. Court of Appeals to review the final rule in February of 2006. The petitions outlined a few issues challenging how reasonable the MACT rule was as it related to the requirements of the Clean Air Act. First, it said the definition of commercial and industrial waste was much too narrow, specifying only waste combusted at a facility that cannot or does not recover thermal energy for useful purpose. “The agency did not actually define waste,” Wildeman said. “It defined waste by the process.” That effectively limits the number of facilities that would fall under the definition of a commercial or industrial solid waste incineration unit—defined as a facility that combusts solid waste—and significantly increases the number of facilities that fall under the boiler rule, wherein lies the other issue outlined in the petition: The MACT floor for industrial boilers was a “no control” standard. “The court agreed with the petitioners that EPA’s definition of commercial or industrial waste was contrary to and in conflict with other definitions in the Clean Air Act and vacated that definition,” Wildeman said. “The court further noted that, because a revised definition of commercial industrial waste would alter the number of facilities subject to the Boiler MACT rule, and because MACT standards are based on averages of similar facilities in the same source category, the Boiler MACT rule also had to be vacated.” The proposed rule would affect numerous biomass facilities, although some are still wading through the documents, numbering more than 1,200 pages. “We’re still in the process of looking over the proposal and determining its impact,” said Lynn Wallace, spokeswoman for Georgia Power, which is developing a 96-megawatt biomass power plant in Albany, Ga. The project is stalled on its timeline for operation before the summer of 2012, awaiting the MACT rule release. Wallace had previously said the company expects it will be affected, but has made arrangements to comply with any new standards and continue with the development of its wood-fired facility. —Lisa Gibson
6|2010 BIOMASS MAGAZINE 21
industry
NEWS Lafarge’s cement plant in Bath, Ontario, is aggressively pursuing carbon emission reduction strategies through the planting of multiple energy crops that may eventually replace a portion of the 110,000 metric tons of coal and petroleum coke the plant requires as fuel each year. “We recognize that our industry (cement) represents 5 percent of the world carbon emissions,” said Robert Cumming, Lafarge environmental and public affairs manager. “There’s also a very high demand for our products, for example, LEED (Leadership in Energy and Environmental Design) buildings use a lot of cement.” When initially embarking on the project, Lafarge had an agreement with biotechnology start-up firm Performance Plants, which provided its seed trait technologies for the planting of switchgrass, little bluestem, hemp, sorghum and tropical maize. Financial restraints forced Performance Plants to pull out of the project, according to Cumming, but Lafarge is still moving forward with its previous plans. Last year, Lafarge began a multiyear life-cycle assessment study with Kingston, Ontario-based Queen’s University’s Energy and Environmental Policy Institute, and has been working closely with researchers on planting trials of perennial crops, utilizing about 2,500 acres of land surrounding the cement plant. Previously, Lafarge rented the land for agricultural purposes, but it was turned back over to the company when farmers could no longer use it. “Eastern Ontario doesn’t have a very good agriculture industry because it doesn’t host much class 1 and 2 land, mostly class 3 and 4, so biomass crops are a good fit here,” Cumming said. Lafarge has four fields set-aside for the trials, land on which the university has been performing various soil sample tests. “During this multiyear trial, we will try to confirm that we can get at least a 90 percent savings on CO2 by growing these crops,” Cumming said. “It would be
22 BIOMASS MAGAZINE 6|2010
PHOTO: LAFARGE
Lafarge cement plant reduced CO2 with biomass
The 1,000 ton bales of processed biomass comprised of switchgrass, hemp and miscanthus are delivered to the cement plant for use as fuel.
a 100 percent savings if we could use tractors fired by biomass. We’re looking at carbon sequestration while root structures are being established in the first two years. We’re hopeful that farmers, should this business (biomass crops) take off, will eventually earn some carbon or offset credits for such a land-use change. The only way that can happen is to have a scientific opinion to support it and that’s what this is about—lifecycle assessments for purpose-grown crops—partly aimed at the long term, or when we begin to trade carbon credits. We want to earn rocksolid data, so there won’t be any questions about what we’re doing.” The second element to the Lafarge project will be testing and using the biomass crops as a fuel source. “Last summer, we contracted a number of local farmers to grow four different crops on the properties,
industry
PHOTO: LAFARGE
NEWS
This vibrant green hemp modified for high-energy performance grows at the Lafarge plant in Bath, Ontario.
all with different soil types,” Cumming said. The harvest yielded 950 1,050-pound bales and now, Mesa Reduction Engineering and Processing Inc. out of Albany, N.Y., will provide equipment to process the bales before they are burned with the coal. A forklift will be used to set the bales onto a conveyer belt, which will take them into a pre-shredder that will reduce them to chip size, and then through a grinder to produce a powdery material that will be blown pneumatically into the front end of the cement kiln. “We (the cement industry) use a lot of fuel,” Cumming said. “Not nearly as much as the power industry but we’re up there, and the reason we need so much energy is because we’re heating rock up to almost a semi-molten level, about 1,400 to 1,500 degrees Celsius (2,550 to 2,730 degrees Fahrenheit).”
A typical kiln is cylinder shaped, about 18 to 20 feet in diameter and 650 feet long. “They’re very large,” Cumming said. “The front face of the kiln itself will be pneumatically blowing the powder into it with the coal and petcoke, the amount of which we use will be reduced.” During the tests, Lafarge will use up to 30 percent biomass, but a minimum of 10 percent. “Essentially we’ll have the equipment there for a couple of weeks in early June, we’ll then do a full emissions testing program to measure the effects and confirm the benefits of the fuel,” Cumming said. To do that, Lafarge is working with emissions testing technology firm RWDI consulting, which will also perform tests using the plant’s traditional fuel in order to produce data for comparison. Cummin said the main impetus in the project as a whole is to stay ahead of the carbon emissions reduction game. “Lafarge has already reduced its CO2 emissions by 20 percent since 1990,” he said. “In light of recent governmental commitments, we need to further reduce those emissions by about 18 percent, and what that means for the cement industry is more challenges than most because two-thirds of our emissions comes from converting limestone to lime.” Ontario currently has a target of 20 percent reductions in greenhouse gas emissions from 2006 levels by 2020, which means Lafarge would have to replace nearly half of its fossil fuels with biomass, according to Cumming. “That [2020] is only 10 years from now, and so we need to start work today to build the future,” he said. “We recognize that carbon challenges are coming, and we intend to meet them head-on. We do have other possible solutions, but this one (biomass) is the most promising.” —Anna Austin
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industry
NEWS Vermont college opens CHP biomass plant Earth Day (April 22) brought a fitting and special occasion for Green Mountain College in Poultney, Vt. The campus celebrated the official opening and operation of its combined-heatand-power biomass facility, which provides 85 percent of the schoolâ&#x20AC;&#x2122;s heat and generates 20 percent of its electricity. The event marked a major step in the collegeâ&#x20AC;&#x2122;s goal of achieving climate neutrality by 2011 through an emission reduction of more than 50 percent, which makes it the first higher education institution in the nation with that distinction, according to the college. A handful of colleges have claimed complete climate neutrality, but largely through the purchase of carbon credits. The CHP facility will burn 4,000 to 5,000 tons of locally harvested wood chips each year, with No. 6 fuel serving as a backup mainly to heat campus buildings, according to GMC. The plant will reduce annual net greenhouse gas emissions from stationary sources on campus from 2007 levels of 3,420 metric
tons of carbon dioxide to 546 metric tons. The $5.8 million plant will pay for itself over 18 years through savings on fuel costs, according to the school. The project is largely a result of student activism, stemming from a proposal written for a 2005 honors seminar to study the feasibility of a new biomass heating plant. The students convinced their peers that the study was worth $10,000 in student activities money and when current President Paul Fonteyn assumed his duties in July 2008, he made the plant one of his first priorities, according to GMC. At least nine courses this past year focused on some aspect of the biomass plant and use of wood as a fuel source. GMC also sees the facility as an in-class educational resource for students and will employ real-time data streaming from the plant on its Web site. â&#x20AC;&#x201D;Lisa Gibson
industry
NEWS Woodland develops demo cellulosic ethanol plant The Bioindustrial Innovation Centre on the University of Western Ontario campus will house a cellulosic ethanol demonstration plant slated for operation in mid-2011. Ontario-based Woodland Biofuels Inc. will develop the facility, with an expected price tag of CA$12 million ($11.5 million) and the capacity to produce about 750,000 liters (198,000 gallons) of ethanol annually. “The Bioindustrial Innovation Centre … is designed to house demonstrations that use biomass as feedstock,” said Woodland President and CEO Greg Nuttall. “It is ideally suited for our process.” The plant will use Woodland’s patented Catalyzed Pressure Reduction gasification process, which can convert multiple feedstocks into syngas for the production of ethanol, acetic acid, reformulated water or power. The demonstration facility will use mainly wood waste. “Our process is capable of producing multiple different industrial chemicals, but we are focused on ethanol for now and our first commercial plant will produce a single product—ethanol,” he said. Woodland Biofuels and its partners received CA$4 million from the Ontario Innovation Demonstration Fund for the demo
project. Nuttall said the plant was given more monetary awards, but he declined to release details. The province’s investment will help create jobs as part of its Open Ontario Plan, a five-year strategy to strengthen the economy and create employment opportunities. Construction and operation of the plant will create 35 full- and part-time jobs, according to Ontario’s Ministry of Research and Innovation, and if the technology is proven successful, Woodland could potentially hire another 585 employees over the next five years. After completing the demo plant, Woodland expects to begin construction of a 20 million gallon waste-to-ethanol plant, which should come on line about 18 months later, according to Nuttall. Woodland uses its CPR technology to develop plants worldwide for companies or organizations looking to manufacture products using waste streams. A typical plant buyer would have access to unused biomass including wood and agricultural residues or biosolids such as sewage sludge, according to Woodland. —Lisa Gibson
6|2010 BIOMASS MAGAZINE 25
industry
NEWS Novozymes launches bioinsecticide in North America Novozymes Biologicals BioAg Group will expand its market this year for Met52 Granular—a bioinsecticide made from a soil fungus—from just Europe to include the U.S. and Canada. Met52 is based on sterile rice and contains Metarhizium anisopliae, a naturally occurring fungus that efficiently kills a range of insects that threaten professional greenhouses and nurseries. It protects against black vine weevil and strawberry root weevil larvae, thrip adults and larvae, mites, gnats, grubs and white flies, according to Sanford Gleddie, global marketing manager for Novozymes Biologicals BioAg Group. “We’ve been working and researching with this particular fungus for coming on 10 years now,” he said. The product was launched in Europe in 2007 and, upon completion of field trials, can now be registered for commercial, nonfood use in North America for ornamentals, shrubs, and forest and shade tree seedlings, among others. The registration process in the U.S., similar to that of chemical insecticides, includes state and U.S. EPA approval. The market expansion is not spurred by demand for biocontrol, Gleddie said, but by product development. The active ingredient in Met52 is the fungal spores. When mixed into potting soil, it grows rapidly and infects the harmful insects, killing the larvae in three to five days, according to Gleddie. “It’s a good bug controlling a bad bug,” he said. “We’re manufacturing and applying a high level of these spores where they’re needed.”
The fungus is potent and has the added advantage of resistance management. “It has a broad mode of action,” Gleddie said. “It’s not very specific to one metabolic pathway.” When chemicals with specific modes of action are used consistently, any insects that are not susceptible to them will quickly multiply. While Met52 is more effective on some insects than others, it has been tested on a wide range of bugs and Novozymes is working to further expand its abilities. Novozymes is also working to develop a spray formula of Met52, along with a registration for use on food crops. “There’s a really good fit for this biocontrol on those types of crops,” Gleddie said. —Lisa Gibson
TECHNOLOGY FOR SALE/ MERGER OR PARTNERSHIP Syntec Biofuel Inc. has developed proprietary catalysts to convert syngas generated from gasified biomass, biogas, natural gas or gasified coal into mixed alcohol (ethanol, methanol, propanol, and butanol) producing 110 gpt with a goal of 142 gpt. University of British Columbia has validated Syntec’s lab results and catalyst has been fabricated by Sud-Chemie. Contact: Michael@syntecbiofuel.com call: 604-681-1064
26 BIOMASS MAGAZINE 6|2010
industry
NEWS GlycosBio expands to Malaysia
Texas-based Glycos Biotechnologies Inc. is expanding its biochemical production capabilities to Malaysia under an agreement with Malaysian Bio-XCell Sdn. Bhd., a government-supported industrial ecosystem focused on the advancement of biotechnology in the country. The two will collaborate on the construction of a biochemical and biotechnology facility within Bio-XCell’s industrial park in Malaysia. The center will include a research and development lab, along with a 20,000-metric-ton (22,000 tons) commercial biochemical production facility that will manufacture acetone, technical-grade ethanol and isoprene, according Rich Cilento, GlycosBio CEO. Research and production at the facility will use waste products from the palm oil industry including crude glycerin and fatty acids, Cilento said. No contracts for supply are in place as yet, but several companies have shown an interest in providing their waste streams for the process. GlycosBio takes a unique approach to biochemicals production, using mostly waste streams, especially glycerin, in lieu of sugars, which are more commonly utilized in such processes. “It’s sort of hand in glove with our technology,” Cilento says of the decision to expand to Malaysia. “Their natural resources align with our feedstock strategy. They don’t have a lot of sugar.” The country also has a long-standing oleochemicals industry, he added. “It completely makes sense for us to have a longstanding partnership with them.” The Malaysian government, through its Biotechnology Corp., is promoting and encouraging a biochemical industry through financial support for companies willing to expand there. “Their program is to support entirely the cost to construct and purchase equipment,” Cilento said, adding that a cost estimate has not yet been established and, through
a long-term agreement, GlycosBio will pay it back. The developing biochemicals industry will be both for domestic and export markets, he said, although the country only has a population of about 25 million to 30 million. “Malaysia doesn’t have a huge addressable market. Most will be more than likely export.” Bio-Xcell’s industrial park is the perfect location for the plant, Cilento said, as all the infrastructure is already in place. Construction is scheduled to begin in the third quarter of this year and to be completed in 2012, followed shortly by operation. “Ultimately, our goal will be to show that we can integrate into an existing oleochemical plant to make an additional chemical,” Cilento said. —Lisa Gibson
6|2010 BIOMASS MAGAZINE 27
industry
NEWS French oil supermajor Total S.A. has invested in Warrenville, Ill.-based cellulosic ethanol company Coskata Inc., leading the company’s Series C-Prime funding round. Total will now have a seat on Coskata’s board of directors. Total says the investment is part of the company’s strategy to prepare for an energy transition, which involves supporting the development of innovative start-ups through its Corporate Venture Activity. Also participating in the transaction were several of Coskata’s prior investors, including Blackstone Cleantech Venture Partners, Khosla Ventures, Advanced Technology Ventures, Globespan Capital Partners, and Arancia. Coskata made its initial public debut at the 2008 North American International Auto Show, when General Motors Co. announced it had taken an undisclosed ownership stake in the company. Last October, together with GM and plasma gasification company Alter NRG Corp., Coskata officially unveiled its $25 million semicommercial cellulosic ethanol facility near Madison, Pa., and soon after announced plans for a commercial facility that will be located in the Southeast U.S. Developed by Oklahoma State University and University of Oklahoma researchers, Coskata’s process technology is capable of converting multiple biomass feedstocks, including woody biomass,
PHOTO: COSKATA INC.
