May 2011 Biorefining Magazine

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INSIDE: STRUCTURING A SUCCESSFULLY CO-LOCATED BIOREFINING PROJECT may 2011

Research Park

power Bioindustrial Innovation Center Executive Director Murray McLaughlin Shares How R&D Centers Can Ignite Biorefining Startup Project Development Page 22

Plus

Capturing Energy from Niche Waste Streams

Page 28

And

Pulp and Paper Mills: The Promise and the Reality

Page 34

www.biorefiningmagazine.com



contents |

may issue 2011 VOL. 02 ISSUE 05

features

22

INTEGRATION A Walk in the (Research) Park R&D centers have much to offer biorefining startups By Erin Voegele

28

FEEDSTOCK Upstream Diversity Scrap plastic isn’t biomass—but it is a waste stream that must be managed By Bryan Sims

34

CO-LOCATION The Scary Truth about Pulp and Paper The potential and reality of co-locating at a mill By Luke Geiver

Contents DEPARTMENTS 4

Editor’s Note

9

Legal Perspectives

The Unbiomass By Ron Kotrba

Structuring a Successful Co-location Project By Dean R. Edstrom

6

Advanced Advocacy

Consistency is King By Michael McAdams

10 Business Briefs

7

Industry Events

12 Startup

Upcoming Conferences & Trade Shows

8

Talking Point

Energy Farming Methods Mature, Improve By Richard Palmer

People, Partnerships & Deals

Biorefining News & Trends

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editor’s note

Waste plastic is clearly not biomass, but this material, which is typically landfilled, serves many of the same purposes as refined biomass—it

THE UNBIOMASS Ron Kotrba, Editor rkotrba@bbiinternational.com

reduces demand on and extends current supplies of petroleum, increases alternative energy options, and puts waste streams to good, productive use. I bring up this topic here to explain why Biorefining Magazine will cover this issue from time to time. And it’s not so far off our mission topic, really; MSW streams, considered “biomass,” often contain high percentages of plastics. I don’t think the idea is in conflict with encouraging people to recycle plastic either. Recyclable plastic has codes, one through six, but there is a lot of plastic that isn’t coded and therefore cannot be easily recycled, and even coded plastic has to be clean, mixed with like plastics of the same color and more to be effectively recycled. In addition, there is a growing movement to make more of the plastic we use daily from biobased polymers. We cover this issue almost weekly, and certainly in every print magazine. But one aspect of bioplastics that is less talked about is how recyclable are the biomass-based plastics? What, if any, are the technical issues to be aware of? This was one of several topics I discussed in April on The Biorefining Blog, my weekly blog on biorefiningmagazine.com. Some interesting comments were received, including one from Joseph Witherspoon, who posted feedback, saying, “I am glad to see this issue discussed. Recycling and reusing has its place and purpose, however, even the recycled and reused plastic ultimately ends up in the landfill unless it is consumed. Converting [it] to fuel is a great way to consume and eliminate the plastic that would otherwise accumulate in a landfill. Additionally, converting plastic to fuel recovers and utilizes the available energy in the material. Watch for developing technologies that will convert plastics, any plastic, including chlorides, into high-quality fuels.” CEO of Houston-based Enhanced Biofuels, Roman Wolff, a regular on both of my weekly blogs (The Biorefining Blog and F.A.M.E. Forum on biodieselmagazine.com), has decades of experience in the refining sector. In response to my post, he said, “Recyclable plastics tend to make better fuel than nonrecyclable plastic. Plastics with chlorine atoms (PVC and other derivatives of vinyl chloride monomer) should not be burned—think dioxins. Even good technologies will end up making hydrochloric acid and require clean-up steps. I am not saying don’t do it, just do it right. Bioplastics will likely be a lot less recyclable than today’s plastics (if done right), because they will be biodegradable—plastic bags will break down instead of killing dolphins or creating a trash island.”

for more news, information and perspective, visit biorefiningmagazine.com/BLOG/READ/BIOREFINING

ASSOCIATE EDITORS Erin Voegele visits with research parks around North America to find out exactly what they have to offer biorefining startups in “A Walk in the (Research) Park” on page 22.

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Bryan Sims, in “Upstream Diversity” on page 28, writes about projects seeking to take advantage of niche waste streams, including MSW and plastics.

Luke Geiver writes “The Scary Truth About Pulp and Paper” on page 34 and, in this instance, scary is good. Colocation benefits could be so many, it’s well … it’s scary.


EDITORIAL EDITOR Ron Kotrba rkotrba@bbiinternational.com ASSOCIATE EDITORS Erin Voegele evoegele@bbiinternational.com Luke Geiver lgeiver@bbiinternational.com Bryan Sims bsims@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com graphic designer Erica Marquis emarquis@bbiinternational.com

PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com

SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com Senior Marketing Manager John Nelson jnelson@bbiinternational.com Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Biorefining Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada or Mexico. To subscribe, visit www.biorefiningmagazine.com or you can send your mailing address and payment (checks made out to BBI International) to: Biorefining Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biorefining 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 Biorefining 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 Biorefining Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rkotrba@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Please recycle this magazine and remove inserts or samples before recycling TM

COPYRIGHT Š 2011 by BBI International

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advanced advocacy

Consistency is King Without it, the wheels spin but get us nowhere BY Michael mcadams

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f ever Washington needed more convincing evidence that decisions, or a vote, made on Capitol Hill can change an entire industry, then it need look no further than the message delivered by the head of BP’s alternative energy business, Katrina Landis, at last month’s New Energy Finance Summit in New York. As she announced the company’s plans to invest $2 billion in renewable energy projects this year, Landis didn’t hesitate to reveal that some of those investments around the world were on indefinite hold because inconsistent government policies had created an economic nebula too dense for investors. Landis didn’t mince words when relaying the realities of the advanced biofuels industry, pushing to commercialize our renewable technologies, when she said, “there needs to be some incentive to make those bets with some surety that there is going to be some return in the future.” BP is just one example of the potential leadership position the U.S. has before it, as it could once again be an innovator the rest of the world could follow. Developing renewable energy alternatives is an inevitable part of our shared global future, and America should help lead the way. The leadership opportunity is real, but will take a consistent commitment by Congress and the administration, avoiding the mercurial ups and downs of public opinion, to first successfully transform America’s energy policy and create a template to follow. A critical part of that could prove to be the renewable fuel standard (RFS). Last month I testified before the Senate’s Environment and Public Works Committee that RFS is the most important federal policy supporting development of a U.S. advanced biofuels industry. But Washington would be wise to not tinker with it by using it as a tool to pick

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winners and losers. Let the market play out and have RFS guide it. Where RFS has shined, our tax policies have been the train light at the end of the tunnel barreling towards us. Advanced and cellulosic biofuels tax policy has been too inconsistent and doesn’t provide parity, or the right form of tax options, to enable some to take advantage of current law. While other renewable sectors are afforded provisions such as a refundable investment tax credit, there’s nothing for the advanced biofuels industry. Depending on your company’s size and scale, a similar ITC option for our industry will prove essential to commercialization. The tax code is also inconsistent in its rewards according to molecule, feedstock or process. We are seeing firsthand how it penalizes many producers such as algae, and other second-generation biofuels. A broader application is sorely needed. To add insult to injury, the current regulatory structure to govern gasoline and diesel integrates first-gen biofuels and must allow as many new molecules as possible into existing commercial distribution chains. While it must be thoughtful and continue to protect the environment and products currently in the chain, it must explore ways to allow fuels that can economically substitute for those made from imported oil. The effort to enhance and expedite the deployment of commercial advanced and cellulosic plants shouldn’t constrain all the various bidders. Rules mandating or excluding feedstocks economical today from use by second- or third-generation technology platforms should be harmonized with the intent of RFS to deliver as many gallons of renewable product. Currently many agencies try to filter their choices through lenses such as food vs. fuel or greenhouse gas reduction requirements. First, we should deploy and develop a wide range of technologies before trying to pick winners without regard to the price of their fuels. I can assure you that $20 ethanol from nonfood sources will have a

hard time, even with a mandate, finding a buyer in this market. By taking a small fraction of the more than $20 billion already invested in building first-generation biofuels plants, we can deploy our new technologies to those existing facilities to successfully commercialize and produce next-generation molecules that are more energy efficient and usable in today’s vehicles. Many new platform technologies could, for small investments, redirect the assets and make fungible molecules. Candidly, these would have more market value. Trying to cram every gallon of ethanol into the gasoline pool has limited returns over the longer haul, and I suggest we broaden the range of products these plants can produce. Heaven forbid some of these plants make specialty chemicals at $6 or $8 a gallon without subsidy. In today’s world, imagine the idea of a sustainable economic facility that no longer needs handouts from the federal government. We see proof time after time that without consistency in public policies our industry is destined for a hamster wheel existence. In a year when budget policy is first on the agenda, it will provide a catalyst for rethinking the status quo. It would force a re-examination of many policies and programs of the past. It’s decision time for the biofuels industry, whether it wants to continue supporting certain programs or change and enhance those that have not proven out. Programs such as the energy title of the last Farm Bill are not included in the current baseline federal budget and will require the industry to step up and politically support it, if it has any chance of moving forward. This provides us all an opportunity. Let’s open our minds to new ideas, let’s communicate across the various sectors and let’s create a better conversation to deliver to consumers the best results for tax payer dollars spent. Author: Michael McAdams President, Advanced Biofuels Association (202) 469-5140 Michael.McAdams@hklaw.com


events calendar |

International Biorefining Conference & Trade Show

September 14-16, 2011

Hilton Americas – Houston | Houston, Texas The International Biorefining Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry. Speaker abstracts are now being accepted online. (866)746-8385 | www.biorefiningconference.com

Northeast Biomass Conference & Trade Show

October 11-13, 2011

Westin Place Hotel | Pittsburgh, Pennsylvania

Algae Event in the Land of 10,000 Lakes 10/25

What more appropriate place is there for a conference about an aquatic feedstock like algae than Minnesota, the Land of 10,000 Lakes? The 5th annual Algae Biomass Summit will take place October 25-27 at the Hyatt Regency in Minneapolis. This event unites industry professionals from all sectors of the world’s algae utilization industries including financing, algal ecology, genetic systems, carbon partitioning, engineering and analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements, foods and more. Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. The event is considered a world-leading educational and networking junction for all algae industries. Educational tracks at the event focus on biology, engineering, analysis, commercial activities, policy and financing; but education is only one of several reasons to go. The summit is where future and existing producers of algae products go to network with other industry suppliers and technology providers. It’s where project developers converse with utility executives; where researchers and technology developers network with venture capitalists; and where Fortune 500 executives and influential policy makers sit side-by-side with project developers. The event is the largest, fastest-growing algae conference of its kind. This year’s event is expected to draw nearly 900 attendees and exceed the previous year’s attendance by almost 20 percent. This growth is powered by the current strength of the industry and the positive outlook for future algae producers. The summit will help you—algae industry stakeholders—identify and evaluate technical and economic solutions that fit your operation. Get your plane ticket, reserve your hotel room and register for the conference today.