Oil giant invests in Coskata
Coskata unveiled its semi-commercial feedstock flexible facility in Madison, Pa., in October.
agricultural waste, energy crops, and construction and industrial wastes, into synthesis gas. The syngas is cleaned, cooled and passed through a conversion process, where it undergoes bacterial fermentation using Coskata’s proprietary microorganisms. The microorganisms consume the carbon monoxide and hydrogen in the syngas stream, and the resulting ethanol is recovered from the solution. —Anna Austin
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industry
NEWS Extreme Forest develops biomass collection, power machines Alabama-based Extreme Forest, a five-year old company that had previously focused on contracts for private land clearing, has developed new biomass collection equipment and is working to perfect a mobile biomass power generator. Owner Michael Durden said his company began designing collection equipment a couple of years ago when the value of woody biomass began to greatly increase, creating a need for quick and simple ways to collect materials while obtaining the right chip or pellet consistency. The machines are much like typical mobile mulcher or pregrinder machines, but have heads on them that can collect the material while processing the biomass instead of leaving it on the ground for later collection. “It’s blown into a basket right away so it’s ready to be burnt or processed into pellets,” Durden said. The machines can clear and collect material from one acre, depending on the material density in about three to four hours. One acre can contain 50 to 100 tons of biomass, Durden pointed out, but at a maximum the machines can handle about 100 tons every four hours. Extreme Forest is also working to perfect a mobile biomass generator, according to Durden. He said the electrical capacity right now is at about 5 megawatts, but will be increased as the company perfects the design. “These generators will be useful at sites without readily
available electricity such as at an oil rig, or in a community that’s been hit by natural disaster,” Durden said. “If power lines are severed, we can quickly utilize the available waste materials for power production, as the machines can be plugged right into the grid. They will also be capable of removing moisture from the biomass instantly, similar to but not exactly like flash drying. If you’ve got a large amount of wet wood like during Hurricane Katrina, these will enable power production on-site within a day of setting up.” Durden said Extreme Forest is working with a few different groups on some regulatory and grid aspects surrounding the generators, but Extreme Forest has done most of the design work. The company is also working with Alabama’s Environmental Protection Division to gain emissions approval. The first generator is nearly complete, according to Durden. The company will not have them available for sale until after it runs tests, but should have them on the market within 10 to 12 months. “It’s just a matter of tweaking and fine-tuning them to possess the optimum efficiency, and also making sure they comply with air quality requirements,” he added. —Anna Austin
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NEWS French engineering company Thermya is working to commercialize and introduce a fast continuous torrefaction technology to the North American marketplace, after more than a decade of perfecting the technology in the European Union. Development of the TORSPYD began in 1994 by Jean-Sèbastien Hery in collaboration with the University of Leven, Belgium, resulting in a treated wood recycler prototype in 1995. After Thermya was created in 2002, the company acquired patents to the initial technology and continued work to further develop the process. In 2006, the TORSPYD process was completed and the first pilot unit was built in 2007. Thermya signed a first license agreement in 2009 with the Spanish company IDEMA, Group Lantec. Thermya spokesman Jean-Christophe Labastugue said the license gives the company the right to construct and/or sell torrefaction plants based on the TORSPYD technology, but not exclusivity. Thermya describes its process as a soft thermal treatment of biomass (240 degrees Celsius or 464 degrees Fahrenheit) based on the continuous circulation of two air flows moving in opposite directions. The hot neutral gases are dehydrated and then depolymerized in the reactor to eventually produce biocoal. According to Thermya, the TORSPYD biocoal product retains 90 percent of its initial mass and contains a moisture level of 1 percent. Properties and energy content vary, depending on the properties of the initial raw biomass, but the company says wood-derived biocoal has a calorific value of 20,000 to 21,000 kilojoules per kilogram. The size of a typical unit depends on the required production capacity and what type of biomass will be utilized. Units
30 BIOMASS MAGAZINE 6|2010
PHOTO: THERMYA
French torrefaction firm targets North America
The TORSPYD torrefaction pilot unit at Thermya’s headquarters can convert biomass into a biocoal product that retains 90 percent of its initial mass.
developed by Thermya range from 100 to 5,000 kilograms per hour, and are designed to operate on the basis of 8,000 production hours annually. Labastugue said the first commercial TORSPYD torrefaction plant is currently under construction in Northwest Spain, and should be operating at the end of the year. The company is looking to secure commercial and industrial long-term partnerships in North America. —Anna Austin
industry
NEWS New York biofuel road map released The New York State Energy and Research Development Authority has released a renewable fuel road map for New York that indicates there is potentially 1 million to 1.68 million acres of nonforest land that can be used for bioenergy feedstock production in New York. The 140-page document assesses the prospects for the expansion of biofuel production within the state while focusing on biomass resource availability and economic and environmental impacts. The road map considers 11 key issues, including stakeholder input, analysis of sustainable feedstock production in New York, feedstock transportation and logistics, life-cycle analysis and public health and biofuel industry economic impacts and analysis. The road map’s lower estimate of available biomass crop land (1 million acres) assumes that no cropland is used for new bioenergy feedstock production, rather new production lands come from abandoned farmland, old pasture, and scrub and shrub lands not currently used for production. The estimate also assumes that only about half of New York landowners would be interested in production. The higher estimate of 1.68 million acres assumes additional land (approximately 0.68 million acres) becomes available by the year 2020 due to projected increased crop and milk yields but on less land, freeing some current crop land for lignocellulosic energy feedstocks. Another potential feedstock source the report considers is municipal solid waste (MSW) for ethanol production. Using data from two New York State MSW characterization studies and a U.S. EPA waste characterization study, estimates of waste biomass available for ethanol production were extrapolated from the New York State Department of Environmental Conservation Waste Management Plan 2000 update. The road map calculates that if New York were to convert only the yard waste and paper waste fraction that’s not currently being
recycled into ethanol, it could possibly yield 426 MMgy of ethanol in the short term and 524 MMgy in the long term, depending upon the conversion process used. Overall, New York lands could potentially provide 5.6 to 16 percent of estimated 2020 in-state gasoline consumption, assuming that the technological barriers to commercial-scale production of lignocellulosic ethanol are overcome by the year 2020, according to the road map. It also finds that New York-derived biomass could support four large-scale centralized lignocellulosic biorefineries (capacity ranging from 90 MMgy to 354 MMgy) or up to 24 smaller capacity (60 MMgy) biorefineries. The Renewable Fuels Roadmap and Sustainable Biomass Feedstock supply For New York can be accessed at www.nyserda.org. —Anna Austin
industry
NEWS Louisiana to host wood pellet plant Point Bio Energy LLC has selected the Port of Greater Baton Rouge, La., as the future location of a proposed $100 million wood pellet plant, after conducting a national survey of possible project sites in the U.S. Plans for the facility were officially announced April 21 by Louisiana Gov. Bobby Jindal; Point Bio Energy CEO Bill New; Port of Greater Baton Rouge Executive Director Jay Hardman; Commissioner of Agriculture and Forestry Mike Strain; and Baton Rouge Area Chamber President Adam Knapp. When complete, the plant will produce 450,000 metric tons (496,000 tons) per year of wood pellets derived from locally sourced woody biomass as well as wood delivered by barge from other locations on the Mississippi, Atchafalaya and Red rivers, and the Intracoastal Waterway through existing barge unloading facilities. Point Energy intends to ship the pellets overseas for use in Europe where the fuel pellet market is well-established. Hardman said the project is one of the biggest for the port in recent years, and will be the first green industry to locate there. “Plans for the plant have been and continue to be well-received [in the area],” he said. Louisiana Economic Development estimates the project will gen-
erate $12.9 million in new state tax revenue and $9.6 million in local tax revenue over the next 10 years, bringing the port an estimated total of $825,400 per year. In addition, up to 100 direct jobs and 273 indirect jobs are expected to be generated from the plant’s construction. Point Bio Energy expects to make use of Louisiana’s Quality Jobs and Industrial Tax Exemption program. The ITE program provides property tax abatement for up to 10 years on a manufacturer’s new investment and annual capitalized additions and applies to all improvements to the land, buildings, machinery, equipment and any other property that is part of the manufacturing process. The state’s Quality Jobs program provides a 5 to 6 percent cash rebate of annual gross payroll for new direct jobs for up to 10 years and a 4 percent sales/use tax rebate on capital expenditures, or a 1.5 percent investment tax credit for qualified expenses. Construction of the wood pellet plant is expected to begin this summer and commercial pellet manufacturing operations are expected to commence in the last quarter of 2011. Hardman said the port commission hopes to give the final approval for a 20-year lease on the 18.8-acre site April 22. —Anna Austin
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industry
NEWS TCL&P votes yes on biomass plant Traverse City, Mich., could be the home of a 10 megawatt combined-heat-and-power biomass facility, following an April 21 vote by the Traverse City Light & Power board to move ahead with the project. After about five years of research and debate, the company has decided it will develop plans for the facility, which is expected to consume about 100,000 tons of wood chips annually from clean forestry residues and other biomass products such as pallets. The plant will not utilize construction and demolition debris, or anything else that has been treated or painted, according to Jim Cooper, TCL&P key accounts and marketing manager. No timeline for construction or operation has been established, as TCL&P has not yet begun designing the facility. Costs have not been determined either, but estimates show it could be about $40 million, depending on design and engineering, Cooper said. Four separate studies by the Department of Natural Resources and individual forestry experts have determined that there is plenty of woody biomass available to support the project, Cooper said. As is the case with most recent biomass project proposals, TCL&P has faced vocal opposition to its plans, but results of
a recent random telephone survey suggest opponents remain in the minority of the company’s customers. The Research Services of Northwestern Michigan College found that customers are either “very supportive” or “somewhat supportive” by more than a two-to-one margin. About 755 customers were surveyed between March 23 and April 8, with an overall margin of error for residential as well as commercial customers of less than ±5 percent. TCL&P serves 11,000 customers and 80 percent of its load consists of businesses. The opposition, albeit marginal, has impacted the TCL&P board’s decision-making process regarding the plant. “That’s the reason why it’s taken a while to come to a conclusion,” Cooper said. TCL&P used some of that time to study alternative sources of power, but determined biomass would produce the lowest electric rates for its customers and allow the highest efficiency for the facility, at about 75 to 80 percent, according to Cooper. The plant would also mean locally generated electricity, lower greenhouse gas emissions, local investment and job creation, he added. —Lisa Gibson
6|2010 BIOMASS MAGAZINE 33
industry
NEWS BCAP comments amassed, final rule release indefinite USDA’s Biomass Crop Assistance Program proposed rule comment period expired April 9. Those anxious for the final rule release and/or the current freeze on the program to cease can now only wait for the USDA to sort through the 24,000-plus comment submissions and formulate a fair and consensus-driven rule. When that will be, however, remains unclear although some in the industry have speculated that it will likely come out later this summer. The proposed rule was released Feb. 8, and individuals or groups had 60 days to submit feedback on program elements. Key provisions included eliminating the dry tonnage measure and adapting to industry norms, scaling back matching collection, harvest, storage and transport (CHST) payments of certain qualifiers and a prohibition on wood materials that might otherwise be used for higher-value purposes. The prohibition stemmed from concerns expressed by the composite panel and fiberboard industries, alleging that the CHST payments for certain eligible materials such as sawdust and wood shavings were directly increasing prices and competition for an established market. The wording in the proposed rule is as follows, “CCC proposes that vegetative wastes, such as wood waste and wood residues, collected or harvested from both public and private lands should be limited to only those that would not otherwise be used for a higher-value product. More specifically, for materials collected from both public and private lands, CCC is proposing to exclude from matching payment eligibility wood wastes and residues derived from mill residues (i.e. tailings, etc.) or other production processes that create residual byproducts that are typically used as inputs for higher value-added production (i.e. particle board [sic], fiberboard, plywood, or other wood product market.” Donna Harman, CEO of the American Forest and Paper Associa-
34 BIOMASS MAGAZINE 6|2010
tion said AF&PA supports USDA’s stated goal of avoiding diversion of materials potentially eligible for the BCAP matching payments from existing value-added production processes already occurring in the marketplace. “Unfortunately, we have serious concerns with USDA’s proposed approach to implementation,” she said. “If USDA focuses the matching payments component on woody biomass materials without a viable market, it can avoid diversion of materials from existing valueadded production processes …” The Biomass Thermal Energy Council said BCAP should preserve the program eligibility of vegetative waste materials such as wood wastes and residues, while the Biomass Power Association suggested that sawdust and wood shavings from saw mills be explicitly excluded from the eligible materials list, but that suppliers of the materials be allowed to petition USDA for eligibility where it can be demonstrated that no higher value use currently exists. “This safeguards biomass used by the composite panel facilities but only when there is a demonstration that such materials will actually be put to such use,” said BPA President Bob Cleaves. The Composite Panel Association suggested a clearer definition of the prohibition proposal, commenting that the terms “wood waste” and “wood residue” are not defined in the proposed rule nor discussed in any legislative history. CPA recommended that it be clearly stated that eligible wood waste and wood residues do not include scraps, sawdust, chips and shavings from saw mills and other wood mill facilities, either in a standalone definition of those terms or in the definitions of renewable biomass. —Anna Austin
industry
NEWS ARIES home at California naval base The first automated, real-time, remote, integrated energy system (ARIES) biodiesel production unit was delivered to U.S. Naval Base Ventura County in Port Hueneme, Calif., for the final phase of a collaboration on its development. The Navy, Biodiesel Industries Inc. and Aerojet Inc., a world aerospace and defense company, formed a cooperative research and development agreement to build a process that would make ASTM-quality biodiesel using local sources and it seems they have succeeded with ARIES. The unit delivered to the base is a commercial-scale system and will be run through demonstrations for a final validation of the process. ARIES is equipped with a new and revolutionary element: remote control technologies that provide real-time sensing and management of key chemistry and processing parameters. The tools were developed by Aerojet, the same company that developed remote sensing and automated technology that sent man to the moon. Real-time sensing can eliminate lengthy testing steps such as transesterification, which can take up to 1.5 hours, according to Russell Teall, Biodiesel Industries founder and president. When the reaction can be seen as it’s happening, those tests become unnecessary. “It’s a major advancement,” he said. “It’s the first time that sort of technology has been applied to biodiesel. It speeds things up by a factor of two.” The system includes stop points where it will show readings, asking if the operator would like to proceed with the reaction. The system also monitors the feedstock characteristics in real time. It can take several kinds of feedstocks including yellow grease,
animal fat, energy crops, waste agricultural products and more. Not only that, but they can be mixed together. “You have to know what sort of characteristics the feedstock has,” Teall said. “Separating is burdensome, but ARIES can mix them up and tell you what the characteristics are on the fly.” The system will also recommend the best formula for the process with those particular feedstocks, leaving less room for operator error. The best feedstock mix depends on the location and climate. Teall cautions dependence on one feedstock can be unsustainable and vertical integration is crucial. The Navy will make good use of the remote-controlled system, as it has identified 20 locations for the initial rollout, Teall said, adding that he doesn’t know a timeline for their establishment. The Navy has an obligation to have between 20 and 50 percent of its energy needs met internally by 2012. “So it’s going to be a fairly rapid rollout,” he said. The Navy’s immense consumption of fuel prompted the seven-year project, which began in 2003. “They’re the largest user of biodiesel in the world and it’s important they have access to their fuel,” Teall said. The integrated energy system makes ARIES applicable to nonNavy endeavors, as well. The system produces about eight times more power and heat than it needs for its own processes. “In the international market, there’s a huge need in rural communities to create income and businesses that don’t exist right now,” Teall said. He cited India, where about 150,000 villages are without electricity. “It becomes a very efficient source of local heat.” —Lisa Gibson
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August 4 - 6, 2010 Westin Copley Place Boston, Massachusetts
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A 21 billion gallon market The 3rd annual Advanced Biofuels Workshop, a one-day event co-located with the 26th annual International Fuel Ethanol Workshop & Expo (FEW) in St. Louis, will feature more than 25 presentations from leading players in the race to scale up and commercially deploy next-generation renewable fuels such as biobutanol, green gasoline, renewable diesel and biobased jet fuel. Hundreds of FEW attendees will arrive early to attend this event—space is limited—so register today.