With an exclusive focus on biomass utilization in the Northeast—from Maryland to Maine—the Northeast Biomass Conference & Trade Show 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. Speaker abstracts are now being accepted online. (866)746-8385 | www.biomassconference.com/northeast

Algae Biomass Summit

October 25-27, 2011

Hyatt Regency Minneapolis | Minneapolis, Minnesota Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all algae industries. (866)746-8385 | www.algaebiomasssummit.org

Southeast Biomass Conference & Trade Show

November 1-3, 2011

Hyatt Regency Atlanta | Atlanta, Georgia With an exclusive focus on biomass utilization in the Southeast—from the Virginias to Gulf Coast—the Southeast Biomass Conference & Trade Show will include more than 60 speakers within four tracks: Electricity Generation; Industrial Heat and Power; Biorefining; and Biomass Project Development and Finance. (866)746-8385 | www.biomassconference.com/southeast

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talking point

Energy Farming Methods Mature, Improve Global Clean Energy Holdings teams up with Penn State to develop jatropha By Richard Palmer

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s the demand for nonfood-based biofuel feedstocks is rapidly growing, so is the sophistication of the commercial agricultural methods used for these types of plants. Jatropha farming is still in its infancy as genetics, agronomics and horticulture sciences are beginning to drive new varieties, more knowledge around the plant’s nutritional requirements and more science-based processes for the care and custody of the plant. This is beginning to drive reliable and scalable results in jatropha farming. Early, less knowledgeable entrants are fading into the background and are being supplanted with a breed of experienced investors and operators keenly focused on building a solid foundation for industrial scale production. So while Jatropha agriculture continues to be a new and exciting alternative energy source, and the world continues to watch its development closely, there are still many misnomers about where it should be grown, how to grow it and what resources the plant needs to achieve commercially productive yields. Unfortunately, “sound bites” still get circulated with very little credibility or scientific basis—such as recent unsupported statements about jatropha generating more greenhouse gases than it saves, or renewable energy projects that are based on deforestation. The Center for Sustainable Energy Farming (www.cfsef.org) was created by Global Clean Energy Holdings Inc., one of the largest commercial jatropha farmers in the Americas, as a platform for multidisci-

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plinary research into all aspects of energy farming. The center allows for collaborative research with other researchers and industry partners. The same collaborative research approach is common with other groups of perennial [tree] farmers, who have combined their efforts and resources to improve their product. The center’s mission is to perform cutting-edge plant science research in genetics, breeding and horticulture, and further develop technologies to allow for the economic commercialization and sustainability of energy farms globally. In essence, the ability for countries to access a home-grown energy solution that does not drain limited resources in the process. The center has a Master Research Agreement with Penn State University, funded by industry partners, and is developing other technical collaborations and financial partnerships. Anyone with a background in plant science or agriculture knows that plants do not grow effectively without proper resources. Balancing resources to end up with a sustainable long-term solution without harming the environment is the challenge. The focus must remain on balancing the three major areas—genetics, agronomics and horticulture practices—so the plant will grow with optimal productivity. The direct correlation between improvements in sustainable farming, corporate social responsibility and the resulting social improvements to the community is being proven on commercial jatropha farms in Mexico today. Innovations made on operating farms have resulted in time and cost efficiencies, which, in turn, provides funds that can be allocated to

social improvements, health care and immunizations for the farm workers and their families, breakfast programs for students, skilled labor training and education. In order to enhance these benefits, improvements in productivity and sustainability are essential. The center’s goal is to triple jatropha yields within 10 years, increase the oil content from 33 to 45 percent, and increase the quality of the oils and other products produced—while minimizing inputs including pesticides and fertilizers. We do not believe this is a genetic race to produce the “super variety,” but it is a race towards commercialization that will lend credibility, reliability and scalability to a plant variety that is working towards mass propagation. Even a super variety planted in inadequate soil and improperly cared for, will be unable to reach its potential and will create dissatisfied stakeholders. If the development focus is properly balanced, the species will go through a series of improvements to continually enhance the characteristics. History has shown this trend with every plant that has been commercialized, including corn. If you look at other commercial crops as a proxy for the possibility for [yield] improvement, not to mention reduction in inputs or resistance to pests and diseases, you will see improvements of 300 to 700 percent over the past 75 years. Jatropha is expected to be the first plant commercialized utilizing modern genomics. The improvements with applied science will accelerate its rapid improvement. Author: Richard Palmer CEO, Global Clean Energy Holdings (310) 641-4234 rpalmer@gceholdings.com


LEGAL PERSPECTIVE |

Structuring a Successful Co-location Project Co-location has its benefits, but it also has risks and liabilities By Dean R. Edstrom

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o-location is not a novel concept. Since the dawn of human economic activity, we have recognized the convenience and efficiency of locating one economic activity in close proximity to a related activity. Today, the benefits of co-location can be measured quite clearly at the bottom line. Examples of co-location are limitless: a smelter, refinery or other processing facility next to a mine, wellhead or hydroelectric facility; an ethanol or biodiesel plant on the site of a grain elevator or soy crush facility; chemical products operations a short pipe length away from a petroleum refinery. Any input to product relationship can suggest an opportunity for co-location. While the concept is simple, establishing a successful co-location relationship can be quite complex. If the ownership of both the primary and secondary facilities is the same, the advantages of co-location can be realized readily. But, often the owners of co-located facilities are different, not only in their views of the economics of the relationship but also in their capabilities to establish and operate their respective facilities. A simple co-location relationship might require only a contract for the supply of a feedstock or other input. The most complex could be documented with a master or joint venture agreement that spells out the major terms of the relationship and is supplemented by agreements for feedstocks, energy, utilities, transport, off-take, site ownership or lease, management, other

services, labor, equity and debt finance, and government subsidies. In any case, the agreements will need to address the endgame: what happens when the agreement expires or is terminated, if the benefits of co-location cease or if one party is sold, goes bankrupt or dissolves. This can be critical where two or more parties co-locate on a site owned by one party. The lease will need to deal with the term, renewals, rent or other payments, changes for market conditions, and ownership or disposition of plant and equipment upon termination. The rent could be $1 per year, market rate or variable depending on the success of the venture. The lessee would want both renewal rights at a predictable cost and termination rights with minimum liability. The site owner will have an interest in preserving the integrity of the property and assuming ownership of the fixed assets at termination. Where the co-located facility is essentially in the business of commodity processing, the supply and off-take arrangements will be critical. Pricing on both ends could make or break the venture. One answer might be a tolling arrangement, where the co-located facility is paid a processing fee that is not tied to the market price of either the inputs or production. Where the downstream producer has a market for a product that is not so sensitive to price, it may take more market risk with respect to inputs. Joint arrangements for utilities and transportation can be a major cost reduction benefit of co-location. Shared electric and natural gas sources and even a jointly owned power plant should be considered.

Water source, recycling and disposal should be common. Road access and rail service should be shared. The agreements will need to identify which party will control these relationships and own the related real estate and fixed assets. Co-location may also involve special management and labor sharing arrangements. Thus, management, employment and various operating services agreements may be used to reduce operating costs. Financing sources, including equity and debt investors in either party to a colocation arrangement, will take a great interest in assuring the integrity and durability of whatever arrangement and agreements are made. Lenders particularly will look for assurances on the supply and off-take sides to support the viability of the facility or company being financed. Risks and liabilities will need to be considered when co-locating facilities. An incident at one facility could damage the other. Indemnification and insurance will need to allocate risks and provide protection that is adequate in scope and amount. Realizing the benefits of co-location will depend on sound planning and structuring. The parties will rely on engineering, operations, procurement, marketing, finance and legal resources to bring the project from conception to success. Outside advisors will bring expertise to the table to support each of these tasks. Author: Dean R. Edstrom Partner Attorney, Lindquist & Vennum PLLP (612) 371-3955 dedstrom@lindquist.com

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business briefs People, Partnerships & Deals

In the Lab Elevance’s new agreement with ISP will focus on biobased biocide carriers.