Panels include: • Value Propositions: A Look at the Upside of Four Unique Fuels • Game-Changing Pathways • Second Life: Converting Existing Industrial Facilities Into Advanced Biofuels Plants • Making Money in the Advanced Biofuels Game • Drop-In Biofuels: Sizing Up Advantages • Integrated Biorefining: Fuels and Chemicals
Co-located with the World's Largest Fuel Ethanol Conference & Expo
June 14 - 17, 2010
www.advancedbiofuelsworkshop.com
EVENT
Bonanza
Attendance at the 2010 International Biomass Conference & Expo mirrored growth in the industry and the excitement generated by the resurgence in renewable energy. By Anna Austin and Lisa Gibson Photography by Elizabeth Burslie
38 BIOMASS MAGAZINE 6|2010
EVENT
a
6|2010 BIOMASS MAGAZINE 39
EVENT
B
iomass Magazine’s International Biomass Conference & Expo drew 1,700 people and nearly 300 exhibitors to the Minneapolis Convention Center in Minneapolis May 4-6. Attendance at the annual event doubled compared with the first event held in 2008. BBI International Vice President Tom Bryan kicked off the general session May 5 by welcoming the attendees and introducing the keynote speaker Jack Oswald, founder and CEO of Syngest Inc. Oswald provided the audience with a vision of the company’s Cornucopia Biorefinery, which is designed to simultaneously produce food, fertilizer and fuel, using every component of an ear of corn. “Our integrated biorefinery model will put an end to the food-versus-fuel debate,” he said. “Now you can have your fuel and eat it too.” The biorefinery would produce several products including food-grade corn oil, high-protein food for human consumption, animal feed, butanol and biochar. Following the keynote was a panel discussion about biomass policy objectives and how biomass organizations can work together to educate and influence lawmakers. Bob Cleaves, president of the Biomass Power Association, said that when approaching lawmakers on Capitol Hill, biomass proponents need to remember that most don’t care about biomass, and to focus instead on energy independence, in general, despite the fact that without biomass, the country will not reach its renewable goals.
Cleaves was one of six speakers on the Biomass Priorities on the Hill general session panel. While biomass comprises 50 percent of all renewable energy produced in the U.S., many people don’t know what it is, Cleaves told the crowd. The BPA is rolling out a communications strategy to remedy that problem, as biomass’s carbon neutrality is under scrutiny. Smokestacks can lead to misinterpretations of the benefits of biomass, as other renewable sources don’t employ them, he said. Another priority of the BPA is to retroactively reinstate the production tax credit, which expired at the end of 2009 and is crucial for development and operation of the industry. Without it, the existing fleet of biomass power facilities will likely fail and the industry will not grow, he said. An extension of the credit is included in the American Workers, State and Business Relief Act. Also included in the bill is an extension of the biodiesel tax credit. Shelby Neal, director of government affairs for the National Biodiesel Board, said a retroactive reinstatement of the credit claims are priorities one, two and three for the NBB. “The credit has been extremely successful,” he said, adding that the negative effects of its expiration have been apparent in plants being idled, reduced production, layoffs, and plants teetering on the edge of solvency. Neal encouraged attendees to call their representatives and ask for reinstatement of the credit. Geoff Cooper, vice president of research and analysis for the Renewable Fuels Association, said the credit is a priority of his, also, along with extension of the
Representatives from several biomass organizations including, left to right, Niebling, Rosenthal, Neal, McAdams, Cooper and Cleaves, took the stage at the International Biomass Conference & Expo to outline their legislative agendas.
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EVENT cellulosic ethanol tax credit and the volumetric excise tax credit for ethanol, paid to gasoline vendors who sell ethanol blends. Cleaves urged everyone in the industry to get involved, saying Congress relies on the private sector to come forward and emphasize needed adjustments. Michael McAdams, president of the Advanced Biofuels Association, agreed and said the industry needs a harmonized voice for change. Panelist Mary Rosenthal, executive director of the Algal Biomass Organization, is advocating algae as a feedstock for biofuels as well as other coproducts. Production mandates similar to the ones for cellulosic ethanol would incentivize algal biomass development and utilization. “We’re looking for parity from a feedstock perspective,” she said. Charlie Niebling, chairman of the board of directors for the Biomass Thermal Energy Council, said his organization is also focused on advocacy, but for awareness and recognition of thermal applications of biomass. There’s a tremendous opportunity to provide heat and power to residential, industrial and commercial facilities, he said. With so many legislative priorities to balance, it’s important to simplify as much as possible, Neal said. Cleaves added that being practical in the requests is crucial, ensuring the industry isn’t asking for too much at once. “Sometimes we feel like we’re just hanging on for the ride,” Rosenthal said, adding that the ABO is aiming to have full-time representation in Washington by next year. “I suggest we walk before we run and pick a no-brainer,” Niebling said.
GRE is working on plans to construct a 99-megawatt (MW) combined-heat-and-power plant in Spiritwood, N.D., that would produce cellulosic ethanol and a lignin pellet byproduct. For the past two years, GRE has been evaluating available biomass feedstocks within a 50-mile radius of the Spiritwood site to potentially cofire the plant. “From a broad perspective of what’s available, we found not much goes to waste in North Dakota,” Broekema said. “For example, a large potato processing plant and malting plant in the immediate area are already selling their waste streams.” Cofiring the Spiritwood plant with 10 percent biomass at 99 MW would require about 70,000 tons per year of raw biomass, or 10 tons per hour, assuming 5,000 Btu per pound, for a continuous operation. If GRE utilized crop residue, about 10,000 acres would be needed to supply the plant, according to Broekema. Once a feedstock source is secured, however, operational challenges remain. “There’s a level of confidence that says you can cofire 5 to 10 percent biomass without offering huge operational challenges,” Broekema said. “They [biomass crops] are more variable than the coal feedstock we’re used to—by season, the soils they’re grown in, variations in yearly rainfall and speciation in the crop that you’re looking at. For energy grasses, data just isn’t available on a widespread basis.” During biomass crop comparison tests, Broekema said in some samples, the alkali and moisture content varied by more than 100
Power Producers Take the Stage The future cost of CO2 is looming over power utilities. To avoid penalties and keep customer costs to a minimum, it’s imperative that utilities begin preparing for a carbon-constrained regulatory environment, according to Great River Energy Manager of Business Development Sandra Broekema. Broekema and others representing the Midwest’s largest power providers presented their views about biomass power challenges and benefits during the general session panel. GRE, a generation and transmission cooperative that serves 1.7 million people in Minnesota and western Wisconsin, has been working for quite some time to avoid future carbon expenses that will be imposed on utilities, Broekema said, costs which would be handed down to customers. “Looking at our generation portfolio, we have a fair amount of coal-fired generation which emits twice the CO2 footprint compared to a natural gas plant,” she said. “If a carbon tax/cost is imposed, that’s going to impact our members more than other utilities around the U.S. “ Broekema said besides keeping costs low, another primary concern of GRE is helping to reach Minnesota’s renewable energy standard of 25 percent by 2020. “We’re on pace to meet that,” she said. The cooperative is especially interested in biomass cofiring because it represents the opportunity for dispatchable power. “Wind and solar do not, so you can’t cost effectively manage that with energy demands,” she said.
Johnson, manager of biofuels development at Alliance Energy, participated in a general session panel called A Utility Perspective on Biomass Derived Power.
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Nearly 300 exhibitors packed into the expo hall at the Minneapolis Convention Center during the 2010 International Biomass Conference & Expo.
percent. “Biomass has some inherent composition issues that may cause operational problems, and we’re concerned about corrosion and emission issues,” she said. “Alkali can cause slagging of the molten ash in the boilers, causing unplanned power outages, and certain biomass has high silica content and can be erosive in a high-velocity boiler situation.” Alliant Energy’s Manager of Biofuels Development Bill Johnson said the driving force in the company’s biomass utilization strategy is also to adequately prepare for future carbon regulations. Rather than developing new facilities, Alliant is identifying existing facilities that are the most compatible with biomass in order to modify or expand its capacity. Alliant currently generates 71 percent of its kilowatt hours from coal at 188 plants across Wisconsin, Iowa and Minnesota, requiring about 17 million tons of coal annually. Echoing Broekema’s sentiments, Johnson pointed out that switching to biomass may not be as easy as it is perceived. “These 42 BIOMASS MAGAZINE 6|2010
plants were designed to burn coal,” he said, pointing out that a multitude of vastly ranging questions surround biomass cofiring or conversions—from changes in fuel density, size, flow characteristics, durability and supply—as opposed to coal’s consistency. Johnson said one of Alliant’s plants in Wisconsin has been permitted to test burn biomass feedstocks, and has experimented with 22 different fuels. “One of the things we’ve learned is that if we pellet, we minimally touch the product 15 times up to as much as 21 times,” he said. “If you’re not adding value when you touch something you’re adding cost, so it became imperative for us to look at ways to reduce cost to aggregators to reduce fuel costs.” Johnson said Alliant came to the conclusion that by densifying material in the field, handling could be reduced by 30 to 50 percent, which would drive down cost and allow material to be far more affordable. “We’re trying a minimum of a 20 percent cofire and would like to move to 40 to 50 percent,” he said. “But first we need to fur-
EVENT ther reduce costs and develop trust with our landowners, producers and foresters in the region.”
Harnessing the Power of MSW Different biomass gasification technologies produce varying results, and which a buyer should select largely depends on how they will use the synthesis gas, according to Karl Schoene, CEO of InEnTec, who participated in a waste-to-energy panel at the conference. After discussing basic gasification processes, he outlined several factors to consider when selecting an appropriate gasification technology. “How the syngas will be used sets the requirement,” he said. “If you’re using a catalyst bed, it has to be very clean. If you’re doing a direct burn, you don’t want a lot of halogens. You also have to know the contents of the feedstock beyond hydrocarbons and carbohydrates as it affects what goes into the residual solids.” InEnTec owns a Plasma Enhanced Melter technology that utilizes a fixed-bed down-draft gasifier. The syngas that is produced is much cleaner than up-draft processes in terms of light vaporizables, according to Schoene, and is suitable for use with catalytic conversion to liquid fuel products. He said PEM is highly tolerant of heavy metals and other difficult contaminates, produces a recyclable solid residual, and possesses low-cooling water requirements and a scalable design. Scott Hughes, chief operating officer for Visiam, described his company’s biomass treatment and waste recovery process as a technological breakthrough. “We can take mixed municipal solid waste (MSW) and recover all of the resources to utilize for other applications,” he said. Visiam’s Vacuum Explosion Process is patented and proven for the separation of organics from MSW and increasing the yield rates of processed biomass, Hughes said. Visiam built a 250-tonper-week pilot plant in Shakopee, Minn., in 2005, and has successfully tested 15 different feedstocks. “One of the things that we’ve seen is that by running regular yard waste through the vessel, there’s about a 30 to 40 percent increase in sugar fermentation,” he said. Larry Link, consultant for Novaspect, touched on the aspects of combustion optimization of MSW. “A big thing we need to focus our efforts on is reducing emissions at waste incineration plants,” he said. “We need less corrosive gases, less emissions and less ash disposal.” Waste incineration plants face many challenges, such as measuring the weight of the fuel going into the plant, variations in Btu content, bridging, clogging and uneven conveyor fills, Link said. He said there are two main areas for optimization, one being bed management. “You must maintain a continuous depth across the bed—not even but continuous— in order to respond to load changes,” he said. “If it’s too thick of a bed, there will be problems with the undergrade air getting through and you may get slagging on top of the bed. If the bed gets too thin, holes will be blown in it and the grate temperatures will be affected.”
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From left to right, Goodale, Nelson and Bilek participated in the One in the Same: Waste Management is Energy Management panel, which was moderated by Jonathan Scoll,far right, an attorney with Lindquist & Vennum.
The air system—undergrate and overfire air—is the second optimization area, according to Link. “Most refuse-derived fuel units have been retrofitted and because of that, the overfire air systems aren’t adequate,” he said. “A correct and coordinated ratio of overfire to undergrate air is critical for good combustion, and only requires minor changes for fuel variations after initial set up.” Roger Nichols, president of eNRG Solutions, echoed Schoene’s notions about the importance of being particular when evaluating gasification technologies. “All gasifiers aren’t alike,” he said. The gasifier eNRG owns was designed by ICM Inc. and converts MSW into steam, electricity, heat or biofuels. A typical 18 MW 500-ton-per-day system has no visible emissions, a wet electrostatic precipitator on the back end to produce a very clean syngas, minimum fuel-size reduction requirements and waste heat recovery, Nichols said. Nichols pointed out that the amount of MSW generated each year is increasing along with the population. “Waste utilization is an area seeing a lot of activity right now,” he said. “Greenhouse gas reduction concerns require modern approaches [to processing waste], as incineration is now perceived as a dirty process. We’re going to run out of land space, so sooner or later we’ll have to deal with it.”
Waste Management is Energy Management Although the Midwest lags behind the rest of the U.S. in production and use of biogas for energy, Wisconsin is the exception, ac44 BIOMASS MAGAZINE 6|2010
cording to Amanda Bilek, energy policy specialist for the Great Plains Institute. “Biogas is a tremendous economic opportunity,” she said. “We believe there is a lot of room to grow and we’re only just getting started,” she said. There are barriers, however, to scaling up biogas production and use, including public policies, which are possibly the most important; few formal organizations and little advocacy presence such as the recently formed American Biogas Council; technical research; new development models; and the fact that the emphasis now is on electricity production from biogas, but there is a much wider window of opportunity, Bilek said. GPI is working on a policy report due in July identifying current policies that incentivize biogas production and use, recommending tweaks to current policy and introducing new and useful policies. Existing policies, which Bilek referred to as “best in class,” include the Rural Energy for America Program, state renewable portfolio standards (RPS) and voluntary electricity tariff programs by utilities. One policy the report will identify that needs tweaking is the production tax credit, an extension of which is included in the American Workers, State and Business Relief Act. Proposed policies that need a push include a federal RPS, as many in the biomass industry, along with other renewable industries, have repeatedly emphasized. But that might not be the best action for biogas use, Bilek said, adding that a biogas production and incentive act could be the game changer, along with a federal climate bill. “A climate bill would no doubt make an impact on the industry,” she said.
EVENT “The rotary kiln is an efficient method of turning animal waste into electricity,” Goodale said. One dry ton of cow manure has a value of 10 million Btu; a value nutrient supply of $56 when spread on land; and an electricity value of $70, he cited. “Think of the day when farmers are bringing their manure to the rotary kiln center,” he said. In addition, that one dry ton of cow manure has a combinedheat-and-power value of $225, he said, adding that the heat produced is just as important as the syngas. According to Goodale, the U.S. Department of Defense is interested in the technology as something that can be used where troops are deployed all over the world, he said, and it can be widely applicable. “I don’t see us ever running out of waste,” he said.
New policies that need a champion include advanced renewable and feed-in tariffs, and an enhanced RPS, which would expand qualifying renewable resources to include biogas injected into the natural gas pipeline. Nick Nelson, president of Midwest Biogas LLC and Welcome BioEnergy, shared some strategies that Midwest Biogas has identified to optimize centralized anaerobic digestion (AD) systems, making them more appealing to a wider audience. “It’s quite daunting how many factors have to be managed for a centralized anaerobic digester,” he said. Areas that need to be optimized include substrate blend, procurement and delivery, process flows, construction costs, and delivery of the energy produced, among others. Developers need to consider several factors, such as whether shop-fabricated equipment is better for their specific project, he said. “Will a more expensive name brand component reduce your capital cost?” he asked. Managing substrate delivery routes is optimal, as is testing substrates and determining which kinds to use. “What wastes are others paying to get rid of?” he said. In addition, the end-user of the energy needs to be close to the operation, which also allows for a competitive delivery cost basis. Panelist Douglas Goodale, bioenergy project manager and principal investigator for SUNY Cobleskill, focused his presentation on the research and development of a rotary kiln gasifier. The system, under research and development by SUNY with the help of other partners, could be a solution for using animal waste instead of just throwing it on the land, he said. The rotary kiln, as the name suggests, has a natural rotation providing agitation of feedstock at high temperatures. In addition, the system sits horizontally with a slight slope, contrary to conventional vertically designed gasifiers. The rotary kiln design allows for complete conversion of biomass to syngas and is able to accept a wide variety of feedstock shapes and sizes without affecting conversion efficiency, he said.
Digesting Food-Processing Residues It takes a team of companies with a variety of expertise to implement an AD project at a food processing facility, according to Dave Konwinski, founder and CEO of Onsite Power Systems Inc. Feedstock management, along with monitoring and operating, might be the most crucial elements of project development, he said. “We really have to look at where the customer sits—what kinds of incentives there are,” he said. The company’s pathway to commercialization of its AD system started with extensive testing that included system analysis, design and feedstock. AD offers economic opportunities in waste recovery as well as renewable fuels production. “It offers the customer a way to deal with the waste stream and turn it into a revenue stream,” Konwinski said. Scott Christian, process engineer with ADI Systems, discussed ADI’s Anaerobic Membrane Bioreactor (AnMBR) for high suspended solid waste. The system uses a physical membrane barrier to separate solids, liquids and gases, distinguishing it from conventional AD systems. AnMBR fits in a compact space, achieves complete retention of biomass and consistently produces a superior-quality effluent, he
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EVENT nitrogen oxide cleanup systems, along with a biogas-fueled low-emission engine generator demonstration, both on dairy farms. The utility recently received $5 million from the U.S. DOE for five projects, four of which are biomass based.
PHOTO: RONA JOHNSON
Using Waste Streams
International Biomass Conference & Expo attendees toured Environmental Wood Supply where they saw wood processing equipment in action.
Industry Tour Features Wastewater and Waste Wood The International Biomass Conference & Expo featured tours of the Metropolitan Wastewater Treatment Plant, which is conducting an algal cultivation pilot study, the Blue Lake Wastewater Treatment Plant, which is building an anaerobic digester to capture biogas, and Environmental Wood Supply, which delivers 280,000 tons of fuel quality urban woody biomass to the city of St. Paul where it’s used to generate 25 megawatts of electric power.
said. The company has 15 full-scale systems operating in Japan and recently established its first U.S. system at Ken’s Foods near Boston, Mass. It can be set up for distilleries, MSW or food processing facilities. The main benefits of organics recycling for food processors are cost savings and an improved environmental profile, which can drive sales, according to Paul Sellew, co-founder and CEO of Harvest Power Inc., which specializes in AD technologies and advanced composting and distributed biomass gasification. Local development is 46 BIOMASS MAGAZINE 6|2010
essential for successful projects, Sellew said, along with product marketing. The Sacramento, Calif., Municipal Utility District will generate 61 percent of its renewable energy portfolio this year from biomass systems that include digesting dairy wastes, MSW and agricultural wastes, among others, according to senior project manager Valentino Tiangco. Dairy farms are ideal places for AD systems—the 151 of them operating in the U.S. produce 374,000 megawatt hours of energy, he said. SMUD is working to develop gas and
The two challenges to effective and widespread use of waste streams from the livestock and biofuels industries are controlling air-deposited nutrients and greenhouse gas emissions, according to David Bracht, an attorney with Husch Blackwell Sanders LLP. Livestock operations are growing in size and that means growing waste streams, while biofuels operations are facing increased regulations and an emphasis on carbon footprint reduction, he said. Both problems can be addressed by biomass energy technologies. “Use nature as a solution,” Bracht said. Most existing animal waste stream systems use AD because it’s easy, he said, but there’s room for improvement. “The next generation of these systems will go beyond just methane,” he said, adding that advanced systems can increase energy capture up to three times the Btu value. “You really have to have an end-user in mind,” he cautioned prospective developers, emphasizing that the user needs to be close to the operation. AD systems can process many different kinds of waste streams. “Anything that biodegrades is a candidate for anaerobic digestion,” said Norma McDonald, North America sales manager for Organic Waste Systems Inc. She discussed components of different types of manure compatible with the company’s systems, drawing on her family’s farming experience. Crop residuals can also be easily digested, but wood cannot. “I want to clear one thing up right now,” she said. “Anaerobic digestion does not compete with other uses of woody biomass.” Off-farm residuals such as syrup stillage, glycerin and yard waste are digestible, as well, said McDonald, who talked about both dry and wet AD. The resulting biogas is more eco-friendly than landfill gas, she said, and allows self-sufficiency for livestock and poultry farmers, who made up about
EVENT one-third of her audience. Besides AD, gasification is also a solution for waste stream management, as discussed by panelist Goutam Shahani, vice president of sales and marketing for Heat Transfer International. Biomass use will grow in the next 10 years, he said, and the company is prepared to advance with that growth. “We at HTI are very excited about this opportunity and we definitely want to be a part of this future,” he said. HTI has developed a starved-air lowtemperature (SALT) gasification system that uses partial oxidation and is clean and controlled, he said, emphasizing the difference between gasification and combustion. The company has one current project using SALT that processes 67 tons of turkey litter per day and can provide 500 kilowatts of electricity to the grid, he said. The company focuses primarily on cost reduction. “I think that’s No. 1,” he said. “In today’s economic environment, a project has to be economic or people will not invest in it.” The gasification system does not need water, another significant benefit, and is flexible in feedstock compatibility as well as energy production, as it can generate heat, steam and electricity, Shahani said.
within the state to evaluate how much wood is being used and for what purposes, according to Dirkswager. The most recent survey completed this past winter found that there is about 960,000 green tons of forest-based biomass being used for green energy, and as far as what’s available goes, Dirkswager said there is about 3 million tons of green woody biomass, including all categories but mill residue. Dirkswager said currently there are about 52 wood energy facilities in the state, six of which use more than 200,000 green tons per year. Dealing regularly with individuals and companies who are interested in locating wood energy facilities in Minnesota, Dirkswager says most of the time notions of what is available are inaccurate. “Most are surprised to find that we have so many facilities already using this resource,” she said. “Currently we have about 25 proposals on board for wood for energy facilities, and this
number changes frequently.” Dirkswager admitted that it can be difficult to filter out realistic proposals from nonrealistic proposals. “We use a set of criteria, and the more they have met—such as making a public announcement and/ or beginning the environmental permitting process—the more likely they are to be put into a separate category, one in which we currently have about five. If you add those up, they are proposing to use about 1.2 million green tons.” “The big picture message here is that we believe we have about 3 million green tons [plus or minus 50 percent] to work with for different industry opportunities, and it matters how we use it,” Dirkswager said. BIO Anna Austin and Lisa Gibson are Biomass Magazine associate editors. Reach them at aaustin@bbiinternational.com or (701) 7384968 and lgibson@bbiinternational.com or (701) 738-4952.
Minnesota DNR Talks Biomass Availability Minnesota’s woodlands are often referred to as a vast forest resource, but the state Department of Natural Resources affirms that much of the woody biomass available in the state is already in use, and that additional projects will be carefully and responsibly selected. DNR Biomass Coordinator Anna Dirkswager and Biofuels Manager Mark Lindquist provided some clarity surrounding Minnesota’s resources, and why it matters how the wood is utilized. “The DNR, regardless of what renewable energy industry we’re dealing with or where we’re purposing to go, has a central mission to work with our citizens to conserve and manage our natural resources for all interests and uses,” Dirkswager said. Every few years, the DNR division of forestry surveys all the wood energy facilities 6|2010 BIOMASS MAGAZINE 47
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Eno, Finland, has three wood-fired district heating systems, including the one pictured here. PHOTO: FINNISH FOREST RESEARCH INSTITUTE
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While the majority of cities and villages in Finland already employ wood-fueled district heating systems, countries such as the U.S. and Canada are just beginning to tap their forestry resources for such widespread networks. By Lisa Gibson
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ith forests covering about 86 percent of its land area, Finland is the most extensively forested country in Europe. Given that fact, it seems only natural that the country would utilize the abundant resource for energy, and indeed it has. In 2008, more than 430 wood-fueled district heating systems were operating in Finland, as biomass energy development grows more rapidly there than any other renewable resource. “In Finland, most of the development we’re seeing is going into biomass,” says Dominik Röser, research scientist with the Finnish Forest Research Institute. “The most abundant resource we have is definitely wood. In most rural communities, there are small-scale district heating systems based on wood-fuel heating municipal buildings like public libraries, hospitals and schools. Almost every single village has its own small-scale district heating networks.” Large cities are also taking advantage of wood resources, and many have combined-heatand-power systems for municipal buildings as well as for homes. In Röser’s home city of Joensuu in North Karelia, about 44,000 households are connected to the network. “[Finland is] already, at the moment, producing about 20 percent of our total energy consumption from wood, which is one of the highest in Europe,” Röser says, adding that in North Karelia, 70 percent of total energy consumption is from renewable resources. “The long-term goal for our area is to become totally oil independent,” he says. The country’s forestry industry is large and well developed, allowing for an efficient existing distribution system. “And we are very effectively using the byproducts of those industries,” Röser says, citing black liquor, bark and sawdust. But over the past 10 to 15 years, Finland has been working toward developing the materials coming directly from the forests such as logging residues, thinning and stumps. “This is where we can grow in the industry,” he says.