Bolingbrook, Ill.-based Elevance Renewable Sciences Inc. has signed a formal collaborative agreement with Wayne, N.J.based International Specialty Products Inc. to evaluate and introduce to the market novel renewable waxes and derivatives as biocide carriers for wood/plastic composite applications. Elevance and ISP have completed initial laboratory evaluations and have identified candidate waxes that are now moving into scale-up testing. Both companies expect to expand testing later this year with commercialization to begin by year’s end. Elevance’s renewable waxes are made from vegetable oils via its proprietary metathesis technology. According to Andy Shafer, executive vice president of sales and market development for Elevance, both companies had several discussions prior to the announced collaboration about how Elevance’s renewable waxes could be utilized as carriers for ISP’s biocides into plastic/ wood applications. A team of researchers at Kansas State University is studying the environmental and economic sustainability of algae biodiesel production. Results of the environmental portion of the evaluation, titled “Sustainability of algae derived biodiesel: a mass balance approach,” have been published in a peer-reviewed journal. A follow-up study will address economic stability. According to Peter Pfromm, a professor of chemical engineering at KSU, the team used a carbon 10 | Biorefining Magazine | may 2011

mass balance to evaluate the environmental sustainability of algae biodiesel production. What Pfromm and his team ultimately determined is that algae biodiesel produced using CO2 sourced from fossil fuels, such as a coalfired power plant, is not environmentally sustainable (regarding carbon) because the coal-derived CO2 is still eventually added to the atmosphere and is not sequestered. Algae biodiesel produced using renewable CO2, such as that produced at an ethanol plant, however, is nearly environmentally sustainable. “The only nonsustainable [aspect] of the operation is making fertilizer to make the algae, which comes from natural gas.” The World Economic Forum has issued a report titled, “The Green Investing 2011: Reducing the Cost of Financing,” in conjunction with Bloomberg Clean Energy Finance, and numbers from the report show that clean energy investments are “a vital component to sustained economic growth.” In September, WEC issued a report that recognized a $295 billion potential for the biorefining industry by 2030, but the recent report focuses on investment trends happening today. Projects based on biomass, geothermal or wind can compete with fossil-based fuels in significant energy markets, the report says. One area that can help drive down the costs of producing renewable energy is continued support for R&D, which in 2010 grew to a record level, reaching 24 percent at $35 billion in the U.S., from $28.6 billion in 2009. “The fruits of this growing research pipeline will filter into the market over the coming years,” the report explained. Also in 2010, the average amount of money invested by venture capitalists into cleantech firms reached $28 million, up $11 million from 2007. Researchers at the University of Nebraska-Lincoln have developed a process

to convert chicken feathers into biobased plastic. The team, led by UNL professor of biological systems engineering Yiqi Yang, used a chemical modification process to transform poultry feathers into a biodegradable thermoplastic. The project has been underway for several years. While the team initially tried to use the feather-based plastic as is, they recently discovered that modifying the material on a molecular basis via a chemical process could broaden the range of applications for the resulting material. The process has been evaluated Light as a Feather UNL researchers have developed a at the bench technique to make plastic from scale. Yang chicken feathers. says his team is currently seeking funding and partnerships to allow testing to reach pilot scale. Rather than seeking grants, Yang says the team would prefer to collaborate with a member of the plastics industry. Utah State University is home to a new bioenergy center. The University’s Board of Trustees recently approved the USU Extension Center for Agronomic and Woody Biofuels. The center will provide the organizational structure to support current research and extensive activities related to using plants for food, feed, fiber and reclamation, known as agronomic science and technology. Research at the center will support crops and their conversion into biofuels, both within Utah and around the nation. According to Dallas Hanks, USU extension bioenergy agronomist and the center’s director, the center will serve as the umbrella for four ongoing bioenergy research projects, including the FreeWays-to-


business briefs |

Fuel project, the Utah Biomass Resources Group, the Urban Farming and Fuel project, and a Department of Defense-funded feedstock project. Additional research projects are expected to be developed under the center in the future. Interjet and Airbus conducted the first jatropha-based biofuel test flight in Mexico recently. The Airbus 320 jet successfully flew from Mexico City’s International Airport to Angel Albino Corzo of Tuxtla Gutierrez airport in the southern State of Chiapas. One of the aircraft’s two engines was fueled with a 30 percent biojet blend. Hydroprocessed jatropha-based jet fuel used in the flight was manufactured by Honeywell’s UOP. According to Honeywell, its Green Jet Fuel process technology was originally developed in 2007 under a contract from the U.S. Defense Advanced Research Projects Agency to produce renewable military jet fuel for the U.S. military. Entities that provided jatropha feedstock for the test flight include the Chiapas state government, Bencafser S.A., and Energy JH S.A., and Globales Energia Renovables, a wholly owned subsidiary of U.S.-based Global Clean Energy Holdings Inc. The Dow Chemical Co. and OPX Biotechnologies Inc. announced recently that the two companies are collaborating to develop an industrial-scale process for the production of biobased acrylic acid from renewable feedstocks. Dow and OPXBIO recently signed a joint development agreement to prove the technical and economic viability of an industrial-scale process to produce acrylic acid using a fermentable sugar (such as corn and/or cane sugar) feedstock with equal performance qualities as petroleum-based

acrylic acid, creating a direct replacement option for the market. If collaborative research is successful, the companies will discuss commercialization opportunities that could bring biobased acrylic acid to market in three to five years. Dow will provide its expertise in industrial chemistry, process optimization and product development. OPXBIO, a company that uses biotechnology to convert renewable raw materials into biochemicals and fuels, will contribute its expertise in strain development and bioprocessing utilizing its trademarked EDGE (Efficiency Directed Genome Engineering) technology. The global petroleum-based acrylic acid market is $8 billion and growing 3 to 4 percent per year. Acrylic acid is a key chemical building block used in a wide range of consumer goods including paints, adhesives, diapers and detergents. Researchers in Brazil are developing a process to extract nanocellulose fibers from biomass and use those fibers to reinforce plastics. The team, led by São Paulo State University professor Alcides Leão, spoke about its research at 241st National Meeting & Exposition of the American Chemical Society March 27. According to Leão, the fibers used to reinforce the plastics are sourced from delicate fruits like bananas and pineapples, but are extremely strong. In fact, some of these nanocellulose fibers are nearly as stiff as Kevlar. However, unlike Kevlar and other traditional plastics, nanocellulose fibers are not sourced from petroleum. To extract the nanocellulose fibers from biomass, the research team placed leaves and stems from these plants into a pressure cooker-like device. After adding a proprietary mix of chemicals, the mixture is heated over several cycles. The result is a material that resembles talcum powder. While the process is described as costly, the researchers noted that just one pound of nanocellulose can produce 100 pounds of super-strong, lightweight plastic.

Neste Oil is serious about expanding the range of feedstocks used to produce its renewable diesel product, NexBTL. The company has received a loan totaling roughly $70 million for research and development from the Nordic Investment Bank. Of the money invested in R&D in the past, 80 percent has gone into feedstock research. The company has recognized recent progress regarding woody biomass and algae oil research, and is also looking into jatropha oil, camelina oil, waste from fish processors and tall oil. Lars Peter Lindfors, senior vice president for Neste’s technology and strategy division, says the loan shows the company’s commitment to raw materials, and the that the additional funding will secure the continuation of cutting-edge R&D and the future development of the NexBTL renewable diesel technology. The Singapore renewable diesel facility Neste opened this year uses mainly palm oil, but the company hopes to use more of the waste created during the process. Stearin, a byproduct of the palm oil production process will account for more than 20 percent of Neste’s renewable input, palm fatty acid distillate will reach 5 to 10 percent, waste animal fats will total roughly 20 percent, and the rest will be rapeseed oil.

Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Industry Briefs, Biorefining, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-8385, or e-mail it to rkotrba@bbiinternational.com. Please include your name and telephone number in all correspondence.

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startup

Biorefining News & Trends

Reach the Sky Farmers would have more incentive to grow energy crops such as giant miscanthus if they had the backing of crop insurance.

A New Assurance

The USDA’s Risk Management Agency aims to provide crop insurance for advanced feedstocks The USDA recently sought proposals to study the feasibility of providing crop insurance to producers of corn stover, straw and woody biomass. Research efforts are also underway for energy cane, switchgrass and camelina. “USDA’s Risk Management Agency is eager to provide risk management services for biofuel crops that are being grown on a sufficiently commercial scale that provides necessary production and market data to allow assessment of their viability for crop insurance,” says Bill Murphy, RMA administrator. “RMA-financed studies are underway now to determine which crops meet this criteria. Those studies should be ready this summer. Mitigating the risks inherent in agricultural production will encourage farmers to produce biofuel crops, providing additional alternative fuel sources for America.” According to Murphy, the ability to secure crop insurance is a prerequisite before most farmers can grow a new crop, largely because banks and lenders generally require crop insurance as collateral to approve operating loans for farmers. Without an operating loan, many farmers can’t afford to plant 12 | Biorefining Magazine | may 2011

their fields. Since crop insurance is generally required by lenders before a loan is approved, the situation has become a bit like the chicken and the egg scenario, Murphy continues. “It’s a critical program to be developed to go along with this developing industry,” he says. The RMA has been looking into the issue for several years, and was specifically directed by the 2008 Farm Bill to look into the feasibility of developing crop insurance programs for biofuel feedstocks. Although efforts right now are focused on six specific crops, Murphy says other feedstocks will likely be addressed in the future. There are two possible paths forward for the development of crop insurance programs for biofuel feedstocks, Murphy says. One is similar to programs developed for crops like corn. The other is modeled after a crop insurance program that has been developed specifically for areas like pasture and rangeland. Traditional crop insurance programs, such as the one for corn, allow growers to purchase insurance based on their own history of production. Crop insurance programs for rangeland and pasture, alternatively, don’t rely on actual measurements of a crop’s growth.

Rather, the RMA uses a rainfall index or vegetative index to determine the amount of production on a piece of land. “It’s the way we found that we could ensure these crops where there isn’t really any history of production or harvest,” Murphy says. “It’s been successful. Actually, growers like it quite a bit. We introduced this concept to growers in the biofuel industry, however, they wanted a standalone product [like corn insurance].” One clear benefit of an insurance program based on the same concept as RMA’s program for rangeland and pasture is that it could likely be developed more quickly. There are several things the biorefining industry can do to assist the RMA in the development of insurance products for biofuel feedstocks. Most importantly, it can share production data with the RMA. “As we move forward we’ll need information like their contract data, how much production—if any, and how much they are paying for [feedstocks],” Murphy says. “I see us working closely with the industry and moving forward with it.” —Erin Voegele


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Don’t Forget about Medium Oil Oil companies of all sizes are important to the biorefining industry If BP, Chevron or any other Big Oil company had done what Hunt Refining Co. out of Alabama just did by signing an off-take agreement to use renewable crude from Kior Inc., both Hunt Refining and Kior might be getting a lot more attention. Not that either company needs it, and not that Hunt Refining is small, but don’t forget the role of medium-sized oil companies in the development of the biorefining industry. In an industry where an off-take agreement is nearly as important as the novel process

to make a renewable product, Hunt Refining Co. might have just paved the way for the future success of Kior (which also received a loan guarantee at an astounding $1 billion to construct four plants). The plan is for Hunt Refining to purchase Kior’s renewable fuel in the future. The business of refining is only one area within an array of business ventures at Hunt. Hunt Energy Enterprises is “interested in investing in,” or partnering with energy entrepreneurs in conventional energy ventures as

well as those in alternative cleantech sectors,” the company states. At Hunt BioVentures, the focus for investment is on life-science companies such as MacroGenics, a company that works with immunotherapeutic products, or Myogen, a firm that specializes in drugs to prevent heart failure. As a criterion for Hunt Energy Enterprises’ investments, the company states, “we are interested in application of technology that has the potential to disrupt the energy industry value chain.” —Luke Geiver