Established Expertise In the 7,000-person city of Eno, Finland, three district heating networks have a combined output of 4.8 thermal megawatts used for public housing and municipal buildings. All three, established separately between 2000 and 2004, are owned by private forest owners and together use a total of 7,700 meters of underground piping. It seems in Finland, district heating networks simply need a local demand to fill in order to warrant development. “It’s always a matter of proximity,” Röser says. “When you have enough buildings in a given area, then you can build a district heating network.” Apartment blocks are ideal for such systems, he adds, as they hold plenty of customers, all of whom will use heat. The latest trend he’s seen in wood-fueled systems development is installation of the systems during construction of the buildings that will use them. For instance, if 50 new homes are being built, it’s ideal to install piping when sewage and other systems are installed, for use later when the plant is developed. “It’s much easier to put the pipes in at the same time,” he says. Part of the reason Finland has seen such success in its woodfueled district heating development is that it uses simple combustion technology in most of its systems. “We have relied on technology that
PHOTO: FINNISH FOREST RESEARCH INSTITUTE
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Chipping operations provide fuel for district heating systems in Ilomantsi, Finland.
is reliable and that can work,” Röser says. “When you are trying to establish a market, you have to use something that works and that’s where, especially in Finland and Sweden, we’ve been very successful in installing and developing reliable technology.” Well-developed technology also helps convince citizens of the benefits of such a project. “If that system doesn’t work, it’s very difficult to convince the public that wood energy is something good,” he emphasizes. But public opposition to harvesting from forests is not as fierce and abounding in Finland as it has been recently in the U.S., a fact Röser again attributes to a robust forestry industry. The systems can bring in added revenue for foresters and forest owners, who make up a large part of the country’s citizens. “The big difference between North America and Nordic countries is that, especially Finnish and Swedish people are very used to using their forests and that’s why it’s not very difficult to convince them to harvest,” he says. But getting correct information out before development can help if any resistance does crop up, he adds. “In my opinion, there are a lot of misconceptions out there in the public about wood energy. The public doesn’t really know what they’re dealing with. The public is the first one that has to be convinced and if you don’t have the support, you can’t do it against their will.” Getting citizens on board can be the biggest challenge in developing district heating systems, Röser says, followed closely by building supply chains. “Our entire harvesting systems had to be somewhat modified and adapted in order to facilitate the harvesting of biomass,” he says. The third and final large challenge was to research the environmental effects of the projects and their operations. The Finnish Forestry Research Institute has one of the biggest research programs to look at harvesting technology, social effects and environmental effects, he says.
CHP for Placer County Citizens in the Lake Tahoe, Calif., area are environmentally conscious too, according to Brett Storey, Placer County project manager,
PHOTO: FINNISH FOREST RESEARCH INSTITUTE
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A truck dumps a load of wood chips into a district heating facility in Eno, Finland.
but structures in the region source power downhill from coal-fired plants in Nevada. So Placer County has proposed a small combined-heatand-power (CHP) facility that could heat buildings such as schools and businesses. “We as a county have been trying to look at biomass as a solution for a number of things,” Storey says. The facility, still in the early stages of development, would be located on the north end of the lake and would have the capacity to produce 2 megawatts (MW) of electricity, along with the heat, using forest residues from a 30-mile radius. “We’re just sort of looking at this as a pilot project to make sure this is the right thing to do in these sensitive areas,” Storey says. “We believe it is and we’re hoping that everyone else there does as well.” Currently, forest residue in the region is burned or hauled away. “They’ve got all this biomass material they don’t know what to do with,” he says. The county is about to move forward with the land-use permits, along with its environmental impact statement and report, and
Storey says the project has support from most of the citizens in the area. “If all goes well, we could construct in 2012 and be operational in 2013,” he says. The county has discussed possible offtake agreements with one school, three current businesses and developers of a nearby proposed project that would include a couple of buildings and some housing structures. The small CHP system will undoubtedly be able to handle the load. “We will have excess capacity,” Storey says. “In fact, stage three to this is we’re also talking with Caltrans, which is the state transportation agency who is going to redo the highway in the area, about at least heating the sidewalks for the community, but potentially heating the road.” Such a measure would help with snow removal, a problem the cities have struggled with, and piping could be laid when the roads are already dug up for reconstruction, as Röser would recommend. “The timing fits perfectly,” Storey says. “The cost would be so much less to lay the pipe as they’re already doing this.” That aspect of the project is in preliminary stages of development, but making optimal use of the facility is favorable. “We’re trying to squeeze every single use out of this we can possibly get,” Storey says. The $8 million to $9 million project would be a public private partnership between the county and the local energy company, Storey says, and has already been granted about $3 million for research and development from U.S. Sen. Dianne Feinstein, D-Calif. It would remove anywhere from 75 to 99 percent of pollutants emitted when the forest slash is burned and reduce pollution from fossil fuels for the buildings connected to the heating network. “We’re fairly sure that everyone is going to see the benefits of this and get behind us,” Storey says.
Significant Benefits Those benefits, according to developers, are numerous and monumental. In Eno, heating costs have dropped by €15 ($19) per megawatt hour; about 1.6 million liters of oil have been replaced each year; the local economy has saved about €1 million; carbon dioxide emissions are reduced by about 4,000 metric tons (4,400 tons) annually; and employment opportunities have increased, according 52 BIOMASS MAGAZINE 6|2010
HEAT to Röser. “There are significant benefits,” he says. “[Finland] wouldn’t put up new systems all the time if they weren’t successful.” A proposed 47 MW CHP facility in Greenfield, Mass., will seek to reap most of those same benefits for the community, if it can be developed as planned. Madera Energy is working to establish a market for heat produced at the facility, looking at other developments nearby. “There’s an industrial park close to us that could potentially be a demand for that heat, though I don’t think it would be a particularly large demand,” says Matthew Wolfe, principal of Madera Energy. A neighboring empty lot might be the site of a new greenhouse, offering another option, and a 3.5-mile stretch from the proposed site to the community’s downtown area holds a hospital, police station and a school, not to mention the plethora of heat users downtown. “It’s not just wishful thinking,” Wolfe says. “We’ve actually had a number of conversations with these potential users of heat. At this point we’re just trying to get a better idea of whether or not it would be economically feasible. There are a lot of challenges.” In preliminary discussions, Wolfe made clear his intent to develop a plant that would not only generate power, but also heat, as it offers so many benefits. “We have to design this to be able to do district heating,” he says. “It’s something that people want to do and as you design a facility, you want it to be as advanced and forward-thinking as possible.” The plant would run primarily on forestbased wood, along with shipping pallets, land clearing and saw-mill residue. Madera has a number of permits in place, but is still waiting for its air permit. A timeline is not yet determined, but Wolfe hopes to begin detailed design and construction in 2011, with operation in late 2013 or early 2014.
selling the energy generated to the municipality, according to Röser. Customers themselves can also come together in a cooperative by paying a fee to cover the investment until it’s paid off, although that structure is more common in central Europe, he says. But employing another community’s business model is seldom the perfect solution when establishing widespread district heating networks. “There is no definite or clear blueprint,” Röser says. “The challenge is to adapt the right business model to the right conditions. Of course, these business models have worked here and they would also work probably in the U.S. or in Canada, but it’s not the one solution that fits everybody.” Amqui, Quebec, has its own unique business model for heating the city’s hospital, stemming from extensive research into Finland’s success. “They have made it [work] for their conditions and I think that is really the key in all of this technology and know-how,” Röser says. “People need to see what we’re doing and
adapt it to their own conditions.” Cooperative Forestry Matapédia bought the boiler for the Amqui system, while the hospital secured the financing for the boiler house. The cooperative contracted the construction of the boiler house and delivered it to the hospital in December 2009, ready to heat, according to Yoland Légaré, cooperative general manager. Energie CFM Inc., a subsidiary of the cooperative, burns biomass from the cooperative’s operations in the boiler and sells the energy to the hospital, he explains, adding that the system and model are considered beneficial to the community. “They have really created a successful business model and heating plant that is a really good pilot case for Canada or for all of North America,” Röser says. BIO Lisa Gibson is a Biomass Magazine associate editor. Reach her at lgibson@ bbiinternational.com or (701) 738-4952.
Building on Success Development is made easier in Finland by federal grants that typically cover about 40 percent of project costs, along with cooperatives to construct and operate, Röser says. When district heating development in Finland was in its infancy, municipalities took the risk and made the investment. Now, it’s becoming more common for forest owner cooperatives to take the reins in investing and development, 6|2010 BIOMASS MAGAZINE 53
MARKET
Bridging the Global Supply Demand Gap
/
A growing number of U.S. wood pellet, chip and briquette producers are shipping their products to Europe, where demand is high, supply is limited and incentives are good. Some worry, however, that numerous obstacles will slow the developing export market. By Lisa Gibson
54 BIOMASS MAGAZINE 6|2010
MARKET
6|2010 BIOMASS MAGAZINE 55
MARKET
C
arolina-Pacific LLC shipped 5,000 tons of wood briquettes to Scandinavia at the beginning of March, marking the first of the company’s regular shipments out of its location at the Port of Georgetown, S.C. The briquettes are contracted to specific power plants there, adding Carolina-Pacific to the increasing number of U.S.-based manufacturers sending their woody biomass products overseas. U.S. companies are attracted to the European market because of higher demand and better incentives for renewable energy. In addition, wood pellet, chip and briquette producers in the Southeast U.S. have the advantage of a large supply of wood to satisfy that European demand, and the product can be transported by ship instead of more costly truck or rail. Cottondale, Fla., is the home of Green Circle Bio Energy Inc.’s 560,000-ton pellet plant, currently the largest in the world; Phoenix Renewable Energy is developing a pellet plant in Camden, Ark., with a capacity of 250,000 tons; and Point Bio Energy LLC is developing a 496,000-ton pellet plant at the Port of Baton Rouge, La. The products from these plants, and many more, are headed for Europe’s well-established renewable energy market.
Patchwork Quilt The European Union has a policy that requires its member countries to generate 20 percent of their energy consumption from
56 BIOMASS MAGAZINE 6|2010
renewables by 2020. In addition, numerous individual nations have their own goals. “They’re just about 10 years ahead of us in terms of a commitment to renewable energy,” says John Kern, chairman and CEO of Carolina-Pacific. “What we’ve got here is a patchwork quilt of portfolio mandates for each state.” Specifically in the Southeast where “coal is king,” he adds, few states have goals that draw renewable developers. “There’s a lot of indecision,” he says. “There’s a lot of inaction domestically here in the states because nobody knows what the future holds.” Kern says he would sell his wood briquettes in the U.S. if a federal renewable portfolio standard (RPS) was passed, but even then, it would be years before the standards would take effect, and development takes time. An RPS usually leads to the implementation of incentives to spur development and ensure those goals are met. “The thing is, there are some incentives in the EU so that there can be higher and better production coming from renewable energy,” says Ronalds Gonzalez, a PhD student at North Carolina State University and co-author of “Wood Pellets: An Expanding Market Opportunity” (see page 68). “Here in the U.S., we don’t have as much incentive to use wood pellets.” Gonzalez adds that more tax incentives in the U.S. would drive the domestic market. Europe adopted the Kyoto Protocol in 1997 and in 2003 started with a disincentive to burn fossil fuels: the carbon tax, Kern explains. The continent aspires to drive down pollution to 1990
MARKET longer and even more expensive land transportation routes, and reharvesting must be done much more sparsely, Gonzalez says. Most areas wait 70 to 100 years, while some forestlands in the U.S. can be harvested again after about 18, he says. “It has a lot to do with the supply,” agrees Al Wolfson, senior associate at Malcolm Pirnie, an environmental engineering, science and consulting firm. “Most of the wood resources available that are reasonable are still in the U.S.” But the majority of U.S. manufacturers in discussions with Malcolm Pirnie aren’t looking exclusively at the European markets, Wolfson adds, as many are banking on an increase in domestic use and therefore a growing domestic market. “It’s not an either/or situation. It’s an and situation.”
Growing Demand U.S. wood products shipments to Europe are expected to increase as the country’s biomass power industry grows.
levels. “Every year they have to shave off a little bit more fossil fuel generation,” Kern says. The domestic biomass market there is expensive from a logistics perspective, as trucking means the added cost of highway tolls and other fees, Kern says. The cost to move 5,000 tons across the Atlantic Ocean by ship is about the same as the cost to move it 100 miles across the countryside, he says. In addition, wood resources in Europe are limited, meaning
European renewable goals coupled with a limited wood supply drive a heavy demand for imported biomass. In 2009, 14.3 million tons of wood pellets were produced globally, of which European countries consumed 8.8 million tons. The continent is expected to reach a consumption of 55 million tons per year by 2020, according to the European Biomass Association. Europe is already using woody biomass for industrial, as well as residential and other applications. “My orientation is around trying to reap the harvest of the biomass markets that we have in the states and position it into the demand, which is in Europe,” Kern says. “I’m bridging the
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MARKET chasm across the Atlantic between suppliers of biomass and the market.” In the U.K. alone, an estimated 12 million to 20 million tons of woody biomass per year will be needed to satisfy the demand, according to Pete Stewart, founder, president and CEO of Forest2Market, a market price and industry information agency. “It’s a phenomenal amount,” he says. While that demand drives densification development in the U.S., it can also hinder profitability, according to Stewart. Being so advanced in biomass utilization, Europe is experienced in developing and operating pellet plants. “They know exactly how much it costs to build those plants, manufacture and run them,” he explains. They understand the cost structure very well so they take that knowledge to the manufacturers in the U.S. “We find it will be a very difficult-type market for manufacturers to squeeze out a mar-
gin because if the Europeans can’t get what they consider a fair or good price, they’re just going to buy it and do it themselves.” Germany-based RWE Innogy is developing a wood pellet plant in Waycross, Ga., called Georgia Biomass. The facility is expected to produce 826,000 tons of pellets each year, headed to RWE’s existing power plants in the Netherlands for cofiring, according to the company. RWE was drawn to develop in the state by the wood surplus, along with a well-established harvesting and logistics infrastructure, local government support, and plenty of local workers with local support to train for RWE’s special requirements, according to Michael Eissing, RWE project manager. “Unlike Europe, the U.S. has a huge growth surplus of wood with no use for the moment,” Eissing says. “This is particularly true in the Georgia region. Wood growth is currently ahead of
consumption in Georgia. Due to the large surplus available, wood is much more affordable in the U.S. than in Europe, with its restricted woodland availability.” Furthermore, Eissing adds that forest management in Georgia is carried out sustainably, meeting RWE’s strict standards for biomass production. Such integration of the supply chain for European renewables is a growing trend, affecting the developing woody biomass product manufacturing market in the U.S, Stewart says. “[The market] will come in, but it will be a lot more integrated than people think it’s going to be,” he says. “There will be a bona fide pellet export business, but a lot of that will be integrated and a few independents will make it, but anybody who believes there’s a 15, 20 or 25 percent manufacturing margin in that is just not thinking logically.”