Say No to Rust

Virginia Tech awarded grant for rust-resistant switchgrass gene work An assistant professor of horticulture at Virginia Tech has been awarded a $1 million grant from the National Institute of Food and Agriculture to develop and deploy rust-fungus-resistant genes and monitor the pathogen in switchgrass. It’s the second monetary award his research into rust resistance has earned him. Bingyu Zhao and his research colleagues at Virginia Tech, Oklahoma State University and Iowa State University discovered potential rust resistance genes in several switchgrass cultivars from their large germplasm. The researchers will now work to enhance their ability to genetically identify rust resistance genes and associate those genes with molecular markers. They will also develop a system for functional analysis of putative rust resistance genes in switchgrass, and analyze the DNA of the switchgrass rust pathogen to determine the structure and dynamics of rust populations across the country, according to Virginia Tech. “A potential virus-induced, gene-

silencing tool for quickly analyzing the function of rust resistance genes in switchgrass has been developed,” Zhao says. As a complement to the natural gene, a novel strategy developed by a research team at Virginia Tech’s Virginia Bioinformatics Institute will be tried to generate switchgrass cultivars with broad spectrum rust disease resistance, he adds. Generating those cultivars is the aim of the research, followed by their strategic deployment according to the rust pathogen population to ensure large-scale and sustainable biomass production, Zhao says. In 2009, Zhao also received a $1 million Faculty Early Career Development (CAREER) award from the National Science Foundation for his research on a diseaseresistant gene in corn that will prevent bacteria from invading distantly related plant species. The award is the National Science Foundation’s most prestigious for creative junior faculty. —Lisa Gibson

Switchgrass Gene Switch Researchers at Virginia Tech are working to enhance their ability to genetically identify rust-resistant genes in switchgrass, and associate those genes with molecular markers.

may 2011 | Biorefining Magazine | 13


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startup

A Novel Formulation A Canadian company develops a new biobased foam product Vital Products Inc. recently announced it has discovered a new chemical composition for its Bio Foam product, for use in packaging applications. “Natural, renewable compositions in polymer chemistry have been the most discussed topic in the industry,” says Vital Products CEO Michael Levine. “Our discovery is significant from a chemical point of view and the markets perspective. We have formulated a composition that is 100 percent natural and renewable. This is a significant accomplishment and it further enhances our ability to meet our manufacturing cost model.” Days after it announced the new formulation for its Bio Foam, Vital Products stated the company’s sales are expected to exceed

$750,000 for the six-month period that ended Jan. 31. According to Levine, the company has already surpassed the volume of sales it had during its 2010 financial year and is well on its way to exceeding the $1 million sales estimate that was issued in late 2010. The most recent documentation filed with the U.S. Securities and Exchange Commission shows that Vital Products Inc. has achieved revenue of $766,862 for the six months ending Jan. 31. Revenue listed from the same period of 2010 was only $27,862. According to the filing, the increase in revenue for the most recent six-month period is attributed primarily to a licensing agreement that has been signed with Den Packaging Corp. During the same

Vital Products Inc.: Products in Development • • • •

Biofill—biobased foam packaging material E-coplank—biobased packaging foam plank E-Foam—biobased flexible foam for use in automotive components Enviro-fill—biobased foam for loosefill packaging applications

six month periods of 2010-’11, the company posted respective net losses of $469,447 and $138,013. —Erin Voegele

An Italian Groundbreaking 13 MMgy cellulosic ethanol plant begins construction in Italy Novozymes partner Mossi & Ghisolfi Group conducted the groundbreaking ceremony for a 13 MMgy multifeedstock cellulosic ethanol plant in Crescentino in northwestern Italy in April. Production is set for 2012. Novozymes, the world’s largest producer of industrial enzymes, has collaborated closely with M&G for the past couple of years and

will supply the enzymes for the plant. Poul Ruben Andersen, marketing director bioenergy at Novozymes, says, “Biofuel made from lignocellulosic biomass is no longer a distant pipedream. The technology is ready and plants will be built and run on commercial scale, offering a compelling alternative to conventional gasoline. M&G’s plant in Crescentino will be

self-sufficient in power. Lignin, a coproduct extracted from biomass during the ethanol production process, is burned in an attached power plant that also feeds excess electricity back to the grid. The plant will employ approximately 100 people and generate many more jobs in the local community. —Ron Kotrba

Increasing Strength Additive makes bioplastics more durable

The Bioplastics Division of Teknor Apex Co. has announced that a clear impact modifier masterbatch for use with polylactic acid (PLA) bioplastics substantially increases the material’s impact strength, while maintaining the clarity of the base resin. According to Tenkor Apex, Terraloy 90000 Series masterbatches are formulated with Biostrength, an impact modifier from Arkema Inc., and carrier polymers consisting of NatureWorks LLC’s Ingeo bioplastic. The 14 | Biorefining Magazine | may 2011

company also notes that the Terraloy 90000 Series complies with the U.S. Food & Drug Administration’s requirements for food-contact applications at loading up to 20 percent. “Terraloy 90000 Series masterbatch increases the toughness and reduces the brittleness of PLA, expanding the value of this key bioplastic in a wide range of packaging applications where clarity is essential," says Edwin Tam, Teknor Apex’s manager of new strategic initiatives. "As a custom compounder, Teknor

Apex is prepared to tailor masterbatch formulations to customer needs by, for example, varying the grade of NatureWorks' Ingeo resin used as the carrier." In fact, one series of testing found that Terraloy 90000 Series masterbatch increased impact strength by a respective 9 and 16 times when used at 5 and 10 percent loadings. At the same percentages, haze levels increase from 4.1 percent to 4.5 percent and 6.5 percent. —Erin Voegele


PHOTO: USDA

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Guest of Honor USDA Rural Business-Cooperative Service Administrator Judith Canales speaks during an April 13 visit to the ICM cellulosic ethanol plant under construction in St. Joseph, Mo.

An Honored Visitor

USDA’s Canales visits ICM’s St. Joseph, Mo., cellulosic ethanol project As part of an effort to highlight USDA programs that promote greater use of biofuels, USDA Rural Business-Cooperative Service Administrator Judith Canales stopped by to check out the progress on the ICM Inc. cellulosic ethanol pilot and demonstration plant under construction in St. Joseph, Mo. The April 13 visit kicked off a series of workshops and events on renewable energy that will be held during the next two months. Secretary of Agriculture Tom Vilsack spoke at the grand opening of the BioProcess Algae Phase II Grower Harvester TM Bioreactor. The algae project is located at the 65 MMgy Green Plains Renewable Energy ethanol plant in Shenandoah, Iowa. USDA is showcasing projects while promoting its blender pump program. USDA’s Rural Energy for America Program funding is available to help install E85 and blender pumps, with a goal of 10,000 blender pumps added during the next five years. “Grants are available to provide fuel station owners with incentives to install flexible fuel pumps that offer Americans more renewable energy options,” Canales says. “I want to make certain that everyone is aware of the variety of assistance USDA Rural Development provides

to help businesses create jobs and become more energy efficient.” USDA’s visit in St. Joseph was successful for both sides, says Greg Krissek, ICM's director of government affairs. “It was certainly an opportunity for Administrator Canales and the USDA rural development team to spread the word about their program and the same time it was gracious of them to be interested in learning a little bit about our pilot plant,” he says. For the overall success of the ethanol industry, progress must be made at both ends of the production and use spectrum, Krissek says. Installing E85 and blender pumps helps the industry move past the E10 regulatory cap on blending, in order to meet the growing requirements of the renewable fuel standard. The USDA’s project to provide money for blender pump installation is a step in the right direction to giving the ethanol industry access to the marketplace. That, in turn, will help foster further development of cellulosic ethanol plants. “Commercial investment and lending for facilities is only going to happen if those investors and lenders see a growing marketplace and growing use of the product,” he says. He adds that it’s important that both first- and second-generation ethanol are suc-

cessful—not just cellulosic ethanol. “We’ve completed the first span of the bridge with the starch ethanol facilities that are across the country. We’re looking at the next span of the bridge which is the cellulosic ethanol,” he says. “You’re not going to get on the second span and throw the first span away.” The U.S. DOE awarded ICM $25 million for construction and operation of the 254,000 gallon a year pilot plant. The company is working to modify its existing dry fractionation corn-to-ethanol pilot plant located at LifeLine Foods LLC for ethanol production using four feedstocks: corn fiber, switchgrass, energy sorghum and corn stover. “Construction should be completed by June first,” he says. “The second half of this year we’ll begin operations.” ICM is partnering with LifeLine Foods on this project, which is a farmer-owned cooperative of more than 700 members. The company will contract with those farmers for its supply of feedstock within a 25-mile radius, or if necessary, a 50-mile radius. This growing season ICM only has a few contracts for feedstock and will conduct its first tests on mostly corn fiber from the LifeLine plant. “There’s a small (feedtstock) program going on this year, it will start to ramp up next year,” he says. —Holly Jessen may 2011 | Biorefining Magazine | 15


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startup

When Numbers Don’t Matter DuPont’s survey reveals the potential for biobased materials in autos—almost DuPont Automotive and the Society of Automotive Engineers have proof that the materials used in our vehicles matter, at least when fossil fuel reduction, fuel economy or emission levels are of concern. The two performed a joint survey asking 500 design engineers questions on the topics. Half of the participants were affiliated with the auto manufacturing industry, the other half with the supply base. To the question “How important are materials to a product’s success?” the participants were given three choices: very important, important, or somewhat important. The participants answered the question for three time segments, 10 years ago, today and, in 10 years. While only 19 percent of the survey participants answered that today a material is only “important” to a product’s success, it revealed that 79 percent believe in 10 years a product’s worth in terms of overall success is “very important.” The main driver that is influencing the change of importance in materials such as fibers, plastics, aluminum, ceramics and biobased materials,

noted the survey, is linked to environmental regulations, according to 93 percent of respondents. To meet those regulations, 61 percent pointed to engine downsizing and power-boost technologies, while 28 percent pointed to lightweight structural materials. David Glasscock, DuPont’s global automotive technology director, points out the urgent need for composites and plastics. If roughly 70 million lightweight vehicle engines used plastics instead of metal in under-hood applications, “we could eliminate the need for 240 million gallons of fuel.” The challenge of making a more fuelefficient vehicle that produces fewer emissions isn’t only about the materials, according to the survey results; 52 percent of the respondents noted the importance of collaboration throughout the value chain as a path to create a successful, and profitable, vehicle. “Clearly the engineers know how to make a fuel-efficient vehicle,” he says. “It’s making one that consumers can afford, and especially enjoy. That is the challenge.” But, even though the survey touched

Behind the Numbers DuPont’s survey shows that biobased products are on the rise. Source: 2011 DuPont Automotive/SAE survey of design engineers performed by Signet Research Inc.