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58 BIOMASS MAGAZINE 6|2010
The inability of U.S. companies to acquire a margin in the sale of their pellets can mean producers have to scrimp in other areas, including quality. “RWE was not satisfied with the quality of pellets coming from the U.S., so they’re building their own plant,” Stewart says. Wolfson is also concerned about the quality of U.S. pellets, with depressed pellet prices in Europe and cheap resources coming out of areas such as Brazil and Malaysia. “Quality could be a critical limiting factor,” Wolfson says. “You really have to be a reliable supplier with a high-quality product.” Another factor limiting the development of a robust export market of woody biomass products is increasing concerns about shipping life-cycle analyses. “I’ve talked to a lot of shippers who are concerned about this,” Wolfson says. “On the other hand, another thing we need to think about is we get a lot of goods brought in by container and a lot of those containers go back empty to their countries of origin. So I do think there’s a lot of backhaul opportunities. “My expectation is that unless you really control your feedstock, as far as being
MARKET in export and a pellet manufacturer, you’re going to face two big issues,” he says, citing significant increases in prices of raw material and competition for that raw material. “I think there’s going to be a big competition between existing pulp and paper mills and pellet plants,” Stewart says. “They use exactly the same raw material, so there’s going to be a big rub there. And I also think there’s going to be some political fallout.” American pulp and paper companies are going to lean on their representatives, especially locally, to dissuade any incentives providing tax abatements, making investments for new woody biomass densification facilities difficult, he predicts. “I think the big companies that are long-time players in the local markets will really push on them to not provide those sorts of incentives. And I think a lot of them will be successful.” In addition, complaints have surfaced about the USDA’s Biomass Crop Assistance Program, including concerns that the Farm Service Agency was subsidizing the export of green energy to Europe. Stewart expects BCAP-2 to exclude exported material for payment qualification, which will undoubtedly affect the woody biomass products industry in the U.S. “I think it will slow down the development because pellet costs will be higher, manufacturing costs will be higher, and that means the end product cost in Europe will be higher,” Stewart says. Another limitation is depth at U.S. ports. Carolina-Pacific’s shipping capacity is limited by the Port of Georgetown’s depth of only 6 meters, Kern says, adding that his once-monthly shipments will amount to about 60,000 tons this year and up to 120,000 next year. Plans to deepen the port to 9 meters would mean it could support 25,000-ton ships and significantly increase freight, he says. Carolina-Pacific also will increase its volume of export by procuring pellets from other companies for shipment with their own products. “We think we can fairly economically reach out about 240 miles or so,” he says. Deep water is essential for shipping wood resources, with most ports requiring about 12 to 13 meters, Stewart says. “There
are a limited number of deepwater ports that have handling or bulk handling capabilities and you have to have those combinations,” he says. But many agree that the limitations are not insurmountable and won’t stop the market from developing. “I do think there’s such an incredible demand in Europe that there’s going to be biomass wood chip and pellet export opportunities and it’s going to grow over the next five to 10 years,” Stewart says. Wolfson agrees and says the U.S. is still
in the fact-gathering phase to sort out the market. “In the next 10 years, we’ll have a very good market,” he says. “We’re seeing intelligent landowners and pellet people and customers overseas getting together to develop truly sustainable supply chains.” BIO Lisa Gibson is a Biomass Magazine associate editor. Reach her at lgibson@ bbiinternational.com or (701) 738-4952.
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The solution behind the solution. 6|2010 BIOMASS MAGAZINE 59
BUSINESS
UNEARTHING GREEN SCAMS
Some renewable energy investment opportunities seem too good to be true—and occasionally they are. How can a potential investor tell a wise investment from a shell game? By Anna Austin
H
i s t o r i c a l l y, the number of investment fraud cases in a given industry increases with the level of hype surrounding it. If it’s frequently in the news and on the Internet, chances are it’s also plagued by gimmicks, scams and/or embellished technological advancements camouflaged by enticing promises of high and quick returns. Rapidly expanding and increasingly profitable, the renewable energy industry is seeing its share of fraudulent business conduct. Perhaps the most notorious case within the biomass sector was brought to light in November by the U.S. Securities and Exchange Commission, which charged Pennsylvania-based Mantria Corp. with more than 300 cases of investor fraud via a $30 million Ponzi scheme. Mantria allegedly targeted elderly investors or those approaching retirement age to finance a supposed carbon negative housing community in rural Tennessee, as well as biochar, while claiming to be the world’s leading manufacturer and distributor of biochar with multiple facilities producing at a rate of 25 tons per day. According to the SEC, Mantria never sold any biochar and had just one facility engaged in testing biochar for possible future commercial production. Mantria’s only source of revenue was from its
60 BIOMASS MAGAZINE 6|2010
resale of vacant lots for its purported residential communities in Tennessee, but those sales didn’t generate enough cash to pay investor returns, rather, the company provided 100 percent financing for almost all of its vacant lot sales to buyers using other investors’ funds, the SEC says. Interest in biochar as a means to sequester carbon and as a substitute for charcoal has reached new heights in the past few years, a likely reason why scammers are hot on its trail, according to John Gannon of the Financial Industry Regulatory Authority. “When an area is hot for investors, scamsters understand that and so that’s where they target their scams,” he says. “When oil prices are high, we see oil and gas scams. When Hurricane Katrina hit, we saw scams there as well. Whatever is in the news is what scamsters and fraudsters target. The legitimate stories in the media help them build credibility about the purported investment that they are pitching.”
BUSINESS
Swindling Styles FINRA is a private corporation that oversees nearly 4,750 brokerage firms, about 167,000 branch offices and approximately 634,000 registered securities representatives. Formed by a consolidation of the enforcement arm of the New York Stock Exchange, NYSE Regulation Inc. and the National Association of Securities Dealers Inc., one of FINRA’s many functions is to issue alerts and advice to investors to help protect their money and avoid scams. Gannon, who is FINRA’s senior vice president of investor education, says there are two main ways of being scammed. The first, which is the scam that Mantria allegedly employed, is a Ponzi scheme. Named after Charles Ponzi who became notorious for using the technique during the early 1920s, the operation pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. Mantria scammers allegedly encour-
aged investors attending seminars or online webinars to liquidate their traditional investments such as retirement plans, stocks, bonds and mutual funds and urged them to borrow as much as possible against their homes or businesses so that they could invest in Mantria. The funds acquired from new or existing investors were then used to pay other investors. The other most common scam is a “pump-and-dump” scheme. “The idea is to increase the price of the stock quickly by putting out bogus press releases, touting it on the Internet and in other various solicitations, basically creating a lot of activity to quickly jack up the price of the stock, and then they sell the shares they own and gain a big profit,” Gannon says. “The prices then quickly go down when there’s no more news/hype, and the investors who bought in at that time are left holding the bags.” In 2008, for example, the SEC filed charges against Mississippibased Sustainable Energy, alleging that the company made false claims to boost share prices from 25 to 45 cents a share, even above 70 cents after some wildly exaggerated press releases. In one release, Sustainable Energy said it could produce 5 gallons of biofuel from one bushel of soybeans, at a price of 50 cents per gallon. As a result of the alleged embellished claims, stock prices soared quickly—and artificially— prompting Sustainable Energy CEO John H. Rivera’s girlfriend to sell 6|2010 BIOMASS MAGAZINE 61
BUSINESS more than 2.6 million shares and then transfer a substantial portion of the proceeds into a bank account held jointly with Rivera. Whether Ponzi, pump-and-dump or other, before an investor is lured into a bad investment, Gannon says itâ&#x20AC;&#x2122;s likely that multiple red flags will be present that should be carefully analyzed.
Look for Red Flags Investors should always raise an eyebrow when the initial investment opportunity discovers the potential investor, rather than
vice-versa, Gannon says. â&#x20AC;&#x153;Especially when the individual or organization presenting the opportunity is unknown or fairly unknown to the investor,â&#x20AC;? he says. â&#x20AC;&#x153;Ask yourself â&#x20AC;Ś why would somebody you donâ&#x20AC;&#x2122;t know bring you a promise of the next-greatest investment out there? Why are they targeting you with this pitch? If itâ&#x20AC;&#x2122;s so good, why arenâ&#x20AC;&#x2122;t they investing themselves?â&#x20AC;? If the company offering an investment is a public company, one should confirm that they are registered with the SEC. â&#x20AC;&#x153;Learn information about the company from that filing,â&#x20AC;? Gannon says. â&#x20AC;&#x153;Many of the stocks that are used to
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62 BIOMASS MAGAZINE 6|2010
defraud people havenâ&#x20AC;&#x2122;t been in business that long. A lot of them have been created through a reverse merger, which is when a company will be in a certain business line and then suddenly, because an industry such as alternative energy is hot, change their name and complete a reverse merger resulting in the company being in a totally different business line. That is a red flag that tells you the investment could be a scam.â&#x20AC;? Most unsolicited recommendations involve stocks that cannot meet the listing requirements of a major national exchange such as the NASDAQ Stock Market or the NYSE. Rather, they are quoted on the OTC (over-thecounter) Bulletin Board or in the Pink Sheets, where there are no minimum financial and other quantitative standards that have to be met by the company, and no obligations to file annual or quarterly reports to publicly disclose information. Yet another red flag is when a vast amount of wealth is promised to an investor in a short time. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a very common tactic,â&#x20AC;? Gannon says. â&#x20AC;&#x153;One solar panel stock scam touted a 200 percent gain, and another scam claimed the companyâ&#x20AC;&#x2122;s stock â&#x20AC;&#x2DC;soared 500 percent in one week.â&#x20AC;&#x2122; When you see pitches like that step back, because itâ&#x20AC;&#x2122;s highly unusual.â&#x20AC;? By examining information on a companyâ&#x20AC;&#x2122;s financial statements Gannon says itâ&#x20AC;&#x2122;s relatively easy to determine if a company has revenue and how much, and whether itâ&#x20AC;&#x2122;s making a profit. Never rely on information you received in unsolicited faxes, e-mails, text messages or blog posts. It could be a paid promoter or con artist, especially online where a single person can use multiple aliases to create the illusion of widespread interest, Gannon says.
Good Intentions, Bad Assumptions Even if a new companyâ&#x20AC;&#x2122;s intentions arenâ&#x20AC;&#x2122;t exactly to pull the wool over an investorâ&#x20AC;&#x2122;s eyes, one must proceed with caution. Energy expert Ronald Rapier, chief technology officer for bioenergy holding company Merica International, says he thinks assumptions (relevant to the biofuels industry) regarding the cost of biomass is one of the worst some companies are making today. â&#x20AC;&#x153;I see many companies claiming they will produce cheap biofuel, but when you take a closer look they are basing
BUSINESS that on getting cheap, free or even negatively valued biomass,” he says. “Unless one can lock up a long-term supply agreement with someone who has a track record of being able to deliver biomass, I don’t think this assumption will hold up.” A high degree of skepticism should be applied to claims of processes being capable of handling “any type of biomass,” Rapier says. “Different feedstocks behave very differently in different processes,” he says. “In a gasification process, some high-ash or high-moisture feedstocks can be problematic. In a cellulosic hydrolysis process, there are certain feedstocks that produce strong enzymatic inhibitors. In general, processes are optimized around specific feedstocks, and they don’t respond favorably to having inconsistent feeds.” All technology has to start somewhere, which is typically in the laboratory. For successful commercialization, lab-scale results have to be replicated at larger scales—an event that Rapier says isn’t likely for the majority of energy technologies. “My own observation has been that most technologies die in the lab, and most that make it to the pilot stage die there. Very few survive all the way to commercialization, but government policies/funding can result in some surviving that shouldn’t have survived.” Reported results are almost always the best that a technology has ever achieved, according to Rapier. “When someone says ‘up to 100 gallons per ton’ I discount that heavily,” he says. “People who tend to hype their technology don’t report typical results. They report the best results to investors and present them as typical, but when they build their plant, typical results are what they will get.” Rapier adds that such assumptions are common among renewable energy companies today, a fair number of which have already resulted in bankruptcy. “[Faulty assumptions] will undoubtedly lead to a few more bankruptcies in the future,” he says.
Spreading the Word Regardless of whether you have fallen for a scam or were lucky enough to avoid one, the best thing to do is to report it to firms such as FINRA or the SEC. “If it didn’t fool you, chances are there probably is or will soon be somebody who is falling for it,” Gannon says.
“By doing this, we can alert people to the issue.” To further deter bogus investments, FINRA has developed a research-based scam meter, a free online tool that analyzes a user’s investment to determine whether it has the red flags of a potential scam (www.finra.org/meters/scam). One investor who lost $20,000 to a bogus greenenergycompanytoldBiomassMagazinehe simply put too much trust into the individual making claims about a company’s technology and product, and discovered it much too late. “Don’t believe everything you read on the In-
ternet,” warns the investor, who didn’t want to be identified. “If you really want to know about something, do your own due diligence— you just can’t do enough. Do lots of research, contact people, check out the patents and see if they are there and licensed to the company, and make sure the person or persons are who they say they are.” BIO Anna Austin is a Biomass Magazine associate editor. Reach her at aaustin@ bbiinternational.com or (701) 738-4968.
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6|2010 BIOMASS MAGAZINE 63
FEEDSTOCK By Kirk Martin
CONTRIBUTION
Align Biomass Strategy to Fit Your Business— Not the Other Way Around Developing a biomass strategy that’s right for your business is necessary to ensure its success because feedstock controls your fuel costs and the ultimate performance and efficiencies of your energy operations.
T
he use of biomass as a substitute for fossil fuel to create energy, whether heat or power (or fuels for that matter), is expected to dramatically grow in the future as a reflection of its potential benefits, including environmental, economic and ability to reduce energy risk. Figure 1 illustrates the dramatic biomass growth expected through 2035.
Interestingly, the Energy Information Administration expects the majority of this biomass growth to take place with existing heat or power generation assets, with twothirds of the expected growth to come from cofiring applications and not in new, dedicated biomass plants. Just because industry growth is expected, however,
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
64 BIOMASS MAGAZINE 6|2010
doesn’t mean that biomass is right for your business. At ground level, for the individual company seeking to economically produce energy from biomass, the difference between “potential” and “realized” benefits is meaningful. The development of a biomass strategy that’s right for your business is essential for success. There are many questions to work
through and analyses to complete to fully understand the complexities of this market and to define the likely benefits and risks to your specific business. Thinking strategically when considering the key issues to follow will provide the framework for the development of your future plans for the utilization of biomass.
FEEDSTOCK By Kirk Martin
Figure 1: EIA 2010 Renewable Energy Outlook
The bottom line is, undertaking a major biomass initiative is risky business given the related challenges and uncertainties. Adhering to disciplined and repeatable business processes, working to truly understand the opportunities and risks in context of your business, and ensuring informed business decision making will reduce risk and improve your odds for success.
Figure 2: EIA Projected Biomass Use (2009 Energy Outlook)
Total Electricity Generation from Wood and Other Biomass (billion kilowatt hours) - Left Axis Electricity Generation in Dedicated Plants (billion kilowatt hours) - Left Axis Electricity Generation in Cofiring Plants (billion kilowatt hours) - Left Axis Residential Wood Consumption (quadrillion Btu) - Right Axis
Success Starts with Supply We all recognize that success is driven by the alignment of feedstock availability, composition and costs with your business operations. After all, feedstock not only drives your fuel costs but also drives the ultimate performance and efficiencies of your energy operations. The process would be comparatively straightforward
if all biomass resources were created equal and performed consistently. The challenge is that there is no common definition or standard for the term “biomass.” Even something as seemingly consistent as “woody biomass” varies widely by species, moisture, size and form, bark and ash content, consistency, energy content, etc. Biomass is not created or defined
equally and, therefore, by definition will not perform consistently in your operations. As the biomass markets develop, too often we observe potential users working to evaluate what’s being made available rather than focusing on what they truly need. This reactive approach can be problematic and creates increased risks for both potential suppli-
ers as well as downstream users. Aligning your biomass strategy to fit your business, and not the other way around, is a primary success factor. To add to the feedstock challenge is the fact that the supply chain (delivering biomass feedstock in the form you need it) is immature and not well-defined or developed. The costs associated with supply chain coordination, including transportation and logistics, preprocessing, and storage and handling typically exceed the cost of the underlying biomass feedstock. Aligning this process to deliver the fuel resource in the form that best fits your business is also important. Of course, understanding the operating performance and economics in your energy systems (from receiving through downstream energy production and emissions) is also critically important.
6|2010 BIOMASS MAGAZINE 65
FEEDSTOCK By Kirk Martin
Putting the biomass strategy before the business’ operational needs forces the business into a range of alternative energy decisions that can negatively influence the goals of the business. The biomass strategy, therefore, must be subordinated to the business strategy.
66 BIOMASS MAGAZINE 6|2010
Suffice it to say determining whether biomass makes sense for your business is not a simple equation. Given the complexity involved, taking a more thoughtful and comprehensive approach to understanding the complete life-cycle impact on your business is required—from feedstock origination and delivery through downstream energy production and emissions. The bottom line is, undertaking a major biomass initiative is risky business given
the related challenges and uncertainties. Adhering to disciplined and repeatable business processes, working to truly understand the opportunities and risks in context of your business, and ensuring informed business decision making will reduce risk and improve your odds for success. The following steps are recommended to help readers develop a long-term biomass strategy. Define Your Strategic Biomass Objectives As with any new initiative, it’s important to “begin with the end in mind.” Start by clearly defining what you seek to accomplish with your biomass strategy and why that is important to your organization. Make sure to define how you expect to measure the success of your biomass strategy, whether that is economic, environmental or regulatory or some combination thereof. Define Your Biomass Process Requirements Once you have defined what you seek to achieve with your biomass strategy, work to define your process requirements so you know what you are looking for and are positioned to communicate your requirements to potential suppliers. What are your downstream energy requirements for biomass? What are your feedstock specifications regarding volumes, consistency, composition, form, costs, etc.? What are your logistical and storage and handling considerations? What kind of supply terms do you desire? Evaluate Potential Supply Resources and Strategies Work with a potential feedstock supplier in the region to better understand what’s available in your market and how the potential supply aligns with your defined requirements. In this part of the review you are really looking to understand what is available, identify potential supply risks and clearly define the gap between
FEEDSTOCK By Kirk Martin
what is available and how that fits with your defined feedstock requirements. This phase will form the foundation for developing a feedstock supply chain strategy and approach that is designed to deliver what your facility needs to achieve your strategic objectives. Define Biomass Feedstock Supply Chain Strategy and Approach Utilizing the information compiled above along with key supplier contacts developed in the process, work with potential supply partners to define the best supply procurement and delivery system for your organization. This may result in a strategy to develop intermediate feedstock aggregation and (pre)processing centers to normalize multiple types of feedstock into a consistent, homogenous fuel stream designed to meet the specifications of your organization. While the approach may increase the direct cost of the feedstock fuel, it should also reduce supply risk and improve handling and operating efficiencies. Prove the Concept Through a Pilot Phase Once the conceptual approach has been defined, it’s important to prove the concept through a pilot phase prior to committing the resources to scaling up the process. A pilot phase should be designed to test the feedstock origination process through receiving and downstream utilization in your operations. The goal is to test the process in the real world and to generate (and collect) the economic and operating data with which to evaluate the process and to compare it with your preliminary design estimates. While this process takes resources and time, the knowledge you gain through the process will no doubt save your organization time and money as you look to ramp up volumes in the future. Plan for Scale-Up Armed with the clearly defined strategic and operational objectives and an understanding of the biomass resources
in your region and how they fit with your requirements, together with the actual operating data and insight gained through the pilot program, you should be well-prepared to determine if biomass represents a viable approach to achieving your goals and to develop an actionable plan to ramp up the process going forward. Putting the biomass strategy before the business’ operational needs forces the business into a range of alternative energy
decisions that can negatively influence the goals of the business. The biomass strategy, therefore, must be subordinated to the business strategy. External guidance through this maze of decisions can help you make the correct ones for your business, saving you time, money and headaches. BIO Kirk Martin is a partner with Ascendant Partners Inc. Reach him at (303) 221-4700.
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BUILDING EQUIPMENT THAT CREATES OPPORTUNITIES
6|2010 BIOMASS MAGAZINE 67
PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
CONTRIBUTION
Wood Pellets: An Expanding Market Opportunity The conditions are ripe for a massive increase in the production of wood pellets in the U.S. due to demand from European countries, favorable manufacturing conditions and the availability of raw materials, especially in the South.
W
ood has been used for heating and fuel purposes for thousands of years. The wood industry has found itself on the verge of a revolution, however, because of the rapid increase in development and utilization of new wood-based solid and liquid fuels. Wood pellets represent an alternative to the use of coal, gas and even traditional wood logs and chips. Wood pellets are cylin-
drical, compressed wood particles used as burning fuel. Pellet size varies from one-fourth to one-third inches (6 to 8 millimeters) diameter and 1 to 1.5 inches (38 millimeters) in length, with a bulk density that is usually about 40 pounds per cubic feet (about two to three times the wood density of softwood). Based on the principle of densification of dried wood chips and sawdust, pellets offer better and more uniform
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
68 BIOMASS MAGAZINE 6|2010
It is important to emphasize that wood pellets are not a new product, they have been utilized for decades, but it is only now that the world is experiencing a large demand increase, and wood pellet potential is still underestimated.
PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
Wood Pellet Exports to Europe With Country of Origin and Destination
SEPTEMBER 26-29 ROCKFORD, IL
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The competitive advantage of the Southern U.S. relies on shortened shipping times, as compared with many British Columbia, Canada, factories, whose travel route takes shipments through the Panama Canal. Opportunities are opened, as Italy, Belgium, and other emerging markets require larger and more frequent shipments, although countries such as Germany, Finland and Russia represent strong competition due to their proximity to the market.
heating properties per unit volume due to their low moisture content. Pellets burn cleaner, have reduced particulate emissions compared with coal, are more economical to transport due to increased bulk density and can be easily produced from wood waste and byproducts. This provides new ways to divert wood waste from reaching landfills as well as to increase overall profit through an integral and more efficient use of the raw material. Wood pellet applications vary from household heating to large-scale industrial power generation. It is important to emphasize that wood pellets are not a new product, they have been utilized for decades, but it is only now that the world is experiencing a large demand increase, and wood pellet potential is still underestimated.
Global Market During the past four years, the global wood pellets market has experienced a dramatic increase. Global production
went from almost 8 million tons per year1 in 2007 to more than 13 million tons in 2009, of which European countries consumed more than 8 million tons (2009). North America produced about 7 million tons in 2009, of which almost 5 million tons were intended for exports to Europe. Leading countries in the consumption of pellets in Europe are Sweden, Austria and Finland, while Germany, France and Italy are experiencing the largest market growth in both capacity and consumption of pellets. Russia is also increasing its production capacity and may become a key player for exports in the near future. In addition, countries such as Denmark, Belgium and Norway are experiencing the most significant increase of the region in pellet consumption. According to the European Biomass Association, it is expected that Europe will reach a consumption of 50 million tons per year by 2020 compared with 8 million tons per year in 2009. Regardless of increased production and
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PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
With the opening of several new facilities in the Southern U.S. the capacity for exports has expanded and European countries with demand for pellets such as Sweden, Italy, Denmark and Norway, may take advantage of their better prices, faster shipping, and a steady availability and supply of pellets.
The world pellets consumption for the next 10 years is projected to increase by 25 percent annually, reaching nearly 140 million tons by 2020. Previous projected growth for 2010 was already surpassed by 2009, reaching more than 13 million tons. This exponential increase is mostly due to the EUâ&#x20AC;&#x2122;s goal to achieve at least 20 percent of its energy source from renewable energy by 2020. Many countries have set up even more ambitious individual goals that can make these projections short in the near future.
consumption, European countries will have a lack of production capacity to satisfy the internal demand, mainly due to the scarce availability of sustainable sources of raw material in the EU. With an increasing demand from several European countries, and few exporters besides Canada and Germany, U.S. producers are finding a growing market that literally
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Engineering, Architecture, Construction, Environmental and Consulting Solutions
70 BIOMASS MAGAZINE 6|2010
PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
The typical price range for wood pellets in the most important markets in the world is notably higher for European countries, giving an advantage to exporters with low raw material and transportation costs when entering these markets
exploded, increasing from 2002 through 2006 by more than 200 percent. Despite this large increase in production, most pellets manufactured in the U.S. were intended for domestic consumption. Canada has dedicated more than 80 percent of its production for the export market, mainly to European countries, and is the largest exporter of wood pellets in the world. With the opening of several new facilities in the Southern U.S, the capacity for exports has expanded and European countries with demand for pellets, such as Sweden, Italy, Denmark and Norway, may take advantage of their better prices, faster shipping, and a steady availability and supply of pellets from these U.S. facilities. These countries may switch from their traditional Canadian supplier, depending on delivered prices and longterm supply agreements. The market for other continents, excluding North America and Europe remain marginal, with combined production of only 0.3 million tons per year. South America, Africa and
Asia are far behind in the race for market share and positioning in the pellet market. These players must not be underestimated, however, especially countries such as Brazil. With the availability of raw material, and well-established wood and paper industry, it will be a matter of time for Brazil to become a key player in the wood pellets market. The U.S South has the ability to supply pellets for the European market at a competitive price because of enhanced production capacity due to a sustainable wood source from plantations. In addition, it may become a better alternative for European buyers than Canada, because of the locations of important ports, better road infrastructure and year-round harvesting. U.S. producers can achieve long-term agreements with European customers because of the increased demand for pellets, and the lack of resources (production capacity and raw material availability) to internally satisfy the demand.
6|2010 BIOMASS MAGAZINE 71
PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
The price composition for wood pellets at the mill gate reflects that energy, raw material (biomass), and labor are key cost drivers in the production of pellets. Energy costs include drying the wood chips prior to pelletizing, which usually can account for as high as 70 percent of the total energy cost. Savings in these areas are extremely important for the profitability of the pellet industry in the U.S. Price distribution is assumed for a 150,000 ton per year factory.
Wood Pellet Pricing
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Wood pellet prices in the U.S. are heavily affected by transportation costs. Since the most common delivery system in European countries is in bulk cargo, prices in Europe tend to be more stable around â&#x201A;Ź215 per ton ($304 per ton2). Pellets in the U.S. are sold in bags by retailers, adding about $20 per ton in packing, pallets and wrapping material. With an average price of $276 per ton as of November, pellets can be found for as low as $176 per ton, or as high as $600 per ton
in the Northern U.S. However, for U.S. companies intending to compete in the export market, the price for warehousing and the ocean freight costs must be taken into consideration. Warehouse costs may add around an additional $10 per ton, while ocean freight (which can be extremely volatile) adds $35 to $45 per ton to the price of pellets. The fact that pellets are not considered a commodity also affects the price. When they are considered a commodity, prices will have less variability, but will still be strongly affected
In Georgia, RWE Innogy is building a factory with the capacity to produce 1 million tons of pellets per year. More factories of similar size are projected in South Carolina and Georgia, intended for the export market to Europe.
PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
The pelleting process is relatively simple depending on how the raw material is received, with processes such as chipping, drying and grinding, being optional.
by transportation costs and raw material availability. This wood pellet commodity market could be developed using futures contracts as with lumber, oil and other products.