16 | Biorefining Magazine | may 2011

on a number of issues including how automakers will meet emerging regulations, vehicle systems that will benefit from innovations in material or even strategies to strengthen the automotive industry, there was no greater data set revealed through the survey than this: when asked about “materials that were poised for growth,” 41 percent of the respondents said biobased products were on the increase as of 2011, up 15 percent from 2008. Next year, who knows what a similar survey might reveal about the importance of biobased products to a vehicle’s success. But we do know this without asking 500 people. There is roughly a 100 percent chance that reducing fossil fuel use, increasing fuel economy and concerns over emission levels will still play a role in the cars we drive. Without figuring the exact numbers, this would signal biobased materials are headed nowhere but up. —Luke Geiver


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Designed to Degrade

Canadian bottler changes name, focus to biodegradable plastic bottles Imagin Molecular Corp. recently announced its shareholders have agreed to change the name of the company to The Plant Bottle Corp. The company, which formerly was involved in the medical imaging business, will now focus on introducing biodegradable plastic bottles to the food and beverage industry. According to the company, all of its operations and investments in the imaging

business will be transferred to Imagin Diagnostic Centres Inc., while plans to acquire and develop imaging centers in Canada will be reversed. Under its new name, the company will work to develop and introduce a biodegradable plastic bottle and solicit beverage companies to convert from traditional polyethylene terephthalate (PET) plastic to its product. According to The Planet Bottle, its

plastic is designed to oxo-biodegrade over a programmed period of 10 to 20 years. Traditional PET takes 500 years to degrade. The company also states that oxo-biodegradeable technology was developed by U.K.-based Wells Plastics, and that the technology works by oxidizing a polymer by the use of a prodegradant, which allows the carbon to be digested by microbes. —Erin Voegele

The Bioenergy Bridge PSU bought equipment to bring industry professionals together Tom Richards is serious about bioenergy. As the initiator of Penn State’s new renewable energy collaboration called the Bioenergy Bridge, Richards is also committed to making sure that the growth trajectory of bioenergy in the next couple of years becomes what he feels it should be. He’s already worked with the Chesapeake Bay commission on projects including winter energy crop practices, perennial grass development and even woody biomass utilization, all of which happened well before he formed the Bionergy Bridge. Now, he has set out to “pull together industry, other external stakeholders and a variety of different university researchers relating to the challenges of bioenergy.” As for where he believes bioenergy should be, look at what he has done in his short time leading a bioenergy effort—one that includes 70-plus researchers and $15 million in funding. The best part about Richards’ work, however, isn’t about what he’s already done, but about what he might do in the future. While the current total for members of the bridge is only four, the center (if one wants to call it that) is positioned to benefit a number of research areas. Members will have access to a biomass energy center, a center for lignocelluloses structure and function, shared fermentation equipment, a center for nano-

Myriant Technologies has already visited the facility for testing purposes, and AdvanceBio Systems LLC recently installed a cellulosic pretreatment reactor. cellulosics and others. To this point, Richards says the pretreatment facility has generated the most interest. “It is basically a user facility for something that is bigger than bench-scale but less than tons per day,” he says. “The facility is set up as a user facility for companies to come in and do their own work, or for us to get our own things done.” People, he says, are starting to recognize that they have to test out their organisms and their processes with real materials. Myriant Technologies has already visited the facility for testing purposes, and AdvanceBio Systems LLC recently installed a cellulosic pretreatment reactor. In addition to access to equipment like the pretreatment reactor, members will also be able to participate in bioenergy symposiums between faculty at

PSU, other researchers and other companies that range in topic from winter energy crop development to catalysis. The hope, Richards says, is to create face-to-face interaction. “We structured this to try and encourage that.” Part of the reason Richards points to as an inhibitor to bioenergy growth has to do with that interaction. “Too often university people aren’t interacting with industry people and finding out what they need,” he says. And, “there are also a lot of other stakeholders out there, including landowners, environmental organizations, state and local governments and federal regulatory agencies that don’t always know what is going on.” Richards and his team have already worked with a company looking into torrefaction and a biodiesel producer using locally grown camelina. His partner at the Bioenergy Bridge, Dan Ciolkosz, is already forming a master’s degree focused on renewable energy. For an individual focused on the future of bioenergy, Richards seems to be on the right path, and his work so far might be enough to consider following him, even if it isn’t. “My philosophy is to bring these folks together, get them to interact, define some common challenges and shared opportunities, and then get to work.” —Luke Geiver may 2011 | Biorefining Magazine | 17


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startup

Relationships Matter

Research demonstrates the ability to form strong partnerships is integral to a company’s success Analysis completed by Lux Research has determined that the stronger a company’s commercial partnerships are, the stronger the company tends to perform overall. According to Mark Bünger, a Lux Research director and the report’s lead author, financial backers and academic collaborators help many new biorefining companies get started. However, too many promising technologies never move beyond the development stage. “Only multiple, active commercial relationships with other businesses will turn these technologies into mature processes and products that actually have a commercial and environmental impact, and a return for their investors,” he says. Bünger and his team used network graphs to study the relationships biorefining companies have formed, focusing in on those companies that are developing new technologies. “A network graph is a way of representing connections in a group,” he says, noting the method has a long history and has been used to study other industries. “Any relationship is complex and very difficult to boil down to just a few factors,” he continues. “What we wanted to do is capture some of the most salient points; things like when the partnership started, what form the partnership took, some of the terms of the partnership…the duration of the partnership, but we also wanted to get some more qualitative or subjective impressions of what works and what doesn’t, what are best practices and things like that.” The study ultimately uncovered how integral the formation of partnerships is to

One unique aspect of partnerships in the biorefining sector is that they are multidisciplinary. 18 | Biorefining Magazine | may 2011

Total

Shell Novozymes Volkswagen Chevron NREL

BP Valero DuPont Waste Management

British Airways

Finding Connections Network graphs can be used to study the formation of relationships between companies. SOURCE: LUX RESEARCH INC.

a company’s success. “To say they are critical would be an understatement,” Bünger says. “In a lot of ways the relationships between the entities are more important than what happens with each individual entity. [For example], if company X has a breakthrough, but they can’t afford to scale up, or they can’t get access to the technology they need downstream of that breakthrough, there are lots and lots of different ways that fantastic performance on a company level won’t have any impact on the real world if it isn’t helped along by partnerships.” One unique aspect of partnerships in the biorefining sector is that they are multidisciplinary, Bünger says. “You’ll see Ford and Pfizer both partnered with companies in this space,” which is unique. You wouldn’t see that in other industries, he continues.

The million dollar question is what makes some companies better at forming these relationships, Bünger says. “It’s not just a function of the technology alone,” he says. “I think it’s very much a function of culture, and leadership.” While some companies are very good at forming meaningful partnerships with other companies, others choose—for one reason or another—to hold their cards close to their chests, he adds. “They think that’s a good strategy because they are going to own whatever comes out of their invention, but more often than not they end up really hindering themselves by doing that,” Bünger says. —Erin Voegele


startup |

When Quitting is Good for Cleantech

Cathy Zoi has parted ways with the U.S. DOE It’s not uncommon for government officials to partner with bioenergy firms after they are out of office. Byron Dorgan, former U.S. Democratic Senator from North Dakota, joined Codexis as a member of the renewable chemical company’s board of directors. Dorgan made the move after his term was over as did John Podesta, who joined Joule Unlimited, after his time as White House Chief of Staff ended. So what’s the big deal with Cathy Zoi, former Under Secretary for the U.S. DOE, taking a

similar path? For one, Zoi left while her term at the U.S. DOE was still intact. Two, she didn’t just take a board position, Zoi joined up with a newly formed cleantech investment firm Silver Lake Kraftwerk (SLKW). Zoi’s move, while unfortunate for the DOE, might be one of the best examples of actions truly speaking louder than words. As a staunch supporter of the cleantech sector, Zoi is proving that her time at the DOE wasn’t just about having a job. She will now have the opportunity to take her knowledge

and passion for the cleantech industry and put it to good use—and one would think she saw something worth leaving for. Adam Grosser, SLKW’s investment leader, says the firm has the opportunity to “redefine the future of energy production,” when it first formed. It appears like the SLKW fund is off to a good start by adding Zoi, and it can’t hurt that the investment fund will be supported by billionaire George Soros. —Luke Geiver

Company Patents ‘Integrated bioRefinery’ Highmark Renewables patents unique version of common phrase

Alberta

A company located in western Canada has received its sixth patent, this one for its Integrated bioRefinery, a trademarked name for its technology. “The patent speaks for itself. It says we are unique and first of its kind and so we are happy to enjoy that protection,” says Evan Chrapko, CEO of Highmark Renewables Research. The Integrated bioRefinery starts with an anaerobic digester, which is then integrated with other bioproduction systems for ethanol, biodiesel or algae, plus other add-on options beyond that. One example of that is the recently expanded anaerobic digeste r

in Vegreville, Alberta, a six-year-old biogas plant that will someday be linked with Growing Power Hairy Hill LP, a 40 MMly proposed wheat-to-ethanol plant. Highmark Renewables is also working with project developers in the U.S., South Africa, Mexico and China. The patent is for the U.S. and South Africa and Highmark Renewables will continue seeking approval in additional countries, Chrapko says. It joins the family of inventions known as the Integrated Biomass Utilization System, or IMUS. Another ethanol-related patent is the company’s enhanced Ethanol Fermentation patent. The Edmonton, Alberta, company got its start in 1999 as a technology company, he says. Since then it has added consulting, engineering, plant design and development partners to the list. Recently, the idea of starting up another consulting division has naturally evolved. “We jokingly call it doctor digester,” Chrapko says. “We are

being called up to help rescue digesters that are not working.” The anaerobic digester technology can utilize a variety of feedstocks from diverse sources, such as residential kitchen waste in cities with collection systems or slaughterhouse waste. “We’re not limited to agricultural waste, we can do municipal, human sewage or essentially anything that is organic matter,” he says. The result is a much-reduced carbon footprint. “When your energy source is waste, it’s pretty much a game changer on the outcome for how do you measure the grams of carbon equivalent per megajoule.” An important part of the company’s work has been integrating the anaerobic digester with other bioproduction systems. It’s not as easy as simply connecting the power source to say, the ethanol plant, and calling it good. “You really have to pay a lot of attention to the heat and energy balances between the biogas and the ethanol plant,” he says. “We’re proud to say and pretty confident that we are the best in the world at economically putting those things together.” —Holly Jessen

may 2011 | Biorefining Magazine | 19


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Incubating Potential Michigan State University’s Bioeconomy Institute is located in a building donated by Pfizer and houses a small-business incubator. PHOTO: MICHIGAN STATE UNIVERSITY BIOECONOMY INSTITUTE

22 | Biorefining Magazine | may 2011


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A Walk in the

(Research) Park

R&D centers can offer important infrastructure and networking benefits to startups as they work toward commercialization By Erin Voegele

Research and development parks, innovation centers and small-business incubators have long been a part of the U.S. industrial landscape. These entities generally aim to offer support and resources to companies working to develop and scale-up innovative, game-changing technologies. While many have traditionally focused in areas such as life science and biomedical innovation, a new wave of facilities is being established specifically to support the bioindustrial sector. In addition to state-of-the-art laboratories and research infrastructure, each entity can offer prospective tenants a wide range of unique benefits, from access to investors and downstream customers, to permitting assistance and highly trained employee pools.

may 2011 | Biorefining Magazine | 23


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While the nuts and bolts offered by a research and development center in terms of infrastructure and equipment are vital, other benefits may ultimately prove more important to startups.

PHOTO: BIORESEARCH & DEVELOPMENT GROWTH PARK

Each center also has its own specialized area of focus. For example, the BioResearch & Development Growth Park at the Donald Danforth Plant Science Center in St. Louis is able to leverage a strong background in plant science research. The BRDG Park was established as part of the original vision of the adjacent Danforth Center, according to Mark Gorski, park business development officer. The founders of the Danforth Center had a vision for an agriculturally focused plant science research park that could take advantage of some of the technologies being developed and discovered there, Gorski says. The BRDG Park essentially allows tenant companies access to core facilities at the Danforth Center, including the greenhouses, the growth chambers and the microscopy facilities. “[Tenants] pay for the use of those facilities, but at a discounted rate,” he says.

Construction on the BRDG Park began in 2008, and the grand opening took place in June 2009. “The building was designed to support plant sciences and agricultural bioresearch in terms of infrastructure,” Gorski says. “We have a building that is built with specialized infrastructure to support wet lab and dry lab research. We have the infrastructure necessary to support startups and mature companies.” This includes common equipment rooms, specialized lab suites and HVAC systems. The center currently consists of one 110,000-square-foot building. “We have approval from the local municipality for three buildings totaling 450,000 square-feet,” Gorski says. “We have a lot of room to grow, and we are planning to grow. I’m sure that we are going to see significant growth from the biofuel and biorefining sectors as we grow the park.” Approximately 10 tenants are currently located at the facility, with a couple more expected to establish operation there this summer. In Ontario, a former Dow Chemical research facility has been taken over by the city of Sarnia and county of Lambton and renovated to create the Bioindustrial Innovation Center. The center is located at the Sarnia Lambton Campus of the University of Western Ontario Research Park. The university has been contracted to manage it as a research park. “We’ve gone in and renovated the building and updated [systems] to handle steam and various waste management sys-

Plant Science The BioResearch & Development Growth Park is an extension of the Donald Danforth Plant Science Center in St. Louis. 24 | Biorefining Magazine | may 2011

tems,” says Murray McLaughlin, BIC’s executive director. Renovations were completed last fall and the grand opening was celebrated in October. The center features both lab space and pilot facilities. The pilot side can handle about three clients at a time, McLaughlin says, noting that six laboratory spaces are also available. The expectation is that bioindustrial companies will cycle through the center in six- to 18-month timeframes to complete pilot-scale work, he adds.

PHOTO: BIOINDUSTRIAL INNOVATION CENTER

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Regional Innovation Murray McLaughlin serves as the executive director of the Bioindustrial Innovation Center located at the Sarnia Lambton Campus of the University of Western Ontario’s Research Park.

In contrast to the focus on plant science at BRDG Park, McLaughlin says BIC is focused primarily on supporting biochemical companies. There are significant benefits associated with positioning a research project at a location that already has basic infrastructure in place, he says. “All our tenants need to do is install their pilot equipment and plug it in,” McLaughlin says. “They will save on their costs because we already have the ability to handle air flow, steam and the service side of it.” The labs are also outfitted with air control systems, fume hoods, benches, and other standard features. “The companies need to put their own equipment into those labs,” McLaughlin says, explaining that it would be impossible for BIC to anticipate the unique needs of each company.


PHOTO: MICHIGAN STATE UNIVERSITY BIOECONOMY INSTITUTE

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Demonstrating Potential Michigan State University’s Bioeconomy Institute features pilot plant capabilities.

Another small-business incubator recently established in Michigan is also located in a repurposed industrial facility. Michigan State University’s Bioeconomy Institute is housed in a 138,000-square-foot building donated by Pfizer. The location features laboratories, an auditorium and a large pilot plant, says Paul Hunt, the institute’s senior associate vice president of research and graduate studies. “It’s well-equipped for chemical research of all sorts,” he says. “The plant contains approximately 30 reactors ranging from 40 to 4,000 liters…It also contains centrifuges, driers, filters, condensers and other chemical apparatus.” The Bioeconomy Institute opened in March 2009 and focuses on three aspects of the bioeconomy: specialty chemicals, biomaterials and biofuels. The institute also houses a small-business incubator that is run under contract for MSU by Lakeshore Advantage. “I think that the Bioeconomy Institute has been designed to provide startups with simultaneous access to academic experts on the science and engineering side, as well as plant facilities and production experts,” Hunt says, noting that through a combination of scientific and production resources and business expertise, the institute is trying to cover all the bases for its tenants.

finance networking opportunities. “We really make it our business here at the BRDG Park to work closely with the investment community,” Gorski says. “One of the most important things that startups need is capital, financial resources.” BRDG Park has a network of angel investors, venture capital firms, private equity firms, and corporate investors it works with on an ongoing basis, he says. BIC can offer its tenants financial assistance through a slightly different mechanism. Within the group, it also has the Sustainable Chemistry Alliance, McLaughlin says. The alliance is essentially an investment arm that

will contribute small amounts of funding— up to $500,000—to companies that are moving from pilot- to demonstration-scale production. “The purpose of that, of course, is to be a catalyst to help these companies move through the next phase after pilot, when they need to build the demonstration-scale unit,” he says. Access to legal expertise is another element available at the BRDG Park. One tenant at the site is a law firm that specializes in intellectual property. The firm, Global Patent Group, is perfectly suited for startups that have a technology and don’t know how to value the IP, Gorski says. IP is the central key element of business for many biorefinery companies. “They need help determining how to value it and how to negotiate with other vendors and customers, or other technology companies,” he adds. While the legal services certainly aren’t free, Gorski notes that the firm’s fees are far less than similar firms based out of areas in New York or Chicago. There is also an obvious benefit to working with a law firm that has offices within walking distance to your research facility. In addition, the BRDG Park is also home to the St. Louis Community College Plant Life Science program, which trains laboratory technicians. “Startup companies

While the nuts and bolts offered by a research and development center in terms of infrastructure and equipment are vital, other benefits may ultimately prove more important to startups. In addition to facilities it offers to tenants, the BRDG Park can offer invaluable

PHOTO: PHYCAL INC.

Beyond Infrastructure

Biological Innovation Phycal Inc. is working to optimize algae at the Bioresearch & Development Growth Park at the Danforth Plant Science Center in St. Louis. may 2011 | Biorefining Magazine | 25


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Chemistry Alliance also feature a great deal of experience in manufacturing and the chemical sectors. “They are well networked in the industry and can offer a lot of experience to the companies they work with,� McLaughlin adds.

PHOTO: PHYCAL INC.

Startup Experiences

Feedstock Focus Enhanced algae strains are imperative to Phycal Inc.’s scale-up plans.

know that they have talent to tap into right here—literally right here in the building— from which they can hire and source interns to help build their business.� In Ontario, BIC helps its tenants leverage the local petrochemical industry. “Sarnia has a very large center around the oil

and gas industry,� McLaughlin says. “It’s probably the largest industrial center for oil and gas in eastern Canada. We’re wellnetworked back to the petroleum-based chemical stream, so we can help companies network and link up some future partners.� The board members of the Sustainable

Phycal Inc. is one company that has benefitted through involvement with the BRDG Park. The company was established in 2006 and is focused on the development of algae-based biofuels. “Our business is really helped out a lot by being in the BRDG Park,� says Mark Abad, Phycal’s senior scientist, noting that his company’s work at the park focuses on the development of metabolically enhanced algae strains. “A lot of it is based on basic cell biology and genetic engineering; taking advantage of known gene functions and incorporating them in traits to help produce those strains,� he says. Being located in the same building as St. Louis Community College’s program has been especially beneficial, Abad says.