New Facilities The U.S. wood pellet industry has been characterized as being dominated by several small- to medium-sized factories. The definition of a medium or large factory needs to be redefined, however. Typically, a large factory was considered to be producing about 100,000 tons per year. In recent years, several facilities in the Southern U.S. have started operations, producing more than 500,000 tons per year. The opening of such facilities redefines the term large-scale production in the wood pellet market. In addition, there are several facilities planned, permitted and ready to break ground, and several others projected to start construction as this article was being written, including four facilities from Phoenix Renewable Energy, planned in Arkansas. The largest wood pellet facility in the world started operations in 2007 in Cottondale, Fla., mainly producing and shipping pellets to Sweden. Several multinational corporations are investing in pellet facilities and operations; recently, Weyerhaeuser and
Mitsubishi announced a strategic memorandum of understanding in order to explore and establish the feasibility of a pellet production facility in the U.S. by 2011, and depending on its success, more facilities could follow in the next few years. In Georgia, RWE Innogy is building a factory with the capacity to produce 1 million tons of pellets per year. More factories of similar size are projected in South Carolina and Georgia, intended for the export market to Europe. Germany has seen its pellet industry grow exponentially becoming an important exporter to neighboring countries. Since 2004, approximately 35 new facilities, in addition to the previously existent 15 plants, have started operations. With an average capacity of 66,000 tons per year, and several new facilities planned for 2010 and 2011, the potential of Germany as producer and exporter is now significant, and itâ&#x20AC;&#x2122;s able to absorb market share from North American manufacturers. Canadian producers have also launched several new facilities. With a well-established market for exports and solid producers such as Pinnacle, looking for a business expansion, the number of factories in Canada has been significantly increased
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Meeting Point for the International Pellets Industry 535 Participants from 35 Nations in 2009 www.pelletsforum.de 6|2010 BIOMASS MAGAZINE 73
PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni and Jeff Wright
The key element in a pellet plant is to have the criteria to choose the right equipment and capacities, especially when handling large production volumes, where typical investment levels can reach more than $30 million in equipment (for plants producing 200,000 tons per year).
in the past four years, adding additional capacity for European exports. U.S. producers still have an advantage compared with Canadian manufacturers regarding shipping ports and strategies. States such as Florida, Georgia, South Carolina and Virginia, all have proximity to important ports, a railroad system and a sustainable source of plantation grown wood for production, resulting in lower transportation costs and minimized storage time.
Many of these Southern U.S. ports have a long history of wood chip, lumber, log, pulp and paper exports. In less than five years, the U.S. Southâ&#x20AC;&#x2122;s pellet industry has transformed from virtually nonexistent to producing 2 million tons in 2009. New pellet facilities have also been announced in the Northern U.S. (New Hampshire, New England Pellets), and the west (Oregon and California, Enligna U.S.). Southern states will still lead the pellet market development, based on the number of facilities announced and in recent operational status. For the U.S. domestic market, however, a single large-capacity factory may not be economically profitable, especially since wood pellets are mostly sold in bags. Transportation to several destinations from a single production site might make prices prohibitive to retail buyers. This market will require special attention in order to grow, and a solution for pellet companies may rely on having several small factories rather than one single large facility, especially when accessibility to roads, railroads and storage space is limited.
Well-Established Technology The process for making wood pellets is fairly simple, and has been wellestablished and developed. The main issues to take into consideration are moisture content and wood species used in the process, making manufacturing a process of finding the right â&#x20AC;&#x153;recipeâ&#x20AC;? for production conditions rather than a technological upgrade. Building requirements and labor for a pellet plant are relatively low. The key element for a pellet plant is having the criteria to choose the right equipment and capacities, especially when handling large production volumes, where typical investment levels can reach more than $30 million in equipment (for plants producing 200,000 tons per year). Nevertheless, by increasing the
74 BIOMASS MAGAZINE 6|2010
PELLETS By Adrian Pirraglia, Ronalds Gonzalez, Daniel Saloni, and Jeff Wright
size of the facilities, some issues arise. Problems such as self-heating of the pellets while being stored, cooling of big volumes of pellets in the manufacturing process, utilization of local wood species with different properties that may affect production parameters and throughputs. The quality, condensation and crumbling of pellets while being transported as well as pellets from mixed species and wood waste must be managed. Production considerations for the pelletization of torrefied wood at an industrial level may represent great opportunities and technological advances that need to be addressed in order to ensure growth and sustainability of this market for the U.S. wood industry.
Final Remarks The right conditions for a massive scale of wood pellet production in the U.S exist. With high import requirements from European countries, and favorable manufacturing conditions and raw material availability that can be found in the Southern U.S., both small and large producers are finding a market niche that must be filled. The wood pellet market seems promisingly sustainable for years to come. In order to become reliable European market suppliers, U.S. producers must solve large-scale production issues regarding warehouse strategy, self-heating, transportation, handling and capital investment. The volatility of pellet prices in the U.S. has to be addressed in order to ensure the sustainability of the market. As a final thought, the technical feasibility for pelletizing torrefied wood must be further developed, due to the promising results and enhanced heating value provided by this material.
percent moisture content. One metric ton equals 1.2 short tons. 2
Calculated at a exchange rate of 1 Euro=1.412 U.S. dollars (01/23/2010) Adrian Pirraglia is a PhD candidate of wood products at North Carolina State University, Ronalds Gonzalez is a PhD candidate of paper science and engineering at NCSU, Daniel Saloni is an assistant professor in the Department of Wood and Paper Science at NCSU and Jeff Wright is
an adjunct faculty member at NCSU. The authorâ&#x20AC;&#x2122;s research group has been working on several projects for energy densification and the economics of ethanol production during the past four years. Achievements of the group include the development of techno-economical models for pellet production, harvesting and transportation of biomass, material testing and characterization as well as market analysis.
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References: 1 Every weight unit expressed in tons is referred to metric tons of pellets, at 10
The solution behind the solution.
6|2010 BIOMASS MAGAZINE 75
EMISSIONS By Rodney L. Pennington
CONTRIBUTION
Air Emissions Control for the Biomass Industry Environmental concerns have prompted government agencies to create rigorous standards for emissions control, and the biomass industry is no exception. Each process requires a different approach, depending on the feedstock, technology, regulations and life-cycle costs.
T
he worldâ&#x20AC;&#x2122;s increasing demand for renewable or sustainable energy has spurred the development of alternative energy sources to replace the traditional natural gas and oil, and their increasing costs. The production of these alternative sources requires a variety of proven air emission control systems. Overviews of the applied
technologies are included, and specific applications are discussed for processing of ethanol, wood pellets, poultry litter, and the operation of biomass dryers and gasifiers. As a result of environmental concerns, government agencies have established increasingly stringent standards for emissions control. Some of the biomass processes are listed
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
76 BIOMASS MAGAZINE 6|2010
tanks. The contamibelow along with the air emission controls nants include: acetthat can be utilized aldehyde, acrolein, ethanol, formaldeto meet the necessary hyde, 2-furaldehyde, requirements. Ethanol Promethanol, acetic acid duction: Particulate and lactic acid. matter (PM), volatile Installations of Rodney L. Pennington organic compounds scrubbers or thermal TurboSonic (VOCs) and hazard- engineer, oxidizers have met the Technologies Inc. requirements for air ous air pollutants (HAPs) are typically pollution abatement. released during fermentation, Alternate solutions include the distillation, the spent grain dry- Photo-catalytic Gas Treatment ing process, and from storage (PGT)1 system, which achieves
EMISSIONS By Rodney L. Pennington
air emission control without any auxiliary fuel. A comparison to the regenerative thermal oxidizer (RTO) is shown for an ethanol process. (Figure 1) Wood Pellets: Wood pellets are used as a supplement or replacement for oil and coal. The pellet is pressed or extruded under high pressure, generally after the wood has been dried to less than 15 percent moisture for use with combustion systems such as boilers. European utilities have already started using wood pellets to burn along with coal in existing power plants. The wood pellet plants operating in the Southeastern U.S. have installed and/or evaluated wet electrostatic precipitators (WESPs) and RTOs or PGT systems to control the PM, VOC, and HAPs which are primarily generated in the drying process of the green wood chips. Poultry Litter: Poultry litter is utilized as a biomass fuel source for power generation. More than 500,000 tons of poultry litter annually, as well as other biomass, produce 55 megawatts of power, enough electricity to serve approximately 40,000 homes. Potential process air emissions are controlled through a semi-dry absorption scrubber (SDA) and baghouse. (Figure 2) Gasification: Biomass, wood chips, sawdust, char, coal, rubber or similar materials are converted into solid ashes, soot and syngas or producer gas with a gasifier. The gas can then be filtered for tars and soot/ash particles, cooled and directed to an end-user such as a kiln, furnace, boiler, an engine or fuel cell to produce electricity.
Figure 1: PGT Comparison to RTO
Natural Gas Based on $7 Per MMBtu, Electrical on $0.06 Per Kilowatt, and 8,600 Hours Per Year
Figure 2: SDA Flow Diagram
The quality of the gas from different gasifiers will vary depending on the system and overall fuel approach. Pre-drying of wood biomass is essential in some processes in order to achieve the higher Btu syngas necessary for the process. A wet electrostatic precipitator system, for instance the SonicKleen WESP, with a PGT or RTO system, can provide the necessary air emissions control for the facility. (Figure 3)
Figure 3: Gasifier Flow Diagram
Air Emission Control Equipment New technologies such as Catalytic Gas Treatment/PGT and traditional technologies are capable of meeting the most stringent control requirements of the biomass industry. A variety of control technologies are used in the biomass industry: CGT or PGT: The CGT or PGT system utilizes a sim6|2010 BIOMASS MAGAZINE 77
EMISSIONS By Rodney L. Pennington
Figure 4: Down-Flow WESP Diagram
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Figure 5: Up-Flow WESP Diagram
ple liquid process to absorb aldehydes and/or alcohols from industrial process gas streams. The absorption system uses hydrogen peroxide (H2O2), nitric acid (HNO3) or sodium hydroxide (NaOH), and aqueous catalysts to capture and oxidize the alcohols and/or aldehydes. The lower the concentration of emissions in the process stream, the lower the CGT/PGT operating cost. Other notable features include â&#x20AC;&#x153;instant-onâ&#x20AC;? and no standby costs. The process gas flows up through a single-stage packed absorption tower, where formaldehyde, methanol, ethanol, and other aldehydes and/or alcohols are absorbed into the counter flow-water solution. The solution is retained for suffi-
cient time in a reaction tank to complete the oxidation process. The clean solution is recycled back to the top of the absorption tower to repeat the simple, continuous oxidation process. Additional catalysts and hydrogen peroxide are added as necessary to maintain the desired oxidation levels. The CGT/PGT system is an economical solution to achieve compliance with the EPA maximum achievable control technology (MACT) requirements and eliminate the increasing fuel cost associated with the RTO alternative solution. It also eliminates the greenhouse gas emissions associated with nonrenewable fuel use. WESP: The WESP system is an ultrahigh efficiency mist and particulate eliminator that achieves compliance with the ever-increasing EPA MACT requirements for particulate, fumes, mists and condensibles. The WESP system eliminates the problems associated with dry electrostatic precipitators, fabric filters and high-energy scrubbers: Hydroscopic particles, which tend to become sticky and solidify causing hard-to-remove deposits and plugging/ blinding Saturated gas streams, which can plug fabric filters or cause corrosion problems High pressure drop: 30-inch water column for a scrubber for high efficiency sub-micron particulate removal, 6- to 8-inch water column in a fabric filter Re-entrainment losses or bleedthrough losses A down-flow WESP design offers unique features not available with an upflow design. (Figures 4 and 5) In wood dryer applications, a venturi/ cyclonic separator has been extremely successful in process gas conditioning providing removal of larger particulate and fully saturating the process gas prior to the WESP. (Figure 6) The WESP provides excellent PM control compliance and provides the pro-
EMISSIONS By Rodney L. Pennington
Figure 6: Typical Venturi, Separator and WESP
tection required for downstream equipment for many of the biomass process air emission control systems. SDA: The SDA system is ideally suited as an efficient acid gas/mist control device upstream of a baghouse or ESP for many types of boiler applications in the biomass industry. The SDA injects lime slurry into the boiler (process) exhaust through an efficient atomizing nozzle system at the top of a down-flow absorption tower. The droplet size and uniform distribution into the air stream are essential to the performance of the SDA system. Droplet size is generally measured in sauter mean diameters and distributed in a bell curve fashion. Although the mean diameter is an important factor, the maximum droplet size and percentage of maximum droplets need to be considered in sizing the retention time to insure that all the water is evaporated and the bottom of the tower remains dry. Evaporation time for the larger droplets is exponentially longer than for small droplets. A two-phase water and compressed air nozzle can generate a droplet onetenth the size of a single-phase, water-only nozzle, thus substantially reducing the retention time and size of the absorption tower. The lime reagent absorbs and reacts with the acid mist to form calcium sulfite or sulfate, which is carried through to the baghouse where it is collected and removed from the system.
The SDA offers several benefits over other types of control including: Greater than 90 percent removal of SO2 and greater than 95 percent HCl removal Utilizes a low-cost reagent, lime No liquid effluent—all water is evaporated into the air stream No water treatment required Simple to operate Wide turndown ratio of 10 to 1 RTO: Today’s RTOs have optimized the benefits of structured media, simplified flow control and compacted the configuration into a smaller prepackaged unit, greatly improving on the original design. Thirty years of design improvements have resulted in a greatly improved RTO. Many of the low-concentration biomass processes still require substantial amounts of auxiliary fuel, however, and have a large carbon footprint.
Conclusion There are many variations in biomass fuel and energy production that require a variety of customized solutions. Each application must be evaluated in light of the process characteristics, emissions regulations, and life-cycle costs to arrive at an optimal solution and choice of equipment. BIO
References: 1
Groupe Conseil PROCD Inc., CGT™ US Patent 7,304,187, PGT Patent-Pending Rodney L. Pennington is a registered professional engineer with more than 36 years of diverse experience in all phases of research, engineering, design, management, sales and marketing of air pollution control and energy conservation systems. He has more than 20 patents, is a published author and speaker and has served as an expert witness in regenerative
6|2010 BIOMASS MAGAZINE 79
THE PERMITTING SPECIALISTS
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80 BIOMASS MAGAZINE 6|2010
BIOMASS MAGAZINE
MARKETPLACE EVERGREEN E NGINEERING ŽŵƉůĞƚĞ ŶŐŝŶĞĞƌŝŶŐ ^ĞƌǀŝĐĞƐ ŝŽŵĂƐƐ ŶĞƌŐLJ Θ tŽŽĚ WƌŽĚƵĐƚƐ ŶŐŝŶĞĞƌŝŶŐ • • • • • • • •
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johnsimmons@carbontecenerg 6|2010 BIOMASS MAGAZINE 81
Visit www.biomassconference.com/southeast and: View interactive exhibitor map See conference sponsors and review sponsor benefits Register to attend Explore conference agenda And much more!
November 2 - 4, 2010 Hyatt Regency Atlanta Atlanta, Georgia
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May 3 - 5, 2011 Americaâ&#x20AC;&#x2122;s Center St. Louis, Missouri