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“What that provides us as a startup company is some stability. Not only do we borrow equipment from them when we have to, or they borrow expertise from us when they have to, but there are also interns available through their program. It’s a good, symbiotic relationship.” This includes the ability to contract with the college for certain research services, which typically involves tasks that Phycal requires infrequently and doesn’t have the equipment on hand to complete. “It gives us a lot more flexibility,” Abad says. “In a small operation you need to be flexible and quick.” While Phycal is focusing on cell biology, a cellulosic ethanol plant is leveraging the pilot facilities available at BIC. Woodland Biofuels Inc. is working to develop a pilot-scale operation at the center, which is expected to be operational by mid-2012. “The Bioindustrial Innovation Center is designed to house pilot and demonstration plants that use biomass as feedstocks,” says Greg Nuttall, Woodland Biofuels’ president and CEO. “In other words, it’s designed for exactly what we are doing. We’ve found it

very helpful working with them. They’ve done an excellent job.” Permitting is one area in which Nuttall says the staff of BIC has been especially helpful. “Permitting can be a rather timeconsuming, resource-consuming task,” he says. “Basically, they are handling it for us. We have to give them our information— what emissions we expect and so on—but they are dealing with all of the regulatory agencies on our behalf.” When considering establishing operations at a research and development park, Abad notes it’s important to understand what your needs will be. “Think hard about what you are going to need, and make sure you have access to expertise and equipment that is essential to your core business, and locate as close as you can to that expertise and equipment, and source of trained labor,” he says. Nuttall agrees that it’s important to ensure a particular facility fits your needs. “It’s also about the people you are working with,” he says. “In the case of the Bioindustrial Innovation Center, they’ve got a great team

there with a lot of expertise behind them, and a lot of experience. They’ve been very helpful to us.” It’s also important to consider what each park is looking for regarding its tenants. “We look for companies that have technology related to agriculture and the plant and life sciences,” says Gorski. “We’re really looking for companies with exciting, new technology, and that have a sort of technology that will lead to successful commercialization.” This includes strong financials. McLaughlin says financials are also important to BIC. “Obviously we need to see a technology that’s been proven at the research level and is ready to go to the pilotscale,” he says. “And, they’ve got to have enough financing to help them through that.” A strong development team, he adds, is also imperative. Author: Erin Voegele Associate Editor, Biorefining Magazine (701) 540-6986 evoegele@bbiinternational.com

WE SEE BIOFUELS. In our dreams. Awake. All the time. Everywhere.

We see how they’re made, how they can benefit your facility and the promise they hold for the future. We have our finger on the pulse of the industry and where it’s headed. Trust Burns & McDonnell to see you through the biorefining process.

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Engineering, Architecture, Construction, Environmental and Consulting Solutions may 2011 | Biorefining Magazine | 27


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28 | Biorefining Magazine | may 2011


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Diversity Sewer sludge, food and beverage wastes and plastics can provide abundant feedstock for biorefineries located onsite By Bryan Sims

The philosophy behind biomass refining is simple: build a renewable, sustainable economy using domestically sourced biomaterial (ideally wastes) while leaving the smallest carbon footprint possible. But there are high-energy, nonbiomass wastes such as unrecycled or unrecyclable plastics, for instance, that are dumped in landfills to sit for thousands of years. It is at this tangential juncture where biomass refining and the waste-to-energy industry cross. There is a growing number of companies within the biorefining landscape, like Tigard, Ore.-based Agilyx Inc., that are utilizing “unconventional” waste feedstock streams, such as waste plastic in municipal solid waste (MSW), for the production of crude oil that can be further refined into fuels and other chemical intermediates. Founded in 2004 under its former name Plas2Fuel, Agilyx employs what CEO Chris Ulum calls a “distributed-manufacturing approach,” whereby the company aims to deploy its modular conversion units at active municipal and industrial waste aggregation sites, such as material recycling facilities (MRFs), transfer stations and plastic recyclers. This, according to Ulum, eliminates costly shipping expenses associated with larger waste processing plants.

may 2011 | Biorefining Magazine | 29


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Hill Ventures, and Reference Capital also participated in the round. Agilyx first deployed its commercial system in 2008 at a beta customer site where the company shipped its first 25,000 gallons of crude oil. It has since optimized its technology, demonstrating the viability of the plastic conversion technology at its showcase commercial facility in Portland. To date, the company has sold more than 120,000 gallons of crude oil from 1 million pounds of plastic that would otherwise have been landfilled or incinerated. According to Ulum, Agilyx is the lone waste plastic-to-oil producer in the world to have locked up long-term off-take arrangements with an oil refiner in the Pacific Northwest. The technology is capable of recycling 20 tons of plastic per day and producing 4,500 gallons of crude oil a day from a typical eight-vessel system. On average, approximately nine pounds of mixed plastic can be converted into one gallon of ultra “sweet” synthetic crude oil, with a process energy ratio of about 7.3-to-1, meaning for every Btu input, 7.3 Btu of output are created in the form of hydrocarbon energy. According to Ulum, Agilyx’s novel conversion units are ideal for counties, municipalities or small townships that are looking for productive means of separating plastic waste streams from MSW or industrial waste debris into saleable crude oil. “One of the things that we think is a real virtue of our solution and our technology is that it’s scalable—we don’t sell a small, medium or large system,” Ulum says, “we sell a basic building block that then can be

PHOTO: AGILYX

“When you look at the municipal waste stream, between 12 and 13 percent of that consists of waste plastic,” Ulum tells Biorefining Magazine. “The whole idea was that we need to put the technology where the waste already resides rather than unnecessarily transporting the waste to the technology.” Agylix’s waste plastic conversion technology is designed to handle the inherent heterogeneity and contamination found in mixed, waste plastic feedstocks. Ulum says there are no limitations to the plastic resin types the technology can process. Additionally, the plastic can be co-mingled and there’s no need to clean the plastic of any contaminants prior to processing. Once the plastics enter the conversion vessels, the material is indirectly heated until converted into a liquid and eventually into a gas. With a series of controlled pressure and temperature adjustments, the gases are pulled through pipes into a central, condensing chamber. There, the gases cool off and contaminants are siphoned away. The synthetic crude oil that remains is transferred into tanks where they can be transported to oil refineries for further conversion into heating oil, diesel or gasoline. Additionally, Agilyx’s technology has evolved to the point of attracting some of the largest waste aggregators, such as Waste Management Inc., in its latest $22 million Series B round in late March. With Waste Management, the investment was led by Kleiner Perkins Caufield & Byers, another newcomer in the investment, and Total Energy Ventures International, an affiliate of oil and gas major Total S.A. Existing investors, Chrysalix Energy Venture Capital, Saffron

Rare Breed Agilyx is the only company to have locked up a long-term contract with an oil refiner to sell its wasteplastic-derived crude oil. 30 | Biorefining Magazine | may 2011

In April, Polyflow received $1.6 million from The Ohio Third Frontier to advance the company’s scaleup effort to build and operate a facility between Cleveland and Akron that’s capable of handling 16,000 tons of waste polymers annually. scaled to match the feedstock processing requirements for our clients. What that means is that we can have a solution that is good for not only large cities, but also small towns.” Agilyx estimates that waste plastic currently takes up to approximately 24 percent of the space in U.S. landfills. While the company may not become the panacea for eliminating all the waste plastic that currently stresses landfills, Ulum knows that his company and others have to start somewhere. “Plastics are still the most difficult waste stream to recycle when compared to paper, metal and glass,” he says, adding that U.S. recycling rates stand at about 10 percent at present. “Our technology addresses the other 90 percent and it provides a solution for the end-of-life of those plastics that’s superior to landfilling, incineration or exportation.” Like Agilyx, Akron, Ohio-based Polyflow looks to attack a similar strategy by capitalizing on the abundant waste plastic streams for production of finished gasoline and diesel. Using conversion technology invented in the 1970s and advanced in 2002 by the Ohio Polymer Enterprise Development, a University of Akron initiative aimed at commercializing technologies developed by startup companies, Polyflow’s technology can handle difficult-to-recycle waste polymer, such as tires or powdered paint waste, without the use of catalysts or gasification, and it operates at low temperatures and pressures, according to Joseph Hensel, director of technology and board member of Polyflow.


PHOTO: AGILYX

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Modular Model Agilyx has produced 120,000 gallons of crude oil from 1 million pounds of waste plastic in its modular production line in Portland.

“If you look at feedstocks available today, the one that has the highest availability is coal,” Hensel says. “The second is natural gas. The third is woody biomass. The fourth is polymer waste. Of those four, polymer waste has the highest Btu content. It’s a good feedstock, it’s readily available and it’s being largely ignored as a resource.”

In April, Polyflow received $1.6 million from The Ohio Third Frontier to advance the company’s scale-up effort to build and operate a facility between Cleveland and Akron that’s capable of handling 16,000 tons of waste polymers annually. Polyflow is collaborating with Youngstown State University, the City of Stow, Defense and Energy Systems,

PolyOne and Chemstress Engineering, and was one of eight companies to receive funding. According to Hensel, the facility should be operational within a year. The company plans to open a larger plant capable of processing 150,000 tons of waste polymer annually within three years. “The 16,000-ton facility would only take 3 percent of the polymer feedstock in the Cleveland/Akron area,” Hensel explains. “The full 150,000 ton facility would take about 27 percent of the polymer waste in the area.” While waste plastics may be an attractive type of feedstock for some, others see opportunities in capitalizing on different forms of waste feedstocks to produce fuels and chemicals, such as food and beverage wastes, or using wastewater to grow algae.

Branching Out

Statesville, N.C.-based Custom Environmental Technologies Inc.’s core business may be wastewater treatment, but that doesn’t mean it isn’t interested in exploiting waste material that feed on sewer water or

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“The world has changed when it comes to our company, because our company has always been geared to treating wastewater from manufacturing, such as the textile, pulp and paper or food and beverage plants,” Grayson says. “For us, going that route was a natural step.” The company has agreements in place with a few partners, both domestically and internationally, for projects that involve capturing sewage sludge for conversion into biodiesel or ethanol, and cultivating algae on wastewater where it can be harvested and extracted for biodiesel production, Grayson says. “We can use our technology at dairy farms, distilleries or sugar mills,” Grayson says. “There’s all kinds of industries we can go with. It’s not just a sugar-based waste stream.” One of those projects in particular was originally announced Decentralized Model Chris Ulum, CEO of Agilyx, says his in 2009 that involved the buildcompany utilizes a distributed manufacturing approach to refine waste plastic into synthetic crude. ing LWC628-RJS-0446 Biorefining Ad #2 1/8/11 10:52 PM Page 1 of a 5 MMgy ethanol plant in

Statesville using food processing waste. The project, a joint venture between CET and Maumee, Ohio-based Green Castle Energy Inc., is “still going forward,” Grayson says. Phase 1 of the project would use wastewater and sludge in fermentable starches and sugars in a standard ethanol process. Phase 2 would incorporate waste paper streams. CET would contribute its technology to precipitate biosolids out of food processing wastewater for the project. While he couldn’t disclose further details regarding a timeframe on a groundbreaking, Grayson isn’t banking on this single project to fulfill his company’s biorefining strategy spun out of wastewater treatment routes. “We’ll never have a shortage of waste feedstock streams in the industries we serve,” Grayson says. “You can count on that.”

Author: Bryan Sims Associate Editor, Biorefining Magazine (701) 738-4974 bsims@bbiinternational.com

PHOTO: AGILYX

effluent discharged from food and beverage manufacturing plants by turning it into biofuels. Founder Ron Grayson says the company wanted to broaden its wastewater treatment solutions for its customers by capturing the most out of the wastes it treats by creating additional revenue, such as ethanol from food and beverage effluent or biodiesel from algal oil.

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co-location

Heaven-Made Match? Integrating a biorefining operation with a pulp and paper mill sounds ideal but, in fact, only a handful of such projects have surfaced in the hundreds of mills around the U.S. and Canada.

34 | Biorefining Magazine | may 2011


co-location |

Scary

The Truth about Pulp and Paper Why substantial progress hasn’t been made—and why it will By Luke Geiver

The amount of potential for the nascent biorefining sector within the pulp and paper industry could be scary.

To start, look at what’s already there: infrastructure, feedstock supply, onsite chemical engineers and above all, years of experience dealing with woody biomass. But it doesn’t end there. Part of the potential is included in what is not at an existing facility, namely thermochemical process technology, designer bugs and job creation. For a startup looking to bring a technology to the world, coexisting, co-locating or even repurposing a mill site seems like a no-brainer. For a mill looking to diversify product, squeeze more out of existing assets, or even just to stay afloat, adding a biorefining component to the site seems like a perfect marriage. So where are all the happy couples? The idea that a pulp and paper mill offers a biorefining developer an immediate ability to deploy that thermochemical process or designer bug while saving a struggling mill town with new jobs, new energy products and new hope, is a good one. It also goes without saying, there are no perfect marriages. And although partnerships like these seem to be scarce (there are roughly three current projects underway in the U.S.), there is still a scary amount of potential for pulp, paper and biorefining relationships, and with the right circumstances, almost perfect can be good enough.

What Scary Means

There is a lot we already know about the pulp and paper industry. Earlier this year, Apple’s CEO Steve Jobs took a health-related leave of absence, and some worried about the future of the media device supergiant. Three months later, Jobs made a surprise appearance for the unveiling of the IPad2. Since its release, Apple has reportedly sold out (roughly 500,000) of the device, and a survey by Piper Jaffray shows that of the second edition devices sold in 2011, 70 percent were purchased by new buyers. So what does all of that mean? For one, Apple might be unstoppable (even when its leader is ill), which we

may 2011 | Biorefining Magazine | 35


co-location

already knew. Also, traditional media, namely newsprint that the IPad and other devices like it are replacing, are becoming the new paper, which again, we already knew. Stan Parton, who formed the Parton Group, a consulting firm for project developers with 35 years of experience in the pulp and paper industry, agrees that technological advancements of devices like the IPad have changed the landscape for some mill operations forever, but there are also other factors that have affected the pulp and paper industry that ultimately show the need for a change that might not be as obvious. “What we are now beginning to see for the first time, when you take out tissue consumption, the U.S. per capita paper consumption is now declining.” In an industry based on scale, which hinges on the size of a production line, the U.S., he says, has fallen behind. “We are dealing with production lines of the newest, most modern facilities in other parts of the world that are two to three times [the capacity] compared to the systems that are in North America.” In addition to larger production lines, the newest facilities can operate with a smaller number of operators due to more advanced control systems. Add in the higher labor costs in the U.S. and the fact that it is cheaper to tack on the freight costs and ship pulp from South America to the U.S., and the struggles in the industry become pretty clear. These circumstances have forced some marginal mills, facilities that were never equipped with new technology, to shut down, explains Parton. But a marginal mill might not be what you think it would be. “For example,” he says, “International Paper shut down a mill in Virginia, a very technically advanced mill.” That mill, he says, did receive technical upgrades, but because the company built a large pulp mill in South America, the mill in Virginia was shut down—coincidentally, both mills have the same installed capacity—showing that a mill might only be considered “marginal” as part of a larger corporate portfolio. In Canada, the pulp and paper scene might be even bleaker than in the U.S. The Forest Products Association of Canada recently completed a study titled, “The New Face of the Canadian Forest Industry: the Emerging Bio-Revolution.” The point of the study, says Tom Browne, program manager of mechanical pulping and sustainability for FPInnovations, was to try and look at all of 36 | Biorefining Magazine | may 2011

the proposed ways to better utilize woody biomass in Canada based on the decline of the pulp and paper industry. “I think the Canadian industry is aware that it needs to do this,” he says. “The number of mill shuts in the last five years has made everybody sit up and notice. I think government at all levels think that this is not just the case of an industry that is whining about tough times, but an industry,” he says, “that is in serious crisis.” The government, he says, is not interested in finding ways to help the mills squeeze out another dollar in savings but, instead, the focus has been put on transformation. “It’s a matter of extending it to other products.” In addition to the decline in newsprint, Browne points to another area of decline that has affected those mills in Canada: the U.S. housing market. “The Canadian lumber industry is also idled to a large extent because we typically sell lumber into the U.S. housing market,” he says, adding, “so a lot of our lumber mills are idle and we have to find new products.” All of these factors—labor costs, advanced operating systems, production lines that can produce 3,000 tons per day, reading devices that can store 3,000 books or more on a single device—reveal the broad trends of the industry. “Some are positive, and some are negative, quite frankly,” says Pete Stewart, president and CEO of Forest2Markets. Along with newsprint, which Stewart says is basically dying, there is also a negative trend for copy

paper in both North America and other developed nations. But, there are some product segments like container board (cardboard) that are doing well, he adds. “You hear that there is all kinds of talk that the pulp and paper industry is dying on the vine,” something Steward notes is not true, but says, “there is definitely a lot fewer mills remaining.” In the end, there is a general decline in demand for paper. For the biorefining industry, all of these elements may seem like a giant arrow with blinking lights pointing to a commercial site, and the same might even be said for pulp and paper facilities looking for a new revenue stream. Unfortunately, as Browne says, “this is not the type of thing that is going to get turned around in a weekend.”

How Long to Turn Around?

One of the hurdles blocking the development of biorefining projects is the pulp or paper products themselves. Doug Dudgeon, manager of process solutions for the Harris Group, says the difficulty is that the value of some products is still high and if you have markets for those products, a facility should still be selling into that market. “That is why it has been hard for the pulp and paper industry to jump into this with both feet,” Dudgeon says. Stewart notes that paper prices are at an all-time high right now, and Parton has a similar sentiment to Dudgeon on why more developments haven’t taken root. “Generally, management is caught watch-

PHOTO: NYSERDA

|

Acid Test Levulinic acid is just one of many biobased chemicals that can be produced at a pulp and paper mill hosting a biorefinery.


co-location |

ing the goose that lays the golden egg instead of watching for new chicks to hatch,” Parton says, adding that, in general, the pulp and paper industry is conservative. It’s not just the pulp-and-paper side that is holding up the development of more co-located biorefining projects. Within each likely class of options—a distressed or idled plant and an operating plant—there are progress blockers. “If a plant has been shut down,” Parton says, “the owners didn’t decide to just shut it down.” Instead, he notes, that plant was most likely run without upgrades for as long as possible before it was actually idled. As Browne explains, a plant that has been completely shut down (especially in a Canadian winter) will present a number of challenges during any restart efforts. For those mills already running, there are the technology issues that include starting with a process that actually works on a commercial scale, and finding a way to integrate it in a feasible manner. Add those issues to a number of others and it might sound like a combined biorefinery and pulp and paper mill may never happen in any other place than Wisconsin (Flambeau Rivers). The issues include: determining a role for the mill owners in the overall process and how a mill can handle more feedstock; dealing with existing environmental permitting issues; and competing with the 145 or so mills in the U.S. that are still making paper out of virgin fibers, as well as the mills in the Pacific Northwest and Northeast that have gone idle. Doug Machon, business development manager for NAES Corp., has news regarding any sort of timeline. “This is a little bit of a good news/ bad news answer. The good news,” he says, “I do believe that the integration of biorefineries into existing plants makes a lot of sense. The bad news,” he adds, “it’s going to be three to five years before policy, funding and economics converge to allow for significant momentum forward.” Even Parton, who adamantly hopes such projects will happen, questions whether a window of opportunity has passed. “If you look at some of the companies in the industry, do they have the economic capacity to do this?” he asks. Dudgeon, like Stewart, says there is general interest by those in the biorefining sector to do this, “more than just kicking the tires,” and the Harris Group is “bullish on this idea.” The truth about pulp, paper and the biorefining industry is that there is an opportunity for a new industry to partner with an old industry in some capacity, and both can play a role in a sustainable future. To get there, however, it’s not as easy as following the blinking arrow created by a declining industry, or by recognizing that we don’t find our next used car in the local classifieds but, instead, online. Whether a developer is looking to partner with an economically established facility or purchase a distressed or mothballed one, not every plant may be perfect, or ready, for such a project. But, as Dudgeon says, “It doesn’t have to be a big number. If it were 5 percent, it is still a lot for an industry in a nascent stage.” Browne points to the FPAC report, which, he says, concluded that integrated facilities or projects are “going to work a lot better than a bunch of standalone plants.” Author: Luke Geiver Associate Editor, Biorefining Magazine (701) 738-4944 lgeiver@bbiinternational.com

may 2011 | Biorefining Magazine | 37


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